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Spring Statement 2019: No major tax announcements

Spring Statement 2019: No major tax announcements

The Chancellor’s speech was light on tax announcements, with no new tax measures introduced.

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Director, Tax Policy

KPMG in the UK

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The Spring Statement was held on 13 March 2019. Taking place at a time when Parliament’s attention is focused on the UK’s withdrawal from the EU, as expected, the UK Chancellor of the Exchequer did not spring any surprises with no major tax announcements being made. The Chancellor did however confirm that the UK will press ahead with a unilateral digital services tax. The Written Ministerial Statement provides additional information on tax-related matters; including a list of consultations expected to be issued over the coming months as well as a short note on Making Tax Digital. HMRC also published policy papers on various matters as well as a consultation on the Structures and Buildings Allowance.

Digital Economy

There had been some speculation that the Chancellor might delay the introduction of the Digital Services Tax (DST) – but the messaging was very clear – the concept of a DST is here to stay. The accompanying Written Ministerial Statement refers to a consultation on the detailed design and implementation (that will be issued “in the coming months”) and confirms the effective date of 1 April 2020.

This is perhaps a disappointment to businesses that may be concerned at the UK going it alone with a unilateral measure. The general consensus is that an urgent international solution is needed and interestingly the Chancellor’s statements were made when representatives from around the world were meeting in Paris (on 13-14 March) as part of the OECD’s work in this area (KPMG webinars discussing global developments may be accessed here and here).

Making Tax Digital (MTD)

MTD for VAT for businesses over the VAT threshold (with turnover over £85,000) comes into force from 1 April this year which will be a disappointment to businesses hoping for a delay. The Chancellor confirmed a light touch approach to penalties in the first year of implementation and, where businesses are doing their best to comply, no filing or record keeping penalties will be issued. It is also noteworthy that the wording used in the Written Ministerial Statement suggests that rolling out MTD to income tax and/or corporation tax in 2020 is now off the cards (previously, the Government talked about rolling out MTD to other taxes in 2020 “at the earliest”).

Documents published alongside the Spring Statement

As is traditional, although there was little mention of tax in the Spring Statement itself a few tax related documents were published alongside it, including:

  • Structures and Building Allowance: Draft legislation for comment on the new Structures and Buildings Allowance. You may find more information in this edition of Tax Matters Digest; and
  • Tax Avoidance, evasion and non-compliance: Policy papers which set out the Government’s achievement thus far and the direction for HMRC’s updated strategy for offshore tax compliance.

Various publications to be released in the coming months.

The Spring Statement also included details of documents that will be published in the coming months, including:

  • General Anti-Abuse Rule (GAAR) – A technical note alongside draft legislation on minor procedural and technical changes to the GAAR legislation to ensure that it works as intended;
  • Corporate Capital Loss Restriction – A consultation on a change announced at Autumn Budget 2018 to restrict, from 1 April 2020, the amount of carried-forward capital losses a company can offset to no more than 50 percent of the chargeable gains arising in a later accounting period;
  • VAT Partial Exemption and Capital Goods Scheme – A call for evidence on potential simplification and improvement following recommendations from the Office of Tax Simplification;
  • National Insurance Contributions (NICs) Employment Allowance draft regulations – A document inviting technical comments on the draft regulations implementing the reform, as announced at Autumn Budget 2018, to restrict this allowance to businesses with an employer NICs bill below £100,000;
  • CGT private residence relief – A consultation on the changes announced at Autumn Budget 2018 to lettings relief and the final period exemption; and
  • Other draft regulations – relating to offshore receipts in respect of intangible property as well as hybrids and other mismatches.

For Melissa Geiger’s (Partner, Head of International Tax and Tax Policy at KPMG UK) reaction to the Spring Statement, please click here.

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