In the UK, new proposals were recently released designed to address the promotion and enabling of tax avoidance schemes.
The Government unveiled a number of planned legislative changes to existing anti-avoidance regimes to strengthen HMRC powers to further clamp down on the market for tax avoidance.
These included changes under the Disclosure of Tax Avoidance Schemes (DOTAS) regime to ensure that the UK tax authority can act quickly and decisively where promoters fail to provide information on their avoidance schemes and clients.
Changes have also been proposed to enable HMRC to more effectively issue “stop notices” to promoters under Promoters of Tax Avoidance Scheme (POTAS) rules, to make it harder to promote schemes that do not work, and to prevent promoters from abusing corporate entity structures to avoid their obligations these rules.
The proposed legislative amendments would also ensure that HMRC can obtain information … Read More »
The finance ministers of France, Italy, Spain, and the United Kingdom have reportedly sent a letter to the US Treasury Secretary, Steven Mnuchin, proposing that new international tax rules for digital companies could be gradually phased in.
The ministers suggest in the letter, seen by Bloomberg News, that tax rules for providers of digital services could initially be restricted to those companies providing “automated” digital services and later could be applied more widely.
By offering such a compromise, the European countries are hoping to persuade the US to re-join negotiations towards the creation of an internationally-agreed framework of tax rules for digital companies. They reportedly suggested that an agreement that includes the US could be reached by the end of 2020 if a phased approach to the introduction of these rules was on the table.
For more information on this, and other topical … Read More »
The new UK Chancellor, Rishi Sunak, revealed his maiden budget on March 11. In it, Sunak pledged to waive business rates on small retailers, to introduce a new tax on plastics, and to remove value-added tax on electronic publications.
The Chancellor announced that any eligible retail, leisure, or hospitality business with a rateable value below GBP51,000 (USD65,670) would, over the coming financial year, pay no business rates, the UK’s commercial property tax. Further, he revealed that the government will provide support for businesses struggling with paying their tax dues, by “scaling up” the Time to Pay service.
It also emerged in the budget that the UK Government had decided to reduce the lifetime limit for Entrepreneurs’ Relief to GBP1m (USD1.25m) from GBP10m, affecting qualifying disposals on or after March 11, 2020. Entrepreneurs’ Relief reduces the amount of capital gains tax paid on … Read More »
Following their election win, the UK’s Conservative Party has said it will use new “freedoms” from Brexit to set its own tax policies, including in the area of VAT.
In its pre-election manifesto, the Conservatives promised to not raise rates of income tax, VAT, or National Insurance. It also cancelled plans to lower the corporate tax rate from 19 percent to 17 percent from April 2020. The Government has however committed to lower the tax burden of business rates (the UK’s commercial property tax), and increase the employment allowance tax relief for small businesses. Further, the research and development tax credit rate will be raised to 13 percent, and the Government intends to review the activities in scope.
It also reportedly intends to also raise the National Insurance threshold to GBP9,500 next year.
On tax enforcement, the Conservative Party committed to:
Double the maximum … Read More »
At the time of writing, Prime Minister Johnson’s slight variation on his predecessor’s plan had passed the House of Commons, but MPs had rejected the government’s moves to force the plan through in just three days. The deal, which had previously secured the agreement of the European Union, would involve a hard Brexit for the UK but ensure that a hard border does not materialize between Northern Ireland and the Republic of Ireland to its south.
According to the EU, the deal provides that Northern Ireland would remain aligned to a limited set of rules related to the EU’s Single Market in order to avoid a hard border. Specifically, it would be bound by EU legislation on goods, sanitary rules for veterinary controls (SPS rules), rules on agricultural production/marketing, VAT and excise in respect of goods, and state aid rules.
It was … Read More »
It had been reported that Boris Johnson’s UN General Assembly appearance would be dominated by announcements of “rolling out the red carpet” to investors, particularly from the United States, with a proposed reduction in the corporate income tax rate to 17% planned to set the cat among the European pigeons, post-Brexit, and a trade deal with the US hoped to be on the cards.
However, the major Boris Brexit Blockbuster speech was somewhat derailed by events in the courts back home, and his speech on technology matters (a key planned focus area once freed from European regulatory and tax ‘shackles’) as delivered to the UNGA was – by all accounts – both perplexing and perplexed, taking in limbless chickens, Greek mythology and malevolent household AI.
Matters of tax and economics have remained mostly off the table since the Prime Minister’s earlier than anticipated … Read More »
The UK Government has released a summary of the feedback that it had received on its consultation on the new Digital Services Tax and set out amendments to its proposals to ensure the regime functions effectively and as intended.
Plans to introduce the levy were confirmed in the 2019 Budget, and are broadly in line with moves in other countries in this area. The Government has proposed that the tax will apply to revenue generated by search engines, social media platforms, and online marketplaces, to revenues from those activities that are linked to the participation of UK users. It will apply only to groups that generate global revenues from in-scope business activities in excess of GBP500m per year. Businesses will not have to pay tax on their first GBP25 million of UK taxable revenues.
According to the Government, with regard to the … Read More »
According to European Council President Donald Tusk, a special place has been reserved in the afterlife for those seeking to bring about a hard Brexit without a plan. By “special,” Mr Tusk didn’t mean “nice.” What he meant was that Boris and Nigel won’t be needing to pack their winter clothes for life in the forever after.
Unsurprisingly, such comments have merely served to fan the flames of the already white-hot Brexit debate. But, away from the fiery rhetoric, member states are at least beginning to make preparations for a no-deal Brexit in an attempt to cushion the blow for taxpayers and businesses. How effective they will be is another matter.
In the Netherlands, State Secretary of Finance Menno Snel informed parliament late last month that the Tax and Customs Administration is preparing for the UK’s withdrawal from the European Union without … Read More »
On November 26, a legal challenge brought by 13 UK expats against the decision of the EU Council to endorse the start of negotiations with the UK on exiting the European Union was rejected by the General Court of the EU. So is Brexit now an unstoppable force? Perhaps the only question left is what sort of Brexit will it be? Prime Minister May’s EU-lite? Canada +++? The Norway option? WTO rules?
The possibility of another referendum on the matter remains, although the chances are slim. What is crystal clear however, is that the waters are now as muddy as ever. So much so that businesses have largely given up attempting to plan for Brexit. At least, that is the conclusion drawn from a survey by accountants Moore Stephens of Brexit preparedness within the business community.
According to the firm, since last … Read More »
Chancellor of the Exchequer Philip Hammond has apparently acquired the nickname in parliamentary circles of “Spreadsheet Phil.” This is suggestive of a man who likes to play around with numbers. A lot. Not the best company at parties, perhaps. A meticulous planner maybe, not given to spontaneous policy announcements. Except that he kind of is. His first Budget as Chancellor was marked by dramatic about-turn on self-employment taxation, and his latest Budget, announced October 30, by a digital services tax, set to commence in 2020. Incidentally, Hammond moved Budget day forward by one day so it wouldn’t be announced on October 31 – Halloween – and suffer a pun-fest at the hands of the media. As it turned out, the 2018 Budget was largely free from tax horrors. But many businesses will surely have been a least a little bit … Read More »