What we have been working on and what we are doing now
In recent months we were so busy doing things that we haven’t told people what they were. So, this report highlights some of our activity in tax this year and explains what we are working on at the moment. We will now publish it every month.
Budget March 2016
The Budget 2016 overview from the ICAEW Tax Faculty written by Frank Haskew has been viewed almost 13,000 times and the faculty team also published the more comprehensive Tax Faculty Budget Report with more of the details. Consultation documents on a number of the measures are being published and the Tax Faculty will respond in due course. We are expecting a lot more once the EU referendum debate is over.
The Finance (No.2) Bill 2016 contains some fundamental changes to the tax system and the Tax Faculty will be making representations and briefing MPs on selected provisions. Unusually, Royal Assent may not be until October because of delays caused by the timing of the EU referendum. This leaves some provisions expected to take effect from 6 April 2016, while they remain unconfirmed for six months.
New members of the team
The Tax Faculty team is now complete. Following Philippa Stedman’s retirement at the end of December 2015, Caroline Miskin joined the Tax Faculty team in February 2016 as our new Practitioner Tax Manager. Sarah Ghaffari joined in April from Kaplan Financial and will be covering the SME Business Tax Committee as well as looking after the Young Members Tax Club. Welcome to them both.
Tax Faculty Conference
The Tax Faculty held a sell-out conference ‘All change for tax in the life of a business’ on 15 April. Highlights from the conference sessions will be written up for future editions of TAXline and the conference will be repeated on 6 July in Manchester.
2. Significant meetings and other activity
Paul Aplin, Frank Haskew and Michael Izza met with David Gauke on 11 April. Professional conduct in relation to tax, Making Tax Digital and the timing for the Finance Bill 2016 debates were all discussed.
Ian Young chaired a meeting of the Global Accounting Alliance (GAA) Tax Director Group in Toronto on 6/7 April. The Group held joint meetings with the Canadian Revenue Agency and representatives from the Big 6 firms. The Group considered its future working arrangements and how to increase its global influence.
3. Media and other public appearances
Anita Monteith has made several broadcasts on BBC Radio 4’s Moneybox programme and spoke about personal service companies at the IPSE policy conference on 26 April and has continued to advise the Treasury Select Committee. In particular, work has involved its Budget inquiry and the ongoing Shifting Sands of tax inquiry.
Sue Moore contributed to the Budget coverage at the offices of the Financial Times for the Financial Adviser.
Frank Haskew chaired an IHT & Wills planning conference on 27 April.
4. News from the technical committees
Making Tax Digital
The Tax Faculty published the results of its survey of 500 representative businesses. This showed that just a quarter of businesses surveyed say they manage their accounts electronically using accounting software.
We had expected to see consultation documents being issued shortly after the Budget but these have not yet been published. It is possible that these will not now be published until late June, after the referendum, because of the restrictions imposed by pre-election purdah.
Faculty staff have attended a number of meetings on Making Tax Digital and Rebecca Benneyworth and Paul Aplin continue to have offline meetings with HMRC through the Digital Advisory Group. Further substantial activity is on hold until we see the consultation documents.
Private client matters
Representatives from the private client committee have had various meetings with HMRC to discuss specialty debts and the unexpected change in the situs of such debts, the use of offshore assets as loan collateral for funds used in the UK, the proposals to change the rules for non UK domiciliaries to be included in Finance Bill 2017, the inadvertent consequences of the changes to entrepreneurs’ relief in Finance Act 2015 and the proposed changes to the transactions in securities regime and liquidation distributions.
SME Business tax committee (SMEBTC)
A new subcommittee has been set up (Capital Taxes Business Sub Committee) with volunteers from the SMEBTC and the Private Client Tax Committee, to look at the changes to CGT reliefs from a business perspective. The remit of the sub-committee includes Entrepreneurs’ Relief, Investors Relief, changes to Transaction in Securities rules and the TAAR on distributions on a winding up.
PAYE real time information – HMRC’s post implementation review
We contributed evidence to HMRC about how well RTI is working. The main problems are HMRC’s poor software design and inaccurate processing which result in unnecessary contact between HMRC and employers, payroll bureaux and employees to sort out errors.
HMRC service and practitioner issues
ICAEW were represented by Frank Haskew at the latest Joint Initiative Steering Group (JISG) meeting on 21 April 2016.
Representatives from the Practitioner Tax Committee (PTC) and faculty staff attended the JISG customer service standards working group on 14 April and are contributing to this initiative. The main topic covered was HMRC’s plans for the £71m investment in HMRC customer service which was announced at Budget 2016. Further meetings will be held where more detailed representations will be made.
The Issues Overview Group (IOG) on which ICAEW is represented met on 11 March and continues to push for progress on various HMRC service issues which are causing our members concern.
HMRC Working Together digital meetings were held in March and April; feedback from attendees remains largely negative. IOG is in discussions with HMRC about hosting meetings for the remainder of 2016 and is hopeful that the future meetings can be opened up to more agents and that they will focus more on issues raised by agents rather than HMRC presentations. The May Working Together meeting is to be a trial of this new format.
Agent Services (formerly Agent Online Self Serve (AOSS)) and Agent Strategy
AOSS is rebranded to Agent Services and HMRC has announced its priorities for the next year. ICAEW volunteers and staff attended a workshop on Agent Strategy (HMRC’s agent view) with CIOT and HMRC and we expect further activity from HMRC in this area.
Common Reporting Standard Client Notification Letters
The Common Reporting Standard and the client notification obligations in s 50 Finance (No.2) Act 2015 have been raised by members. We are reviewing the draft regulations, together with the draft HMRC guidance and will then issue further guidance for ICAEW members. This will also be covered in our forthcoming webinar, Compliance and disclosure: the new offshore landscape, on 19 May.
April TAXline included reflections from Paul Aplin as he moves on from being a Tax Faculty office-holder to being vice-president elect of ICAEW. Lindsey Wicks wrote about all the changes to the tax treatment of goodwill since Finance Act 2002, Neil Warren considered practical challenges on VAT registration and Catherine Robins reported on a Court of Appeal case on the rules for discovery assessments.
6. Representations and consultations
Tax representations submitted
During March and April the Tax Faculty submitted the following formal representations:
ICAEW REP 51/16 Apprenticeship Levy
ICAEW REP 52/16 Making tax digital-discussion paper on simpler payments
ICAEW REP 59/16 Payroll - Starter checklist
ICAEW REP 62/16 Treaty Residence of Pension Funds
ICAEW REP 63/16 Shifting Sands - UK tax policy and the tax base
ICAEW REP 64/16 'No return of class 1A NIC' declaration removed from Basic PAYE Tools
Consultations on which responses are being developed by committee volunteers and faculty technical managers are as follows. We would welcome your comments well before the issuing body’s deadline so we have time to consider them:
Subject matter, issuing body, date issued
Issuing body deadline
Corporate double taxation dispute resolution
Corporate contributions to grassroots sports
Surplus advance corporation tax (ACT)
Fulfilment house due diligence
Gift Aid small donations
Business rates: more frequent revaluations
Tax evasion: failure to prevent criminal facilitation
Life insurance policies: part surrenders/assignments
Employee share schemes: NIC election
VAT disclosure regime (VATDR) & IHT DOTAS
Neil Gaskell and Sue Moore
Tax Faculty Webinars and TAXtalks
The March TAXtalk covered Making Tax Digital and topical payroll issues. There was also a TAXtalk Budget Special in March. The April TAXtalk covered points coming out of the recent property webinar, as well as the implications of the new State pension, the news from Panama, and Country by Country reporting.
The faculty ran three webinars in April, covering Property taxes, Inheritance tax and Budget and Finance Bill 2016. Future webinar topics include:
Compliance and disclosure: the new offshore landscape
Payroll: the new regime
Savings and dividend allowances – calculating your tax liability. This will illustrate how the new dividend, interest and personal allowances calculations work, together with examples
All our webinars are free for Tax Faculty members, and can be booked through our events page at http://www.icaew.com/en/technical/tax/tax-faculty/tax-faculty-events
Our Tax Club for young tax professionals met in March when Mike Down spoke about HMRC enquiries and Alternative Dispute Resolution. The April meeting was on the Common Reporting Standard and the speaker was Jonathan Schwarz. Rebecca Benneyworth will speak at the May meeting on Extracting funds from SMEs.
Annual General Meeting
The Tax Faculty’s Annual General Meeting will be held on Friday 13 May 2016