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)

UK government defends finance bill process amid concerns over scrutiny

Members of Parliament will have time to fully scrutinise the UK finance bill’s measures, Financial Secretary to the Treasury Mel Stride insisted after opposition MPs claimed that the government is seeking to avoid “proper scrutiny and transparency.”

Stride rejected opposition claims that the government is restricting the scope for amendments as MPs debated the bill at its second reading on December 11. Scottish National Party MP Kirsty Blackman asked why the government did not present an “amendment of the law” resolution for debate after the autumn budget on November 22.

My news story for Tax Analysts, December 14 (paywall)

UK mulls royalty withholding tax to target digital economy

The UK government is consulting on an extension of withholding tax on royalty payments and is prepared to take unilateral action if insufficient progress is made on multilateral solutions to challenges posed by the digital economy, according to a position paper released alongside the autumn budget.

The challenge that digitisation poses for sustainability and fairness in the tax system can only be properly solved on an international basis, Chancellor of the Exchequer Philip Hammond told members of Parliament November 22. The position paper sets out the government’s emerging thinking about potential solutions, he said. “But in the meantime,” he added, “we will take what action we can.”

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

UK invites feedback on tax measures for 2018

HM Treasury and HM Revenue & Customs are consulting on draft legislation for the UK’s next finance bill, which will form part of the 2018 Finance Act.

Eight consultations were published September 13, a day after members of Parliament approved the second finance bill of 2017, which will now proceed to its committee stage.

The new consultations relate to the bank levy, disguised remuneration avoidance schemes, interest on debt traded on a multilateral trading facility, landfill tax, offshore trusts, income tax for partnerships, registration of pension schemes, and payments on termination of employment. Draft legislation, explanatory notes, and tax information and impact notes are provided, and comments are invited by October 25. Read more:

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

UK government set to consult on tax measures for 2018

Draft clauses for a finance bill to be introduced after the UK’s autumn budget will be published for consultation on September 13 as part of the transition to a new budget timetable.

The consultation on the measures earmarked for Finance Act 2018 will be open until October 25. “The transition means there are fewer clauses than in recent years, but pre-legislative scrutiny will again help consideration of the bill,” said Mel Stride, financial secretary to the Treasury.

Disruption caused by the general election contributed to an unusually high number of retrospective tax measures earmarked for the second finance bill of 2017, expected to be published on September 8, he told members of Parliament. Read more:

My news story for Tax Analysts, September 8 (paywall)

Another finance bill set to be passed with very little scrutiny

We now know that the 600 or so pages of finance bill measures withdrawn in April to make way for the general election will be reintroduced, with some technical amendments, “as soon as possible after the summer recess”. There will be very little time for debate in the shadow of the Brexit negotiations, but concerns continue to be expressed about the some of the measures.

It’s interesting to look back to mid-April, just before Theresa May called the election, when Andrew Tyrie, then chairman of the Treasury Committee, said he would continue to press the government to allow for MPs examining finance bills to consult tax experts before beginning detailed scrutiny of the legislation. Continue reading Another finance bill set to be passed with very little scrutiny

HMRC urged to reconsider timing of Making Tax Digital project

HM Revenue & Customs has come under increased pressure to reset the timetable for its Making Tax Digital (MTD) project, with tax professionals warning that small businesses will struggle with what accountants call the most far-reaching reform of the UK tax system for generations.

Last week the Chartered Institute of Taxation warned that the spirit of voluntary compliance is at stake if the government continues to pursue an unrealistic timetable for implementing compulsory digital record keeping.

“Tax systems exist for the benefit of society, not vice versa, and the business case for any change to the tax system should be based on the total economic impact, not just [aspects affecting HMRC],” the UK tax committee of the Association of Chartered Certified Accountants said as six MTD consultations closed on November 7.

Read more: My news story for Tax Analysts, 9 Novmember (paywall).

‘Aggressive’ Making Tax Digital programme may backfire, UK tax bodies warn

The spirit of voluntary compliance is at stake and some tax advisers may be unable to cope with demand if the UK government continues to pursue an “unrealistic” timetable for implementing compulsory digital record keeping, according to tax professionals.

The warning came days after a senior member of Parliament told Chancellor Philip Hammond that “every effort” should be made to make the Making Tax Digital (MTD) project a pilot programme, perhaps over several years. HM Revenue & Customs told MPs that MTD will help small businesses avoid errors and reduce the tax gap.

The April 2018 timetable is “unreasonably tight,” John Cullinane, tax policy director at the Chartered Institute of Taxation, said in a press release. “There is widespread agreement that digitisation can bring efficiency and other benefits to HMRC and taxpayers alike. The government appears to be forcing the pace in the belief that requiring even very small businesses to go digital in a tight timescale will transform their record-keeping and reduce the tax gap, helping HMRC to recoup its investment in the project.”

Six consultations on MTD will close on November 7.

Read more: My news story for Tax Analysts, 4 November (paywall).

See also:

CIOT press release 3 November.

ICAEW Tax Faculty submission to APPG inquiry into “public confidence in HMRC’s capability to collect tax fairly and effectively,” 28 October.

UK Office of Tax Simplification urged to take proactive approach to complexity

The UK’s Office of Tax Simplification should focus on preventing rather than curing complexity, according to tax professionals responding to the office’s “high-level strategy” consultation. The OTS says that while its mandate does not extend to a “formal say” on future policy, its goals include embedding simplification into the policy-making process. One expert told Tax Analysts that given the right focus and resources, the OTS could “hold the key to wholesale reform.”

Read more: My news story for Tax Analysts October 15 (paywall).

Tax experts criticise penalty proposals amid UK tax avoidance rhetoric

UK government proposals to penalise enablers of tax avoidance schemes could prevent some taxpayers from getting expert advice on complicated issues, according to the Chartered Institute of Taxation. The proposed penalties should be better targeted at those who deliberately seek to profit from avoidance, CIOT said in an October 12 press release.

Separately, Michael Izza, chief executive of the Institute of Chartered Accountants in England and Wales, has warned that politicians have unfairly singled out accountants in their criticism of professional advisers over avoidance.

Read more: My news story for Tax Analysts, October 13 (paywall).

Look-through taxation for small companies is too complicated, say UK tax bodies

A proposed new tax system for small companies would increase uncertainty and confusion among small business owners and increase the scope for errors, UK tax experts said in response to consultation on the merits of a “look-through” model.

The UK already has two complicated systems, one for unincorporated businesses and one for corporate bodies, the ICAEW Tax Faculty noted a submission to the Office of Tax Simplification. “Rather than introduce a new model we would support simplification in each area,” the Faculty said. The Chartered Institute of Taxation said a key effect of a mandatory look-through system appeared to be to generate an increased tax yield from small business.

Read more: My news story for Tax Analysts, 8 October (paywall).

And there’s an interesting discussion on Twitter, in response to this tweet: