Publishing draft legislation allows for technical consultation and provides taxpayers with predictability over future tax policy changes. Alongside this, the Government is making announcements in a number of areas of tax policy.
The Government is also publishing a research report titled ‘Impact of Making Tax Digital for VAT’. This considers the impact of Making Tax Digital (MTD) across those taxpayers that have been required to operate it. Since April 2019 all VAT registered businesses with VAT taxable turnover above the VAT registration threshold (currently £85,000) have been required to keep records digitally and use software to submit their VAT returns.
Digital links between records have been required since April 2021. Making Tax Digital (MTD) is a key part of HMRC’s ambition to become one of the most digitally advanced tax administrations in the world. To read the research, click here here.
- Basis Period Reform: Under the current system, tax returns filed by the self-employed and partnerships are based on a business's set of accounts ending in the tax year. A set of complex rules can apply to allocate the profits of those businesses to a tax year, which can cause confusion and error. The Government has announced a reform and consultation on how to simplify the system.
- Clamping down on promoters of tax avoidance: announced in November 2020, the Government is bringing forward a package of measures to clamp down on promoters of tax avoidance. Including:
- ensuring HMRC can protect their position by 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
- supporting taxpayers to identify and exit avoidance schemes
- Increasing Normal Minimum Pension Age (NMPA): The draft legislation increases the normal minimum pension age from 55 to 57 in April 2028. This is the age at which most members of registered pension schemes can draw benefits without incurring unauthorised payment charges. Individuals will be able to keep their protected pension age if they transfer their pension.
- Notification of an uncertain tax treatment by large businesses: The Government is publishing a summary of responses and draft legislation to implement a new requirement for large businesses to notify HMRC where they have adopted an uncertain tax treatment. This will apply to returns due to be filed on or after 1 April 2022. This will help address the legal interpretation portion of the tax gap, estimated to be £4.9bn in 2018-19.
- Tax treatment of asset holding companies (AHCs): The Government is responding to its second stage consultation on, and publishing initial draft legislation relating to, the tax treatment of AHCs. These targeted reforms are designed to enhance the UK’s attractiveness as a location for AHCs, and represent a balanced approach in response to stakeholder representations.