Weekly Tax Update - Monday 13 May 2013

1 GENERAL NEWS

1.1 Queen's Speech and National Insurance

The Queen's speech included an announcement concerning a National Insurance Contributions Bill, the main elements of which will be for:

reducing employer NICs bills each year by, from April 2014, entitling every business and charity to a £2,000 Employment Allowance; extending the General Anti-Abuse Rule to NICs, reinforcing the Government's commitment to tackle abusive avoidance; strengthening legislation to prevent the use of offshore employment payroll companies (intermediaries) to avoid employer NICs; and removing the presumption for self-employment for limited liability partnership members. www.gov.uk/government/uploads/system/uploads/attachment_data/file/197434/Queens-Speech-2013.pdf

1.2 Tax Professionals' Forum

As part of restoring the UK's reputation for a predictable, stable and consultative tax system, the Government established the Tax Professionals Forum shortly after the 2010 election to ensure that the Government's commitments on better tax policy making were subject to independent scrutiny.

The Forum have recently produced their second annual report which includes the following review of the way in which new tax legislation was formulated during the period under review:

"There are five stages put forward in the Framework in the process of making tax legislation. For most consultations, the Forum believes these five stages are both needed and useful. The reasons for this depend on the circumstances. For example, in formulating policy, the Government may have formulated a proposal which goes further than is necessary to achieve the particular policy objective, may be unaware of the effect the proposal may have on other areas, or may not have taken into account other existing legislation. An open formulation of policy allows engagement with the taxpayer.

It is pleasing to report that the period has shown a number of good examples where the five stages have been or are being followed, in particular the consultations on the changes to the CFC rules, the Statutory Residence test, the reform of the taxation of non-domiciliaries, tax relief for decommissioning and a number of others. These have resulted in the taxpayer having a clear understanding of government policy, and policies being developed more effectively and efficiently.

In contrast, however, in other cases, consultations have started:

part way through the process (such as that on the provisions relating to the transfer of assets abroad and gains made by offshore close companies), without a clear articulation of the policy involved (for example, on IR35 and Controlling Persons), or without an discussion of the policy (for example, the changes to SDLT on properties owned by non-residents through companies, investment funds and others and the cap on income tax reliefs). The Government has indicated that concerns over possible avoidance and forestalling mean that it is difficult for some of the changes identified above to follow the normal consultation stages. In our...