Weekly Tax Update - Monday 22 July 2013

1 GENERAL NEWS

1.1 Finance Act 2013

Finance Bill 2013 received Royal Assent on 17 July 2013. The Act can be found at:

www.legislation.gov.uk/ukpga/2013/29/contents/enacted

1.2 DOTAS: Draft Regulations to include ATED schemes

Finance Act adds ATED to the list of Taxes covered by DOTAS. HMRC has now published draft regulations setting out the types of ATED arrangements to be disclosed to HMRC.

If implemented as drafted the regulation will apply from 1 October 2013. There are transitional rules for arrangements arising between 13 December 2012 and 30 September 2013. Certain arrangements are excluded from the need for disclosure and these are where:

the transferor and transferee are not connected persons, and the transfer is on arm's length terms; the transferor and the transferee are members of the same group of companies, the transfer is on arm's length terms and the transferee meets the ownership condition; the transfer constitutes a company distribution, and the transferee is an individual, a corporation sole or a person who meets the ownership condition; or the transfer constitutes a settlement. The arrangements are prescribed (disclosable) if they do not comprise excluded arrangements under the Schedule to these Regulations and as a result of the arrangements, or any element of the arrangements—

a company, partnership or collective investment scheme ceases to meet the ownership condition in respect to the chargeable interest; the taxable value of the chargeable interest is reduced to £2 million or less; or the taxable value of the chargeable interest is reduced with the consequence that the chargeable interest falls within a lower tax band than it otherwise would. www.hmrc.gov.uk/drafts/dotas-ated-tech-note.pdf

1.3 DOTAS: Draft Regulations concerning confidentiality and employment income hallmarks

HMRC has issued a response document to its earlier consultation (Lifting the Lid on Tax Avoidance Schemes) and included a draft regulation for further consultation.

In relation to the confidentiality hallmark, the test of confidentiality from HMRC will be whether "it might reasonably be expected that a promoter would...wish to keep the way in which any element of these arrangements (including the way in which arrangements are structured) that secures, or might secure, the tax advantage confidential from HMRC". The hallmark will apply whether or not there are specific conditions of confidentiality on the client.

When applying this test the promoter should first consider its own position and if it concludes that it would want to keep the arrangement confidential from HMRC then the arrangement is within the hallmark. If the promoter concludes that it does not want to keep the arrangement confidential from HMRC then it needs to consider whether it might reasonably be expected that another promoter would wish to keep the arrangement confidential.

The document also proposes a new hallmark for disguised remuneration arrangements. Arrangements will be disclosable if the statutory conditions are met where:

the arrangements are intended to circumvent Part 7A; and none of the Part 7A exclusions is in point. Further details can be found in the consultation document. If implemented as drafted it will come into force on 1 October 2013. Responses to the consultation are requested by 28 August 2013.

www.hmrc.gov.uk/drafts/dotas-hallmark.pdf

1.4 Sharing and publishing data for public benefit

HMRC has published a consultation paper on sharing and publishing data for public benefit. The introduction by David Gauke is copied below:

"The data held by the public sector is among the most useful and valuable anywhere. This is why the UK Government is at the forefront in making a step change in the availability of data held by the public sector, with the potential to deliver significant public benefits.

Last month, the Government took two major steps towards realising these benefits. First, the Government published its response to the Shakespeare Review of Public Sector Information, setting out a framework for pursuing this agenda in the public sector. Secondly, the UK helped secure the G8's Open Data Charter, which presumes that the data held by Governments will be publicly available unless there is good reason to withhold it.

It is important that HMRC plays a full part. HMRC's relationship with businesses and individuals is unique, and this is reflected in the scope and depth of the information HMRC collects, creates and protects on behalf of taxpayers.

HMRC operates under a strict legislative framework that limits data sharing. This provides all of us with the assurance that our information will be protected, essential to the effective operation of the tax system.

There are, however, potential uses of HMRC data which could generate public benefits without compromising the core principle of taxpayer confidentiality. This consultation brings forward three options:

wider sharing of aggregated and anonymised tax data, for example, for the purposes of research or policy development; release of basic non-financial VAT registration data as public data; and sharing more detailed VAT registration data on a more restricted and controlled basis for specific purposes, such as credit referencing. There are potentially significant benefits, including: improving policy making across government; supporting the Government's transparency and growth objectives by helping improve access to credit for business; and making it easier to protect against fraud. VAT registration data could also provide a foundation for private sector business registers. There are likely to be further positive uses which emerge only once the data is available.

But it is paramount that any data release has appropriate safeguards, essential to maintaining taxpayer confidence and protecting HMRC's reputation. None of the proposals introduced in this consultation proposes release of individual taxpayers' financial or tax payment data.

The Government will reflect on responses to this consultation when deciding whether - and, if so, how - to take forward the proposals. Should the Government do so, legislation would be required, with further opportunity for public and Parliamentary scrutiny.

This consultation explores important issues of how publicly-held data should be used and how HMRC should undertake its public functions. I welcome it and would encourage all interested parties to participate."

www.gov.uk/government/uploads/system/uploads/attachment_data/file/223931/130717_Data_sharing_condoc_final_v2.pdf

2 PRIVATE CLIENT

2.1 ISA: Qualifying investments for a stocks and shares component

The Statutory Instrument enabling a wider scope of holding within an ISA was laid before the House of Commons on 12 July and comes into force on 5 August 2013.

5) In regulation 7 (qualifying investments for a stocks and shares component)—

in paragraph (2)(a)(ii) for the words "officially listed on a recognised stock exchange, and" substitute "either officially listed on a recognised stock exchange or, in the European Economic Area, admitted to trading on a recognised stock exchange, and", in paragraph (3) before "if" insert ", or the condition as to admission to trading in paragraph (2)(a),", in paragraph (3)(a)— before "within" insert "or admitted to such trading", before "would be qualifying investments" insert "or trading". Regulation 5 amends regulation 7 of the Regulations to include as qualifying investments, shares in a company which are admitted to trading on a recognised stock exchange in the European Economic Area.

www.legislation.gov.uk/uksi/2013/1743/pdfs/uksi_20131743_en.pdf

2.2 Consultation on transfer of assets abroad

HMRC has published a consultation on further changes to the transfer of assets abroad legislation. This includes further responses to the July 2011 consultation (further to those published on 11 December 2012) and proposals for greater certainty on how benefits provided to a UK resident person are matched to relevant income of a person abroad,

The Government accepts that the current rules can give rise to uncertainty and that legislation now enacted in Finance Act 2013, while providing greater certainty, may not provide an equitable result in some cases. The Government, therefore, proposes to set up a working party comprising of HMRC and external volunteers to discuss the concerns raised and develop detailed options for reform. The Government anticipates that any legislative reforms arising from the working party would be introduced by Parliament within the Finance Bill in 2014 [with draft legislation published later this year].

Options for reform include:

Amend the December 2012 draft legislation; Provide greater clarity and certainty through guidance; Amend the current legislation (the legislation in force prior to FA2013); Introduce a new set of matching rules. Responses are requested by 10 October 2013.

www.gov.uk/government/uploads/system/uploads/attachment_data/file/223688/130716_ToA_draft_condoc_final.pdf

3 PAYE AND EMPLOYMENT MATTERS

3.1 Draft National Insurance Contributions Bill

HMRC has published a policy paper setting out the draft National Insurance Contributions Bill.

The measures contained in the Bill include a general anti-abuse rule, provisions to make offshore employment intermediaries liable to NICs, changes to partnership tax arrangements in relation to National Insurance contributions and four other changes.

https://www.gov.uk/government/publications/draft-national-insurance-contributions-bill

3.2 Late P11D submissions: problems with new online service

Employers who have been unable to submit forms P11D, P11D(b) and P9D due to problems with the new online service should submit their forms as soon as possible. If they do this before 4 August 2013 but are then issued with a penalty notice they should write to HM Revenue & Customs (HMRC), at the address below, and appeal, explaining that they tried to file on time but experienced problems...