Autumn Statement: Chancellor likely to clamp down further on tax avoidance – Smith Cooper
MIDLANDS accountancy and advisory firm Smith Cooper is expecting Chancellor George Osborne to announce further measures to tackle corporate tax avoidance in his Autumn Statement on Wednesday.
The Chancellor is due to give his first all-Tory Autumn Statement/spending review this week and with just a day to go, Smith Cooper has made a number of predictions about what will be discussed.
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The firm’s head of tax Jackie Hendley said: “As the Government continues to look at ways of balancing the budget with increased pressure to spend on defence and healthcare, HMRC is looking to meet this shortfall by continuing with cuts, whilst increasing focus on tackling tax avoidance.
“We predict the following items will be addressed in the Autumn Statement.”
General Tax:
• The Chancellor has stated that he will continue to take action to stop avoidance, evasion and imbalances in our tax system, we can expect more targeted announcements;
• Further pension reforms – we expect comment on how the Government intends to take forward the proposals set out in the Pensions Green Paper;
• HMRC has recently announced the closure of a number of its offices, together with increased use of the Connect system (to collect and interrogate available data). Discussion may take place about how HMRC will interact with taxpayers after these closures;
• Further details could be discussed on how the UK plans to implement the OECD’s proposals to comply with BEPS in an attempt to gain greater control over cross border inter-company transactions;
• Powers to tackle companies who persistently engage in aggressive tax planning;
• Personal services companies – the Treasury believes it is missing out on more than £400m of tax revenue due to workers taking their income through a limited company
• Entrepreneurs’ relief – in the March Budget the Chancellor tightened rules in an attempt to prevent abuse of entrepreneurs’ relief. The Chancellor may again target this relief which cost the Exchequer £2.9bn in 2013/14, potentially either restricting the maximum amount of relief available or increasing the requisite period of ownership
Employment Tax:
Following consultation over the summer we can expect comment on:
• Employment intermediaries tax relief for travel & subsistence. Expectations are that HMRC will remove tax relief on travel and subsistence expenses paid to workers engaged by intermediaries which could have a huge impact on certain elements of the agency sector and there is a good chance it will be enacted
• Termination payments, with any tax/NIC-free elements relating to termination payments only applying in redundancy situations rather that the current position
VAT:
• Further comment is expected in respect of use and enjoyment VAT changes impacting offshore companies businesses with establishments in tax havens such as Gibraltar, Channel Islands and other locations outside of the EU
Other topics:
• The Chancellor has already confirmed that he will announce plans to ease the transition to lower tax credits in next month’s Autumn Statement. Following the embarrassing defeat in the House of Lords can we expect any relaxation to the proposed changes?
• Further comment is expected around giving devolved powers to combined authorities, of which, subject to having an elected mayor, Greater Birmingham could be a beneficiary.
Hendley added: “I expect the Autumn Statement will be putting more meat on the bones of a number of policies that have been under consultation during the summer.
“We hope to receive further clarification on policies such as the new rules in respect of dividend taxation and the main residence nil rate band, in both instances the impact on trusts is still unclear.
“We are looking forward to hearing more about how the Chancellor intends to ‘finish the job’ and return the UK to a Budget surplus of £23bn in 2019/20.”
