Given the chancellor’s surprise decision to drop the Operating and Financial
Review last week, the accounting profession may be forgiven for thinking that
today’s PBR could be the most unpredictable of recent years. Accountancy
Age has drawn together all the likely changes in this afternoon’s
statement. Look out for the following.
• The chancellor may make moves to clamp down on VAT avoidance by big
retailers, who use offshore locations to sell CDs and DVDs cheaply.
• The purchase of capital losses by companies may be scrutinised, perhaps
ruled out, except where there is an ‘economic’ reason for the transaction.
• Although unlikely, the chancellor could announce a penalty regime for
advisors pushing tax avoidance schemes.
• Possible 2% rise in VAT to fill the black hole.
• The chancellor may move on the long-standing dormant bank accounts issue,
but faces opposition from the banks themselves.
• The chancellor may give an update on the progress of ECJ cases, as he faces
growing pressure to quantify the looming liability.
• The government traditionally announces allowances for income tax and NICs
at this stage, which will probably rise with inflation, allowing fiscal drag to
steadily increase government receipts.
• It is believed Brown will commit to introducing legislation enabling Real
Estate Investment Trusts to come into effect by next summer, although the
industry will be watching closely for the precise form proposed.
• The government may introduce a ‘planning-gain supplement’, a type of land
development tax requiring land owners to pay a tax on capital gains made once
planning permission is granted, or at least announce a consultation.
• Professional services firms are hoping for relief from a potential tax hit
due to the clarification over Abstract 40.
• The Carter Review, looking at HMRC’s e-services strategy, is thought
unlikely to be announced as part of the PBR, despite earlier suggestions that
this would be the best time to reveal Lord Carter’s findings. Some industry
experts hope the Review will call for more incentives to encourage online tax
• The chancellor could cut out stamp duty relief on properties invested
within unit trusts. Currently properties invested within unit trusts avoid stamp
duty when the units are wholly transferred to another owner.
• Some adjustment to the taxation of oil and gas companies could be included
in this afternoon’s PBR, although a mooted windfall tax on the sector, which has
benefitted from soaring oil prices, is thought unlikely.
• Reform proposals for physical and online gambling sectors are on the PBR
agenda, as the Treasury looks to reflect on the new Gambling Act, which comes
into operation in 2007.
• In the wake of the scrapping of the Operating and Financial Review further
measures to cut red tape for small businesses are expected to be announced.
• Tax incentives may be introduced to help boost employee share ownership
• Business awaits the end to confusion over rules relating to the tax
treatment of IFRS accounts, with a stealthy tax grab mooted by some.
• The Treasury has already announced a number of changes to the tax treatment
of leases, and may provide an update on the matter. Start-up or loss-making
businesses entered long-term leases in plant and machinery to take advantage of
tax treatments, but this loophole is to be closed down.
• Shared-equity schemes designed to help first-time buyers have been mooted.
• Initiatives on productivity are regarded as near-certain.
• The announcement of modernisation of powers at the merged HM Revenue &
Customs – could HMRC receive stronger, police-like powers?
• Headline-grabbing measures to ease the administrative burden for small
business taxation could be announced.
• An update on film tax breaks that have been regarded as open to abuse
through so-called ‘double dipping’.
• A review of the way in which AIM stocks are taxed could be announced –
though the suggestion is thought to be somewhat speculative.
MTD represents 'the single most significant change to the UK’s system of taxation in recent times', says Knill James partner Nick Rawson. So, how prepared are SMEs for digital tax reporting?
The SME community voices concern about the chancellor's measures in the Spring Budget
Following chancellor Philip Hammond’s Spring Budget speech, we explore the key takeaways for businesses and individuals
Unincorporated businesses under the VAT threshold given an extra year to prepare before MTD becomes mandatory