Other news in brief

On 22 March 2022 the OECD published a public consultation document on a new global tax transparency framework to provide for the reporting and exchange of information with respect to crypto-assets. The ‘Crypto-Asset Reporting Framework’ (CARF) will cover crypto-assets that can be held and transferred in a decentralised manner, without the need for financial intermediaries, as well as potential asset classes using similar technology that may emerge in the future. It is hoped that the framework will enable tax authorities to collect and exchange tax-related information in respect of those who engage in certain transactions in crypto-assets. Under the CARF, entities and individuals that as a business provide services to exchange crypto-assets against other crypto-assets, or for fiat currencies, will be required to apply certain due diligence procedures to identify their customers, and then report the aggregate values for such customers annually. In addition to the CARF, the OECD’s consultation also includes proposals developed as part of a review of the Common Reporting Standard (CRS). The review proposes to revise certain definitions, clarifies the alignment of the due diligence procedures with the 2012 Financial Action Task Force recommendations and enhances the reporting data points under the current CRS. The deadline for comments on the proposals is 29 April 2022 and a public consultation meeting is expected to be held at the end of May 2022.

On 25 March 2022 the Scottish and UK Governments opened the bidding process for two new ‘Green Freeports’ in Scotland that will “regenerate local areas, create high quality jobs and support transition to a net zero economy.” A prospectus has been published setting out the selection criteria that bidders will need to meet as well as the range of tax reliefs that successful bidders will be able to access. The tax reliefs available in Scottish Green Freeport tax sites are expected to be comparable with those offered in English Freeport tax sites and include Land and Building Transaction Tax relief, enhanced Structures and Buildings allowances, enhanced capital allowances, employer NICs relief and Non-Domestic Rates Relief. Prospective bidders are invited to submit their applications by 20 June 2022, with the successful Green Freeport locations expected to be announced in early autumn 2022. Having had details of the English based Freeports for some time now, it is pleasing to see Scotland’s proposed Green Freeports move forward and we look forward to seeing investment initiatives which help the country move towards net zero ambitions and fairer working practices for employees.

The Residential Property Developer Tax (RPDT) introduces a new 4 percent tax which will apply to companies’ profits in excess of £25 million arising from the development of certain residential accommodation for sale from 1 April 2022. For a high level overview of RPDT and when it applies refer to our previous article. The legislation for the new tax was enacted in Finance Act 2022, and now initial guidance has been published in a new RPDT Manual. The guidance was developed by HMRC in conjunction with stakeholders and provides further clarifications on how RPDT will operate, including a number of examples.

As mentioned previously in Tax Matters Digest, all VAT registered businesses, regardless of taxable turnover, are required to follow Making Tax Digital (MTD) for VAT requirements from their first VAT Return Period starting on or after 1 April 2022. Prior to this extension, MTD for VAT was only mandatory for businesses whose UK taxable turnover was above the VAT registration threshold. Although this will mainly impact micro businesses which have voluntarily registered for VAT, it may well be relevant for businesses that are larger but whose UK taxable supplies are under the threshold because their main turnover derives from exempt or outside the scope of UK VAT supplies. Please speak to your usual KPMG in the UK contact if you have any questions or concerns about the MTD for VAT requirements.

KPMG has published ‘KPMG: Our Impact Plan 2022’ reporting on progress against environmental, social and governance commitments, which include: advancements on commitments towards net zero by 2030; the creation and introduction of our new Inclusion, Diversity and Equity (IDE) Collective Action Plan; and new commitments to support education and economic empowerment.

Karim Haji, Head of Financial Services at KPMG UK, commented on the Bank of England money and credit data stating “the question is how useful this February data is, with geopolitical events escalating and the cost-of-living crisis growing more acute through the month of March.”