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News briefing, 8 March 2013
Our weekly comments on tax stories by the national press
Avoidance & evasion
A multimillion-pound tax avoidance scheme involving a hedge-fund manager and two Hollywood films has been shut down by the courts.
Times; Financial Times
Even the swiftest of glances revealed this was an artificial arrangement: movie rights were sold for £21.9m – although the purchaser had to contribute only £4.8m – and then they were immediately sold back for a much lower price. This is one of a number of recent successes HMRC have had in challenging aggressive tax avoidance through the courts.
HMRC have launched a clampdown on taxpayers who have failed to declare profits made on the sales of second homes.
Telegraph; Financial Times
Taxpayers have until 9 August to tell the Revenue of their intention to disclose details of unpaid tax, and they must settle their debts by 6 September to take advantage of a restricted penalty. This is a wearyingly predictable amnesty, but it is unclear how much effort Revenue staff will put into following up on those who do not come forward.
HMRC are investigating £2 billion of government schemes to regenerate deprived areas, after some of the arrangements were suspected of being “entirely artificial”.
Times
The government wants to attract investment to develop deprived areas by creating special tax relief, but, perhaps inevitably, tax schemes will be produced to take advantage of the relief in a way not anticipated. The providers always try to remove the risk without losing the tax relief.
Business
The government stands to lose out on one of its biggest sources of revenue by failing to reform the tax system to take account of online selling, according to Ian Cheshire, chief executive of retailer Kingfisher.
Guardian
Some high street businesses must feel they are nothing but shop windows for other internet traders with lower overheads. The Organisation for Economic Cooperation and Development (OECD) has been doing a great deal of work in this area, and it is unlikely significant changes can be made without the OECD leading them.
General
Higher-rate taxpayers are being urged by tax experts to claim back overpaid tax and missed reliefs before it is too late.
Financial Times
The story’s writer, Lucy Warwick-Ching, has left it late to warn readers that the tax year will end on 5 April and that 2008/09 will fall out of account for claims. In 2012, her article of a very similar ilk appeared in the FT at the end of January.
The chancellor, George Osborne, is facing demands from Conservative MPs and business leaders to use the Budget to lower taxes to demonstrate support for “aspiration” – but the prime minister, David Cameron, has played down the likelihood of cuts.
Telegraph; Telegraph; Telegraph
And so, the pre-Budget frenzy begins again, with the usual demands for tax cuts and special treatment for specific industries. The government’s approach so far has been to keep expectations low – which may be a bluff but may also reflect a desire to keep things simple and boring after last year’s numerous Budget debacles.
Amateur sports clubs could benefit from thousands of pounds of new tax breaks after this month’s Budget, ministers have said.
Telegraph
The plan is to make more clubs eligible for charity reliefs such as gift aid and reduced business rates. Measures will be included in the Finance Bill.
VAT
The Court of Justice of the European Union has ruled that UK defined-benefit pension schemes are not exempt from paying VAT on the fees paid to investment managers.
Times
In essence, the schemes will have to pay VAT on investment management services because the court decided they were not special investment funds. The European Commission is reviewing the VAT directive, and the pensions industry will lobby to have investment managers’ charges made VAT-free.
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