UK and International Tax news

Tax Administration and Maintenance Day

Friday 28th April 2023

The Government has announced a package of technical tax policy proposals to support its ambition to simplify and modernise the tax system, to tackle non-compliance, to make the tax system fairer for taxpayers and to make the customs system work better for traders.

Simplification and Modernisation

In Autumn 2022, the government issued a mandate to put tax simplification at the heart of policy making. First steps were announced in the Spring 2023 Budget with a range of improvements to make it easier for businesses to interact with the tax system, and these included:

  • a systematic review to improve HMRC guidance and key forms for small businesses
  • a consultation to expand the ‘cash basis’, a simplified way for over four million sole traders to calculate and pay their income tax
  • delivering the IT changes to enable agents to payroll benefits in kind on behalf of employers, and
  • a package of measures to simplify customs import and export processes for traders, taking advantage of new freedoms following EU exit and promoting economic growth by making importing and exporting as easy as possible.

The Financial Secretary to the Treasury announced yesterday that the government is to take the next steps to make tax as simple as possible for taxpayers and highlights of the key measures include the following:

The Help to Save scheme is to be extended in its current form by 18 months until April 2025 with a consultation on the scheme design to determine how it could be simplified.

A consultation on proposals to modernise and digitise the framework for stamp taxes on shares will seek views on proposals to ensure that any new framework will meet its objectives for a simple, clear and efficient tax system.

As part of HMRC’s wider Tax Administration Framework Review, the government is to publish two further consultations. These will focus the smarter use of information and data, including from third parties, in order to simplify tax administration for individuals and businesses, and improve HMRC’s compliance capabilities.

There will be a call for evidence on how legislation could be updated to standardise and simplify data provision, and to improve data protection.

Views are to be sought on a legislative approach to piloting and a new approach known as a “sandbox” that HMRC could use to pilot changes. The consultation will explore opportunities and challenges of possible sandbox testing models, and what safeguards might be necessary and proportionate.

Following on from customs announcements made in the Spring 2023 Budget, the government is publishing a consultation on proposals to improve the customs treatment of post and parcel exports. The aim is to ensure customs facilitations for low-value post and parcels are as beneficial as possible, while creating a level playing field for operators to export low-value goods with ease.

Consultations are also being launched on:

  • a potential change to the tax treatment of lending and staking cryptoassets for decentralised finance,
  • the introduction of a new type of investment fund,
  • diverted profits tax, transfer pricing and permanent establishments,
  • reforms to Gift aid, and
  • an update to the VAT Terminal Markets Order legislation.

Tackling the Tax Gap

According to the government, since 2010, it has introduced over 200 new measures and invested over £2bn extra in HMRC to tackle non-compliance in the tax system. In 2021-22, HMRC secured and protected £30.8bn for public services that would otherwise have gone unpaid.  This action has ensured the tax gap remains on a long-term downward trend.

The government is to publish a summary of responses to the 2021 call for evidence on the umbrella company market and a consultation on policy options to regulate umbrella companies and to tackle non-compliance in the umbrella company market.

The government is also to publish a consultation on the introduction of a new criminal offence for promoters of tax avoidance and on how to expedite the disqualification of directors of companies involved in promoting tax avoidance.

As announced in January 2023, the government will require repayment agents to register with HMRC to protect vulnerable customers and within a three-month window starting on 2 May 2023.

There are to be further counsultations on business tax debt modernisation and the Construction Industry Scheme,

Further tax policy and administration announcements

A number of other tax policy announcements are to be made including off payroll working, HMRC’s Powers and Safeguards evaluation report, and in relation to retrospectively awarding National Insurance credits.

If you would like further information on the above announcements, please contact Keith Rushen on 0207 486 2378.

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