£161 million government investment to increase HMRC compliance and debt management capacity

Rishi Sunak announced that in addition to the £100m already pledged back in March 2021 to tackle fraud, the government will invest a further £161 million over the next five years to increase compliance and debt management capacity in HMRC.

The increase in staff is expected to bring in more than £3 billion of additional tax revenues over the next five years. HMRC staff will provide greater support to taxpayers seeking to pay off accrued tax debts, and to tackle the most complex tax risks, ensuring large and mid-sized businesses pay the tax they owe.

With an in-depth knowledge of HMRC’s working practices, we can assist you, should you receive a communication from HMRC.

Our experienced team deal with all HMRC matters including but not limited to:

  • Making a disclosure to HMRC
  • Assisting with ongoing enquiries and/or disputes
  • Code of Practice 9 investigations
  • Settlement opportunities
  • Agreeing Time To Pay arrangements.

Our team work closely with our clients, keeping them informed each step of the way.

Please do not hesitate to contact a member of our Tax Disputes and Resolutions team.

 

Spring Statement 2022 – full summary

The Chancellor Rishi Sunak delivered his Spring Statement at this troubled time, and with inflation at its highest rate in 30 years. The Statement was intended, not as a ‘full Budget’ but as an economic update.

However, given the current significant increases to the cost of living, the Chancellor did include a number of tax measures, including the headline grabbing reduction to the basic rate of Income Tax from 2024.

Our summary provides an overview of the key announcements arising from the Chancellor’s speech, and how they are likely to impact your business and personal finances.

Please get in touch with your usual haysmacintyre contact or any member of the Tax team, if you have any queries.

Spring Statement 2022 highlights

The Chancellor Rishi Sunak delivered his Spring Statement earlier this afternoon, at this troubled time, and with inflation at its highest rate in 30 years. The Statement was intended, not as a ‘full Budget’ but as an economic update.

However, given the current significant increases to the cost of living, the Chancellor did include the following tax measures:

  • National Insurance: increase to the starting threshold of £3,000 (to £12,570), from July 2022, to equalise the National Insurance and Income Tax thresholds
  • Employment Allowance (for National Insurance) for small businesses: increase to £5,000 from April 2022
  • Income Tax: the basic rate will be cut from 20% to 19% from 2024
  • Fuel duty cut by 5p per litre, from 18:00 this evening until March 2023
  • Energy: installation by households of heat pumps, solar panels and insulation will suffer 0% VAT
  • Energy: the household support fund, which provides councils with funds to support vulnerable households, is to be doubled
  • The Government is to publish a Tax Plan, to reduce and reform taxes in this Parliament
  • R&D tax credits and business investment: reforms to be announced in the Autumn Budget

Further details to follow in our full summary.

Please contact Katharine Arthur, Partner with any queries.

The UK’s new Overseas Entities Register for those who own UK land

The Act was originally branded as the Registration of Overseas Entities Bill in 2018, but this was fast tracked through the UK Parliament in light of the Russian invasion of the Ukraine.

Brief history of the legislation

The UK government issued a discussion paper in March 2016 due to concerns about the lack of transparency afforded to certain owners of UK real estate, who could hide their identities using overseas entities and structures.

After the 2016 ‘call for evidence’ and the UK government’s response in March 2018, the draft Registration of Overseas Entities Bill was published in July 2018. Some adjustments were made in 2019 and then the world changed, placing this on the backburner.

Recent events brought it back into focus, and the UK government reintroduced this legislation in February 2022 to be fast tracked through Parliament as part of their urgent response to the Russian invasion of Ukraine.

There are three parts to the Act, but here we focus solely on the Register of Overseas Entities. The other two aspects relate to Unexplained Wealth Orders and Sanctions.

The Register of Overseas Entities

Information currently available on overseas entities that own UK land is limited to the entity’s name and where it was incorporated, rather than who ultimately owns the land. The intention behind this new register is to stop the use of illicit funds to buy UK land by increasing transparency for (and hopefully public trust in) overseas entities who own, or aim to own, UK land by identifying who ultimately owns and controls them.

The new legislation will require any overseas entity that wishes to own UK land (or indeed, has since any time after 1 January 1999) to:

  • Identify its beneficial owner(s)
  • Register its beneficial owner(s) with Companies House in exchange for an overseas entity ID number; and
  • Keep the register up to date each year. This is much like the Persons of Significant Control register that already applies to UK companies.

Overseas entities that already hold UK land will only have 6 months to either register or sell the land but the details still need to be provided for sales post 28 February.

Failure to register or provide the relevant information to Companies House will result in the UK’s Land Registry not registering title to any UK land for an overseas entity, which will effectively freeze the UK land for any non-compliant entity because they will not be able to buy, use or sell it.

Who is a beneficial owner?

A registrable beneficial owner is broadly an individual or another entity that directly or indirectly owns 25% of the shares or voting rights in the overseas entity or can appoint/remove a majority of the board.

For trustees who hold any of those rights, the beneficial owner will be an individual or other entity that has the right to exercise, or actually exercises, significant influence or control over the activities of their trust. This will be crucial given that the managing officers are held liable for errors.

What information is required?

Individuals who are beneficial owners must provide the register with the following:

  • Name
  • Date of birth
  • Nationality
  • Usual residential address
  • A service address
  • Date they became a registrable beneficial owner.

As a result of considerable personal information uploaded to this public register, certain protections will be implemented, including the permanent suppression of the date of birth and usual residential address, as well as the protection regime for individuals that may be placed at risk as a result of being identified on the public register.

In providing this information, each relevant overseas entity must confirm that it has taken reasonable steps to identify all its beneficial owners and file the relevant identification information with Companies House.

The onus is placed firmly on the overseas entity to check for any registrable beneficial owners and declare one of the following:

  • That it has identified all beneficial owners and has no reason to believe there are others, and that it is able to provide the required information about those identified;
  • That it has no reason to believe that it has any registrable beneficial owners and instead provide required information about its managing officers;
  • That it has reasonable cause to believe that it has a registrable beneficial owner, but has been unable to identify the beneficial owner and therefore cannot provide the required information; or
  • That it has identified beneficial owners but cannot provide all of the required information about all or one of them.

Who is responsible?

It is a criminal offence by the entity and every officer, including ‘shadow directors’, to fail to comply with the annual updating duty. It is worth noting that professional advisers to an entity are not within the scope of the legislation.

Potential relaxation?

There is room for regulations to be introduced to limit what must be provided, where there is an equivalent local company register. This would be a very helpful limitation, so keep your eyes open for future developments.

What action should you take?

Companies House now have to implement the register as soon as possible. However, in the meantime, any foreign entity selling UK property between 28 February 2022 and the register implementation date is required to submit their details at the point of sale.

For fiduciary service providers who have look after such entities in any capacity and directors or shareholders of such companies, we would suggest a thorough review of your records to identify those with UK properties and consider whether you need to register the entity and how to do it.

The penalties are very steep with fines at up to £2,500 per day, per relevant person and a risk of five years in prison in some circumstances.

For more information, please contact your usual Haysmacintyre contact or James Walker.

Making Tax Digital

Making Tax Digital (MTD) for income tax will take effect from April 2024. The introduction of MTD will be a significant move to a more digitalised tax system, which will result in eligible individuals (from April 2024) and partnerships (from April 2025) being required to file quarterly submissions to H M Revenue & Customs, along with keeping digital records.

The introduction of MTD for income tax will also see a new penalty regime, which can be seen here, along with a change to how self-employed/partnership profits are tax is summarised below.

Our MTD for income tax webinar on 9 March 2022 will provide more information – register here.

Basis Period Reform

At present, self-employed/partnership profits or losses are generally based on the set of accounts ending in the tax year, known as the ’current year basis’.

The new rules, being introduced with MTD for income tax, will be a ’tax year basis and come into effect from the 2024/25 tax year. The tax year basis will mean that individuals will be taxed on profits (or utilising losses) that arise in the tax year, rather than the previous method where it was based on the accounting period that ended in the tax year.

Individuals/partnerships with an accounting date other than the end of the tax year and who choose not to change their accounting date will therefore need to apportion profits/losses from different accounting periods for the ’tax year basis’. This will likely result in using provisional figures in tax returns before submitting final figures once the later accounting period taxable profits have been finalised. In order to move from the ‘current year basis’ to the ’tax year basis’ there will be a transitional period in the 2023/24 tax year.

We strongly recommend that you speak to your normal haysmacintyre contact as soon as possible if you think the above may affect you.

For more details about MTD or any of the above, please contact Alfie O’Dell or your usual haysmacintyre contact.

Tier 1 Investor visa route closes

For individuals who already hold a Tier 1 (Investor) visa, it is still possible to make an application for leave to remain before 17 February 2026, and for individuals wishing to apply for indefinite leave to remain this must be submitted before 17 February 2028. It is advised that all investors who meet the qualifying conditions make a settlement application as soon as possible and, in any event, ahead of the closure of this route in February 2028.

The Government states that settlement in the UK will now be conditional upon applicants executing an investment strategy that will aid genuine job creation and provide other economic benefits. Other visa categories will be expanded and revised to enable entrepreneurs wishing to run a business in the UK if they are able to demonstrate a track record of investing overseas. The end of the Investory visa means that passively holding UK investments will no longer be sufficient to obtaining UK settled status, but opportunities will be still available to individuals who can contribute skills, innovation, and growth to the UK economy.

If you are an individual wishing to relocate to the UK, we recommend that you seek tax advice before you become a UK tax resident. Please contact us for pre-immigration tax planning advice.

Making Tax Digital for Income Tax

The webinar will provide an overview of the MTD regime for Income Tax Self-Assessment from April 2024 and what you need to do to prepare in advance of this fundamental change to annual tax reporting.

This webinar is appropriate for all individuals, and particularly those with rental income or self-employment income.

Register for the webinar via the link below.

We look forward to seeing you at the event.

 

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