Autumn Statement 2015 – Updated Tax Rules
November 26th, 2015
Tax administration and simplification
Making tax digital
Most businesses, self-employed people and landlords will be required to keep track of their tax affairs digitally and update HMRC at least quarterly via their digital tax account. This should reduce errors through record keeping.
HMRC will ensure the availability of free apps and software that link securely to HMRC systems and provide support to those who need help using digital technology. This will not apply to individuals in employment or pensioners, unless they have secondary incomes of more than £10,000 a year. The government will publish its plans to transform the tax system shortly and will consult on the details in 2016.
Review of employment status
The government has responded to the final report of the Office of Tax Simplification (OTS) review of employment status and is taking forward the majority of its recommendations.
Simple assessment of tax
The government will publish draft legislation for a new, simpler process for paying tax. This will be used for taxpayers in self-assessment who have simple tax affairs where HMRC already holds the data it needs to calculate the tax liability, and where existing payment processes are not available. Taxpayers will be sent a calculation that will be a legally enforceable demand for payment, and taxpayers will be able to challenge and appeal these calculations. This process will come into effect in the 2016/17 tax year.
‘On or before’ reporting obligation review
On 6 April 2016, the two-year temporary relaxation for micro employers using real-time PAYE reporting will come to an end. This currently allows existing micro-employers using real-time PAYE to report all payments they make in a tax month on or before the last payday in the tax month rather than on or before each and every payday. This will align the treatment for existing micro-employers with all other employers.
Tax avoidance, evasion and compliance
Offshore tax evasion
A new criminal offence will be introduced which will remove the need to prove intent for the most serious cases of failing to declare offshore income and gains.
The civil penalties for deliberate offshore tax evasion will also be increased. There will be a new penalty linked to the value of the asset on which tax was evaded and more public naming of tax evaders. Civil penalties will be introduced for those who enable offshore tax evasion, including public naming of those who have enabled the evasion.
Corporates failing to prevent tax evasion
There will be a new criminal offence for corporates that fail to prevent their agents from criminally facilitating tax evasion by an individual or entity.
Serial tax avoiders
There will be new measures for those who persistently enter into tax avoidance schemes that are defeated by HMRC. These include a special reporting requirement and a surcharge on those whose latest return is inaccurate because of the use of a defeated scheme. The names of such avoiders will be published and those who persistently abuse tax reliefs, will be subject to restrictions on accessing certain reliefs for a period. The government is also widening the promoters of tax avoidance schemes (POTAS) regime, by including promoters whose schemes are regularly defeated.
General anti-abuse rule (GAAR)
A new penalty of 60% of tax due will be charged in all cases successfully tackled by the GAAR. The government will also make small changes to the way the GAAR works to improve its ability to tackle marketed avoidance schemes.
Capital allowances and leasing
With effect from 25 November 2015, legislation will counter two types of avoidance involving capital allowances and leasing. These changes will prevent companies from artificially lowering the disposal value of plant and machinery for capital allowances purposes. They will also make any payment subject to tax as income where it is received for agreeing to take responsibility for tax deductible lease-related payments.
Action will be taken against those who have used or continue to use disguised remuneration schemes and who have not yet paid the appropriate tax. There may also be new legislation to close down any new schemes intended to avoid tax on earned income, where necessary, with effect from 25 November 2015.
Asset managers’ performance-based rewards
Performance awards received by asset managers will be subject to income tax rather than CGT, unless the underlying fund undertakes long term investment activity.
CGT entrepreneurs’ relief: contrived structures
The government will consider bringing forward legislation to amend the changes made by Finance Act 2015 to entrepreneurs’ relief, in order to support businesses by ensuring that the relief is available on certain genuine commercial transactions.
Large business tax compliance
In the Summer Budget 2015, the Chancellor announced new measures to improve large business tax compliance, with a consultation over the summer to refine the detail of the measures. Following consultation, the government will legislate to introduce:
- A new requirement that large businesses should publish their tax strategies as they relate to UK taxation or affect it;
- A special measures regime to tackle businesses that persistently engage in aggressive tax planning;
- A framework for cooperative compliance.