UK Tax Day Announcements
Yesterday, the government published more than 30 tax updates, consultations and documents on the first ever Tax Day. The announcements were part of their plan to strengthen policymaking, modernise the UK tax system and tackle non-compliance.
In an effort to modernise tax administration, they announced renewed funding and an expansion to the Making Tax Digital programme as well as three new reviews and a change to inheritance tax reporting requirements. One of these reviews calls for evidence on the tax administration framework, covering the core legislation, processes and guidance which underpin obligations for HMRC, taxpayers, agents and third parties. The other review is also a call for evidence and will examine the opportunities and challenges of more frequent payment of income and corporation tax. This could mean that many people and small companies may have to pay income and corporate tax bills much earlier in the future.
The final review publishes the results of the 2020 consultation on raising standards in the tax advice market. This will now seek views on the definition of tax advice and a requirement to make professional indemnity insurance compulsory for all tax advisers.
The change to IHT reporting requirements comes as a result of recommendations from the Office of Tax Simplification 2019 report. Reporting regulations will be simplified so that non-taxpaying estates will no longer have to complete inheritance tax forms.
The announcements also included a number of proposals to challenge deliberate non-compliance. These include the publication of a consultation on proposals to clamp down on promoters of tax avoidance that could form part of the Finance Bill 2021. They will also publish a summary of the responses and next steps to the 2020 call for evidence for tackling disguised remuneration tax avoidance.
Further to the 2019 No Safe Havens strategy, the government will publish two discussion documents to inform future policy measures. The first, ‘Helping Taxpayers Get Offshore Tax Right’ seeks views on ways to assist taxpayer reporting. The second, seeks views on improving the ‘Preventing and Collecting International Tax Debt’.
There were also a number of new consultations on areas where the government is considering reform. These include a fundamental review of business rates; changes to Air Passenger Duty (more commonly referred to as Aviation Tax); a new tax on the largest residential property developers; and a review of aspects of the Landfill Tax. Value Added Tax was also a focus area including rejecting VAT grouping, an update on how HMRC intend to simplify VAT Partial Exemption rules, new rules to prevent value shifting for VAT, and a report on VAT and the Public Sector.
The Office of Tax Simplification has also come under scrutiny. The government will conduct a review of the effectiveness of the OTS in providing advice and recommendations. This will include consideration of the OTS’s objectives and functions, resourcing, funding and governance; its relationships with HMRC and the Treasury; the OTS’s work to date and its impact on the government’s approach to taxation. The outcomes of the review will be published in Autumn 2021.
There were also a few announcements on assets, pensions and investment. The government plan to make changes in a future Finance Bill to facilitate the inclusion of the asset groups that will be in scope of the expanded Dormant Asset Scheme and will relate to CGT and pension tax legislation. The government are also making technical updates to pension tax rules to remove anomalies and remedy any age discriminations following the 2015 public service pension reforms. The tax treatment of Superfunds (consolidation vehicles for defined benefit pension schemes) will be reviewed, and a consultation to explore and update the rules that determine the taxation of securitisations and of transactions involving insurance-linked securities will be published.
Lastly, following a the 2019 review of Social Investment Tax Relief (SITR), the government has decided to extend SITR’s ‘sunset clause’ for two years until April 2023. This is a venture capital scheme that helps social enterprises raise money by offering investors tax relief on the shares they buy, or the money they lend the enterprise. A statement explains that “Due to the ongoing effects of Covid-19, now is a difficult time for social enterprises, many of which are supporting communities across the UK through the pandemic… As such, at Budget 2021 the government announced it would extend SITR in its current form beyond its sunset clause of April 2021, for two years, in order to continue supporting investment to social enterprises in most need of growth capital.”
A full list of announcements can be seen as part of the Treasury Command Paper.