Other news in brief

Pillar Two: Addition of Pillar Two anti-abuse rule in the UK

On 14 March 2024, the UK Government published a Written Ministerial Statement (‘the Statement’) regarding the addition of an anti-abuse rule in the UK in respect of Pillar Two, to be legislated in a future Finance Bill and to apply these provisions from 14 March 2024. In particular, the Statement directly references the Administrative Guidance published by the OECD on 18 December 2023 which includes anti-avoidance rules where multinational enterprises (MNEs) had sought to enter into certain transactions or arrangements with the intention of exploiting the Transitional Country by Country Reporting (CbCR) safe harbours for the Pillar Two regime. The Administrative Guidance specifically references hybrid arbitrage arrangements including deduction/non-inclusion arrangements, duplicate loss arrangements, and duplicate tax recognition arrangements. The Administrative Guidance also indicates that these rules should apply to transactions entered into on 15 December 2022 (i.e. the date upon which the OECD published the original Safe Harbour and Penalty Relief document), but where jurisdictions cannot incorporate this retroactively into domestic law due to constitutional (or other similar) grounds then the Administrative Guidance states that 18 December 2023 should be the applicable date. It is notable that the Statement indicates that the UK Government instead intends to apply these provisions from 14 March 2024 and not the earlier dates provided for in the Administrative Guidance. It is also notable that the Statement specifically focuses on the anti-abuse rule and does not reference other parts of the December 2023 Administrative Guidance, although it notes that the UK Government will consult with stakeholders on how the provisions will be legislated. 

HMRC proposals impacting the information to be provided with Self Assessment returns

HMRC have published draft legislation to implement the outcome of their earlier consultation on increasing the data they collect. As well as the payroll reporting changes covered elsewhere in this edition of Tax Matters Digest, there are also draft regulations which would require, for returns covering 2025/26 onwards:

• Directors in owner-managed businesses to provide the amount of dividend income received from their own companies separately to other dividend income, and the percentage share they hold in their own companies, via their Self Assessment return; and
• The self-employed to provide information on start and end dates of self-employment via their Self Assessment return.

The consultation on the draft legislation is open until 9 May 2024.

HMRC halt plans to reduce telephone services

On 19 March 2024, HMRC announced that, following an earlier trial, changes to helpline services would now become a permanent. The announcement said that HMRC planned to close the Self-Assessment tax helpline between 8 April – 30 September, only open the VAT helpline for the five business days ahead of the filing deadline each month and no longer handle PAYE refund queries over the phone. In each case, taxpayers were advised to use HMRC online resources instead. However following feedback, the next day HMRC announced that they would halt these plans while they engage with stakeholders to consider how all taxpayers’ needs can be met.   

UK CBAM consultation published

On 21 March 2024, the Government published a consultation on the introduction of a UK carbon border adjustment mechanism (CBAM) from January 2027. As previously announced in December, it is proposed that the UK CBAM will cover certain carbon intensive imports in the following sectors: aluminium, cement, ceramics, fertilisers, glass, hydrogen, and iron and steel. The consultation contains details of the specific commodity codes to be included with the scope at Annex A. Interested parties are invited to share their views on the consultation, which will remain open until 13 June 2024. There is also the opportunity for stakeholders to participate in a roundtable discussion.