Government publishes ‘no deal’ Brexit impact assessment

In a new document, the government has assessed the impact of a ‘no deal’ Brexit scenario on UK businesses and trade.

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According to the government, its ‘primary aim’ is to ‘ensure that the UK leaves the EU with a negotiated deal’. However, it also stated that it is planning for ‘all eventualities’, including a no deal scenario.

In its assessment, the government suggested that a no deal Brexit scenario would ‘delay goods crossing the Channel’. Potential disruption could result in ‘reduced availability and choice’ of products, according to the assessment, and customs checks could cost firms £13 billion per year.

The government also stated that there is ‘little evidence’ that UK businesses are preparing for a no deal scenario. Furthermore, the government found evidence that individuals are not sufficiently prepared for ‘the effects that they would feel’ in a no deal scenario.

Commenting on recent Brexit developments, Dr Adam Marshall, Director General of the British Chambers of Commerce (BCC), said: ‘The overriding priority must be to assure businesses, employees, investors and communities that an unwanted no deal scenario will not be allowed to happen by default on 29 March.’

The government’s assessment can be read here.

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OTS publishes review into impact of technology on taxation

The Office of Tax Simplification (OTS) has published a review into the impact of technology on UK taxation.

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The review analyses how technology creates opportunities and poses challenges for UK taxation.

According to the OTS, technology could pose a risk for taxpayers in the future. The OTS argues that the use of technology to submit returns will not ‘remove the need for individuals and businesses to understand and comply with their tax obligations’.

The review puts forward some key points for the government to consider in regard to the impact of technology on taxation. The OTS recommends expanding the current personal tax account (PTA), and automatically enrolling taxpayers into the service; mitigating the risk of taxpayers ‘losing sight of their tax obligations’ through the use of technology; and monitoring the impact of the movement towards a cashless society.

Commenting on the issue, Paul Morton, Tax Director at the OTS, said: ‘Technology has transformed much of our day-to-day lives, in some areas almost beyond recognition. Although many tax-related activities have benefitted from a digital approach, we are still at the early stages of the potential transformation.

‘This paper explores some of the more difficult questions that new technology presents.’

The review can be read in full here.

Government launches consultation on ‘plastic packaging tax’

The government has launched a consultation, outlining its proposal to introduce a tax on plastic packaging with less than 30% recycled content.

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The ‘plastic packaging tax’ was announced in the 2018 Autumn Budget and is set to be introduced in 2022. The tax will be UK-wide, and the government has stated that it is ‘committed to working closely with the devolved administration’ on its design.

In its ‘call for evidence’ on the matter, which was made last year, the government received a record number of responses. It found that using recycled plastic is ‘often more expensive than using new plastic’, despite it being better for the environment.

According to the government, plastic packaging accounts for 44% of the plastic used in the UK. The UK generates over 2 million tonnes of plastic packaging each year.

In this consultation, which is open until 12 May 2019, the government is seeking views on the design of the new plastic packaging tax. In addition, it is looking at how best to implement the tax without causing administrative disruption.

The government is also seeking to create ‘economic incentives’ to encourage manufacturers to produce sustainable packaging.

The next steps in regard to the new tax will be outlined during the 2019 Budget. The government intends to publish draft legislation on the matter in 2020.

£3 billion in Apprenticeship Levy funding ‘remains untouched’, data reveals

A Freedom of Information request made by the Open University (OU) has revealed that £3 billion in Apprenticeship Levy funding remains unused, meaning that only 14% of available funding is being utilised by employers.

 

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Further research carried out by the OU revealed that although employers agree in principle with the Apprenticeship Levy, many have been left feeling ‘frustrated’ with the scheme. A handful of employers stated that the process for applying for funding has ‘put them off’, while 66% reported that they find the system confusing.

Furthermore, some employers said that the apprenticeships available are ‘not flexible enough to meet their needs’, while others revealed that government changes mean that they are ‘unable to make long-term strategic decisions’.

Of those who have embraced the Apprenticeship Levy, 27% stated that it has been good for their organisation, while 20% said that working with apprentices has delivered ‘significant benefits’.

Commenting on the matter, David Willett, Corporate Director at the OU, said: ‘Employers are missing out on a golden opportunity to close skills gaps and ensure that their organisations are equipped with the ability, agility and knowledge required to handle upcoming challenges.

‘With so many employers experiencing skills shortages, it’s crucial that they make use of the Levy and invest in training to ensure that their organisations remain strong and competitive in the future.’

Small businesses ‘worrying about access to finance after Brexit’, according to report

A report published by the British Business Bank has revealed that a third of small businesses believe it will become ‘more difficult’ to access finance once the UK leaves the EU.

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The Bank’s 2019 Small Business Finance Markets report also revealed that, although 29% of small firms expect Brexit to have a ‘negative impact’ on their business, many remain optimistic about growth, with half of small businesses still aspiring to expand over the next 12 months.

However, the overall demand for external finance has declined, according to the report: just 36% of small businesses used external finance in 2018. Evidence also suggests that some firms are delaying longer-term investment decisions until after Brexit.

Commenting on the report, Keith Morgan, CEO of the British Business Bank, said: ‘It is clear that a lack of confidence is affecting many smaller businesses, as evidenced by a continuing drop in demand for external finance. It is, however, encouraging to see that half still aspire to grow, and that there’s increased awareness of a broader range of finance options.

‘This will be an important factor in ensuring that smaller businesses are better placed to make the right finance choices as uncertainty diminishes and confidence returns.’

Survey suggests eight in ten businesses ‘aware of MTD for VAT’.

A survey carried out by HMRC has revealed that 81% of VAT-mandated businesses are ‘aware of Making Tax Digital for VAT (MTD for VAT)’, either by name or by concept.

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MTD for VAT is set to come into effect from 1 April 2019 for businesses which have a taxable turnover above the VAT registration threshold (currently £85,000). As part of the initiative, businesses must keep some records digitally, and must submit their VAT returns via an Application Programming Interface (API).

HMRC polled 500 businesses, and found that 43% of firms had heard about MTD through their accountant. A further 13% had heard about the initiative via an email from HMRC; 11% read about it on HMRC’s website; and 9% heard via a letter sent to them by HMRC.

However, only 45% of businesses stated that they plan to sign up to MTD for VAT before its introduction in April. One in five firms ‘don’t have a clear idea’ of when they plan to sign up, and 4% said that they require additional information before they decide.

Commenting on the MTD for VAT initiative, Mel Stride, Financial Secretary to the Treasury, said: ‘HMRC has made good progress in preparing for MTD. The pilots have progressed well, and the full functionality of MTD has been tested with a wide range of different businesses, including some below the VAT threshold, which have chosen to take part voluntarily.

‘HMRC is ready, the software market is ready, and hundreds more businesses are getting ready every day by joining the pilot.’

MPs call for introduction of new levy on clothing retailers

The Environmental Audit Committee has called for the introduction of a new levy on so-called ‘fast fashion’ retailers.

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The Committee wants to make clothing retailers ‘take responsibility’ for the waste that is generated during the process of making new clothes.

It has suggested that each item of clothing retailers create should be subject to a 1p ‘producer responsibility charge’, termed the Extended Producer Responsibility (EPR) charge. The Committee believes that this will help pay for ‘better clothing collection and recycling’.

The Committee also stated that taxation should be reformed to ‘reward companies that offer clothing repairs’, and also reward those who attempt to reduce the ‘environmental footprint’ of their products. Additionally, the Committee urged the government to ‘reduce VAT on repair services’.

Commenting on the issue, Mary Creagh, Chair of the Environmental Audit Committee, said: ‘Fashion retailers must take responsibility for the clothes they produce. That means asking producers to consider and pay for the end-of-life process for their products through a new EPR scheme.

‘The government must act to end the era of throwaway fashion by incentivising companies that offer sustainable designs and repair services.’