Tax Administration and Maintenance Day

The Government has published a series of tax policy and consultation updates on Tax Administration and Maintenance Day 2023.

Tax policy and consultation updates published

On 27 April 2023, as part of ‘Tax Administration and Maintenance Day’ (TAMD), the Government published a series of tax policy and consultation documents as part of its work to deliver a modern, simple and fairer tax system. There were several important updates including announcement of a consultation on several international tax changes (to be published shortly), a consultation on the introduction of a new type of investment fund (the Reserved Investor Fund), and a modernisation of Stamp Taxes on shares. There were other announcements aimed at simplifying the tax system, as well as announcements aimed at reducing the Tax Gap, for example, the introduction of a criminal offence for certain promotors of tax avoidance. 

Key announcements

The main announcements were set out under two headings: Simplification and modernisation of the UK’s tax system and Tackling the Tax Gap.

Simplification and modernisation of the tax system:

  • International tax changes: The Government has announced that a consultation will be issued in May 2023 simplifying and updating legislation in relation to diverted profits tax, transfer pricing legislation and permanent establishments. We expect this to be tidying up rather than major reform;
  • Reserved Investor Fund (RIF): With a more financial services flavour, the Government has published a consultation on the introduction of a new type of investment fund. The fund would be structured as an unauthorised co-ownership contractual scheme and is expected to be treated as a ‘transparent’ fund and the main tax features are expected to be based on the Authorised Contractual Scheme tax regime. The consultation document describes relevant matters concerning the introduction of the vehicle and how the tax regime might operate. The RIF is expected to be a suitable vehicle to hold UK real property and much of the consultation focuses on tax matters relevant to real estate investments, including non-resident capital gains tax, stamp taxes, and capital allowances. The RIF is also expected to be relevant to other asset classes across private and public markets. This is a significant development in the UK funds landscape; 
  • Decentralised Finance lending: Another financial services announcement was the publication of a response to the call for evidence on the tax treatment of crypto-asset transactions in Decentralised Finance lending and staking. The Government has published a further consultation on amending the tax rules to better reflect arrangements;
  • Modernisation of the Stamp Taxes on Shares: The Government published a consultation on modernising and digitising the framework for Stamp Taxes on shares building on a call for evidence carried out in 2020;
  • Improving the data HMRC collect: following last year’s consultation, the Government intends to take forward its proposals to collect improved data on employee hours worked, dividends paid to shareholders in owner-managed businesses, and self-employment start and end dates; and
  • Tax Administration Framework: The Government has published two documents, one is a call for evidence in relation to information and data gathering powers, and the second is a discussion document on a legislative approach to piloting

Tackling the Tax Gap:

  • A consultation on introducing a criminal offence for promoters who fail to stop promoting certain schemes and proposals to expedite the disqualification of directors of companies involved in promoting tax avoidance;
  • A consultation on a package of reforms to the Construction Industry Scheme exploring strengthening the tests for Gross Payment Status and reducing some administrative burdens;
  • Later this year the Government will publish a consultation on the Employee Ownership Trust tax regime to ensure the reliefs are targeted appropriately and are not used for unintended tax planning;
  • The Government will also shortly publish a response document to the 2021 call for evidence on the umbrella company market and a consultation on options to regulate umbrella companies and tackle non-compliance; and 
  • As previously announced, the Government intends to press ahead with requiring repayment agents to register with HMRC.

Further detailed commentary on some of these key announcements above will be available in the next edition of Tax Matters Digest.

In addition to the above, there were some other noteworthy announcements.

New consultations

The Government launched several new consultations, including on:

  • Off-payroll working (OPW) changes: which would allow HMRC to credit any tax and NIC paid by workers and/or their Personal Service Companies (PSCs) on income/profits that derive from an engagement, against any PAYE/NIC due from that engagement’s end-client/fee-payer as a result of failing to operate the OPW rules correctly. The prospective offset should apply from 6 April 2024, with HMRC continuing to notify workers/PSCs regarding their potential entitlement to reclaim any overpaid taxes to prevent double taxation in the meantime;
  • Help to Save scheme design to determine how it could be simplified so that it has longevity as a key savings product for those on low incomes, encourages take-up in the target group, and provides the best value for taxpayers;
  • Customs treatment of post and parcel exports to improve the customs treatment of low-value post and parcel exports, ensuring appropriate due diligence is applied to help protect the countries and territories exported to, and compliance with international obligations; and
  • Charities compliance measures to help tackle non-compliance and protect the integrity of the sector. The consultation seeks views on several areas including: tainted charity donations, approved charitable investments, non-charitable expenditure, and charity filing obligations.

Consultation responses

Other announcements

The following updates were also provided:

  • Future of Gift Aid: the Government will continue its engagement with the charities sector to improve the way that Gift Aid works in order to minimise administrative burdens through the use of technology;
  • Plastic Packaging Tax: a consultation will be issued later in the year on allowing a mass balance approach for calculating the proportion of recycled content in chemically recycled plastics for the purposes of the Plastic Packaging Tax;
  • VAT Terminal Markets Order legislation: the Government will consult late in the year on updating the legislation to clarify the VAT treatment of exchange traded commodity transactions;
  • National insurance credit changes: The Government will publish further information in due course on plans to address concerns that some eligible parents who have not claimed child benefit miss out on their future entitlement to a full State Pension; 
  • Powers and safeguards evaluation: The Government has published a report on the commitments it made to help build and maintain public trust in the tax system; and 
  • Updated Evaluation List: the Government has published HMRC’s updated evaluation list and confirms plans to evaluate the Plastics Packaging Tax and the Super Deduction.