The UK government’s first “Tax Day” has seen the launch of a number of new consultations and the announcement of a series of tax policies aimed at helping shape the future of the UK tax system. Traditionally such material has been issued on the same day as the UK Budget; however, these technical documents are often overshadowed by the more headline-grabbing nature of the fiscal policy decisions made at the same time and thus this year the two have been separated.
Highlights from yesterday’s package of measures include two discussion documents providing further indication of how HMRC plan to prevent offshore non-compliance, specifically, in the context of their “No Safe Havens” strategy published in March 2019:
Helping taxpayers get offshore tax right. This document seeks views on how HMRC should more efficiently use the huge amount of data at their disposal (primarily as a result of the CRS and FATCA information exchange frameworks) in order to promote offshore tax compliance and make it easier for taxpayers to get their offshore tax affairs right first time. It also explores how HMRC may be able to work more closely with intermediaries such as tax agents, employers and financial institutions to ensure offshore tax compliance.
Preventing and collecting international tax debt. This document seeks views on better ways to prevent and collect international tax debt, i.e. debt which has arisen because of the non-payment of UK tax, where either the taxpayer, their assets, or both, are outside of the UK. Interestingly, HMRC highlight that prior to the Covid-19 pandemic collection rates for domestic tax debt were approximately 90%, whereas for international tax debt collection rates were typically nearer 35%.
Other highlights include:
- A long-awaited summary of responses to the 2018 consultation “Taxation of trusts – A Review”. The responses did not indicate a strong desire for a comprehensive reform of trust tax at this stage but did comment on how the current tax rules can be perceived as creating barriers to using a trust. The main areas where respondents sought reform concerned Income Tax and Inheritance Tax and the government have stated that they will keep the issues raised under review.
- Two related “calls for evidence”: “The tax administration framework: supporting a 21st century tax system” and “Timely payment”. These papers request views on how the current rules governing tax administration and payments should be updated, focusing on digitisation and the use of more “real time” data together with outlining a desire for the due date for tax payments to be more closely aligned with the generation of the associated income or gains. Modernising the UK tax infrastructure is in everybody’s interests, however, in reality the closer alignment of payments is likely to mean the acceleration of deadlines and/or a requirement for more regular payments which, whilst understandable in a post-pandemic world, will inevitably come with greater complexity.
- A consultation document on Transfer pricing documentation. The key themes outlined in this paper concern imposing additional requirements on UK members of large multi-national groups to maintain and provide to HMRC (on request) so-called “master files” and “local files” detailing transfer pricing policies as well as the possible introduction of an “international dealings schedule” filing requirement, on which details of cross-border intra-group transactions would be recorded. These measures would effectively build on the Country-by-Country Reporting rules and continue the drive towards greater transparency, particular where international tax matters are concerned.
Finally, it should be noted that, despite speculation, there were no further announcements made in respect of the future of Inheritance Tax (or wealth taxes in general), Capital Gains Tax or the UK pensions tax regime.
HM Treasury’s summary of the measures announced yesterday can be found here and the full versions of the policy papers and consultation documents can be found here.