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News briefing, 8 February 2013

Feb 8, 2013, 06:17 AM
Authors : Taxation
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Post date : Feb 8, 2013, 06:17 AM

Our weekly comments on tax stories by the national press


The UK has no "magic bullet" to deal with tax avoidance by multinationals and must instead push for international tax rules to be updated, according to Mike Williams, the Treasury's head of business and international tax.

The key issue here is the impact of double taxation agreements, most of which follow, or are highly influenced by, the OECD model agreement. In particular, the predominantly ‘bricks and mortar’ definition of a permanent establishment in article 5  and the exemption for storage facilities makes it easy to avoid creating permanent establishment in the UK, while still making substantial consumer sales through an online platform.

Gambling companies plan to spend hundreds of thousands of pounds to keep open a tax loophole that costs the public purse an estimated £250m a year.

These businesses have a vested interest in fighting the proposed point-of-consumption gambling tax. Currently, only UK-based operators are subject to the 15% levy, but it will be payable from the end of 2014 in respect of all regardless of where the business is based. The current discrepancy means most such operations are run from jurisdictions in which online gambling is well-regulated but lightly taxed, such as the Isle of Man or Gibraltar.


Taxpayers who face a £100 penalty for missing the 31 January deadline to file their self assessment returns could have the fine cancelled if they contact HMRC.

HMRC is streamlining self assessment by removing taxpayers who should not be in the system – and the department is keen to hear from anyone who believes they have received a form erroneously. Notwithstanding this, figures in this week’s Baker Tilly’s tax e-newsletter point out that the number of people having to submit a tax return is rising inexorably.

Up to a thousand taxpayers were charged more than once for their tax bill last week due to a system failure at HMRC.

The fault appears to lay with Santander, which handles HMRC’s online payment system, not with the tax department itself. A message on the Revenue’s website warned of the problems but wasn’t kept up to date, wasting a PR opportunity.

Leading think-tank the Institute for Fiscal Studies has warned of hefty tax increases in the first Budget after the 2015 election, as the next government seeks to repair a £64bn deficit.
Guardian, Telegraph, Independent & Times

It would be inopportune to impose tax increases before a general election – and most new governments put up taxes soon after they have been voted into power.

Income tax

Almost half of companies have not heard of the soon-to-be introduced real-time information (RTI) system for PAYE, according to a survey by accountancy support service Crunch.

Employers do not regard PAYE as their core business and are used to operating under the current system. It is very important that advisers, as well as tax officials, do everything they can to help firms prepare for RTI, bearing in mind that many are distracted by having to struggle through the current economic situation.

The UK’s wealthiest individuals are expected to pay 60% of this year's total income tax, in spite of accounting for only 14% of the country's taxpayers, official figures have shown.
Telegraph & Times

As more lower-paid people benefit from the increased personal allowance, higher earners become responsible for a greater proportion of tax, particularly as rising numbers of taxpayers are caught by the 40% threshold.

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