Tax Day 23 March 2021 … over hyped & under whelming!

The Government had initially billed Tax Day as the day that they would set out their medium to long term tax strategy. The reality was much less than expected, although still marked by publication of over 30 documents, ranging from new consultations and discussion documents to interim reports, calls for evidence and summaries of previous responses!

There were about 30 areas announced, focussed across these three key areas:

• Tax administration
• Tackling non-compliance
• Other tax policies

Modernising Tax Administration

This section included the Government exploring whether income tax self-assessment payments should be changed from twice a year to quarterly or even monthly, and whether smaller companies should be paying corporation tax more frequently as the ‘Making Tax Digital’ program extends from VAT across the wider tax spectrum. These measures include a requirement for businesses and landlords with an income of £10K per annum which are liable to Income Tax will need to maintain digital records and use software to make quarterly returns to HMRC from April 2023.

Tackling non-compliance

A new ‘re-energised’ focus on tax abuse – albeit the Government continue to reference tax avoidance. This included measures on ‘Clamping down on promoters of tax avoidance’ as well as ‘Raising standards in the tax advice market’ through a consultation around proposal for a standard definition of tax advice together with a mandatory requirement that tax advisers hold professional indemnity insurance. Other measures include Tackling disguised remuneration tax avoidance, Preventing and collecting International Tax Debt. Many of these consultations run over the next few weeks and months help to refine the tax legislation and move the ‘noise’ of research, investigation and consultations away from Budget day.

Other tax policies

A wide range of additional measures, minor tweaks and longer term reviews and consultations were also included within this ‘Other’ category. They included, amongst others, business rates review and particularly in respect to tightening the rules on Furnished Holiday Lettings (FHLs), Air Passenger Duty, a new Residential Property Developer Tax in 2022 – to help pay for Aluminium Composite Material (ACM) cladding remediation further to the Grenfell Tower tragedy. The Government also announced that it will conduct a review of the effectiveness of The Office of Tax Simplification (OTS) as required by the Finance Act 2016. Lastly it highlighted further changes to pension tax, Superfunds and trusts as well as Aggregates Levy and Landfill Tax; Carbon Emissions Tax being negated by the implementation of a UK Emissions Trading System, numerous VAT adjustments and a technical amendment to the Structures & Buildings Allowances (SBA) to improve the clarity of data captured on the required SBA statement to reduce the risk of ‘overlapping’ tax relief by subsequent owners.

Contact Us

If you have any queries in respect to Tax Day and how any of the issues raised may impact you or your real estate projects & transactions, then do get in touch.