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14 March 2018 UK issues Spring Statement and associated documents In his speech of 13 March 2018, the United Kingdom (UK) Chancellor confirmed his plans that major tax or spending changes would now be made only once a year – at the Budget in the Autumn.
This Alert highlights the key new tax developments, and also provides a brief summary of other consultations and calls for evidence. The Government has issued an updated position paper on corporate tax and the digital economy which builds on the original paper published as part of the Autumn Budget. The updated paper sets out the Government's view that:
While this is essentially the same position as that set out in the original position paper, the Government now goes into more detail on how this can be achieved and the challenges in doing so. However, the paper does not set out the Government's final position on these issues. Instead it sets out the Government's updated thinking, with a view to engaging further with businesses and other stakeholders to better understand and resolve some of the outstanding questions. Stakeholders are still able to contribute to the debate by providing feedback on this updated paper. No formal deadline has been set for the receipt of responses. We have been helping businesses engage with HM Treasury on this either through meetings with HM Treasury or written responses. Online platforms enabling the sale and rent of goods and services online are growing intermediaries in the UK economy. The Government has launched a call for evidence to explore how it can build on work already undertaken with online marketplaces (such as in the Value Added Tax (VAT) arena). The Government is principally interested in platforms that facilitate the sharing economy (e.g., by allowing people to earn money from resources they are not constantly using, such as cars or spare rooms), facilitate the gig economy (e.g., by allowing people to use their time and resources to generate income) or connect buyers with individuals or businesses offering services or goods for sale. The work will initially consider platforms that host transactions through which users could incur a tax liability rather than those trading their own goods or services through their own website, and will focus on direct tax in the first instance. Responses are due by 8 June 2018. The Government wants to understand how platforms interact with their users currently, what they know about them, and understand more about attitudes to tax among people earning money through platforms (with a view to ensuring that those people understand and meet their tax obligations). It is also interested in views on ways that online platforms create new opportunities for individuals or businesses to deliberately avoid paying tax as well as on further opportunities for platforms to work together with HM Revenue & Customs (HMRC) to help users understand and meet their tax obligations. The call for evidence notes that the Taylor Review of modern employment practices also has connections to this work. Part of the Government's response to the Taylor Review included a consultation on employment status. This looks at providing clarity as to the rights of people, particularly those working through digital platforms in the gig economy. The Taylor Review also examines whether the rules around working time for national minimum wage and national living wage purposes for workers can be made simpler and easier to enforce. A call for evidence to explore the design of the VAT registration threshold has been published. This follows on from the review of VAT by the Office of Tax Simplification (OTS), which was published late last year. The OTS's review found that the relatively high UK VAT registration threshold, currently set at £85,000, had a distortionary impact on business growth. The OTS recommended that the Government should examine the current approach to the level and design of the VAT registration threshold with a view to setting out a future direction of travel. This latest call for evidence explores the effect of the current VAT registration threshold on smaller businesses and considers alternative options and whether those options could better incentivize growth. It also provides a summary of the European Commission's recently published the Small and Medium Enterprise (SME) VAT proposal which is not due to be implemented until July 2022, acknowledging that the UK position in this respect will be determined by negotiations once the UK has left the EU. This is a great opportunity for SMEs and other interested parties to put their views forward on the design of the UK's VAT registration threshold. The deadline for responses is 5 June 2018. A new consultation, following on from the previous call for evidence on the VAT split payment mechanism, seeks views on potential options for a split payment mechanism. The expansion of e-commerce poses a significant challenge for tax authorities as a result of some businesses failing to charge VAT on sales of goods to online consumers. To address this issue, the UK was the first country to introduce joint and several liability rules to hold online marketplaces liable for the unpaid VAT of sellers on their platforms. However, the Government wants to go further in combatting online VAT fraud, by utilizing payments industry technology to collect VAT on online sales by transferring the VAT due on sales directly to HMRC. The Government considers that this would significantly reduce the challenge of enforcing online seller compliance and offer a simplification for businesses. This consultation also looks to assess further the overall viability of split payment by seeking the views of a wider range of stakeholders. In particular, it seeks to identify which party is best placed to perform the split of the VAT from the gross payment. HMRC will be running a series of collaborative workshops to test emerging views over the spring and summer of 2018 and invites interested parties to contact them. The closing date for comments is 29 June 2018. This consultation, which closes on 5 June 2018, seeks evidence that demonstrates the significance of any impacts that VAT or APD have on tourism, or that helps show how the use of these taxes might support the growing success of the sector in Northern Ireland. This consultation response indicates the Government's intention to create a new excise category for heated tobacco products. The Chancellor's speech also referred to a call for evidence on whether the use of non-agricultural red diesel tax relief contributes to poor air quality in urban areas and a consultation on reduced vehicle excise duty rates for the cleanest vans. This consultation looks at the objectives and design criteria for extending tax relief for training of employees and the self-employed. The aim is that a mix of complementary policies involving direct spending and taxation will help ensure individuals can access the skills necessary for the future. The deadline for responses is 8 June 2018. ER can reduce the capital gains tax rate on a sale of shares in a private company to 10% on gains up to a lifetime limit of £10m. The consultation is aimed at assisting individuals whose shareholding is diluted by an injection of new capital into the company such that they no longer meet the 5% holding required to qualify for ER on any gain up to that date. Under the proposals such individuals would be able to elect to crystallize a gain immediately before dilution, so as to benefit from ER. It would also be possible to elect to defer the gain until such a time as the shares are sold, to prevent a dry tax charge. The election will only be available to individuals and not to trustees with qualifying holdings which may be diluted. It will be a condition of the election that the issue of shares by the company be part of a commercial scheme or arrangement which has as its main purpose, or one of its main purposes, the obtaining of capital as new consideration subscribed for the issue of new shares. Responses are due by 15 May 2018. With the aim of promoting high-growth and innovative investment, the Government is consulting on creating a fund structure within the Enterprise Investment Scheme for investment in innovative knowledge-intensive companies. The consultation closes on 11 May 2018. Reducing single-use plastic waste through the tax system: A call for evidence (closing on 18 May) will explore how changes to the tax system or charges could be used to reduce the amount of single-use plastic waste. Aims include reducing unnecessary production, increasing reuse and improving recycling. The Government would also like to explore how to drive innovation in this area to achieve those outcomes and will look across the whole life-cycle of single-use plastics. In his speech, the Chancellor made it clear that any tax measures would not be introduced as a way of raising revenue but as a way of changing behavior. Cash and digital payments in the new economy: A call for evidence (closing on 5 June) looks at how the transition from cash to digital payments impacts on different sectors, different regions and different demographics. It explores how the Government can support digital payments and ensure that the ability to pay by cash is available for those who need it, while cracking down on the minority who use cash to evade tax and launder money. Extension of security deposit legislation: With effect from April 2019 the current scope of the security deposit legislation (which requires high risk businesses to provide an upfront security deposit where HMRC believes there is a risk to the revenue) will be extended to include corporation tax and Construction Industry Scheme deductions. The consultation includes HMRC's proposals for implementing this change to ensure that it is introduced in the most effective way, that the legislation is targeted, and that there are appropriate safeguards. The consultation closes on 8 June 2018. Autumn Budget 2017 had already announced that business rates revaluations would take place every three years, rather than every five years, following the next revaluation. The Spring Statement brings forward that next revaluation by a year to 2021. The three-year revaluation then commences in 2024.
Document ID: 2018-5411 |
