Scottish government opens debate on income tax strategy

The Scottish government has launched a debate on the use of devolved tax powers to protect public services in the face of continued austerity imposed by the UK government, first minister Nicola Sturgeon told members of the Scottish Parliament on September 5.

Sturgeon was outlining her minority government’s priorities for the 2017/18 parliamentary session. The programme sets out 16 proposed bills, including measures to implement budget proposals expected to be announced later this year. The Scottish government recognises that “taxation must be used responsibly and progressively, and that taxpayers value certainty”, according to a government paper titled “A Nation with Ambition” ….

Ruth Davidson, leader of the Scottish Conservatives, warned that “dragging Scotland down with ever more punitive taxes is not the right way.” Read more:

My news story for Tax Analysts, September 6 (paywall)

HMRC large business unit reveals increase in ‘tax under consideration’

HM Revenue & Customs has revealed that its estimate of the amount of tax large businesses might have underpaid rose to £24.8 billion for the year ending March 31, an increase of almost 14 percent from the previous year, while the department stressed that the figure did not represent tax actually owed or unpaid.

HMRC released its estimate of “tax under consideration” to the law firm Pinsent Masons in response to a freedom of information request … “A £3 billion rise in the tax HMRC is querying shows that HMRC is broadening its horizons and putting a far wider range of transactions under scrutiny,” said Heather Self, a partner at the firm.

“Tax under consideration is not tax owed or unpaid, it’s an estimate of what might be at stake if we didn’t investigate,” an HMRC spokesperson said in an emailed statement. Read more:

My news story for Tax Analysts, August 31 (paywall)

UK government to consult on promoting ‘taxpayer certainty’

HM Treasury officials will explore several potential opportunities to promote “taxpayer certainty” for large businesses, Chancellor of the Exchequer Philip Hammond has told the Office of Tax Simplification.

In response to the OTS’s recommendations on the computation of corporation tax liabilities and a separate report on stamp duty on paper documents, Treasury on August 29 released two letters from Hammond to the OTS, both of which were dated August 14.

Hammond said in response to the corporation tax report, “I encourage the OTS to engage with the consultation announced at spring budget 2017 on the risk profiles of large business and promoting stronger compliance.” The consultation, originally intended to be released before the summer parliamentary recess, will be issued “in due course,” an HMRC spokesman told Tax Analysts. Read more:

My news story for Tax Analysts, August 30 (paywall)

HMRC figures confirm higher corporation tax receipts

UK corporation tax receipts reached a record £49.5 billion in the financial year ending on March 31, an increase of 12 percent over the previous year, according to HM Revenue & Customs.

The increase was due to higher receipts from industrial and commercial, financial, and insurance sector companies, HMRC said in “Corporation tax statistics 2017″ an analysis published on August 24 of receipts from corporation tax, the bank levy, and the bank surcharge. The bank levy accounted for £3 billion and the bank surcharge, which was introduced in 2016, raised £1.1 billion. The diverted profits tax, introduced in 2015, is excluded because it is a different head of duty, HMRC noted, but the corporation tax figures will include any additional tax arising from behavioural change in response to its introduction …

Total corporation tax liabilities for 2015/16 were estimated at £43.4 billion, HMRC said, an increase of 1.4 percent on the previous year. The number of companies with a liability was 1.37 million, up 11.2 percent. The distribution of liabilities was “highly skewed”. Read more:

My news story for Tax Analysts, August 28 (paywall)

Tax increase would have little impact on highest earners, says UK think tank

UK policymakers need to be “up front” about the uncertainty of the impact of changes in income tax rates, said the Institute of Fiscal Studies, which argues that any additional revenue from Labour’s proposed 50 percent rate would be paid predominantly by those with incomes between £80,000 and £200,000.

In a briefing note published on August 22, the IFS said that some of the uncertainty reflects significant “forestalling” undertaken by taxpayers between March 2009, when an increase to 50 percent for taxable income over £150,000 was announced, and the implementation of that change in April 2010. Read more:

My news story for Tax Analysts, August 23 (paywall)

HMRC vows to pursue tax evaders in ‘intentionally scary’ documentary

HM Revenue & Customs officers made it “absolutely clear” in a TV documentary that there is no hiding place for people intent on tax evasion, RSM UK partner Mike Down observed.

Catching the Tax Dodgers is “intentionally scary,” Down said, after the programme makers sought to portray what they called “the war between the tax dodgers and the taxman.” The documentary, filmed over a period of four years, was broadcast by Channel 4 on August 13.

HMRC thinks it has “discovered a £36 billion black hole,” the documentary’s narrator said in reference to the department’s estimate of the tax gap for 2014/15. That sum represented 6.5 percent of theoretical tax liabilities, HMRC said in its October 2016 report. The report notes that the tax gap showed an “overall downward trend” from 8.3 percent in 2005/06 before levelling out in recent years. Read more:

My news story for Tax Analysts, August 21 (paywall)