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News briefing, 16 August 2013
Our weekly look at the tax stories from the national press
Avoidance & evasion
The Court of Appeal has rejected a scheme used to avoid stamp duty land tax (SDLT) on the purchase of a £65m building on Regent Street, London, in a decision that will save the public purse £68m.
Telegraph
This is the DV3 case, the first time avoidance of SDLT through sub sale relief had come before the courts. The Court of Appeal used purposive construction principles to deny relief. It was also noted that anti-avoidance provisions had been introduced a few months later, by FA 2003, s 75A, which prevented the loss occurring in future. Although the scheme was a commercial property and involved the use of a partnership, it is not reassuring for other arrangements based on sub sale relief.
Ten alleged tax criminals have been added to HMRC's most-wanted list, even though just one of the original 20 has been caught in the past year.
Telegraph; Times
Anyone who suffers a penalty for neglecting to advise HMRC about needing to be within self-assessment to repay child benefit (see below) is going to feel unfairly treated by the fact fraudsters – mostly smugglers and VAT same artists, rather than direct tax evaders – are escaping overseas
UK accountancy firms are eyeing a new legal licence that could give their services an additional layer of secrecy and may fuel public concerns about how advisers help companies minimise their tax bills.
Financial Times
The alternative business structure licence is designed to enable a greater range of firms to offer legal services. A side effect of allowing tax advisers to compete with solicitors will be that both will benefit from legal professional privilege – which was held in the recent Prudential case to be unavailable to accountants, even though they may be giving the same advice as their counterparts in the legal sector.
Business
The UK head of accountancy giant Deloitte, David Sproul, has warned of a disconnect between the Treasury's reduction of corporation tax to attract big business and attempts by the Public Account Committee (PAC) to “determine what the fair share of tax is” for multinationals.
Telegraph
The public would probably be happy with the UK having corporation tax at just 20% if it was sure that multinationals were actually paying the rate on their local profits. The PAC unfortunately fails to distinguish between businesses using reliefs, such as the patent box, as they were designed, and those that push legal avoidance through complex business structures to the limit.
Income tax
Parents on higher incomes who receive child benefit must register with HMRC for self assessment by 5 October to avoid a steep penalty.
Telegraph
The fact taxpayers could be penalised for forgetting to register for self assessment to repay a state benefit is an indication that something is wrong with the welfare and tax systems.
Policy
Financial “cowboys” who peddle tax avoidance schemes to wealthy clients could face fines of up to £1m under new rules proposed by the government.
Times
HMRC have published a consultation document called Raising the Stakes on Tax Avoidance, which makes proposals on two issues. High-risk promoters, intermediaries and users of avoidance schemes will be subject to new obligations. Users of schemes will be encouraged to settle their tax affairs after similar cases have been lost in court or tribunal. Views are sought on an extension to the disclosure of tax avoidance schemes (DOTAS) rules. The consultation closes on 4 October.
High-earners face a sharp rise in their capital gains tax (CGT) bills under plans put forward by the Liberal Democrats.
Financial Times
The Lib Dems propose charging CGT at the appropriate income tax rate and reducing the annual exemption. Inheritance tax would be replaced by an accessions tax that would charge by reference to the recipient’s circumstances. A pound is a pound from whichever source it is received; why should gains be taxed at a rate lower than that which applies to earned income? The rates have been aligned before, under Nigel Lawson’s chancellorship. Taxing gifts and bequests by reference to the recipient, rather than the donor, is a well-established feature of many countries’ tax systems.
Residence
HMRC are to remind tens of thousands of non-domiciled UK residents that tax may be due on remittances coming into or out of the country.
Financial Times
Remittances take many forms. In another example of their use of nudge theory, the Revenue will send non-domiciles a factsheet of examples of remittances, to ensure tax returns are completed correctly.
- Blog
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