One Month in a Minute: June 2018

Draft legislation for Finance (No 3) Bill

The government announced on 11 June that it will publish draft clauses for Finance (No 3) Bill on 6 July 2018, along with accompanying explanatory notes, tax information and impact notes, responses to consultations and other supporting documents. All publications will be available on the gov.uk website.

Making Tax Digital: even represented businesses will need access to their HMRC business account

The Tax Faculty of the Institute of Chartered Accountants in England and Wales (ICAEW) has highlighted that even businesses that have tax agents will need to access their respective business tax accounts (BTAs) in order to complete certain transactions.

The detail is still being worked through by HMRC but it is understood that:

  • all businesses within MTD will have to provide an email address;
  • businesses will have to access their BTA to authorise and manage agents;
  • notifications of certain changes of circumstances will be available to businesses only through their BTA, or will need to be confirmed by the taxpayer through that account.

HMRC advises that it will minimise the transactions which are available only through the BTA, keeping them to those where it has an obligation to receive direct confirmation from the business. There will be an alternative process for businesses which have obtained agreement from HMRC that they are digitally excluded and therefore are not required to transact online.

PERSONAL TAXATION

ATT calls for equal access to personal tax relief on training costs

We noted in March One Month in a Minute that the government had asked in the Spring Statement for input on how the tax regime might be improved to assist in reducing the perceived skills gap, particularly where an individual might want to re-train in an entirely new field, to adapt to changes in the work market.

The Association of Taxation Technicians (ATT) has recently said that there should be a ‘level playing field’ between those who are employed and those who are self-employed, such that all are entitled to tax relief on work-related training expenses. The ATT said:

‘Tax relief for such training costs should be available regardless of whether the individual is employed or self-employed, learning a new skill or updating an existing skill.

Self-employed individuals are often surprised and disappointed to find that relief is not available for the costs of acquiring new skills to develop their business. It is interesting to note that if the same business was incorporated and run as a limited company – so that the individual became an employee of their own company – they could then direct the company to pay for the course. In that case, provided the course was genuinely for the benefit of the business, the company should receive corporation tax relief on the costs with no tax consequences for the individual.

We appreciate that extending tax relief is likely to have an initial cost to the Treasury, but anticipate that this would be offset in the longer term as the economy benefits from a more skilled workforce.’

BUSINESS TAXATION

IR35 consultation published

The consultation document Off-Payroll Working in the Private Sector has been published, offering three options:

  • Extending the current public sector reform to the private sector – this is the government’s preferred option, effectively to extend the recent regime forced on public sector bodies (PSBs) to determine the worker’s employment status. Many readers will be aware that there have been some significant problems with the PSB rules, such as PSBs adopting a ‘blanket approach’ to categorising all workers as employees to minimise risk, and the failure of the online check employment status tool (CEST) to adopt mutuality of obligations as a critical factor in determining employment status.
  • Securing the supply chain – the end client would need to undertake due diligence on businesses that they engage, to ensure that they are complying with relevant tax and employment rules.
  • Additional record-keeping – requiring businesses to keep more/better records in anticipation of an HMRC compliance visit.

TRUSTS AND INHERITANCE TAX

GDPR and beneficiaries in a will

STEP has also reported on clarification of the issue of whether or not practitioners holding wills on behalf of their clients are obliged to notify named beneficiaries that they stand to benefit from another’s will. Clearly, some clients might not want others to know that they are (or by inference are not) beneficiaries. But the new General Data Protection Regulation (GDPR) regime gives ‘data subjects’ rights to know what information a practitioner might hold about them.

While the Information Commissioner’s Office (ICO) has not published formal guidance, a probate practitioner has relayed to STEP the response received from a question she raised on the ICO website.

‘The ICO's answer is that a practitioner who stores a will on behalf of a client does not have to contact beneficiaries when the will is written, but only when it comes into effect on the testator's death and the estate begins to be administered. At that point the practitioner ought to send beneficiaries a GDPR-compliant privacy notice to advise them how their data will be stored and processed.

The ICO representative confirmed that the situation with beneficiaries while a will is drafted falls under Article 14(5)(d) of the GDPR… …that article states that the data controller need not comply with the request if the personal data concerned “must remain confidential subject to an obligation of professional secrecy”’.

TAX ADMINISTRATION

HMRC self-assessment exclusions published

HMRC has published an updated list of “exclusions” – circumstances in which it will not be possible to file the 2017/18 tax return online with a conventional approach. Many of these exclusions arise because HMRC’s algorithms for allocating losses and the personal allowance against various income sources do not comply with the law, following the introduction of the dividend and savings ‘allowances’ (which are, strictly, nil-rate bands). In some cases, a paper return will need to filed instead, while also claiming a ‘reasonable excuse’ if filing after the normal paper deadline of 31 October. In other cases, it will still be possible to file online but with specific entries in boxes – workarounds – as set out in the list.

To read this article in full and for our other online tax services, email pete.taylor@bloomsbury.com for a free trial.

Written by Ellie MacKenzie

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