Tax Maintenance and Administration day - help needed!

Last week, HMRC issued a raft of consultations as part of its Tax Maintenance and Administration day.  These are aimed at supporting the Government’s ambition “to simplify and modernise the tax system, tackle non-compliance, make the tax system fairer for taxpayers and to make the customs system work better for traders.”

Andrea and Julia have reviewed these announcements and set-out the consultations that we think BUFDG need to respond to as a priority. But we need your help, input and expertise! 

Off-payroll working (IR35): calculation of PAYE liability in cases of non-compliance – responses due by 22 June 2023

This is the long awaited consultation on the potential offset of taxes paid by a limited company, against a PAYE liability under an off-payroll working/IR35 relationship.

Current legislation does not allow HMRC to set off any PAYE, income or corporate tax and NICs already paid by a worker and/or their intermediary (typically their own personal service company) against the PAYE liability of the deemed employer. Instead the individual/intermediary may be entitled to claim a repayment for amounts they have overpaid, if they are ever made aware.

Set-off would only be available for deemed employer’s liabilities for Income Tax and employee NICs deducted in respect of the specific worker.  HMRC are suggesting that taxes such as Corporation Tax, Income Tax and employee NICs, plus any class 2 and 4 NICs and tax paid on dividends could be used to offset the liability.

Julia will be drafting a response on behalf of BUFDG members.  If you would like to be involved in reviewing the draft response, please contact Julia.

Charities Tax compliance – responses due by 20 July 2023

This consultation examines “some of the charity taxation rules to help tackle non-compliance and protect the integrity of the charity sector without changing the overall purpose of the reliefs. It will ensure the rules continue to be fit for purpose.” It focuses on these areas:

• Preventing donors from obtaining a financial advantage from their donation
• Preventing abuse of the charitable investment rules
• Closing a gap in non-charitable expenditure rules
• Sanctioning charities that do not meet their filing and payment obligations

Andrea will set-up a call with members to discuss this before drafting the first response.  If you would like to be attend the call, please contact Andrea.

There are two tax administration consultations:

1. Tax Administration Framework Review, Information and Data – responses due by 20 July 2023

This consultation focuses on how HMRC’s information and data gathering powers could be updated, alongside standardising data provision from third parties, designing more flexible legislation, considering pre-population of returns and simplifying powers. This is a key consultation given the questions re pre-population of tax returns and how a tax payer would challenge and resolve discrepancies in information. 

2. The Tax Administration Framework Review: Creating innovative change through new legislative pilots – responses due by 20 July 2023

HMRC is exploring how it can develop and improve testing prior to wider roll out of change.  Suggested areas for discussion are:

1. What benefits and challenges do you think piloting potential policy and process changes in this way would bring?
2. What safeguards would you like to see in the operation of pilots conducted within the proposed approach?
3. In addition to the ‘showcase space’ where ongoing pilots could provide progress reports seeking input from participants, are there any other ways you would want to engage in the development of new policy, processes, and legislation?
4. What areas of HMRC activity do you think would benefit from this type of approach?
5. What participant support and oversight would you like to see?

Given the issues that members have experienced on some recent system role outs and the lack of clarity in some HMRC guidance, BUFDG will be responding to these consultations.  Andrea and Julia set-up a call with members to discuss both consultations before drafting the first responses.  If you would like to be attend the call, please contact Andrea or Julia.

The consultations that we will not be responding to

Other consultations that have been issued that we do not plan to respond to are:

• Customs treatment of post and parcel exports – ends 20 July 2023 - not planning to respond as this focuses on exports of parcels from UK. It is aimed at hauliers, companies, etc using the Export Memorandum of Understanding (Export MoU) (which covers consignments under £900; the consultation considers whether this limit should be increased) and Extra Territorial Offices of Exchange (ETOEs) (the consultation considers use of form CN 23 and increasing the limit from £1000)
• Construction Industry Scheme reform – ends 20 July 2023 we are not planning to respond to this as the main focus appears to be on payments to prospective tenants by landlords and establishing a CIS grouping arrangement.
• Reserved Investor Fund consultation
• Stamp Taxes on Shares modernisation
• The taxation of decentralised finance (DeFi) involving the lending and staking of cryptoassets
• Expanding the cash basis
• Taxation of environmental land management and ecosystem service markets
• Tougher Consequences for Promoters of Tax Avoidance
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