NEWS – WEDNESDAY 24TH MARCH 2021
NEWS – WEDNESDAY 24TH MARCH 2021
TAX NEWS – WEDNESDAY 24TH MARCH 2021
Second home owners targeted by HMRC
The Treasury has launched a series of proposals as part of the Government’s “Tax Day” consultations. Chief among them is a tightening of rules for second home owners who will now only be able to register for business rates if their properties are genuine holiday let businesses. Currently, second home owners are able to declare they intend to make their property available to let but there is no requirement to verify that it is actually being used commercially. Owners may then also claim small business rates relief. New legislation will mean a second home’s qualification business rates will depend on the actual number of days the property was rented for. Treasury officials also said some owners may have claimed coronavirus support grants of up to £9,000 each to replace lost income. Paul Falvey, tax partner at BDO, said the change “will create clarity and certainty”. Chris Etherington, a partner at RSM, called the measures a “sensible step” and “welcome news for local authorities” while Nimesh Shah at Blick Rothenberg added that a rise in coronavirus grant applications would probably have raised eyebrows at HMRC. A Treasury source said: “We are going to force people to account for the claims they make.” Full details of the crackdown and the penalties home owners will face will be published in the coming weeks.
Treasury’s “Tax Day” consultations a missed opportunity
After the Treasury failed to deliver proposals for fundamental tax reforms yesterday, campaigners such as Robert Palmer, executive director of Tax Justice UK, said “tax day has turned out to be a bit of a flop”. With many key decisions delayed until the autumn, the announcements amount to a mere tweaking with Tom Selby, senior analyst at AJ Bell, describing the policy papers as “the dampest of squibs”. “While reforms to modernise the way tax is administered in the UK, reduce the inheritance tax rates burden on non-taxpaying estates and deal with tax avoidance are all laudable, this feels like a missed opportunity to tackle some fairly obvious flaws in the system,” he said. Ahead of the Treasury’s announcements there was widespread speculation that higher and additional rate tax relief on pension contributions would be abolished and capital gains would be more closely aligned with income tax, but neither of these materialised.
Financial Times City AM The Sun Daily Express
Inheritance tax paperwork simplified
From January 1 2022, the requirement to complete inheritance tax paperwork will be dropped for estates whose value is significantly under the threshold after probate – a change expected to cover more than 90% of estates. A measure introduced during the pandemic allowing trustees to provide an inheritance tax return without physical signatures of all of those involved will also be made permanent. Commenting on the changes, Sean McCann at NFU Mutual said the Government should simplify the IHT process further by having more concise rules on lifetime gifts and making life insurance pay-outs free of inheritance tax, for example.
City AM The Sun Daily Express, Page: 17
Calls for broader definition of online sales tax
The outcome of a consultation on business rates reform, which campaigners for the high street hoped would result in lower taxes for physical stores coupled with a possible 2% tax on online purchases, has been delayed until the autumn. The Chancellor is reportedly keen on the plan which could raise an initial £2bn extra a year. A number of submissions to the Treasury’s business rates review called for the scope of its proposed online sales tax to be extended, from sales made through internet retailers to any online sales that could have been made on the high street. This would include accommodation, travel and software. The Treasury said that internet retailers account for around £100bn of the total £700bn value of all online sales excluding financial services.
The Times, Page: 40 The Sun
Firms promoting tax avoidance face crackdown
Companies promoting tax avoidance schemes will face tougher measures under Treasury plans, with Kate Ison, tax partner at, BCLP, pointing out that HMRC was seeking “extensive new powers” and would “strike the core of a promoter’s finances at best and entire business at worst”.
Financial Times The Sun
SMEs NEWS – WEDNESDAY 24TH MARCH 2021
MTD to usher in more frequent tax payments
The Treasury has suggested changing the timing of almost all tax payments after 2024 to realise its “vision [for] a tax system that works closer to real time”. Under the “making tax digital” programme, the Treasury will seek to use up-to-date digital tax return data to “bring the calculation and payment of tax closer to the point where the income or profit arises”. The plans will see and small companies and self-employed people pay tax more frequently, and closer to the point at which they make the money. Andy Chamberlain of the freelancer trade body IPSE commented: “We have early concerns that in-year tax payments simply won’t be practical for many self-employed businesses as it is not clear how the system would account for their volatile incomes.”
Financial Times, Page: 2 The Daily Telegraph, Business, Page: 5 The Sun
INDUSTRY NEWS – WEDNESDAY 24TH MARCH 2021
Letter: Listed groups should use mid-tier accountants more
Martin Muirhead vouches for managed shared audit stating the policy would enable a greater number of mid-tier firms to enter the market “providing the pipeline the sector needs.”
UK minister reveals test and trace spending on consultants
The Government’s test and trace programme spent £438m on “professional services” since the start of the pandemic, roughly 2% of the total £23bn of expenditure on the programme so far.
CORPORATE NEWS – WEDNESDAY 24TH MARCH 2021
Former PM ‘lobbied on behalf of failed financial firm’
Opposition MPs have called for a probe after it was revealed that former Prime Minister David Cameron lobbied the Bank of England in a bid to secure assistance for Greensill Capital, which employed him as an adviser. Greensill appointed Grant Thornton as its administrators on Monday, warning it is in “severe financial distress”.
PENSIONS NEWS – WEDNESDAY 24TH MARCH 2021
Technical updates expected for pension rules
The Treasury has said it will be making a slew of “technical updates” in areas where the state pension system doesn’t work but there was no sign in its “Tax Day” announcements of substantial reform for pensions, something James Jones-Tinsley, pensions expert at Barnett Waddingham. described as “disappointing”. He added: “The Treasury has squandered the opportunity to make real change – and the clock is ticking. If we don’t see action soon, the UK’s looming pensions crisis is only going to get worse.”
PERSONAL FINANCE NEWS – WEDNESDAY 24TH MARCH 2021
Dormant assets scheme expanded
The Government’s dormant assets scheme is to be expanded to include insurance, pensions and investments. Currently, the scheme only covers old current and savings accounts. The Treasury claims the expansion could unlock more than £800m in lost funds which would be spent helping vulnerable people and communities across the UK.
ECONOMY NEWS – WEDNESDAY 24TH MARCH 2021
ONS reports fall in jobless rate
The Office for National Statistics (ONS) has released data showing that the jobless rate in the UK has decreased for the first time since the onset of the coronavirus pandemic. The rate of unemployment returned to 5% between November and January, from 5.1% in previous months, with Chancellor Rishi Sunak noting: “Coronavirus has caused one of the largest labour market shocks this country has ever faced, which is why protecting, supporting and creating jobs has been my focus throughout this crisis. We have taken decisive action with a £352bn package of support.” Suren Thiru at the British Chambers of Commerce added: “With many firms struggling with the damage done to their cashflow by a year of COVID restrictions, unemployment is likely to remain on an upward trajectory until well beyond a full reopening of the economy.”
Evening Standard City AM
Liz Truss announces four new investment hubs
The UK is creating four regional trade and investment hubs to boost economic growth across the UK. Hubs would be located in Edinburgh, Cardiff, Belfast and Darlington, Secretary of State for International Trade Liz Truss said. The Government explained that the new hubs will provide support and advice to help regional businesses to access major trade markets and boost exports.
BBC News City AM
INTERNATIONAL NEWS – WEDNESDAY 24TH MARCH 2021
Yellen: US wants to stop a “global race” to the bottom
Treasury Secretary Janet Yellen has said the US wants to stop a “global race” to lower taxes on corporations. Speaking at a hearing of the House Financial Services Committee to discuss the country’s recovery from the pandemic, Ms Yellen said her staff were working with the Organisation for Economic Co-operation and Development to coordinate the potential tax changes with other countries. “We’ve had a global race to the bottom in corporate taxation and we hope to put an end to that,” she said. Her comments come as White House prepares to unveil plans to raise taxes on businesses and the wealthy to help pay for $3trn of new spending on infrastructure and green jobs. Separately, Mathias Cormann, the incoming head of the OECD, has told the FT that he is “quietly optimistic” he can secure a global deal on taxing multinationals. Meanwhile, UK Chancellor Rishi Sunak told an event with Bloomberg yesterday that a multilateral solution to taxing global tech giants is “in our grasp” adding that he was “very keen to see a resolution” on the issue reached when G7 finance ministers meet in July.
OTHER NEWS – WEDNESDAY 24TH MARCH 2021
Illegal money exchange business owner ordered to pay £1m
A man who set up an illegal Money Service Business (MSB) and bought a £700,000 house with the profits, has been ordered to pay back nearly £1m. Shunjian Jiang, 30, was arrested in August 2016 after HMRC investigators found that he was operating an unregistered and unregulated MSB.
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