A short summary of recent topical developments in tax and property with links to guidance and discussion; specifically:
Final Guidance Uncertain Tax Treatments
ATT warns residential property buyers to beware of possible increase in costs and complexity
Office of Tax Simplification Evaluation Papers (Property Income)
CIOT response: business rates review technical consultation
ATT warns of impact of R&D tax relief plan on small companies
Ground-breaking deal to establish two new Green Freeports in Scotland
Regulations laid to designate Freeport Tax Sites in East Midlands, Liverpool City Region and Solent Freeports
Consultation response: Review of the UK funds regime
Final Guidance Uncertain Tax Treatments
HMRC has now published its final guidance on the notification of uncertain tax treatments by large business which are due to come into effect from 1 April 2022 and which were discussed in last months blog article which contains further details on how the rules are intended to operate.
ATT warns residential property buyers to beware of possible increase in costs and complexity
The Association of Taxation Technicians (ATT) has responded to HMRC’s consultation on stamp duty land tax (SDLT) on mixed-property purchases and Multiple Dwellings Relief (MDR). The ATT is supportive of HMRC’s plan to crack down on SDLT tax avoidance when people buy residential property, but is concerned that HMRC’s proposals to tackle one aspect of the problem will add uncertainty for the purchaser about final purchase cost, complexity that affects both sellers and buyers and could delay the buying process - as well as resulting in increased SDLT bills. Further details can be found here.
HMRC guidance: Check if you can claim National Insurance relief in Freeport tax sites
HMRC has published new guidance on claiming relief from employer Class 1 National Insurance contributions (NICs) when taxpayers employ someone in a Freeport tax site. It is important to note that relief cannot be claimed until the relevant Freeport tax site has been designated. Further details can be found here.
Office of Tax Simplification Evaluation Papers
The Office of Tax Simplification (OTS) has published new papers on: the role of agents and other intermediaries, the operation of the PAYE system, and the scope of its forthcoming reviews of property income and general approach to simplification.
CIOT response: business rates review technical consultation
The CIOT has responded to the Department for Levelling Up, Housing and Communities (DLUHC) and HM Treasury’s technical consultation on the business rates review for properties in England.
To support the proposed three yearly valuation cycle, new legal obligations, likely to take effect from 2023, will require ratepayers (including those businesses that pay no rates due to a relief) to notify the Valuation Office Agency (VOA), via a new online process, of changes to the occupier, the property and to provide rent and lease information in real time, usually within 30 days, and through a mandatory annual return.
A copy of the CIOT response can be found here.
ATT warns of impact of R&D tax relief plan on small companies
The Association of Taxation Technicians (ATT) is calling for a rethink of the Government’s plan to require companies to notify HMRC in advance that they intend to claim R&D tax reliefs, because the ATT fears it risks denying tax relief to the very smallest and newest companies that need this tax relief the most.
A copy of the ATT response can be found here.
Ground-breaking deal to establish two new Green Freeports in Scotland
The UK and Scottish governments have made a landmark agreement to establish 2 new Green Freeports in Scotland.
The Green Freeports will have net-zero targets at the heart as prospective bidders will have to make a pledge to reach Net Zero by 2045. The bidding process will open in spring, closing in summer, after which the bids will be assessed, and successful locations announced. Bidders must set out how they will regenerate the area, create high quality jobs and support transition to a net-zero economy. It is hoped that the new sites will be operational by spring 2023.
Further details can be found here.
Regulations laid to designate Freeport Tax Sites in East Midlands, Liverpool City Region and Solent Freeports
On 25 February 2022, HMRC published maps to delineate Freeport Tax Sites in each of the East Midlands, Liverpool City Region and Solent Freeports. On 1 March 2022, three Regulations were laid to designate each of those sites as Freeport Tax Sites.
The tax reliefs available in Freeport Tax Sites include stamp duty land tax relief on qualifying acquisitions of land, a 10% enhanced rate of structures and buildings allowances, a 100% first-year allowance for qualifying expenditure on plant and machinery, a zero-rate of secondary Class National Insurance contributions (NICs) for qualifying employments and business rates relief.
Consultation response: Review of the UK funds regime
HM Treasury has published a summary of responses outlining the feedback the government received on the call for input on the UK funds regime. Based on the responses, the government, and the FCA where applicable, propose the following next steps:
a review of the genuine diversity of ownership (GDO) condition
further consideration of options to improve the tax efficiency of UK authorised funds, and in particular multi-asset funds
a workstream focusing on further reforms to Real Estate Investment Trusts (REITs), which will also consider the interaction of REITs with the new AHC regime
further engagement with industry to explore what authorised fund managers would find helpful in terms of additional information regarding the application process
an HM Treasury, HMRC and FCA working group to progress work on permitting the distribution of capital by authorised funds
promotion of the UK’s fund offering abroad, including working with industry on further opportunities where possible, and
further work to explore options for the introduction of a new unauthorised contractual scheme fund structure
As set out at Autumn Budget and Spending Review 2021, HMT and HMRC are also working towards a consultation on the VAT treatment of fund management fees as part of the UK funds regime review. This consultation on VAT will be published in the coming months.
If you have any questions on the above please do not hesitate to get in touch.