Other news in brief

Certain large businesses are required to notify HMRC where they have adopted an uncertain tax treatment in VAT, corporation tax, or certain income tax (partnership and PAYE) returns due to be filed on or after 1 April 2022 (see recent article for background). On 1 April the online notification form was made available on HMRC’s website accompanied by statutory guidance on what the notification is required by law to include. Notifications which do not contain all the required information will not be valid.

The Government has published a summary of responses to its consultation on corporate re-domiciliation, which was first announced at the 2021 Autumn Budget. A UK corporate re-domiciliation regime would enable a foreign-incorporated company to change its place of incorporation whilst maintaining its legal identity as a corporate body. In the response document, the Government notes that respondents were broadly supportive of its proposal to introduce a such a regime and that the majority supported a two-way regime, permitting both inward and outward re-domiciliation. Respondents also highlighted the need for a flexible regime balancing simplicity of design with sufficient rigour, that would provide users with certainty. In terms of next steps, the Government confirmed that it still does intend to introduce a re-domiciliation regime. However, as this consultation represented the early stages of the policy development process, further refinement of the policy will be required with the points raised by respondents taken into account and further formal consultation undertaken as appropriate.

On 5 April 2022 the Economic and Financial Affairs Council of the EU (ECOFIN) discussed a revised compromise text for an EU minimum tax directive for the implementation of Pillar Two of BEPS 2.0 in EU law. The revised compromise text had been updated to address Member States’ concerns on the implementation timeline, including to extend the maximum deferral period for the Income Inclusion Rule and Undertaxed Payment Rule for Members States where no more than 12 (previously ten) Ultimate Parent Entities of in-scope groups are located to six years. However, Poland restated its request for a legally binding link on the implementation of both Pillar One and Pillar Two and did not support the revised text and no political agreement was reached. Further discussions are now required, with a view to reaching agreement on the general approach during the ECOFIN meeting scheduled for 24 May. For further detail please read the Euro Tax Flash  from KPMG’s EU Tax Centre.

On 1 April 2022 the European Commission opened a public consultation on a new EU withholding taxes system to avoid double taxation. The initiative aims to tackle burdensome withholding tax refund procedures for cross-border investors in the EU and the risks they present in terms of tax abuse and would introduce a common EU-wide system for withholding tax on dividend and interest payments, as well as a system for tax authorities to exchange information and cooperate. The consultation asks respondents’ opinions on potential policy options including improving withholding tax refund procedures, establishing a common EU relief at source system, enhancing the existing administrative cooperation framework and combating tax abuse. The consultation will run until 26 June 2022 and Commission adoption is planned for the fourth quarter of 2022.

On 31 March 2022, the Government published a written statement on tax exemptions for sponsorship payments under the Homes for Ukraine Scheme. According to the statement, the Government intends to legislate retrospectively within Finance Bill 2022-23 to ensure that the Homes for Ukraine Sponsorship Payment will be exempt from income tax and corporation tax with effect from the date the first payments to sponsors will be made. The sponsorship payment will also not be chargeable to National Insurance contributions. As the sponsorship payments will be treated as non-taxable income, any expenses that could otherwise have been offset against taxable income will not be allowable as a tax deduction. The statement notes that the Government also intends to legislate within Finance Bill 2022-23 to ensure that companies that currently qualify for the existing reliefs available from the Annual Tax on Enveloped Dwellings (ATED) and the 15 percent rate of Stamp Duty Land Tax (SDLT) for dwellings used in a property development or property trading business or let on a commercial basis will continue to be able to claim the reliefs while the dwellings are being used under the scheme. The legislation will have effect from 1 April 2022 for ATED and 31 March 2022 for the 15 percent rate of SDLT. HMRC have updated their ATED and SDLT guidance accordingly.

KPMG International has published ‘KPMG: Our Impact Plan 2022’ detailing progress against environmental, social and governance (ESG) commitments made last year. This update includes details of advancements on commitments towards net zero by 2030, the creation and introduction of a new Inclusion, Diversity and Equity (IDE) Collective Action Plan and new commitments to support education and economic empowerment.