Weekly Tax Update - Tuesday 7 May 2013

1 GENERAL NEWS

1.1 Overseas Territories announce commitments to tackle tax evasion

HM Treasury has announced that further Overseas Territories (Anguilla, Bermuda, the British Virgin Islands, Montserrat and the Turks and Caicos Islands) have signed up to the UK Government's strategy on global tax transparency. This will involve bilateral exchange of information with the UK as well as multi-lateral information exchange with the EU G5 (France, Germany, Italy, Spain plus the UK). www.gov.uk/government/news/chancellor-welcomes-huge-step-forward-in-global-fight-against-tax-evasion

1.2 Single compliance process

HMRC has now agreed with the agent representative bodies to change the approach for Corporation Tax and Income Tax compliance checks across all small and medium enterprise cases. An opening letter will give the taxpayer seven days to tell HMRC if they wish to deal directly with the department. If the taxpayer does not reply, HMRC will contact the taxpayer's agent by phone within 14 days to progress the case. If contact or progress cannot be made, then HMRC will go back to the taxpayer.

www.hmrc.gov.uk/news/single-compliance.htm

European Parliament Committee on Economic and Monetary Affairs - Fight against Tax Fraud, Tax Evasion and Tax Havens

The European Parliament Committee on Economic and Monetary Affairs has recently adopted a draft report "Fight against Tax Fraud, Tax Evasion and Tax Havens" following the action plan against tax fraud and evasion released by the European Commission in December 2012.

Its recommendations include:

the establishment of a "European blacklist" of tax havens based on a common definition by the end of 2014, as well as sanctions against these jurisdictions, such as the suspension or termination of agreements to prevent double taxation, and against European companies that continue to operate in such areas (e.g. ban on access to tendering procedures for public contracts or state aid); companies' country by country reporting of activities; the establishment of a register of trusts and other opaque entities that can be used by individuals to hide assets from the tax administration; the agreement of the revision of the Savings Taxation Directive and its renegotiation with several non-EU countries to promote the use of automatic exchange of banking information between tax administrations; the implementation of a compulsory CCCTB. French and German Finance ministers also called on the Commission in a letter sent on 24 April to review current EU rules to combat money laundering and financial crime and take further measures in this area to limit the ability of financial establishments to operate with non-cooperative jurisdictions.

http://www.bundesfinanzministerium.de/Content/EN/Pressemitteilungen/2013/2013-04-25-PM29-englisch.html

Improving the efficiency of tax collection and tackling tax evasion and fraud will be on the agenda of the next Ecofin Council, on 14 May, and subsequently it will be discussed at the European Council, on 22 May.

2 PRIVATE CLIENT

2.1 Error in HMRC's April 2013 Trust & Estate newsletter

There was an error on page 2 of HMRC's April 2013 Trusts & Estates Newsletter under the subheading 'Dealing with the Income Tax and/or Capital Gains Tax liability of a deceased person's estate'. The second paragraph should say - 'The tax liability of most death estates during the administration period is straightforward. Where a trust has not been set up (by will or the rules of intestacy that apply in England and Wales), the liability can be dealt with by:

HMRC, Pay as you Earn & Self Assessment, PO Box 4000, Cardiff, CF14 8HR

www.hmrc.gov.uk/news/tande-newsletter-error.htm

HMRC Savings & Investment manual

HMRC has published draft changes to its Savings and Investment manual to cover the FB2013 changes on interest in kind, interest included in compensation payments, specialty debt and disguised interest. These draft changes are available for comment upto 31 July 2013

www.hmrc.gov.uk/manuals/saimmanual/updates/saim-guidance.pdf

3 PAYE AND EMPLOYMENT MATTERS

3.1 Real Time Information announcements

HMRC has issued a number of announcements on RTI as follows:

RTI and Annual schemes: www.hmrc.gov.uk/news/rti-annual-schemes.htm 2012-13 forms P11D(b) and payslips - employers in the Real Time Information (RTI) pilot: www.hmrc.gov.uk/news/forms-payslips-rti.htm Correcting payroll reports for misalignment between payment dates and tax periods: www.hmrc.gov.uk/payerti/reporting/correcting-reports.pdf Real Time Information - your 2012-13 end of year report and first 2013-14 RTI report: www.hmrc.gov.uk/news/rti-report.htm 3.2 Employer supported bus services

HMRC has issued some frequently asked questions to clarify the tax treatment of employer supported bus services.

www.hmrc.gov.uk/thelibrary/local-bus-faqs.pdf

4 BUSINESS TAX

4.1 Whether VAT repayments are subject to corporation tax

In the case of Shop Direct Group and others, the Upper Tribunal agreed with the First tier Tribunal that VAT refunds and interest on those refunds were subject to corporation tax in the case of refunds relating to VAT on business activities, even where the business (and right to VAT refunds) had been transferred.

www.tribunals.gov.uk/financeandtax/Documents/decisions/shop-direct-others-v-HMRC.pdf

4.2 Investment trust companies

It was announced in the 2013 Budget that secondary legislation would be introduced to provide a further exception to the income distribution requirement for investment trust companies at regulations 19 and 21 of the Investment Trust (Approved Company) (Tax) Regulations 2011 (SI 2012/2999). The exception will apply in certain circumstances where an investment trust company has accumulated realised revenue losses in excess of its income for an accounting period, such that a requirement to make a distribution would result in a distribution from capital.

Draft regulations have now been published for comment by 28 May 2013. Subject to the consultation responses, the changes are expected to take effect for accounting periods commencing on or after 1 July 2013.

www.hmrc.gov.uk/drafts/itc.htm

www.hmrc.gov.uk/drafts/itc-si.pdf

www.hmrc.gov.uk/drafts/itc-si-em.pdf

4.3 Partnerships and the ability to prosecute a dissolved partnership

The Advocate General for Scotland has issued a notice regarding new law affecting the ability to prosecute partnerships, and which came into force on 26 April 2013. An...