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News briefing, 21 June 2013
Our weekly look at the tax stories in the national press...
Avoidance & evasion
Thousands of UK companies are employing a secretive corporate structure involving anonymous shares, which the World Bank warns can be “used extensively for illegal activities”.
Times
There is no suggestion that the UK companies using bearer shares are involved in illegal activities, just that they could be. If such a risk exists, it is up to the authorities to change the law – as many countries have done. Bearer securities have been used to change the situs of non-doms, but HMRC recently announced they would no longer accept this argument in respect of certain types of debt.
The prime minister, David Cameron, has hailed a landmark deal with the UK’s G8 partners to rewrite global rules to stop companies shifting profits between countries to limit their tax payments. The move comes after he secured agreement from the UK’s overseas territories and crown dependencies that they will sign up to a clampdown on evasion.
Independent; Guardian; Financial Times; Times; Guardian
The government would like to see companies reveal who owns and controls them. The information would be kept on a central register available to law enforcement agencies and revenue authorities. For such a measure to work, all countries would have to impose the requirement in a similar timescale to prevent corporations from moving their bases of operations to less transparent tax regimes.
HMRC’s tax evasion tip-off hotline received an average of more than 300 calls a day last year, official figures show.
Times; Financial Times
The hotline is unlikely to help catch the really big evaders, but it keeps the issue in the public mind – and, from HMRC’s point of view, gives the impression the authorities are doing something about illegal tax dodging.
Business
UK lawmakers and unions representatives have called for restrictions on tax advantages related to high levels of debt, following the discovery that the measures have helped some of the country’s best-known brands owned by private equity groups to reduce their corporation taxes.
Financial Times
We are not sure what the FT is saying here. Is it wrong for a firm to organise its tax affairs within the law so that it has more money to invest? Companies would pay smaller amounts of tax if they operated as efficiently as private equity businesses in claiming all available deductions. If there is a problem with the effect of debt, either the thin cap rules need to be changed or, more fundamentally, the tax treatment of equity and debt should be harmonised.
HMRC plan to ‘name and shame’ banks that do not comply with a voluntary code of practice on taxation.
Financial Times
HMRC are consulting on the code with a view to enhancing it. Banks that have adopted the code will be expected to reconfirm their commitment, and an annual report will name those that have done so and those that have not.
Small businesses are to be given extra breathing room in which to prepare to report payments of wages in real time.
Times; Telegraph
The relaxation to the real-time information (RTI) rules, allowing the smallest employers to report payments once a month rather than when they pay employees, has been extended to 5 April 2014. HMRC say all firms regardless of their size will have to report via RTI from 2014/15, but the department will come under pressure to preserve at least some of the exceptions on a permanent basis.
Income tax
Conservative backbench MPs Tim Loughton and Andrea Leadsom have tabled a change to the law that would give some married couples a shared tax allowance.
Times
This subject has become a dead horse, failing to move on no matter how hard it’s flogged. For our most recent comment, see last week’s news briefing.
Overseas
UK expatriates who have sold their Spanish homes are facing a four-year wait for refunds of tax charged on the sale of the property.
Mail
This retention tax imposed on non-Spanish residents should be refunded if the sellers’ Spanish tax affairs are in order. Other than chasing the relevant tax authority and appointing a local adviser, there is probably little more to do on an individual basis, although the involving EU authorities might be a possibility.
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