HM Treasury urged to act to prevent switch to loan schemes

Serious and urgent work is needed to prevent any “mass shift of contractors” into loan arrangements via umbrella companies in response to changes in U.K. off-payroll legislation, according to the Low Incomes Tax Reform Group (LITRG).

But the “general poor reputation” of umbrella companies does not uniformly match the reality and is “not deserved by many in the sector,” Victoria Todd, head of LITRG, said in a March 24 release.

LITRG’s 150-page report explains how umbrella companies and other intermediaries operate in the U.K. labour market, devotes two chapters to “the benefits and complexities” of umbrella companies, and explores the use of disguised remuneration schemes. The report, based largely on research conducted in November 2020, acknowledges financial support from the Trades Union Congress…

Read more: My news story for Tax Notes, March 26 (paywall).

U.K. set to push contentious measures as Brexit talks continue

The U.K. government set out plans to introduce a Taxation (Post-Transition Period) Bill and revisit the controversial United Kingdom Internal Market Bill, while EU diplomats reportedly warned that substantial gaps remained in post-Brexit trade talks.

The House of Commons will consider on December 7 amendments made by the House of Lords to the United Kingdom Internal Market Bill, Leader of the House of Commons Jacob Rees-Mogg announced on December 3.

The Lords amendments included the removal of measures overriding the terms of the Northern Ireland protocol in the EU withdrawal agreement. The U.K. government has argued that the measures represent a safety net to protect the integrity of the United Kingdom’s internal market, but the European Commission gave notice in October of a legal action over the government’s refusal to remove them.

My news story for Tax Notes, December 3 (paywall):

U.K. tax scheme promoters face new sanctions

Tax avoidance is not as widespread as people might think, HM Revenue & Customs said as it announced that scheme promoters responsible for misleading advertising will face new sanctions.

An enforcement notice published jointly by HMRC and the United Kingdom’s Advertising Standards Authority requires promoters to be “clear about the potential consequences of tax avoidance” in any online adverts, HMRC said in a November 26 release. Promoters who do not comply with the regulator’s advertising code may have paid adverts removed from search engines, and follow-up compliance action can include referral to trading standards officers, HMRC added.

In a separate report HMRC said it has heard “the very real public anger” about the people who promote contrived avoidance schemes.

My news story for Tax Notes, November 30 (paywall):

U.K. Tax Scheme Promoters Face New Sanctions

HMRC intends to name employers claiming JSS grants

The National Audit Office’s October 23 report on the coronavirus employment support schemes, together with new HMRC guidance, confirmed what HM Treasury disclosed earlier this month:

“HMRC intends to publish the names of employers claiming the new JSS scheme and to notify employees through their personal tax accounts when an employer has claimed JSS.” – @NAOorguk at, confirmed by @HMRCgovuk at:

.@NAOorguk on #CJRS and #SEISS:”The scale of total fraud and error is likely to be considerable, particularly for CJRS, but HMRC will not know the actual levels until the end of 2021 at the earliest.”

.@NAOorguk on exclusions: “People were excluded from the schemes either because of ministerial decisions about how to target the schemes, or because HMRC did not have data needed to properly guard against the risk of fraud…”

.@hmtreasury and @HMRCgovuk should “consider how to ensure that reliable data covering as many people as possible can be used to determine eligibility so that fewer people suffering loss of income are excluded from future similar schemes”.

Originally tweeted by Andrew Goodall (@agoodall4) on 23rd Oct 2020.

UK Treasury rejects call to evaluate pension tax reliefs

Now is not the right time for a formal evaluation of pension tax reliefs, the UK government said in response to a report calling for a “step change” in the administration and understanding of reliefs.

HM Revenue & Customs does not understand the impact of “any of the largest tax reliefs, including reliefs on pensions which were forecast to cost £38 billion in 2018-19″, the House of Commons Public Accounts Committee said in July. The government “has not made any assessment of whether that huge cost actually encourages saving for retirement or reduces dependence on state retirement benefits, or whether it just enables those already saving comfortably to save more”, the committee argued.

There are “vast amounts of tax forgone” through reliefs, Mel Stride, Treasury Committee chair and Conservative member of Parliament, said in July, as he launched an inquiry into “tax after coronavirus”. But the committee has said it will consider the role of reliefs in rebuilding the economy after COVID-19. The inquiry has invited written evidence by December 7.

My news story for Tax Notes (paywall) published on September 29 is reproduced here, with permission.

Tolley’s Tax Digest: Tax compliance update

Tolley published in August my fourth tax compliance update since 2016. This 42-page digest draws together and summarises recent tax compliance-related legislation and guidance, and includes:

  • summaries of the key compliance-related draft clauses for Finance Bill 2021 and the government’s proposed reform of tax administration;
  • details of the new regime for taxation and recovery of coronavirus support payments, and an overview of the legal framework for the support schemes; and
  • the current status of more than 20 tax compliance-related consultations, including those announced on ‘L-day’ in July.