The measures set out in this joint HMRC and Treasury paper will shape the next steps in delivering the Government’s tax administration strategy, announced in July 2020. The paper also includes a range of policy announcements and updates which will support wider improvements in the tax system, including on business rates and environmental taxes, as well as measures to drive down non-compliance and enhance simplification. Here we take a look at the main areas in the consultation which we think will be of interest to our clients.
The main areas of focus are:
- Modernising tax administration
- Tackling non-compliance
- Tax policy announcements
Delivering the Tax Administration Strategy
This includes the government restating it’s commitment to Making Tax Digital (MTD) and legislating later this year to extend MTD to Income Tax Self Assessment from April 2023.
In the recent budget the government announced investment of £95m in HMRC to deliver new digital technology needed to help build a trusted, modern tax administration system. This funding will allow development of a single digital account and single customer record. The ambition is that these integrated accounts will be available to everyone, allowing them to view and engage with all their tax affairs in one place.
Also included are plans to reduce inheritance tax reporting requirements. This follows recommendations by the Office of Tax Simplification, the government will reduce administrative burdens for those dealing with inheritance tax. Reporting regulations will be simplified later this year so that from 1 January 2022 over 90% of non-taxpaying estates each year will no longer have to complete inheritance tax forms for deaths when probate or confirmation is required.
HMRC will be clamping down further on promoters of tax avoidance – As announced in November 2020, the government is publishing a consultation on a package of measures to clamp down on promoters of tax avoidance. Proposals include ensuring HMRC can protect their position by securing or freezing a promoter’s assets so that the penalties they are liable for are paid, tackling offshore promoters and the UK entities that support them, closing down companies that promote avoidance schemes and disqualifying their directors, and supporting taxpayers to identify and exit avoidance schemes. HMRC is also publishing draft technical guidance on the package of measures being legislated for in Finance Bill 2021.
Tackling disguised remuneration tax avoidance – The government is publishing a summary of the responses to the 2020 call for evidence which was exercise was part of the government’s response to the recommendations in the Independent Loan Charge Review. The summary of responses document will also set out the government’s next steps.
Off-payroll working rules – The government is publishing external research into the impact of the 2017 public sector reform of the off-payroll working rules on the education sector and on employment agencies.
No Safe Havens – The ‘No Safe Havens’ strategy outlines how HMRC will ensure taxpayers comply with their UK tax obligations regardless of where their income or gains are made. The strategy focuses on assisting taxpayers to comply and responding appropriately if they do not. There will be further consultations around this area to develop policy further.
Further tax policy announcements
There are a number of other areas that either have new initiatives associated with them or consultations about to be launched. These include:
- Fundamental review of business rates
- Strengthening the self-catering accommodation criteria for business rates
- Review of the Office of Tax Simplification (OTS)
- Residential property developer tax
- Dormant Assets Scheme expansion
- Tax treatment of Superfunds
- Taxation of trusts
- Specific areas of VAT including for the public sector, and land and property rules
To view the full list of policy announcements and the detail contained within the first two sections visit .Gov. Our team will make sure that they are on top of any changes so they can advise our clients appropriately. Do get in touch if you’d like to discuss any of the content of today’s publication.