Tax Update provides you with a round-up of the latest tax developments. Covering matters relevant to individuals, trusts, estates and businesses, it keeps you up-to-date with tax issues that may impact you or your business. If you would like to discuss any aspect in more detail, please speak to your usual Smith & Williamson contact. Alternatively, Ami Jack can introduce you to relevant specialist tax advisors within our firm.
1.1 February Budget commitment from Conservatives and Labour
The Conservative and Labour parties have both stated that they would hold a Budget in February 2020 if elected.
The Conservative and Labour parties have both set out plans for their first 100 days of government if they were to win a majority in Thursday’s General Election.
It is understood that the Conservatives plan to set out their legislative programme on 19 December and hold a post-Brexit Budget in February 2020. The Conservatives have pledged tax cuts in their February Budget.
Labour has announced that it would plan to hold a Budget on 5 February 2020, which would closely follow its manifesto pledges.
1.2 Agent Update 75
HMRC has published the latest edition of Agent Update. It provides an overview of the recent issues of which tax agents should be aware.
This Agent Update includes:
- information on offshore investment funds (OIFs) including how to identify OIFs and how the OIF is taxed;
- information on what to expect from a statutory review;
- a reminder of the high income child benefit charge deadline of 31 January;
- updates to 2019/20 self-assessment tax returns for student and postgraduate loan borrowers;
- a summary on the new Structures and Buildings Allowance;
- an update on corporation tax unique tax reference (UTR) numbers for non-resident company landlords; and
- practical information on submitting the ATED return online.
2. PAYE and employment
2.1 Labour and Conservatives commit to review of IR35 rules
Both the Labour and Conservative parties have stated that, if they win the General Election on 12 December, they will review the proposed application of the IR35 rules to the private sector.
In an interview on Radio 4’s Money Box, the current Chancellor Sajid Javid announced that the proposed IR35 rules, which affect contractors working in the private sector, would be included in the self-employment review promised in the Conservative manifesto. The Chancellor could not confirm whether or not the changes, due to come in from April 2020, would be postponed pending the review.
It has been reported that Labour has also confirmed that it would undertake a review of the proposed IR35 reforms. A review of the IR35 rules was also included in the manifestos of the Liberal Democrats and the SNP.
3. Business tax
3.1 HMRC publishes new guidance on CT instalments for very large companies
HMRC has published a new set of guidance and examples on the CT instalment payment dates that apply to very large companies for accounting periods beginning on or after 1 April 2019.
Companies and groups with taxable profits exceeding £20 million are required to pay quarterly instalments, four months earlier than large companies. For a 12-month accounting period, payments will be due in months 3, 6, 9 and 12 of the period to which the liability relates. The guidance provides examples on when instalments should be made and how to work out instalment payments.
4.1 New EU VAT rules for online marketplaces
An amending Directive and an Implementing Regulation have been published in the EU Official Journal. They provide detailed rules on the creation of a VAT one-stop-shop and making online marketplaces responsible for collecting VAT on goods sold on their platforms to EU customers.
The new rules introduce special provisions for large online marketplaces from 1 January 2021. Online marketplaces in the EU will become responsible for charging and collecting VAT from their non-EU sellers on goods up to a value of €150 sold to customers in the EU using their platforms. The one-stop-shop single EU VAT return will include all types of services as well as intra-community distance sales of goods and distance sales of goods from non-EU countries.
5. And finally
5.1 Sauce for the gander
We didn’t trust ourselves to comment last week, but we cannot say goodbye to Health Secretary Rt. Hon. Matt Hancock’s extraordinary statement about NHS pensions just yet.
He said “the proposals…for ‘Scheme Pays’ for the 2019/20 tax year constitutes an example of tax planning. Depending on the detail of how you put the proposed approach into practice, the scheme could constitute tax avoidance.”
Well, well. The Government is sanctioning tax avoidance. Why?
“The Government has already accepted the overall case that pension taxation arrangements are a unique problem for NHS clinicians.” Oh really? The problem is staff cutting down their hours because of the adverse effect of the pensions contribution cap which clicks in after a specific amount of income.
It is hardly an argument that something should be permitted because it is unique, and we are not at all sure it is unique as the behaviour shown by the NHS staff is entirely rational and likely to be reproduced by others at similar levels of income.
Of course, we all want the NHS to function efficiently this winter, but the Government is saying that tax avoidance is acceptable when it suits it.
We will all draw our own conclusions, both for pensions and acceptable tax avoidance. One thing we will not allow is that it isn’t a precedent.
Tax Update 3 December 2019 - And finally
|ATT – Association of Tax Technicians
|ICAEW - The Institute of Chartered Accountants in England and Wales
|CA – Court of Appeal
|ATED – Annual Tax on Enveloped Dwellings
|NIC – National Insurance Contribution
|CIOT – Chartered Institute of Taxation
|ICAS - The Institute of Chartered Accountants of Scotland
|CJEU - Court of Justice of the European Union
|CGT – Capital Gains Tax
|PAYE – Pay As You Earn
|EU – European Union
|OECD - Organisation for Economic Co-operation and Development
|FTT – First-tier Tribunal
|CT – Corporation Tax
|R&D – Research & Development
|EC – European Commission
|OTS – Office of Tax Simplification
|HC – High Court
|IHT – Inheritance Tax
|SDLT – Stamp Duty Land Tax
|HMRC – HM Revenue & Customs
|RS – Revenue Scotland
|SC – Supreme Court
|IT – Income Tax
|VAT – Value Added Tax
|HMT – HM Treasury
|UT – Upper Tribunal
By necessity, this briefing can only provide a short overview and it is essential to seek professional advice before applying the contents of this article. This briefing does not constitute advice nor a recommendation relating to the acquisition or disposal of investments. No responsibility can be taken for any loss arising from action taken or refrained from on the basis of this publication. Details correct at time of writing.
This article was previously published on Smith & Williamson prior to the launch of Evelyn Partners.