May insists on UK’s integrity in Brexit solution

Any solution to the Irish border issue must preserve the integrity of the United Kingdom, Prime Minister Theresa May said in a defiant response to the EU-27 leaders’ rejection of her Brexit plan.

Both sides in the negotiations have to face the fact that there are “two big issues where we remain a long way apart,” May told a Downing Street press conference September 21. European Council President Donald Tusk declared on September 20, at the end of an informal summit in Salzburg, that the United Kingdom’s proposed framework for future economic cooperation “will not work, not least because it risks undermining the single market.”

Responding to May’s speech in a September 21 statement, Tusk said the EU-27 will “treat the Chequers plan as a step in the right direction.” Read more:

My news story for Worldwide Tax Daily, published by Tax Notes on September 22 (paywall)

Chequers plan for economic cooperation will not work, EU warns

The United Kingdom’s proposal for future economic cooperation will not work, and an EU summit in October will be a “moment of truth” for the Brexit talks, European Council President Donald Tusk said.

Prime Minister Theresa May announced September 20, following what she called a frank bilateral meeting with Tusk, that the U.K. government will bring forward new proposals to resolve the impasse over the land border between Ireland and Northern Ireland. But she maintained that the Chequers proposal for a free trade area is the only credible proposition for achieving frictionless trade. Read more:

My news story for Worldwide Tax Daily, published by Tax Notes on September 21 (paywall)

This story was also published in the September 24 edition of Tax Notes International.

Brexit committee urges government to reconsider customs plan

The U.K. government must change its approach to Brexit to secure a withdrawal agreement if the EU continues to oppose its customs proposals, according to a House of Commons committee.

Brexit secretary Dominic Raab told journalists, however, that the government has made compromises. “We do need to see that matched on the EU side,” he said.

Prime Minister Theresa May told the BBC September 17 that if Parliament does not back the Chequers proposals, “the alternative to that would be not having a deal.” Read more:

My news story for Worldwide Tax Daily, published by Tax Notes on September 19 (paywall)

HMRC defends efforts to promote Making Tax Digital

HM Revenue & Customs defended its efforts to raise awareness of Making Tax Digital for VAT after a leading accountancy body warned that many businesses remain unaware of the programme…

“The lack of awareness among businesses about MTD is of concern and needs to be addressed. The communications on MTD do not appear to be getting through to VAT-registered businesses,” said Anita Monteith, ICAEW’s technical tax manager, in a September 13 release.

HMRC published on July 13, during the survey period, a new VAT notice setting out the digital record-keeping and return requirements and a communications pack intended to “provide stakeholders with information to support businesses that need to make the transition” …

“Since the ICAEW’s survey was completed, we have been increasing our promotion of MTD and our guidance published in July has received over 150,000 views,” an HMRC spokesman told Tax Notes. Read more:

My news story for Tax Notes (paywall), September 14

HMRC warns of customs and VAT impact of no-deal Brexit

HM Revenue & Customs has alerted 145,000 businesses that trade only with EU countries to changes that would have an immediate impact in the event of a no-deal Brexit in March 2019.

HMRC sent separate letters, signed by Deputy Chief Executive Jim Harra, to VAT-registered businesses based in Northern Ireland and those based elsewhere in the United Kingdom.

For businesses outside Northern Ireland, HMRC confirmed that in a no-deal Brexit scenario, those trading with the European Union only would have to start completing customs declarations from March 2019, and that customs checks would be applied for the first time. Read more:

My news story for Tax Notes (paywall), September 14

HMRC: Letters on ‘no deal’ Brexit advice for businesses only trading with the EU, September 13

UK finance bill inquiry examines HMRC powers

A House of Lords committee’s inquiry into the draft finance bill is seeking evidence of “perceived unfairness” in UK tax policy or enforcement …

The Lords Economic Affairs Committee re-established its Finance Bill Subcommittee on September 4. The subcommittee will examine developments in the balance of powers and safeguards between HM Revenue & Customs and taxpayers, it announced on September 12. It requested written submissions by October 1 …

Before the summer parliamentary recess, the House of Commons Treasury Committee and Treasury Subcommittee published written evidence submitted to inquiries into the VAT systemtax avoidance and evasion, and the conduct of tax inquiries and disputes. Read more:

My news story for Tax Notes (paywall), September 13

House of Lords Economic Affairs Finance Bill Sub-Committee: Call for evidence, September 12

UK seeks public support for post-Brexit trade agreements

The UK government has no desire to push through trade agreements without public support, a minister told peers debating the Trade Bill as UK and US trade officials met in London …

The Trade Bill, setting out measures enabling the UK government to develop a post-Brexit trade policy, passed its second reading in the House of Lords after seven hours of debate on September 11 … Rona Fairhead, minister of state at the Department for International Trade, told peers that the bill is intended to provide “continuity of the existing trade agreements that we already have through the EU, and the certainty that this gives to businesses and our trading partners.” Read more:

My news story for Tax Notes (paywall), September 13

Lords Hansard: Trade Bill second reading, September 11

HMRC’s approach to disputes worsens backlog, tax bodies say

HM Revenue & Customs seems eager to litigate rather than accept reasonable arguments in tax disputes, even when the prospects of success are “less than 50 per cent,” according to the Chartered Institute of Taxation. The “unwelcome trend” is adding to a growing backlog of appeals for tax tribunals, the CIOT said in response to the House of Commons Treasury Subcommittee’s inquiry into the conduct of tax investigations and the resolution of tax disputes.

My news story of July 6 for Tax Notes (paywall) is now reproduced in full with permission:

HMRC’s Approach to Disputes Worsens Backlog, Tax Bodies Say (pdf)

As I reported, HMRC officials and CIOT president Ray McCann were scheduled to give evidence to the subcommittee’s inquiry on July 9. The evidence session was postponed following the resignations of Brexit secretary David Davis and foreign secretary Boris Johnson over the July 6 Chequers agreement:

A personal tax roadmap would help address complexity, says OTS

Misunderstandings remain about UK taxation of savings income, but a personal tax roadmap would help address its significant complexities, the Office of Tax Simplification said last month.

A range of tax reliefs to encourage saving works well for most taxpayers, and 95 percent of people pay no tax on savings income, the OTS said. But the interaction between rates and allowances is so complex that HMRC’s self-assessment computer software has sometimes “failed to get it right,” the OTS pointed out in a 50-page report titled Savings Income: Routes to Simplification.

My news story of May 29 for Tax Notes (paywall) is now reproduced in full with permission: U.K. Office of Tax Simplification Calls for Personal Tax Roadmap (pdf).

A tax compliance update for Tolley’s Tax Digest

My tax compliance update for the May 2018 issue of Tolley’s Tax Digest starts like this:

This Digest draws together and summarises the primary and secondary legislation, and draft income tax and VAT notices, relating to HMRC’s Making Tax Digital project. At the time of writing some commentators had suggested that the implementation of Making Tax Digital for VAT might be deferred in the light of pressures created by the Brexit process, but no announcement had been made. The Office of Tax Simplification recommended in April 2018 ‘urgent work’ to simplify the business tax system. Continue reading A tax compliance update for Tolley’s Tax Digest

Charity Tax Commission invites comments on effectiveness of tax reliefs

An independent commission reviewing the UK’s tax treatment of charities has suggested that Brexit may present opportunities for addressing several issues. The Charity Tax Commission, which the NCVO established in October 2017, has invited comments by July 6.

Tax reliefs for charities are estimated to be worth £3.8 billion a year, and reliefs for donors are worth £1.5 billion, according to the commission.

My news story of March 19 for Tax Notes (paywall) is now reproduced in full with permission:

UK charity body launches review of tax breaks (PDF)

Old versions of tax law on government website – an update

Last week HM Revenue & Customs apologised for linking to some very old legislation, in a guidance note on new criminal offences, and removed the offending links. HMRC guidance at GOV.UK does not normally include statutory references, but if that is going to change there is a clear risk that the same mistake will be made again.

Legislation.gov.uk is described as “the official place of publication for newly enacted legislation”. Great care is needed in relation to older tax legislation, including some of the major consolidation Acts.

For example, go to Income Tax Act 2007 and you’ll see a prominent warning about an apparently very large number of changes that have not yet been processed. Continue reading Old versions of tax law on government website – an update