Other news in brief

On 24 November 2022, the Government published its response to the consultation on the implementation of the OECD’s ‘Mandatory Disclosure Rules for Common Reporting Standard (CRS) Avoidance Arrangements and Opaque Offshore Structures in the UK’ (see our previous article). The UK had previously implemented similar but much broader EU rules (DAC 6) in January 2020 as an EU member state at the time, however shortly before reporting had been due to start on 1 January 2021 these were significantly scaled back to discard the elements that were not in the OECD’s model rules. The new regulations implementing the OECD model rules, which will come into force in the first half of 2023, will replace the existing UK rules (based on Hallmark D of the EU rules) completely. The consultation response notes two recent decisions on the design of the UK implementation of the OECD’s rules. First, it will be welcome news that reporting pre-existing arrangements should only be required for those entered into from 25 June 2018 (rather than 29 October 2014). Second, the Government has decided that it will not provide an online manual system for businesses to report, instead reporting will be required using XML software. HMRC will continue to work with stakeholders to draft guidance on the rules.

On Tuesday 22 November 2022, the Department for Levelling up, Housing and Communities launched a consultation on the Building Safety Levy. The proposed Building Safety Levy, which was announced in February 2021, seeks to ensure that the taxpayer and leaseholders do not have to pay remediation costs involved with fixing unsafe buildings. The levy will be charged on new residential buildings which require building control approval in England and will be paid by developers. The consultation is seeking views on the design and implementation of the levy, including which asset classes it will be chargeable on, how it will be calculated, what the rates will be and who will be responsible for collecting the levy. The consultation will close on 7 February 2023.

From 1 April 2023, the main rate of corporation tax will increase to 25 percent for companies with profits exceeding an ‘upper limit’ of £250,000. A 19 percent 'small profits rate' of corporation tax will apply to companies with profits which do not exceed a ‘lower limit’ of £50,000. If a company’s profits fall between the upper and lower limits, a marginal relief will apply to provide a gradual increase in the corporation tax rate up to the main rate. The upper and lower limits will be proportionally reduced for short accounting periods as well as by the number of ‘associated companies’. Broadly, a company is an associated company of another at any time when one of the two has control of the other, or both are under the control of the same person or persons. The definition of control for these purposes also considers whether there is a relationship of ‘substantial commercial independence’ between the two companies. New regulations, ‘The Corporation Tax Act 2010 (Factors Determining Substantial Commercial Interdependence) Regulations 2022’, coming into force on 1 April 2023, have been published which specify the factors to be taken into account when determining whether a relationship between two companies constitutes ‘substantial commercial interdependence’. The ‘associated companies’ definition will also have relevance for the quarterly instalments payment regime, small claims treatment under the patent box regime, and the capital allowances long life assets rules from 1 April 2023 as it replaces the current ‘51% group companies’ test.