A number of consultations and calls for evidence were published on 1 December 2017 alongside Finance Bill 2018-19. The Tax Faculty will be submitting written responses to a number of these so please send your comments to firstname.lastname@example.org with the name of the consultation as the email title. More detail can be found about those consultation in separate news items (see below).
Royalty withholding tax
The government has published a consultation document, Royalties Withholding Tax, setting out the possible ways in which the FA 2016 withholding regime could be extended to cover sales made in the UK where the royalty payer does not have a permanent establishment, or a trade, in the UK with which the royalty payment can be connected. See our news item for details.
Rent a room relief
Following on from the comment by the chancellor that he wanted to “align the relief more closely with its intended purpose, to increase supply of affordable long-term lodgings” a call for evidence has been published to find out how rent a room relief is utilised by individuals. The government is keen to understand who uses the relief, what kinds of activity they are carrying out, and why they might choose to let spare accommodation in their main or only residence. They will also consider whether the relief is properly targeted and whether the legislation should define the length of tenancy permitted. See our news item for details.
Making Tax Digital: interest harmonisation and sanctions for late payment
This consultation presents options for aligning rules and rates of interest across the main taxes and for late payment penalties. The government is now proposing a hybrid model combining elements of the current late payment penalties for income tax with an interest type calculation. See our news item for details.
Plant and machinery lease accounting changes
This consultation seeks to ensure that the tax rules for plant and machinery leases continue to operate as intended given accounting changes introduced in IFRS 16 which removes the classification of leases as either finance leases and operating leases for the lessee. It should be noted that a significant number of companies follow FRS 102 which is based on IAS 17 and does not alter the classification of leases. See our news item for details.
Corporate interest restriction – consultation on leases
The corporate interest restriction (CIR) was enacted in Finance (No 2) Act 2017 but following accounting changes to the treatment of leases there is a further consultation to explore the tax position. IFRS 16 changes the way in which leases are classified for lessees and this will have an impact on the CIR which is currently uses the accounting definitions for operating and finance leases. HMRC has suggested three options to reform the rules. This consultation is relevant to single companies and groups with net financing costs of more than £2m per annum who lease assets for use in their business.