Weekly Tax Update - 9 November 2015

1. General

   1.1 Removal of Extra-statutory Concessions (ESCs)

   HMRC has given notice that nine ESCs will be withdrawn from 1 or 6 April 2017 and that ESC 3.20 on insolvent business VAT will be given statutory effect. Each of the 10 ESCs is thought to be beyond the scope of HMRC's administrative discretion and therefore should be outside the ESC regime.

   The nine ESCs to be withdrawn relate to income, corporation tax, excise duty and VAT:

   VAT - Para 9.8 Notice 708 - Apportionment of works of approved alterations to a qualifying protected building; A94 - Profits and losses of theatre backers (Angels); 69 - Building Societies: conversion to company status; C1 - Credit for underlying tax: dividends from trade investments in overseas companies; 6.2 Excise: hydrocarbon oil duties: duty - paid deliveries for refinery boilers; BIM66301 Remuneration of sub-postmasters; 3.23 VAT: supplies by Financial Ombudsman Services Ltd to ombudsman authorities; 3.28 VAT: supplies by Financial Services Authority to self-regulating organisations; and 3.31 VAT: supplies by Financial Services Compensation Scheme Ltd to compensation scheme authorities. The ESC that will be legislated is ESC 3.20 VAT: Bad Debt Relief and insolvent businesses: revocation of clawback, which ensures insolvency practitioners do not become liable for the clawback of input tax on bad debts where the supply took place before the insolvency of the business for which they act. HMRC invites responses to its mini consultation, including draft legislation that intends to ensure the purpose and effect of the existing ESC is maintained, by 16 December 2015.

   HMRC's initial assessment of the potential impact of withdrawing the nine ESCs listed and invitation to taxpayers to provide responses to its proposals is at:

   www.gov.uk/government/uploads/system/uploads/attachment_data/file/473496/Withdrawal_of_extra_statutory_concessions_-_technical_note_and_call_for_evidence.pdf

   HMRC's consultation on how it plans to give effect to ESC 3.20 is at:

   www.gov.uk/government/uploads/system/uploads/attachment_data/file/473500/Extra_statutory_concessions_-_technical_consultation_on_draft_legislation_-_ESC_3.20.pdf

   1.2 Amendment to the International Tax Compliance Regulations 2015

   The International Tax Compliance Regulations 2015 have been amended. These regulations are intended to improve international tax compliance and give effect to the agreements and arrangements the UK government reaches with other jurisdictions on such matters.

   The amendments come into effect on 20 November 2015 and are as follows:

   the definitions of 'financial institution' and 'investment entity' are aligned with those set out in the relevant US legislation relating to the Foreign Account Tax Compliance Act (FATCA); Venture Capital Trusts (VCT) and dormant accounts are removed from the list of accounts that are not reportable in relation to the Common Reporting Standard (CRS), and so become reportable. Financial institutions can elect to treat dormant accounts as non-reportable accounts. This change is to comply with the EU Directive on Administrative Co-operation; and Ghana is added as a participating jurisdiction in relation to the CRS. The legislative amendments are at: www.legislation.gov.uk/uksi/2015/1839/pdfs/uksi_20151839_en.pdf

2. Private client

   2.1 Electronic submission of IHT information - revised directions

   Following comments made to HMRC on the earlier directions, we welcome the revised directions that HMRC has issued, which...