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News briefing, 19 July 2013
Our weekly review of tax stories in the national press...
Avoidance
The tax tribunal has thrown out a complex and aggressive attempt to avoid UK tax on an international ports business.
Guardian
The scheme involved the P&O ports business, now owned by the Dubai DP World company, which used a “rate booster” scheme to artificially create a UK tax credit for foreign tax payments. HMRC appear to be on a winning streak, recently announcing that over £1bn of tax has been “protected” by tribunal decisions in their favour in the first six months of 2013.
The government is to change the law around a scheme to rejuvenate deprived areas because it has been riddled with alleged tax avoidance.
Times
The business premises renovation allowance was introduced to encourage the regeneration of empty buildings in deprived areas. After lobbying, it was excluded from the cap on otherwise uncapped reliefs introduced by Finance Act 2013. Arrangements were disclosed to HMRC under its disclosure of tax avoidance schemes regime that showed aspects of the allowance were being taken advantage of to avoid tax in a way not envisaged. The Revenue is reviewing the allowance to prevent this happening in future.
Business
The number of winding-up petitions issued by HMRC against businesses has fallen by more than a third in the past year, according to new figures that have led experts to claim the taxman is increasingly choosing to seize goods from companies instead.
Independent
Distraint must be preferable to winding if it means the Revenue is better able to collect money it is owed. Firms that find themselves in difficulty with settling their tax bills can still apply to for time-to-pay arrangements with the department.
The Confederation of British Industry (CBI) has hit out at the government’s stance on tax, criticising plans for country-by-country reporting by companies and demanding concessions for infrastructure assets and employers.
Times
The CBI styles itself as the “UK's top business lobbying organisation” – so it is not surprising that it objects to something that would impose a heavier regulatory burden on its members. Whether or not country-by-country reporting would be worthwhile is an ongoing debate; it would highlight significant profits being made in tax havens but might involve a great deal of work auditing and identifying tax liabilities that add little to the understanding of the company’s position.
The chief executive of Morrisons supermarket, Dalton Philips, has joined other top retailers in demanding a sales tax on online retailers – a measure that has been criticised by Alex Baldock, head of Shop Direct, a leading home delivery retailer.
Telegraph; Financial Times
The cry for a tax on digital retailers is the sound of a dead horse being flogged. Parliament’s Business, Innovation and Skills Committee is conducting an inquiry into the UK retail sector that includes the impact of online and direct sales on the high street.
George Osborne is creating the world’s most generous tax regime for shale gas in an attempt to galvanise the industry.
Financial Times; Guardian; Independent
The tax rate will be 30% as opposed to the 62% paid my most of the oil and gas industry. Quite why this is necessary, given the environmental concerns, the need to reduce reliance on fossil fuels, and the fact that the US is likely to be exporting the product, remains to be seen.
Income tax
HMRC wrote off collecting more than £950m in outstanding tax in a major overhaul of the PAYE system, according to the National Audit Office.
Telegraph
The news is effectively a continuation of the PAYE end-of-year reconciliations from 2008/09 and 2009/10. The media at the time was appalled that ordinary taxpayers, including pensioners with more than one source of income, were being sent tax bills. In an effort resolve the situation, the Revenue temporarily raised its tolerance from £50 to £300, which led to considerable sums being written off.
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