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News briefing, 13 September 2013
Weekly comment on tax stories in the national press
Avoidance
Almost half of the UK’s leading companies have failed to comply with the law and disclose subsidiaries that can be used as an offshore means to avoid tax.
Independent
Companies are required by Companies Act 2006 to inform Companies House of all subsidiaries, including those off shore. While Companies House has got most of the FTSE 350 to comply, there will be many other firms that have not. There is emphasis nowadays on transparency, and non-compliant businesses can expect to be picked up.
The amount of additional corporation tax collected through investigations into the UK’s largest businesses has fallen to its lowest level since 2006/07.
Financial Times
Tax collected as a result of investigations will fluctuate from year to year, depending on how long cases take to be resolved and on the resources allocated. The latest figures suggest greater cooperation between companies and HMRC’s Large Business Service, with real-time handling of disagreements and therefore fewer investigations.
Dispute
Taxpayers can now request to settle tax disputes with HMRC through an arbitration process, rather than going to a tribunal.
Financial Times
HMRC and the tax industry were so impressed with the results of the pilot of alternative dispute resolution (ADR) that the tax department made the system part of its normal business with individual taxpayers and small and medium-sized businesses, and with larger and complex cases in some instances. The hope is that ADR can be used to reach settlements by mediation in protracted disagreements, rather than having to go through the courts.
Investigation
Businesses have been warned that HMRC now have access to details of all credit and debit card payments to UK companies, in a major expansion of the tax department’s investigative powers.
Times
The Revenue will not be able to see personal details or card numbers, but will use the data in accesses to check traders have paid the correct tax. The power is an obscure provision of Finance Act 2013, but it has the potential to be a major weapon in the taxman’s armoury.
Investment
UK investors with substantial holdings of Vodafone shares could face US tax liabilities after the mobile phone giant agreed to sell its stake in Verizon Wireless for £84bn.
Financial Times
Vodafone investors will receive shares in Verizon as part of the deal. The American liabilities referred to in the FT story are simply the withholding taxes on the US dividends, potentially at 30%. But this will not apply to investors who sell the Verizon shares – and many individuals are likely to do so. The bigger story – surprisingly not taken up in more sensational terms by other papers – is the payout of £1.12 per Vodafone share will be made by a now-standard B-share issue, allowing investors to convert what would otherwise have been an income distribution into a capital one. Most will then be able to cover the gain by selling when they have unused annual exemption or losses.
Policy
Marriage tax breaks are a more “cost effective” way of cutting taxes for poor households than raising personal allowances, according to former chancellor Dominic Lawson.
Telegraph
Chancellor George Osborne was reported in the summer to have said details of the £150 tax break will be included in this year’s autumn statement, although it is arguable whether or not such a change is worth the level of administrative complexity it will create.
- Blog
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