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Spring Statement 2018

Spring Statement 2018

As expected, the Spring Statement included the release of many tax consultations and calls for evidence.

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The Chancellor of the Exchequer announced his first Spring Statement on 13 March. It was trailed as not introducing new tax measures or spending measures, but a number of interesting consultations and requests for evidence were published focusing on how the tax system should adapt to the modern world. As anticipated, the taxation of the digital economy featured most heavily in these announcements: firstly, an update to last Autumn’s position paper on corporation tax and the digital economy, and secondly, a call for evidence in relation to the role of online platforms in ensuring tax compliance by users. Other consultations released include ones on Entrepreneurs’ Relief, VAT split payment collection, and how to tackle the UK’s plastic waste problem. In a Written Ministerial Statement, the Chancellor has set out the tax consultations we can expect over the coming months.

The consultations released on the day of the Spring Statement include:

Digital economy
An updated position paper on the taxation of the digital economy, with the clear overriding message that the Government has a strong preference for coordinated, multilateral action in this space. The Government is waiting to see how the landscape evolves in light of anticipated recommendations to be published at OECD and EC level over the coming weeks. For more on this, see our article this week.

Cash and digital payments in the new economy
This call for evidence requests comments on the role of cash and digital payments in the new economy, to ensure the Government can support digital payments and the use of cash, and crack down on tax evasion and money laundering.

Allowing Entrepreneurs’ Relief on gains made before dilution
This consultation proposes changes to Entrepreneurs’ Relief to allow this relief for individuals who no longer hold a 5 percent interest in a company where the reduction in their percentage shareholding is due to that company issuing shares to raise capital for the purposes of its trade. For more on this, see our article this week.

Taxation of self-funded work-related training
A consultation on the extension of tax relief for training by employees and the self-employed to support upskilling and retraining. For more on this, see our article this week.

Extension of security deposit legislation
As announced at Autumn Budget 2017, legislation will be introduced in the next Finance Bill to extend the current scope of security deposit legislation to include Corporation Tax and Construction Industry Scheme deductions from April 2019. This consultation seeks views on the proposals to ensure the legislation is introduced effectively and in a targeted way.

Tackling the plastic problem
A call for evidence on how changes to the tax system or charges could be used to reduce wastage of single-use plastics by reducing unnecessary production, increasing reuse, and improving recycling.

Financing growth in innovative firms: EIS knowledge-intensive fund
As part of the Patient Capital Review reforms to promote high-growth and innovative investment, the Government is consulting on the introduction of a new approved fund structure within the Enterprise Investment Scheme (EIS), focused mainly on investing in knowledge-intensive companies.

Online platforms’ role in ensuring tax compliance by their users
The Government will explore how online platforms could work with HMRC and taxpayers to help people who make money through the platforms understand and meet their tax obligations.

Alternative method of VAT collection – split payment
Following on from the previous call for evidence on alternative methods of VAT collection, the Government has released a follow-up consultation on how a potential split payment mechanism could work to combat online VAT fraud.

VAT registration threshold
As recommended by the Office of Tax Simplification (OTS) the Government has released a call for evidence on the effects of the current VAT threshold on the growth of small businesses.

VAT, APD and Tourism in Northern Ireland
The Government is seeking evidence on the impact of VAT and Air Passenger Duty (APD) on tourism in Northern Ireland.

In addition, two consultation outcomes were announced, on more frequent revaluations for business rates and the tax treatment of heated tobacco products.

The Chancellor’s Written Ministerial Statement also sets out what we can expect in the next few months, including consultations on:

  • Large business compliance; 
  • Profit fragmentation;
  • Off-payroll working in the private sector;
  • Short term business visitors;
  • The taxation of trusts;
  • Tackling Corporate Insolvency and phoenixism risks;
  • The CGT payment window;
  • VAT and vouchers;
  • Transferable Tax History (TTH) for oil and gas;
  • Petroleum Revenue Tax (PRT) deduction for decommissioning costs; 
  • Tackling construction sector supply chain fraud;
  • Gaming Duty accounting periods;
  • Reforming VED rates for vans; and
  • Red diesel use in non-agricultural, non-road mobile machinery.

For further information please contact:

Mandy Pearson

Sharon Baynham

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