IF THERE IS ONE big winner from this year’s Budget, HMRC has a significant claim, coming out of the chancellor’s almost hour-long address with an additional £1bn of departmental budget and the prospect of new ‘modern’ powers.
At face value, the powers appear to be a massive extension, and in practice will mean the taxman can recover tax directly from debtors’ bank and building society accounts, including ISAs.
A consultation document is expected shortly, but the government expects the move to generate £4bn over the next five years.
The Budget document shows the powers will focus on those owing at least £1,000 and have been “contacted multiple times” by HMRC to pay. It adds “a single aggregate of £5,000 will be left across all accounts, including ISAs, after the debt is recovered”.
“There are going to need to be safeguards in place to ensure HMRC do not withdraw incorrect or disputed amounts of tax from the taxpayers’ bank account,” said Reeves tax partner Geraint Jones. “This is likely to cause significant concern among civil liberties groups.”
Consultations, too, were launched on crackdowns on tax avoidance arrangements linked to Enterprise Investment Schemes and Venture Capital Trusts, which the government is concerned exploits reliefs in heavily de-risked, artificial vehicles.
On a corporate level, steps have been taken to prevent intra-company transfers across borders in order to prevent profit shifting.
“This measure builds on anti-avoidance measures introduced in the Autumn Statement that sought to block avoidance arrangements utilising derivative contracts to transfer UK profits outside of the UK tax net,” said Kevin Hindley, managing director at Alvarez & Marsal. “The measures announced by Osborne today broaden that scope to capture arrangements that have the same economic effect, but utilise a mechanism other than a derivative contract.”
There was also confirmation of the expected ‘accelerated payment’ or ‘pay up first’ scheme for tax avoidance structures disclosed under DOTAS. The move sees those in tax avoidance schemes compelled to pay their bills up front while HMRC conducts investigations into their arrangements. The move is designed to eliminate the tactic some employ of holding onto disputed tax, while their case is investigated and litigated, which can take years.
CIot urges HMRC to consider a delay to the 1 September 2017 introduction of its new corporate offence of failure to prevent the criminal facilitation of tax evasion
HMRC intends to extend the date for withdrawal of transitional relief on investment growth from 30 November 2016 to 31 March 2017
The current business rates system is over-complex and reform is needed, but reforms should focus first of all on simplifying the appeals process, particularly for businesses which are subject to business rates exemption
The CIoT has called on the government to rethink its approach to ensuring online sellers pay the correct amount of VAT.