Simplifying and modernising the tax system and tackling the tax gap – this framed the consultations, calls for evidence and next steps announced on tax administration and maintenance day (TAM day). ICAEW’s Tax Faculty highlights the key points.
On TAM day (27 April), the government published a series of consultations and tax policy updates, summarised in a policy paper, written ministerial statement and news story, together with a list of documents. The policy paper also announced several consultations that will happen later in 2023.
Although TAM day’s main focus was on simplifying and modernising the tax system and tackling the tax gap, ICAEW’s Tax Faculty welcomes two announcements that fell under the heading, “Further tax policy and administrative announcements”. These are:
- addressing the fact that some eligible parents who have not claimed child benefit could miss out on their future entitlement to a full state pension; and
- a technical consultation on a potential change to off-payroll working rules, following an incorrect employment status determination. This would allow HMRC to set off the tax and national insurance contributions already paid by a worker or their personal service company against the PAYE liability of the deemed employer.
Simplifying and modernising the tax system
Two new consultations have been launched under the banner of the tax administration framework review. The first is a call for evidence on information and data powers that concerns standardising data provision from third parties, designing more flexible legislation, considering pre-population of returns, and simplifying powers to make them more consistent across different tax regimes. The second involves using ‘legislative sandboxes’ to pilot changes. Despite being involved in initial discussions about this approach, the faculty does not yet know what this will mean in practice.
The government also plans to proceed with collecting new data on self-employed start/end dates, employee hours worked and dividends paid in owner-managed businesses. It is difficult to see how this will sit under the ‘simplification’ banner. The Tax Faculty previously criticised these proposals for clashing with the growth and simplification agenda.
Following on from an earlier call for evidence, HMRC is now consulting on modernising stamp taxes on shares. This also includes questions on whether to have a single tax on shares and securities, rather than the current stamp duty and stamp duty reserve tax regimes.
The tax treatment of crypto-asset transactions in decentralised finance (DeFi) lending and staking also moved onto the next stage in the policy making process. A consultation has been launched on the potential for an amendment to the tax rules.
Alongside consultations on the customs treatment of post and parcel exports, a tax regime for a Reserved Investor Fund, and help to save, the government announced future consultations and proposals. These will cover diverted profits tax, transfer pricing and permanent establishment reform, gift aid, and updating the VAT Terminal Markets Order legislation.
Tackling the tax gap
A more immediate change announced on TAM day is the requirement for repayment agents to be registered (specifically have an agent services account) for claims made on or after 2 August 2023.
When the government publishes its response to the 2021 call for evidence on the umbrella company market, it will also publish a consultation on policy options to regulate umbrella companies and to tackle non-compliance. This was outlined in the policy paper.
As expected, the government has published a consultation on potential criminal offences for tax avoidance scheme promoters who continue selling tax avoidance schemes after being issued with a stop notice.
Focusing on compliance in certain sectors, there are consultations on reforming the construction industry scheme (CIS) and tackling non-compliance in the charity sector.
Following a call for evidence on modernising tax debt collection from non-paying businesses, the government plans to consult further on the following four proposals:
- extending taking control of goods (TCoG) to those with no UK assets, or assets at a principal place of business;
- extending TCoG to in-house leasing;
- extending Direct Recovery of Debt to Digital Wallets; and
- security deposits to recurring non-paying businesses.
It was also signposted that the government will publish a consultation later this year on the use and effectiveness of the employee ownership trust tax regime.
If you would like to speak to us regarding any of the information above, please email or call Mark Griffiths, Director.