One Month in a Minute - Sarah Laing, Busy Practitioner

ALL TAXES

EU launches tax compliance consultations

The European Commission has launched two public consultations on specific measures designed to improve tax collection and tax compliance across the EU. The first consultation is on the development of a European Taxpayer's Code, which would clarify the rights and obligations of both taxpayers and tax authorities. The second consultation is on a European Tax Identification Number (EU TIN), which would facilitate the proper identification of taxpayers in the EU. Both were among the measures proposed by the Commission in December to tackle tax fraud and evasion.

The aim of the public consultations is to gather examples of best practices in the member states on collecting data on taxpayers' identities as well as taxpayer compliance and transparency. The results of both consultations will be used to identify and develop the appropriate policy responses by the end of 2013. For further information, see the Europa website at http://ec.europa.eu/index_en.htm.

Agent Update published

Agent Update, issue 34, February-March 2013, has been published and contains information on the following topics:

  • Improving the operation of PAYE: Real Time Information- final reminder;
  • Real Time Information – ‘At a glance guide’;
  • Business readiness checklist.

Agent Update issue 34 can be accessed on the HMRC website at http://www.hmrc.gov.uk/agents/update34.pdf.

International update

UK/China: A Protocol to the Double Taxation Agreement (DTA) between the UK and China was signed in Beijing on 27 February 2013. This Protocol updates the existing DTA of 2011. The Protocol will enter into force once both countries have completed their legislative procedures. See the HMRC website at http://www.hmrc.gov.uk/taxtreaties/news/china-uk-protocol.htm for further details.

UK/Isle of Man MOU: HMRC has signed an agreement with the Isle of Man establishing a new disclosure facility, which will run from 6 April 2013 and 30 September 2016. This will allow investors with accounts in the Isle of Man to come forward and settle outstanding tax liabilities. The Memorandum of Understanding (MOU) is available on the HMRC website at http://www.hmrc.gov.uk/news/lsle-of-man-disclosure.pdf.

Implementation of the UK-US FATCA Agreement

On 18 December 2012, HMRC published a summary of responses to the consultation seeking views on the implementation of UK-US FATCA Agreement in the UK. Draft regulations and draft guidance were also published. Following the publication of the final FATCA regulations by the US Treasury and Internal Revenue Service on 17 January 2013, HMRC extended the consultation period on the draft regulations and guidance to provide more time to consider the US regulations. A summary of responses and further information on the FATCA consultation are available on the HMRC website at http://www.hmrc.gov.uk/budget-updates/march2012/index.htm#13Feb13.

Tax agents’ dishonest conduct regulations

The Finance Act 2012, Schedule 38 (Tax Agents: Dishonest Conduct) (Appointed Day and Savings) Order 2013 (SI 2013/279) comes into force on 1 April 2013. FA 2012, Sch 38 makes provision enabling HMRC to issue a tax agent with a conduct notice, if it has been determined that the agent has engaged in dishonest conduct, to obtain working papers from them, and impose penalties. Where an individual incurs a penalty in relation to dishonest conduct which exceeds £5,000, the Schedule provides that the Commissioners for HMRC may publish certain information about this individual. Schedule 38 also repeals the previous powers to call for papers from a tax accountant under TMA 1970, s 20A.

The Finance Act 2009, Section 101 (Tax Agents: Dishonest Conduct) (Appointed Day) Order 2013 (SI 2013/280) also comes into force on 1 April 2013. Broadly, FA 2009, s 101 applies late payment interest to any sum due by virtue of any enactment to HMRC but paid late.

Tax defaulters’ details published

Under the provisions of Finance Act 2009, s 94, HMRC has published the first list of deliberate tax defaulters. HMRC may publish information about deliberate defaulters where both of the following things apply:

  • HMRC have carried out an investigation and the person has been charged one or more penalties for deliberate defaults;
  • those penalties involve tax of more than £25,000.

The current list of deliberate tax defaulters published on 21 February 2013 can be found online at http://www.hmrc.gov.uk/defaulters/defaulters-list.pdf.

Government considers Welsh tax cuts

The Treasury is considering plans to give the Welsh Assembly taxation powers that would allow it to vary the rates of tax that apply to people who live and work in Wales in a bid to encourage more investment in the country.

The government is currently evaluating its response to the Silk Commission which reported in November last year and recommended that some tax-raising powers should be devolved to the Welsh Assembly, such as landfill tax, stamp duty, business rates and aggregates levy. It also said responsibility for income tax should be shared between Wales and Westminster.

According to The Independent, Conservative sources now say they are in favour of devolving decisions on income tax to the Welsh Assembly, as this mirrors plans to give the Scottish Parliament power to vary tax rates due to come into effect in 2016.

PERSONAL TAX

Revised tax calculator launched

HMRC haS released a new version of the calculator which can be used to estimate the amount of income tax and NICs payable by individuals. The calculator can be found on the HMRC website at http://tools.hmrc.gov.uk/hmrctaxcalculator/screen/Personal+Tax+Calculator/en-GB/summary?user=guest.

Pension savings calculator amended

In response to customer feedback HMRC has amended its online pension savings calculator. The existing calculator has been changed so that it now works out the carry forward amount when the pension input amount is known. A separate calculator has been created to work out the pension input amount when this isn't known. The calculator can be accessed online at http://www.hmrc.gov.uk/pensionschemes/apsaa-calc.htm.

Simplified system for certain remittance basis users

HMRC has published a second summary of responses to the previous consultation on Statement of Practice 1/09, which provides a simplified tax treatment of income for certain employees who are taxed on the remittance basis. The government announced that it would defer the legislation of SP1/09 until Finance Bill 2013 to give more time to take account of the views received in consultation, and to co-ordinate with the parallel deferral of the abolition of ordinary residence for tax purposes. The summary of responses and draft legislation are available from HMRC at http://customs.hmrc.gov.uk/channelsPortalWebApp/channelsPortalWebApp.portal?_nfpb=true&_pageLabel=pageLibrary_ConsultationDocuments&propertyType=document&columns=1&id=HMCE_PROD1_032591.

Share capital reduction

Following recent requests, HMRC has published guidance on the tax treatment of payments to individuals and other non-corporates following share capital reduction. The two situations in which this latest interpretation is most likely to have an impact are:

  • where shares are issued as paid up from the reserve, the shares would be treated as paid up other than for new consideration for the purposes of determining whether there is a distribution under either CTA 2010, ss 1022 or 1026, unless the facts show that there is a reorganisation to which the analysis given in the new guidance applies, and
  • where a distribution is made from the reserve, the share capital that has been reduced would not be treated as new consideration in determining the amount of the distribution under CTA 2010, s 1000(1)B.

The guidance can be found online at .

ARPT guidance published

Guidance about applying for help to check property and valuation details for the Annual Residential Property Tax (ARPT) has been published by HMRC. In certain circumstances, individuals can ask HMRC to carry out a check on their property details and valuation to see if they need to pay ARPT. This is called having a 'pre-return banding check' (PRBC). The guidance explains who can apply for a PRBC and what to do if you don't receive a decision in time or you don't agree with HMRC's decision. For further information, see the HMRC website at http://www.hmrc.gov.uk/arpt/pre-return-banding-checks.htm.

Child benefit reminder

HMRC has been reminding people with an income over £60,000 whose family is still receiving child benefit to opt out before 28 March if they wish to avoid filling in a tax return and repaying the benefit for the 2013/14 tax year.

Latest HMRC figures show that over 370,000 people have opted out of child benefit since the high income child benefit charge was introduced on 7 January. Those who have already stopped their child benefit payments do not need to act.

People who continued to receive child benefit after January need to register for self- assessment by 5 October 2013 to repay the benefit received between January and April 2013, but opting out now means they will not need to fill in a tax return in future years. For further information, see www.hmrc.gov.uk/childbenefitcharge.

BUSINESS TAX

Advisory fuel rates updated

The advisory fuel rates applicable where employers reimburse employees for business travel in their company cars, or require employees to repay the cost of fuel used for private travel, have been updated with effect from 1 March 2013. The new rates are as follows:

Engine size

Petrol

LPG

1400cc or less

15p

10p

1401cc to 2000cc

18p

12p

Over 2000cc

26p

18p

 

Engine size

Diesel

1600cc or less

13p

1601cc to 2000cc

15p

Over 2000cc

18p

 

Employer Bulletin

HMRC has published Employer Bulletin, Issue 43, February 2013, which contains information on the following:

  • Chancellor’s autumn statement;
  • Filing employer annual returns;
  • Student loans;
  • New HMRC addresses for post;
  • Basic PAYE tools;
  • From 2013-14 the HMRC PAYE bank account is changing;
  • Receive your tax codes and notices online;
  • Child maintenance scheme;
  • Employer orderline;
  • Flexible parental pay and leave;
  • Reporting PAYE information in real time;
  • EDI and internet employer submissions;
  • PAYE payments;
  • Expenses and benefits;
  • Change of address for employees;
  • Toolkits to reduce common errors;
  • PAYE tax code change;
  • Changes to workplace pensions – parallel preparations;
  • Employer diary; and
  • Helpline and orderline numbers.

The Bulletin can be found online at http://www.hmrc.gov.uk/paye/employer-bulletin/bulletin43.pdf.

RTI update

The HMRC publication Pay As You Earn Pilot Employer Monthly update: February 2013 - Real Time Information is available online at http://www.hmrc.gov.uk/rti/emp-monthly-update-feb13.pdf. All PAYE schemes will be required to start reporting PAYE in real time in April 2013 except, for some of the very largest PAYE schemes where HMRC have specified a different date to start reporting. There are a number of important tasks employers and payroll operators need to complete around the end of the tax year (5 April). In summary these are:

  • Indicate on the last FPS, or EPS, for the year that it is the 'Final submission for the tax year',
  • Answer the end of year declarations and questions, and
  • Enter the employer's contracted-out number (ECON) where applicable. If the employer has recorded NI letters D, E, L, N or O on any RTI submission during 2012-13, he will need to ensure that he records the ECON on the last FPS/EPS submission. For the 2012-13 tax year the ECON can only be recorded if the final submission indicator or final submission scheme ceased indicator is also set.

HMRC EMI contact details change

The contact address for advance assurance requests for Enterprise Management Incentives (EMIs) has changed from 4 March 2013 to:

Small Company Enterprise Centre Admin Team, HM Revenue & Customs,  Medvale House, Mote Road,  Maidstone, Kent ME15 6AF.

Telephone: 0845 600 2622

ACT regulations published

The Corporation Tax (Treatment of Unrelieved Surplus Advance Corporation Tax) (Amendment) Regulations 2013 (SI 2013/157) came into force on 11 March 2013. The purpose of these regulations is to ensure that companies can obtain relief for surplus advance corporation tax (ACT) that had accrued prior to its abolition of ACT with effect from 6 April 1999. Broadly, these regulations amend the definition of ‘group’ so that shadow ACT need not be taken into account where a distribution is made to a parent company resident in an EEA Member State. The regulations and an explanatory memorandum are available online at http://www.legislation.gov.uk/uksi/2013/157/pdfs/uksiem_20130157_en.pdf.

CASCs qualifying rules to be amended

The government has announced it intends to amend the law to make the Community Amateur Sports Clubs (CASC) qualifying conditions clearer for sports clubs. Enabling legislation will be introduced in the Finance Bill to be published on 28 March 2013. This will allow HMRC to set out clearer detailed rules in secondary legislation after a public consultation. HMRC will publish a consultation document in the spring which will set out proposals for the new, clearer, conditions. For details of the Written Ministerial Statement, see http://www.publications.parliament.uk/pa/cm201213/cmhansrd/cm130304/wmstext/130304m0001.htm#1303041000002.

Sarah Laing CTA

 

Written by Ellie MacKenzie

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