Tax Administration and Maintenance Day: key considerations for business

TAMD is fast becoming a regular fixture in the fiscal calendar, falling shortly after a Budget, with the purpose of providing a day to focus on technical tax policy proposals.

While many of the proposals concentrate on niche areas – rather than any one proposal representing a significant shift in tax policy – there is lots in the detail which will be relevant to business. This article explores some of the key announcements.

The government’s focus of the day was on supporting their ambitions to simplify and modernise the tax system and tackle the tax gap, with many of the announcements falling under these two themes:

• simplification and modernisation of the tax system
• tackling the tax gap.

Simplification and modernisation of the tax system

• Cross-border tax: A consultation will be published on simplifying and updating the legislation in respect of;
  • Diverted Profits Tax (increased rate on diverted UK profits);
  • Transfer pricing (related party transactions); and
  • Permanent establishments (right to tax non-resident entities with a UK business presence).

Further detail will be provided when the consultation is published later in May. It’s understood this consultation won’t be on wholesale reform of these areas, but will focus on ensuring the application is clear to taxpayers, and the outcome remains consistent with the underlying policy intention, international standards and the UK’s bilateral treaties.

• Modernisation of Stamp Taxes: The government has announced a consultation on proposals to modernise and rationalise the framework for Stamp Taxes on Shares, including exploring whether to have a single tax on securities, proposals for the assessment and administration and key elements of any new single tax including liability, tax base, geographical scope, compliance regime and exemptions and reliefs.
• Further Real Estate (and wider fund) announcements: While the Stamp Taxes consultation largely focuses on shares and securities, a number of other announcements are also expected to be relevant for the Real Estate sector. This includes a consultation on the introduction of a new type of investment fund, the Reserved Investor Fund (RIF), the main use of which is expected to be holding real estate (though not exclusively, and the consultation explores what other asset classes may be held in a RIF) and a consultation published on a package of reforms to the Construction Industry Scheme.
• New data collection requirements: Following the government’s consultation on ‘Improving the data HMRC collects from its customers’, it’s been confirmed that the government intends to proceed with collecting improved data on employee hours worked from employers. Draft legislation to implement this change will be shared with affected businesses and organisations in the coming months for technical consultation ahead of its inclusion in an upcoming Finance Bill. It was also announced that new data will be collected on self-employed start/end dates and dividends paid in owner-managed businesses.
• Crypto-assets: A response to the call for evidence on the tax treatment of crypto-asset transactions in Decentralised Finance (DeFi) lending and staking was published, alongside the announcement of a further consultation on potential for amendments of the tax rules so they better reflect the substance of these arrangements.
• Customs: A consultation was published on proposals to improve the customs treatment of post and parcel exports.
• Updating the VAT Terminal Markets Order (TMO) legislation: The government announced that it intends to update the TMO legislation to clarify the VAT treatment of exchange traded commodity transactions and to fulfil its commitment to bring the UK Emissions Trading Scheme fully into the scope of the TMO.
• Tax Administration and Framework Review: As part of the government’s wider review to support a 21^st century tax system, a call for evidence was published on HMRC information and data powers with a focus on enabling digitalisation, improving compliance and reducing admin. There was also a discussion document published on a potential new legislative approach that HMRC could use to pilot and test legislative changes.

Tackling the tax gap

• Tackling non-compliance in the umbrella company market: It was confirmed that the summary of responses to the 2021 consultation will be published shortly, alongside a new consultation on policy options to regulate umbrella companies and tackle non-compliance in the umbrella company market.
• Employee Ownership Trusts (EOT): Later in 2023 the government will publish a consultation on the use and effectiveness of the EOT tax regime which was introduced in 2014. The consultation is expected to focus on ensuring the reliefs remain effective at incentivising EOTs, while preventing them being used for unintended tax planning.
• Tackling promoters of tax avoidance: Consultations have been opened into a new criminal offence for promoters of tax avoidance who fail to comply with a legal notice from HMRC to stop promoting a tax avoidance scheme, and expediting disqualification of directors of companies involved in promoting tax avoidance.
• Modernising tax debt collection from non-paying businesses: A response to the 2022 consultation was published and an update that the government now plans to further investigate the approach to modernising HMRC’s powers in this area.

Miscellaneous tax policy and administrative announcements

• Off-payroll working: The government has published a technical consultation on a potential legislative change to address the overpayment of tax in cases where an end client concludes an incorrect employment status outcome and becomes liable for income tax and NIC. While it’s hoped this consultation will provide an avenue to deal with the potential overpayments of tax and NIC with effect from 6 April 2024 (alongside potential to apply retrospectively to income tax and NIC assessed after this date where the error occurred from 6 April 2017), as Jonathan Berger highlights in a recent article, it underlines the need for end users to ensure that they have reviewed their approach to engaging off-payroll workers.
• Evaluation of Plastic Packaging Tax and the Capital Allowances Super Deduction announced: HMRC’s tax evaluation plan has been updated to include evaluation of these two tax policies introduced in recent years. While the Super Deduction ended on 31 March 2023, this research is expected to help keep ministers appraised on how the policy is working and will help inform the consideration of any future policy options. With the Super Deduction having been replaced by temporary full expensing, this could form a pivotal piece of research for the future capital investment tax relief landscape.
• Plastic Packaging Tax: Later in 2023 there will be a consultation released on aspects of the calculation of PPT.

Next steps

Businesses should consider the potential implications of the above proposals on their business and whether they wish to feed into the government's policy making processes on these issues. We will be responding to many of these consultations, if you would like to discuss the above proposals in further detail please do reach out to Abigail Agopian.