The UK economy is well placed to respond to the “shock” of last month’s EU referendum decision, newly appointed chancellor of the exchequer Philip Hammond told members of Parliament, saying that the government is committed to ensuring that the UK has a competitive corporate tax system that encourages innovation and business investment.
“We have already announced a reduction in corporation tax to 17 percent – the lowest rate in the G20 – and we are reducing the [property tax] business rates burden by £6.7 billion,” Hammond said July 19. He made no reference to his predecessor George Osborne’s aim, reported in the Financial Times shortly after the Brexit vote, to set a long-term target of less than 15 percent for the corporate rate.
Read more: My news story for Tax Notes, 22 July (paywall) published by Tax Analysts.
HM Revenue and Customs will need to reassure the public that its new online systems are easy to use and secure – and management’s response when things do not go as expected will be a critical test of the department’s digital strategy, according to the public spending watchdog.
HMRC outlined its “Making Tax Digital” programme last December, but a series of consultations setting out detailed plans was delayed because of the EU referendum. Tax practitioners have expressed concern that the continued delay is increasing uncertainty for businesses, and some tax experts have called for the timetable to be reset.
A new report on HMRC’s accounts by the National Audit Office said the whole organisation will need to be transformed if it is to achieve its aim of becoming once of the most digitally advanced tax administrations in the world.
Read more: My news story for Civil Service World, 21 July.
A National Audit Office report has identified two areas of risk in HMRC’s stated aim to have “one of the most digitally advanced tax administrations in the world”. These are optimism bias in the department’s key assumptions, and the need to understand the costs and benefits of the proposed “transformation” for taxpayers.
The NAO said: “Most business customers will be required to update HMRC quarterly rather than annually about their tax affairs, and some may need to purchase new software that works with the new systems … Some businesses are sceptical of HMRC’s evaluations of the costs and benefits of previous changes to the tax system. HMRC plans to develop a fuller picture of what it will cost taxpayers and businesses to use the new systems over the next year.” Continue reading Making Tax Digital: Understanding the costs and benefits for taxpayers
Tax agents rank HMRC’s performance less highly than individuals and small businesses do, as I noted here. Today the ICAEW Tax Faculty comments on this finding of the annual HMRC customer survey, and notes that agents have “most knowledge” of how HMRC is working in practice.
HMRC’s annual report published on 14 July includes a good deal of information that has already been reported, discussed and debated. I’ve noted some of the key points below.
The annual report on Your Charter, published at the same time, sets out some findings from a customer survey designed to measure performance against the various elements of the charter.
We are told to expect a full report later in the summer. In the meantime, feedback from individuals, small businesses and tax agents suggests that tax agents, who have “more regular” dealings with HMRC, are “generally the least positive”. Continue reading Some interesting feedback on HMRC’s performance
After Chancellor of the Exchequer George Osborne said that he wants to set a target rate of less than 15 percent, tax practitioners suggested that further reductions in the U.K.’s corporation tax rate are not a top priority for businesses and may not have the desired effect.
Osborne is planning to “slash corporation tax” in order to woo businesses deterred from investing in a post-Brexit Britain, the Financial Times said in a July 3 report, noting that the move could alienate voters.
The Confederation of British Industry welcomed the announcement. “The chancellor is right to be considering moves that support economic growth and send out the signal that the U.K. is open for business at this critical time,” said CBI chief economist Rain Newton-Smith.
Read more: My news story for Tax Notes, 6 July (paywall) published by Tax Analysts. Stephanie Johnston contributed to this story.
George Osborne has told the Financial Times that he wants to set the lowest corporation tax rate of any major economy, announcing “a target of 15%”. The current rate is 20%. The paper reported that:
[Osborne] said Britain should “get on with it” to prove to investors that the country was still “open for business”.
The FT added that before the EU referendum the chancellor had “threatened to make £30bn of tax rises or spending cuts” in a post-Brexit emergency Budget:
He is now striking a more cautious note, awaiting official forecasts before announcing any new measures in the Autumn Statement.
The FT also noted that the move could alienate some voters, and Labour’s shadow chancellor John McDonnell has tabled an urgent question for today, 4 July, on the corporation tax proposal. Continue reading Does the UK need even more corporation tax cuts?
The UK’s low corporation tax rate attracts jobs and investment, and it would be a grave mistake to cancel a further cut to 17 percent planned for 2020, Financial Secretary to the Treasury David Gauke warned members of Parliament before they approved the cut by a vote of 308 to 255.
A Committee of the Whole House completed its consideration of the finance bill June 28 after several hours of debate. MPs defeated by just 22 votes an amendment implementing public country-by-country reporting, and defeated by 37 votes a new clause on tax transparency moved by Margaret Hodge, Labour MP and former chair of the House of Commons Public Accounts Committee.
Read more: My news story for Tax Notes, 30 June (paywall) published by Tax Analysts.