Tax Administration and Maintenance Day – A Comprehensive Overview
Introduction
On April 27, 2023, the UK government made a significant announcement, unveiling more than 20 proposals that encompass various aspects of taxation. This article provides a detailed examination of these announcements and offers insights into key areas of interest and importance.
Simplification and Modernization of the Tax System
One of the prominent features of this event is the government’s focus on the simplification and modernization of the tax system. This initiative aims to streamline and update tax regulations for greater efficiency and clarity.
Help to Save Scheme Reform Consultation
The Help to Save scheme, designed to promote savings among eligible individuals, is up for reform. The government is seeking public input on potential changes to enhance its effectiveness.
HMRC Information and Data Powers – Call for Evidence
The HMRC (Her Majesty’s Revenue and Customs) is soliciting opinions on improving its information powers. The intention is to differentiate penalties based on individual taxpayer circumstances and encourage collaboration. Additionally, the call for evidence contemplates fundamental principles of data powers and responsibilities as a precursor to potential pre-population of tax returns.
New Legislative Pilots – Discussion Document
A significant development is the introduction of new legislative pilots, opening the door for potential changes in tax legislation. These pilots could lead to fundamental shifts in the tax landscape.
Customs Treatment of Post and Parcel Exports – Consultation
Another critical area of discussion involves the customs treatment of post and parcel exports. The government is actively seeking input on how to manage these transactions more effectively.
Customs Advance Valuation Ruling Service
In a bid to simplify the calculation of costs related to goods shipments, HMRC has launched the Advance Valuation Ruling Service (AVRS). This service provides legal certainty for importers about the correctness of their chosen customs valuation method.
Tax Treatment of Cryptoasset Transactions in Decentralized Finance (De-Fi) Lending and Staking
The government is conducting a consultation on the tax treatment of cryptoasset transactions within the realm of Decentralized Finance. The existing guidance imposes capital gains tax (CGT) on crypto lending and staking, but the new proposals aim to simplify this process by considering the economic aspects more comprehensively.
HMRC Data Gaps Consultation Response
In an effort to gather more data and improve tax collection, the government plans to introduce draft legislation requiring employers to report data on employee hours worked via Real Time Information PAYE reporting.
Modernization of the Stamp Taxes on Shares Framework – Consultation
HMRC is exploring the possibility of modernizing the Stamp Taxes on Shares framework by replacing Stamp Duty and Stamp Duty Reserve Tax with a single tax on Securities. The proposed changes will encompass various elements including liability, tax base, geographical scope, compliance regime, and more.
Reserved Investor Fund – Consultation
The government is also planning to simplify and update legislation related to diverted profits tax, transfer pricing, and permanent establishments. These changes aim to ensure clarity and alignment with international tax treaties and OECD transfer pricing guidelines.
Future of Gift Aid
To enhance the effectiveness of Gift Aid and reduce administrative burdens, the government will collaborate with the charities sector to leverage digital technology.
Updating the VAT Terminal Markets Order Legislation
The government intends to update the Terminal Markets Order (TMO) legislation to clarify the VAT treatment of exchange-traded commodity transactions and expand the scope of the TMO to include the UK Emissions Trading Scheme.
Tackling the Tax Gap
Efforts to tackle non-compliance in the umbrella company market are on the horizon. The government plans to regulate umbrella companies and address non-compliance issues.
Repayment Agents – Protecting Customers Claiming Tax Repayments
To ensure the security of customers claiming tax repayments, the government will require repayment agents to register with HMRC.
Construction Industry Scheme Reform – Consultation
The government is contemplating reforms to the Construction Industry Scheme and is soliciting input from stakeholders.
Charities Compliance Measures – Consultation
Charities compliance measures are also under review, and the government is seeking input on potential changes in this area.
Business Tax Debt Collection Modernization – Consultation Response
The government is committed to enhancing tax debt collection by empowering HMRC to seize goods, extending debt recovery powers to digital wallets, and requiring security deposits from repeat non-compliant businesses.
Employee Ownership Trusts
A consultation on the effectiveness of the Employee Ownership Trust (EOT) tax regime is expected later this year. This aims to align reliefs with the promotion of EOTs as an employee ownership business model.
Further Tax Policy and Administrative Announcements
The government is taking steps to address concerns related to National Insurance credits and will provide further details on this matter in the future. There is also an evaluation of HMRC powers and safeguards, and a consultation on the calculation of PAYE liability in cases of non-compliance.
Plastic Packaging Tax
The government intends to consult on a mass balance approach for calculating the recycled content in chemically recycled plastics, especially concerning the Plastic Packaging Tax.
In conclusion, the Tax Administration and Maintenance Day in 2023 reflects the government’s commitment to refining the tax system and addressing key issues across various tax-related domains. These announcements mark important steps toward more efficient and streamlined tax administration in the UK.
