A round up of other news this week.
Further to our recent article on the proposed deferral of the implementation of the EU mandatory disclosure rules (DAC 6), the European Council has now confirmed that negotiations on the DAC 6 deferral have been completed in Council. We understand that this amendment will be adopted through use of a written procedure, and it is expected that the draft Directive will be adopted by the Council before 1 July 2020. We understand that the proposal includes the option to defer for up to six months. Therefore, the possibility of Member States implementing deferrals of different lengths of time remains. So far, we understand that two countries (Belgium and Luxembourg) have confirmed a deferral of six months. From a UK perspective HMRC have advised that, as and when any proposed deferral is final at an EU level, they will confirm how it will apply to the UK rules.
The House of Commons Public Bill Committee has met three times now on 4, 9 and 11 June and considered all clauses up to and including clause 71. As expected, the only amendments that were passed were those laid by the Government relating to the loan charge rules discussed in the last edition of Tax Matters Digest. All other clauses were passed without amendment including: the corporation tax rate remaining at 19 percent; the increased rates of R&D expenditure credit and structures and buildings allowances; the reduction in the Entrepreneurs’ Relief lifetime allowance; and the new Digital Services Tax. The remaining clauses will be considered in further committee sessions to be completed by 25 June. Alongside the Bill the Government has published a letter discussing the powers it includes to make secondary legislation and a draft copy of The Insolvency Act 1986 (HMRC Debts: Priority on Insolvency) Regulations 2020 which relates to clause 96 and sets out the debts owed to HMRC that will have secondary preferential status in insolvency procedures.
The Government published the UK’s Approach to the Northern Ireland Protocol command paper on 20 May 2020. Following on from this, on 11 June, HMRC published a form to enable businesses to tell them that they will be impacted by the new processes for Northern Ireland goods movements. These businesses can also sign up for email updates on the new requirements. The form will be live on gov.uk from 11 June to 29 June 2020. Businesses affected are encouraged to self-identify so HMRC can make sure guidance and communications are reaching the right audience. HMRC are particularly keen for businesses to get in touch if they have no experience of international trade.
The Office of the United States Trade Representative (USTR) has announced investigations into digital services taxes adopted or proposed in a number of jurisdictions including the UK under Section 301 of the 1974 Trade Act. Section 301 allows the USTR to “investigate and respond to a foreign country’s action which may be unfair or discriminatory and negatively affect U.S. Commerce”. As part of the investigations, the USTR has requested consultations with the respective governments. In particular, the USTR is concerned that the digital services taxes ”discriminate against US companies”, ”are retroactive in nature”; and ”constitute possible unreasonable tax policy by diverging from norms reflected in the US and international tax systems”. If the USTR determines the digital taxes to be discriminatory, it will review and take action. The deadline for public comment is 15 July 2020.
KPMG has published its latest Economic Outlook report. Yael Selfin, Chief Economist at KPMG UK, commented on the report which includes details on the uncertainty and risks of a hard Brexit.
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