Finance Bill debates: CFC and debt cap changes
The Public Bill Committee met on 14 and 19 June for further sittings on the Finance Bill. On 14 June, the government tabled three more amendments to Sch 20, to prevent double charges arising on financing income in connection with the matched interest rule and debt cap. Details are available from the Parliament website via lexisurl.com/yd5Xh.
Controlled foreign companies guidance
HMRC has published for comment the first tranche of its draft guidance on the new controlled foreign company (CFC) rules contained in Finance Bill 2012 Sch 20. So far this includes: overview chapter; CFC gateway chapters 3, 4 & 5; and loan relationships exemption chapter 9. Guidance on the whole of Sch 20 will be published in stages over the summer, before it is incorporated into the HMRC’s International Manual in 2013.
Creative sector tax reliefs
HM Treasury has published a consultation document on corporation tax reliefs for the creative sector, which includes the animation, high-end television and video games industries. The new reliefs will be modelled on existing film tax relief and, subject to state aid approval, will apply from 1 April 2013.
Matthew Rowbotham of Pinsent Masons said that the new relief would satisfy a ‘long-standing demand’ of creative businesses outside of the film industry. Colleague Eloise Walker, however, sounded a note of caution. ‘The proposed tax credit looks good on paper’, she said. ‘However, the complexities in its planned execution – especially around the definition of core expenditure – are not in step with how the industry is developing in the modern world.’
The closing date for the submission of comments on the proposals is 10 September 2012.
RTI penalties consultation
HMRC has issued a consultation document on the structure of penalties for late filing and late payment under PAYE real time information (RTI) from 2013. The document considers such things as whether to base penalties on the number of filing defaults or the number of employees; the timing of late filing/payment penalties; and whether to phase their introduction. Commenting on the consultation, Steve Wade, Director and leader of the RTI project at KPMG, said: ‘It’s encouraging that the consultation document considers capping penalties but worryingly this and the proposals to stagger penalties to ease the pressure on HMRC does suggest that HMRC is anticipating that significant penalties may be levied.’
As the RTI proposals currently stand, ‘some employers will find it extraordinarily difficult to comply with the requirements through no fault of their own’, Wade warned. ‘The penalty regime needs to have some flexibility to accommodate these employers who may well be genuinely trying their very hardest to fulfill their obligations but unable to because the rules are either not clear or not practical.’
The consultation will close on 6 September 2012.
Employer asset-backed pension contributions
HMRC has issued a draft guidance note on the legislation in Finance Bill 2012 Sch 13, denying upfront tax relief for employers who pay asset-backed (ie, non-cash) contributions to their registered pension schemes. The guidance reflects the two tranches of legislation, the first applying from 29 November 2011 and the second from 22 February 2012. Guidance is to follow on contributions paid before 29 November 2011, where the arrangement continued after that date.
NICs on entertainers
HMRC has published HMRC Brief 19/12, which explains how HMRC will apply the Social Security (Categorisation of Earners) Regulations, SI 1978/1689, to entertainers. This follows the Upper Tribunal decision in the case of ITV Services Ltd v HMRC [2012] UKUT 47, which found against ITV and upheld the decision of the First-tier Tribunal that the actors’ contracts provided for remuneration by way of salary and there was liability for Class 1 NICs under the regulations on all the remuneration payable under the contract types.
PAYE tools and reminders
The latest version of HMRC's basic PAYE tools to help employers run their payroll systems is now available.
HMRC has issued a reminder that the P11D, P11D(b) and P9D forms for 2011/12 are due by 6 July 2012.
HMRC toolkits
HMRC has published its updated toolkits on business profits and capital vs. revenue expenditure to assist agents when completing their clients’ 2011/12 returns.
LDF: third joint declaration
Liechtenstein and the UK have signed a third joint statement updating the Liechtenstein disclosure facility (LDF) and other tax cooperation agreements between the two countries. Key announcements include: extension of the final compliance date until 5 April 2016; a single charge rate of 50% for the 2010/11 tax year; and HMRC to consider allowing relief for ‘newly-discovered’ capital losses. HMRC will publish guidance on the single charge rate and CGT loss relief shortly.
Life insurance: qualifying policies
Budget 2012 announced the government’s decision to restrict tax relief available for qualifying life insurance policies by limiting the amount of premiums payable by an individual to no more than £3,600 in any 12-month period for policies issued from 6 April 2013. The details were published in a Budget technical note, and HMRC has now published a consultation seeking comments by 6 September 2012 on the intended implementation of the restriction and transitional rules.
V1-8: land and property
An updated version of this book of guidance dealing with the VAT treatment of land and property transactions has been issued. This replaces the previous version issued in 2002.
‘Scottish SDLT’
The Scottish government has published a consultation document on proposals for a land and buildings transaction tax for Scotland to replace the current UK SDLT from April 2015. This follows the enactment of the Scotland Act 2012 which gives the Scottish Parliament new financial powers from 2015 over taxes on land and property transactions and on disposal to landfill. This consultation is the first of three dealing with these devolved tax powers.
SDLT6 guidance
HMRC will release a new version of the SDLT6 guidance notes (providing general guidance for practitioners and purchasers completing their land transaction returns) on 2 July 2012.
DTAs and TIEAs
A tax information exchange agreement (TIEA) between the UK and the Marshall Islands was signed in Majuro, Republic of the Marshall Islands on 20 March 2012.
HMRC has announced details of the UK’s treaty negotiating priorities for the year to 31 March 2013. HMRC plans to begin negotiations on double tax agreements (DTAs) and protocols with Japan, Portugal and Russia among others. HMRC also plans to take forward work on DTAs and protocols with Austria, Canada, Germany, Iceland, Kosovo, Panama and Turkmenistan. HMRC plans to take forward work on tax information exchange agreements (TIEAs) with Andorra, Macau, Monaco and Seychelles.
HMRC charts
HMRC has published its latest organisation charts and supporting datasets, as at 31 March 2012. They can be accessed via lexisurl.com/UE0Gn.
See also:
Finance Bill debates: CFC and debt cap changes
The Public Bill Committee met on 14 and 19 June for further sittings on the Finance Bill. On 14 June, the government tabled three more amendments to Sch 20, to prevent double charges arising on financing income in connection with the matched interest rule and debt cap. Details are available from the Parliament website via lexisurl.com/yd5Xh.
Controlled foreign companies guidance
HMRC has published for comment the first tranche of its draft guidance on the new controlled foreign company (CFC) rules contained in Finance Bill 2012 Sch 20. So far this includes: overview chapter; CFC gateway chapters 3, 4 & 5; and loan relationships exemption chapter 9. Guidance on the whole of Sch 20 will be published in stages over the summer, before it is incorporated into the HMRC’s International Manual in 2013.
Creative sector tax reliefs
HM Treasury has published a consultation document on corporation tax reliefs for the creative sector, which includes the animation, high-end television and video games industries. The new reliefs will be modelled on existing film tax relief and, subject to state aid approval, will apply from 1 April 2013.
Matthew Rowbotham of Pinsent Masons said that the new relief would satisfy a ‘long-standing demand’ of creative businesses outside of the film industry. Colleague Eloise Walker, however, sounded a note of caution. ‘The proposed tax credit looks good on paper’, she said. ‘However, the complexities in its planned execution – especially around the definition of core expenditure – are not in step with how the industry is developing in the modern world.’
The closing date for the submission of comments on the proposals is 10 September 2012.
RTI penalties consultation
HMRC has issued a consultation document on the structure of penalties for late filing and late payment under PAYE real time information (RTI) from 2013. The document considers such things as whether to base penalties on the number of filing defaults or the number of employees; the timing of late filing/payment penalties; and whether to phase their introduction. Commenting on the consultation, Steve Wade, Director and leader of the RTI project at KPMG, said: ‘It’s encouraging that the consultation document considers capping penalties but worryingly this and the proposals to stagger penalties to ease the pressure on HMRC does suggest that HMRC is anticipating that significant penalties may be levied.’
As the RTI proposals currently stand, ‘some employers will find it extraordinarily difficult to comply with the requirements through no fault of their own’, Wade warned. ‘The penalty regime needs to have some flexibility to accommodate these employers who may well be genuinely trying their very hardest to fulfill their obligations but unable to because the rules are either not clear or not practical.’
The consultation will close on 6 September 2012.
Employer asset-backed pension contributions
HMRC has issued a draft guidance note on the legislation in Finance Bill 2012 Sch 13, denying upfront tax relief for employers who pay asset-backed (ie, non-cash) contributions to their registered pension schemes. The guidance reflects the two tranches of legislation, the first applying from 29 November 2011 and the second from 22 February 2012. Guidance is to follow on contributions paid before 29 November 2011, where the arrangement continued after that date.
NICs on entertainers
HMRC has published HMRC Brief 19/12, which explains how HMRC will apply the Social Security (Categorisation of Earners) Regulations, SI 1978/1689, to entertainers. This follows the Upper Tribunal decision in the case of ITV Services Ltd v HMRC [2012] UKUT 47, which found against ITV and upheld the decision of the First-tier Tribunal that the actors’ contracts provided for remuneration by way of salary and there was liability for Class 1 NICs under the regulations on all the remuneration payable under the contract types.
PAYE tools and reminders
The latest version of HMRC's basic PAYE tools to help employers run their payroll systems is now available.
HMRC has issued a reminder that the P11D, P11D(b) and P9D forms for 2011/12 are due by 6 July 2012.
HMRC toolkits
HMRC has published its updated toolkits on business profits and capital vs. revenue expenditure to assist agents when completing their clients’ 2011/12 returns.
LDF: third joint declaration
Liechtenstein and the UK have signed a third joint statement updating the Liechtenstein disclosure facility (LDF) and other tax cooperation agreements between the two countries. Key announcements include: extension of the final compliance date until 5 April 2016; a single charge rate of 50% for the 2010/11 tax year; and HMRC to consider allowing relief for ‘newly-discovered’ capital losses. HMRC will publish guidance on the single charge rate and CGT loss relief shortly.
Life insurance: qualifying policies
Budget 2012 announced the government’s decision to restrict tax relief available for qualifying life insurance policies by limiting the amount of premiums payable by an individual to no more than £3,600 in any 12-month period for policies issued from 6 April 2013. The details were published in a Budget technical note, and HMRC has now published a consultation seeking comments by 6 September 2012 on the intended implementation of the restriction and transitional rules.
V1-8: land and property
An updated version of this book of guidance dealing with the VAT treatment of land and property transactions has been issued. This replaces the previous version issued in 2002.
‘Scottish SDLT’
The Scottish government has published a consultation document on proposals for a land and buildings transaction tax for Scotland to replace the current UK SDLT from April 2015. This follows the enactment of the Scotland Act 2012 which gives the Scottish Parliament new financial powers from 2015 over taxes on land and property transactions and on disposal to landfill. This consultation is the first of three dealing with these devolved tax powers.
SDLT6 guidance
HMRC will release a new version of the SDLT6 guidance notes (providing general guidance for practitioners and purchasers completing their land transaction returns) on 2 July 2012.
DTAs and TIEAs
A tax information exchange agreement (TIEA) between the UK and the Marshall Islands was signed in Majuro, Republic of the Marshall Islands on 20 March 2012.
HMRC has announced details of the UK’s treaty negotiating priorities for the year to 31 March 2013. HMRC plans to begin negotiations on double tax agreements (DTAs) and protocols with Japan, Portugal and Russia among others. HMRC also plans to take forward work on DTAs and protocols with Austria, Canada, Germany, Iceland, Kosovo, Panama and Turkmenistan. HMRC plans to take forward work on tax information exchange agreements (TIEAs) with Andorra, Macau, Monaco and Seychelles.
HMRC charts
HMRC has published its latest organisation charts and supporting datasets, as at 31 March 2012. They can be accessed via lexisurl.com/UE0Gn.
See also:
