Tax News
April 2009
UK tax law is being rewritten
Two new bills are to be presented to Parliament as part of the government’s commitment to updating the UK’s tax laws. In theory, the new bills aren’t supposed to change existing legislation. Key features of the project include a “more logical structure” for taxation law, the use of simpler language, consultation with interested parties and no alteration to primary taxation policies. However, critics have pointed out that corporation and international tax legislation could face major changes – affecting small businesses and the self-employed. For example, the rewrite of the corporation tax bill will include new provisions on gifts to charities, losses and various forms of relief.
More than £10 billion of tax is paid in error
The financial comparison website www.unbiased.co.uk has just released the results of an investigation into the tax system in which it reported that £10 billion of tax was paid in error. It also found that four-fifths of individuals have done nothing to reduce the amount of taxation they pay. The average person unnecessarily pays more than £190 in taxation a year, depending on their financial and lifestyle choices.
HMRC investigates Barclays’ tax avoidance
The government is investigating Barclays over alleged tax avoidance schemes, it has been reported. According to the Guardian, the lender might have been utilising a number of international loans to allegedly avoid tax payments. The investigation is said to have come to light after a Barclays insider passed documents on to the Liberal Democrats’ Treasury spokesman, Vince Cable.
State-owned banks: the offshore issue
According to a new survey by tax campaigner Richard Murphy, UK banks operate more than 1,207 subsidiaries in offshore tax centres making up 22% of all the banks’ subsidiaries. In the case of Barclays almost 30% of its subsidiaries were in tax havens. An equivalent survey in the US found that no bank had more than 10% of its subsidiaries in tax havens, and their overall exposure to this market was very much lower than that of the UK banks. The Cayman Islands were the most popular haven location: 262 of the subsidiaries were based there. Jersey came next with 170, partly owing to the considerable enthusiasm of Lloyds TSB for creating subsidiaries in that island. Pressure is mounting for an investigation into the offshore activities of the now state-owned banks.
Red tape costs soar to £77 billion
In the same week that HMRC unveiled “streamlining” measures for business, the British Chambers of Commerce (BCC) revealed that the price of red tape and regulations has rocketed by £10 billion to £77 billion in the last year alone.
Meanwhile, according to HMRC, from 1st April, small firms will benefit from less confusion when dealing with the department, owing to its all-encompassing set of powers over PAYE, VAT, corporation tax and income tax. Agents and companies will also be able to take advantage of a two-tier tax tribunals system, which replaces the existing system. Finally, HMRC will implement changes to the entry and exit rules for small enterprises working under the flat-rate VAT scheme. However, some professionals have been critical of these changes, not least the new appeals system, which will be discussed in a future TSR editorial.
CBI slams proposed tax increases
The Confederation of British Industry (CBI) says an increase in corporation tax cannot be justified in the current economy and slammed the government’s proposed 5% corporation tax rise.
