HMRC's Business Payment Support Service helps viable businesses facing temporary financial difficulties to spread tax payments over an agreed timetable. The service has supported over 160,000 businesses, collectively employing more than 1.2 million people, spread over £4 billion of tax. Of this, more than £3 billion has already been repaid. All requests continue to be assessed on the same basis as when the service was introduced, and we will continue to offer this service as part of our time to pay arrangements.
HMRC will be consulting on a package of deterrents and new tools to help HMRC tackle offshore tax evasion. This includes a notification requirement for certain new offshore bank accounts and a new tough approach to penalties for offshore non-compliance.
Comments are also invited on whether the Government should consider reforms to the information HMRC receives on non-resident trusts.
HMRC has published a consultation document entitled "Disclosure of Tax Avoidance Schemes (DOTAS)" exposing draft legislation on options to strengthen and improve the regime to ensure that HMRC continues to obtain early information about avoidance risks and that there are sufficient sanctions to penalise those who do not comply with the regime. HMRC has identified a number of weaknesses in the legislation that inhibits the performance of DOTAS. This consultation outlines proposals to remove these weaknesses in order to further bear down upon tax avoidance.
Regulations will be made and laid before Parliament in the New Year and will come into effect no later than 1 April 2010 to extend the Tax Avoidance Disclosure Regime (DOTAS) to require the disclosure of certain tax avoidance schemes that concern high value residential property and that users of all Stamp Duty Land Tax (SDLT) avoidance schemes must report the use of the scheme back to HMRC.
A response to the Consultation Document "The Tax Avoidance Disclosure Regime: Stamp Duty Land Tax" published at Budget 2009 has been published on the HMRC website.
An avoidance scheme involving an 'administration fee' charged under a separate contract will be closed from 9 December 2009. Certain
fees charged under a separate contract in connection with personal lines insurance are brought into the scope of IPT.
See PBRNote 15
Companies and groups holding index-linked gilt-edged securities ('ILGs') that enter into arrangements such that they are not exposed to the inflationary
aspect of holding the ILG will no longer benefit from the tax-free uplift in carrying value with effect from 9 December 2009.
See PBRNote 14
Legislation, effective from 9 December 2009, will be introduced in Finance Bill 2010 to counter two types of avoidance involving the leasing of plant or machinery. It will ensure that:
Legislation, effective on and after 9 December 2009 will be introduced in Finance Bill 2010 to prevent companies from exploiting a weakness in
Schedule 10 to the Finance Act (FA) 2006 (the "Sale of Lessor Companies Legislation") which would allow a group to sell a lessor company without
suffering the full effect of the charge imposed by the Schedule.
See PBRNote 11
Legislation, effective from 9 December 2009, will be introduced in Finance Bill 2010 to counter two tax avoidance schemes that have been designed to avoid IHT charges on property in trusts. The measure will have effect for:
A summary of responses to the consultation on False Self Employment in Construction will be issued in the New Year.
The apportionment rules will be amended to ensure that, when recognised, deferred profits are taxed on an appropriate basis. The measure will have
effect for periods of account beginning on or after 9 December 2009.
See PBRNote 09
From 1 October 2009, transfers of securities to a non-EU clearance service or depositary receipt issuer will no longer be exempt from stamp duty or stamp duty reserve tax if they form part of a scheme to avoid higher rate stamp tax charges.
Legislation will be introduced in Finance Bill 2010 to prevent tax avoidance through the transfer of an entitlement to benefit from capital allowances
on plant or machinery, used for the purpose of a trade, where the tax written down value of the plant or machinery exceeds its balance sheet
value. The legislation will apply to transfers involving the sale of companies and to transfers involving consortia and partnerships, but it will only
apply where the transfers are tax-motivated. The majority of the legislation, which was announced on 21 July 2009, will have effect for transactions
taking place on or after that date. Three changes to the 21 July announcement will have effect only for transactions on or after 9 December 2009.
See PBRNote 12
The Financial Secretary to the Treasury made statements on 14 October and 9 November 2009 announcing the government's intention to change the corporation tax rules on the taxation of debt buy backs. Draft legislation was published on 9 November.
The Financial Secretary to the Treasury announced in a Written Ministerial Statement dated 21 October 2009, that regulations had been made to counter attempts to avoid tax under the CFC rules using payments of UK manufactured interest and manufactured overseas dividends.
A new test for substantial donations is being developed. Donations to charities that are caught by the test will not be eligible for relief. Donations will be caught if they are made by a donor whose main purpose or one of whose main purposes for entering into an arrangement is to return value from the charity to the donor. The next stage of the process is for HMRC to work with the Charities sector to produce draft legislation.
HMRC has published a summary of responses received to 2 documents published on 31 July:
HMRC's internet publication, "Spotlights", which highlights avoidance schemes, will be expanded to include more general "buyer beware" messages to enhance its consumer protection role. These will provide customers with an indication of the type of arrangements to avoid. It will continue to highlight specific avoidance schemes that in HMRC's view are ineffective or have unintended adverse consequences in order to deter customers from buying into high risk avoidance.
HMRC has published, as an official statistical release, an estimate of the overall tax gap and new estimates of some direct tax gaps alongside its regular publication of indirect tax gaps. This puts HMRC at the forefront of research in this area. Also published on 9 December 2009, is "Protecting Tax Revenues 2009", which summarises these estimates, and places them in the context of the work that HMRC has done, and is doing, to close the tax gap.
Understanding the distribution and causes of the tax gap plays an important role in the development of compliance strategy and is one of the factors that help to guide HMRC's actions and resource deployment, even if the measurement is less than perfect. Tracking indicators of potential levels and trends provides an understanding of changes in compliance and can be used to assess the impact of existing strategies. This strategy is succeeding.
The PSA target for the reduction of the illicit cigarette market has been exceeded. Good progress has also been made towards the hand-rolling tobacco target. Specifically:
The latest illicit market share estimates for 2007/08, published on 9 December 2009, show that the Government's Tackling Tobacco Smuggling strategy has continued to be successful in reducing the illicit market and associated losses.
HMRC propose to consult on changes to the Postal Services Act 2000 to strengthen customs powers to tackle tobacco smuggling in the post.
HMRC:
This is a new group to be set up to consider what actions HMRC can take to increase the number of people that make the transition from the hidden to the formal economy.
A response to the previous consultation is published and a further consultation on how HMRC should work with tax agents to ensure that fewer inaccurate returns and claims are submitted.
A second consultation has been published on the compliance checking framework for excise duties, covering information and inspection powers, record-keeping rules and time limits and updating on future plans to modernise excise administrative law.
HMRC has published a summary of responses to the consultation document "Bulk and specialist information powers" which was published on 9 July 2009. This considers options for reform of information powers not covered by the Review of Powers to date.
HMRC is consulting on draft legislation to bring corporation tax and petroleum revenue tax (except for Quarterly Instalment Payments) within the harmonised interest regime introduced by Finance Act 2009.
HMRC is consulting on draft clauses to complete the modernisation and alignment of penalties for late filing of tax returns and late payment of tax.
HMRC is to apply a more consistent approach to the collection of debts in litigation. At present HMRC currently has an inconsistent approach to the collection of tax in cases where a tribunal or court has found against the customer but there is a further appeal. HMRC must repay overpaid tax where there is a judgment in favour of a taxpayer, even though that judgment is subject to appeal. However where there is a judgment in its favour, HMRC does not consistently collect the tax before the appeal is heard. Accordingly, HMRC has decided to move to a consistent approach, under which payment of the tax will normally be required in all such cases.
The change of practice will take effect in relation to all decisions made by the Tribunals or the Courts on or after 1 April 2010.
Changes are proposed to the Stamp Duty Land Tax and Petroleum Revenue Tax error or mistake legislation. Draft legislation will be published shortly and HMRC will consult on this with stakeholders. The proposed changes are modelled on the income tax, capital gains tax and corporation tax legislation contained in Schedule 52 FA 2009. They will prevent alternative claims for repayment i.e. common law claims and will have a four year time limit. The new rules will come into effect after a transitional period during which claims will be possible under the current rules.
HMRC will require businesses seeking Time to Pay arrangements worth £1m or more to provide an Independent Business Review (IBR) in support of their request.
This concession is for taxpayers in receipt of a determination of income or corporation tax who are out of time to file their tax return, and who can demonstrate that the sums charged are excessive. By concession we collect only the sum that would have been due for the period had the taxpayer filed the return on time. As part of the review of ESCs, legislation will be introduced to permit us to continue to apply this treatment provided the relevant conditions are met.
