A round up of other news this week.
On 3 December 2020, HMRC published a policy paper on their review of interest rates within the tax system, which was prompted in response to the recommendations of Sir Amyas Morse’s independent review of the Loan Charge. (NB a report showing the actions HMRC have taken to implement the recommendations of this review more widely was also published on the same day). The policy paper concludes that the interest rates used by HMRC, are not inconsistent with those used by tax authorities internationally and are similarly based on an underlying national base rate. Furthermore the review finds that the principle of charging interest generally appears to be reasonable when compared to interest charged commercially. As a result of the impact of historical high interest rates on enquiries open for significant periods, HMRC’s review recommends that the Government should consider whether the automatic link with the Bank of England base rate should be suspended where there is a significant increase to the base rate, to above three percent and whether HMRC should have greater discretion in exceptional circumstances.
The OECD’s annual revenue statistics report was published on 3 December 2020. It shows that in 2019, the average tax to gross domestic product (GDP) ratio fell by 0.1 percent from the year before to 33.8 percent. Although there were increases in 20 OECD countries for which 2019 data was available, this was outweighed by larger on average decreases in the remaining 15 OECD countries reviewed. The report also looks specifically at consumption tax revenues under COVID-19, considering the lessons that can be learned from the 2008 global financial crisis. According to the report, COVID-19 is expected to have a bigger impact on consumption tax revenues than the global financial crisis as consumption is more directly affected.
On 9 December 2020, the OECD published its first Peer Review of the Automatic Exchange of Financial Account Information which shows that 88 percent of jurisdictions engaged in automatic exchange since 2017-18 were deemed to have satisfactory legal frameworks in place. The report notes that a second stage of the monitoring process, now underway, will assess the effectiveness of automatic exchange in more than 100 jurisdictions.
The BRC-KPMG Retail Sales Monitor for November has recently been published, showing a growth in sales. Paul Martin, Head of Retail, KPMG in the UK, commented “despite the on-going unprecedented environment, UK retail fought hard during November to win growth on last year. It was a tale of two channels however, as lockdown resulted in a dismal performance for high street retailers, whilst online sales rose by impressive double figures across most categories”.
© 2021 KPMG LLP a UK limited liability partnership and a member firm of the KPMG global organisation of independent member firms affiliated with KPMG International Limited, a private English company limited by guarantee. All rights reserved.
For more detail about the structure of the KPMG global organisation please visit https://home.kpmg/governance.