The Chartered Institute of Taxation (CIOT) has urged the government to ‘simplify’ its new Structures and Buildings Allowance (SBA).
The SBA provides relief for expenditure on certain new, non-residential structures and buildings. Eligible construction costs incurred on or after 29 October 2018 will qualify for relief: this will be at an annual rate of 2%, on a straight-line basis. If a contract was entered into before this time, relief will not be available.
In a recent report, the CIOT stated that the current SBA rules are ‘too complex’, and that they ‘over-complicate matters for taxpayers’.
According to the CIOT, the SBA ‘creates new categories of expenditure’, which will have to be identified and tracked for tax purposes. The Institute has urged the government to remove ‘much of the detail and complexity’ from the current proposals in order to help eliminate confusion amongst taxpayers.
Commenting on the matter, John Cullinane, Tax Policy Director at the CIOT, said: ‘We urge the government to consider whether a simpler, more streamlined approach to the SBA is possible. The policy aims could have been achieved by a simpler approach of incorporating the relief for this expenditure into the existing capital allowances available.’
Thousands of taxpayers have urged HMRC to delete the biometric data it stored during phone calls made to its Voice ID system.
HMRC has gathered millions of callers’ biometric data since launching its Voice ID system in 2017. However, non-profit organisation Big Brother Watch stated that people have been ‘railroaded into a mass ID scheme by the back door’.
HMRC’s Voice ID system allows taxpayers to say a key phrase when calling its helpline, which is used in place of a conventional password in order to grant access to accounts. The Revenue now permits individuals to opt out of using the Voice ID scheme, and delete any data captured. However, millions of Voice ID records have been stored in a third-party database.
Big Brother Watch said that it has reported HMRC to the Information Commissioner’s Office (ICO), on the grounds that it has ‘broken data protection laws’.
Figures show that there are seven million taxpayers currently enrolled in HMRC’s Voice ID database. According to a Freedom of Information request, 162,185 individuals have opted out of the Voice ID scheme and have had their biometric data deleted by HMRC.
A spokesperson for HMRC said: ‘Our Voice ID system is very popular with millions of customers as it gives a quick route to access accounts by phone.
‘All our data is stored securely, and customers can opt out of Voice ID or delete their records any time they want.’
A report published by the Economic Affairs Committee has suggested that HMRC is ‘treating taxpayers unfairly’, and has called for the Revenue’s tax avoidance and evasion powers to be reviewed.
The Committee stated that HMRC is failing to ‘discriminate effectively’ in regard to the full range of behaviours and circumstances it classes as tax avoidance.
The Committee said that a ‘clear difference’ exists between deliberate tax avoidance and ‘naïve decisions’ made by ‘unrepresented’ taxpayers.
‘Clearer distinctions’ are needed in relation to the government’s approach to dealing with tax avoidance, the Committee affirmed.
Commenting on the matter, Lord Forsyth of Drumlean, Chair of the Economic Affairs Committee, said: ‘HMRC is right to tackle tax evasion and aggressive tax avoidance. However, a careful balance must be struck between clamping down and treating taxpayers fairly.
‘Our evidence has convinced us that this balance has tipped too far in favour of HMRC and against the fundamental protections every taxpayer should expect.’
A government spokesperson responded: ‘We’ve taken unprecedented action to crack down on avoidance and evasion, making sure people pay their fair share of tax and securing funding for our vital public services.’
HMRC has started to write to taxpayers ahead of the introduction of the Welsh rates of income tax (WRIT) on 6 April 2019.
From this time, taxpayers will pay the WRIT if their main residence is situated in Wales. The Welsh government will set the rates. It intends to use the money raised by the WRIT to fund public services, such as the NHS and schools.
Workers with a main residence in Wales will pay tax at the Welsh rates via Pay as You Earn (PAYE). HMRC will add a ‘C’ to the start of individuals’ tax codes so that affected taxpayers pay the correct rates.
Those who opt to file their self-assessment tax return online will be required to tick a box in order to tell HMRC that they pay the WRIT.
Commenting on the matter, Angela MacDonald, Director General for HMRC Customer Services, said: ‘We want to help people pay the right tax, so we’re writing to customers to let them know that they’ll now be paying WRIT.
‘Customers don’t need to do anything right now, but should make sure to keep HMRC informed if their details change in the future.’
Additional information on the WRIT can be found here.
The Government has launched its new ‘Help to Save’ scheme, which is designed to encourage workers on lower incomes to save.
The government-backed scheme was originally due to come into force in April 2018, but was subject to a delay.
Under the scheme, eligible individuals can save up to £50 every calendar month, for up to four years. After two years they will receive a 50% tax-free bonus on their savings, followed by a further 50% bonus after four years, on any additional savings made.
This means that taxpayers saving the maximum of £2,400 over four years would receive a total bonus of £1,200.
The scheme is open to working people who are entitled to Working Tax Credit and receiving Working Tax Credit or Child Tax Credit. It is also available to those claiming Universal Credit who have a household or individual income of at least £542.88 at their last monthly assessment. (Universal Credit payments are not included in household income for this purpose.)
Help to Save will be available until September 2023.
HMRC has announced an increase in its late tax payment rate, although it has not increased the corresponding interest rate for repayments to taxpayers who have overpaid their tax.
The decision to increase the late payment rate follows the Bank of England’s recent decision to increase UK interest rates to 0.75%.
HMRC has increased the late tax payment rate from 3% to 3.25%, while the repayment rate remains static at 0.5%.
An HMRC spokesperson stated that the different rates ‘provide fairness to taxpayers who pay on time’, with those who do not pay on time facing a ‘higher rate of interest on the unpaid tax that would otherwise have gone to our schools, hospitals and other vital public services’.
The Revenue also argued that setting a higher repayment rate could lead to deliberate overpayments of tax, and emphasised that the repayment rate never falls below 0.5%.
However, some experts warned that the disparity in interest rates is compounded by the amount of time it takes to make repayments to taxpayers.
HMRC is urging UK taxpayers to declare foreign income or profits on offshore assets ahead of the 30 September 2018 Requirement to Correct (RTC) disclosure deadline.
The RTC legislation requires taxpayers to inform HMRC about any offshore tax liabilities in relation to income tax, capital gains tax (CGT) or inheritance tax (IHT).
Renting out a property abroad, transferring assets and income from country to country, or renting out a property in the UK whilst living abroad may result in taxpayers receiving a significant tax bill in the UK.
HMRC has stated that, under the Common Reporting Standard (CRS) initiative, from 1 October 2018 over 100 countries will be able to exchange data relating to taxpayers’ financial accounts. HMRC said that the CRS will ‘significantly enhance’ its ability to detect offshore non-compliance. It is urging taxpayers to therefore ensure any non-compliance is corrected before 30 September.
‘Since 2010, we have secured over £2.8 billion for our vital public services by tackling offshore tax evaders, and we will continue to relentlessly crack down on those not playing by the rules,’ said Mel Stride, Financial Secretary to the Treasury.
‘This new measure will place higher penalties on those who do not contact HMRC and ensure their offshore tax liabilities are correct. I urge anyone affected to get in touch with HMRC now.’
Taxpayers can amend their offshore tax liabilities by using HMRC’s digital disclosure service: this can be accessed here.