02/02/2024
Finance Bill update
The remaining Commons stages (Report Stage and Third Reading) of the Finance Bill are scheduled for Monday 5 February 2024. As at the time of writing, seven Report Stage amendments/new clauses in the name of the Chancellor of the Exchequer have been tabled. HMRC have published explanatory notes for each group of government amendments:
UK government publishes command paper on Northern Ireland
The UK government has published a command paper, titled Safeguarding the Union, which sets out a package of proposed measures intended, in the event of the restoration and ongoing functioning of the Northern Ireland government institutions, to protect “Northern Ireland’s political and constitutional place in the Union, strengthen the operation of the UK internal market, and support ever greater opportunities for trade within it”. Measures include statutory protections for Northern Ireland’s constitutional position and continued access to the UK’s internal market, and the establishment of a UK East-West Council and Intertrade UK (a new body to promote trade within the UK).
With respect to the operation of the Windsor Framework, the paper proposes replacing the ‘green lane’ with a broader UK internal market system and introducing an internal market guarantee to protect UK trade flows. The intention is to remove checks on goods moving within the UK internal market system, except checks undertaken by UK authorities to prevent abuse, criminality and the risk of disease, and broaden the range of goods that can be moved within the UK internal market system.
Annex B of the paper includes an update on the devolution of corporation tax powers to Northern Ireland. An Act allowing for a devolved power to set a Northern Ireland rate of corporation tax to apply to certain trading income was enacted by the UK parliament in 2015. The update commits the UK government to a “rapid, focused process” on implementation of corporation tax devolution through a new Joint Exchequer Committee that will take forward urgent work once a new Minister of Finance is in place. Annex B also includes an update on plans for an Investment Zone for Northern Ireland which, as with other Investment Zones across the UK, would provide targeted tax incentives to encourage investment and boost growth.
HMRC consulting on IR35 tax liability offsetting legislation
Further to an announcement at Autumn Statement 2023, HMRC have published Calculating PAYE liabilities in cases of non-compliance for off-payroll working (IR35). This technical consultation seeks views on draft regulations and draft HMRC manual guidance for a mechanism by which HMRC, when recovering tax due under PAYE from a deemed employer following non-compliance with the IR35 off-payroll working rules, would be able to account for taxes already paid by the individuals or their intermediaries on the income. The enabling legislation for the proposed regulations is contained within Clause 17 of the current Finance Bill (above). The consultation is open until 22 February 2024.
HMRC publish draft corporation regulations for business transfers by building societies
HMRC have published draft regulations, The Mutual Societies (Transfers of Business) (Tax) (Amendment) Regulations 2024, together with a draft information note, for technical consultation. The proposed regulations would update existing corporation tax regulations introduced in 2009 on the use of trade losses following transfers of business between building societies. According to HMRC, the amendments reflect changes since 1 April 2017 to the treatment of tax losses and capital allowances following businesses transfers introduced by the 2017 corporation tax loss reforms, and will restore a level playing field with equivalent situations involving transfers between companies, including banks. This consultation is open until 28 February 2024.
National Audit Office publishes report on evaluation and management of tax reliefs
The National Audit Office (NAO) has published a new report looking at tax reliefs intended to promote UK economic growth, and examining whether HM Treasury and HMRC have an effective system in place to manage and respond to risks affecting these reliefs in a timely and proportionate way. The NAO’s recommendations include for the Treasury and HMRC to build on the improvements they have made so far in administering tax reliefs and make a ‘step-change’ in how they assess whether tax reliefs achieve their economic objectives, are not too costly, and are not exploited to avoid or evade tax. Citing encouraging examples of changes where evaluations have found tax reliefs are not achieving their objectives, the NAO encourages the government to carry out sufficient evaluation work to understand whether claims are legitimate and reliefs are working, and to act promptly to get reliefs back on track if problems are identified.
EU Carbon Border Adjustment Mechanism – issues with submission of reports
The first reports under the EU Carbon Border Adjustment Mechanism (CBAM) were originally due on 31 January 2024. However, due to technical issues with the EU systems, some businesses were unable to submit their reports. Accordingly, the European Commission is effectively providing for a 30-day extension to the due date for businesses that request delayed submission, which is possible from 1 February via the Transitional Registry. No penalties will be imposed where there have been difficulties submitting the report, provided the submission is made promptly when the issues are overcome. (Contact: Zoe Hawes)
EMEA Dbriefs webcasts
The next EMEA Dbriefs Tax webcast is on Wednesday 7 February 2024 at 12.00 GMT/13.00 CET. UK Tax Monthly Update – February is from our UK Tax Focus series and will be hosted by Tim Waterhouse. During this webcast our panel will discuss the latest UK tax developments, with updates on news in corporate tax, employment taxes, and indirect taxes.
On Thursday 8 February 2024 at 12.00 GMT/13.00 CET there will be a Dbriefs webcast, hosted by Pieter Van Hoecke, titled ‘Next-Gen’ Digital Invoicing And Reporting In The Modern Tax Environment. Our panel of experts will discuss how organisations can adapt and shape their behaviours and responses to reflect changes to regulator-driven digital invoicing and reporting guidelines. Our panel will explore real-world experiences and the latest trends in the field of digital invoicing and reporting and the variety of solutions and technologies being adopted in the market.