Domestic Reverse Charge Implementation Delayed In a move described as a ‘victory for common sense’ by the Federation of Master Builders (FMB) chief executive, the implementation of the domestic reverse charge which was due to take effect on the 1st October 2019 will now come into effect on the 1st October 2020. The domestic reverse charge means that customers receiving a service in the constructing and building sector may have to pay the VAT to HMRC instead of paying the supplier. Some 150,000 businesses will be affected by the change. Reasons for the delay HMRC announced the delay on the 6th September 2019 citing concerns from industry representatives and the desire to avoid the changes coinciding with Brexit as the reasons...

The Government has announced that an independent review will be held into the April 2019 Loan Charge with the results due in mid-November 2019. The review will consider the impact of the loan charge on taxpayers who have entered into disguised remuneration schemes and provide recommendations. In particular the review and recommendations will consider: Whether the Loan Charge is an appropriate response to the tax avoidance behaviour in question Whether changes to the Loan Charge already announced address any legitimate concerns raised regarding the impact on individuals (for example in relation to affordability) The impact on wider taxpayer fairness HMRC’s ability to tackle tax avoidance effectively in the future In ...

The 2019 Loan Charge The 2019 Loan Charge was introduced by the Finance (No 2) Act 2017. The charge means that all employment related loans entered into on or after the 5th of April 1999 which remain ‘outstanding’ (i.e. no settlement agreement has been reached with HMRC) on the 5th April 2019 will be chargeable to tax as employment income in the 2018/2019 tax year. Employment loans were most common in the late 1990s and early 2000s and the vast majority involved employers providing funds to employee benefit trusts ("EBTs") that would then loan the money to the employee on the understanding that it would never need to be repaid. In the Rangers case, the Supreme Court largely dismissed the effectiveness of these types of schemes ...

Follower and accelerated payment notices were introduced in Finance Act 2014 with a view to addressing taxpayers and promoters involved in tax avoidance schemes. The objective of these rules was to improve efficiency with dealing with tax avoidance schemes and to ensure that tax in dispute in relation to the use of an avoidance scheme is held by HMRC until it is resolved. However, these measures have been criticised as draconian by some of those affected, citing the lack of right of appeal and scepticism over whether they are sufficiently targeted as areas for concern. What is a Follower Notice? Where marketed tax avoidance schemes are entered into by a large number of taxpayers, it is more efficient for HMRC to investigate a re...

In the case of  The Queen on the Application of T M Jimenez v FTT (2019), the Court of Appeal overturned the High Court's decision and held that HMRC has the power to issue an information notice to non-UK residents, thereby strengthening its ability to tackle cross-border tax avoidance. Background Mr Jimenez, a UK national with a Spanish passport, left the UK to live in Cyprus and then the UAE. It was common ground that he had been a UK taxpayer for some of this time, however the precise period was in dispute and his tax position was under investigation by HMRC. HMRC issued a notice under paragraph 1 of Schedule 36 Finance Act 2008 to Mr Jimenez's address in Dubai requesting information regarding his affairs, including details ...

The Mutual Assistance in the Recovery of Debt (MARD) is an arrangement which allows a country’s tax authority to collect debts via other countries’ tax authorities and vice versa. We’ve seen an increasing number of these MARD cases at PD Tax, yet it is a surprisingly little-known topic. MARD Example: Susan Susan was born in the UK and studied creative writing and literature at a UK university. Whilst studying, Susan freelanced as a writer for local publications and received payments without tax/NICs being deducted via PAYE. Susan wasn’t aware she needed to register as self-employed with HMRC and complete tax returns to report her income. Susan emigrated to Germany after she graduated, leaving no assets in the UK. Y...

HMRC has changed the registration deadline on its disguised remuneration (DR) settlement opportunity. Those looking to take advantage of this opportunity should register their interest as soon as possible. Background As reported in our previous blog, HMRC is currently running a settlement opportunity for users of DR schemes to settle their tax affairs before a new loan charge comes into effect in April 2019. HMRC had stated that users must register their interest by 31 May 2018 and submit all the required information by 30 September 2018. These dates were designed to give HMRC enough time to process cases before the April 2019 loan charge comes into effect. New Deadline Despite the 31 May deadline for registrations havi...

Please note that this article was updated on 1 August 2018. Please see the bottom of the article for further information. Individuals who have undeclared UK tax liabilities arising from offshore income or assets must disclose such items to HMRC under the requirement to correct (RTC) and pay any tax that is owed by 30 September 2018, or face a more severe set of penalties under failure to correct (FTC). HMRC have begun contacting individuals who have sources of offshore income/gains requesting that they consider whether their UK tax compliance obligations have been met. There are generally 2 kinds of approach: HMRC have received information regarding unreported income/gains in an overseas country/territory, and are contacting you ...

HMRC have announced a new settlement opportunity for users of disguised remuneration (DR) schemes. Those wishing to take part in this opportunity must register their interest by 31 May 2018 and make a full disclosure by 30 September 2018. Background HMRC previously ran a similar settlement opportunity for users of employee benefit trusts (EBTs) which closed on 31 July 2015.  A number of DR cases were before the courts around this time including the ‘Big Tax case’ of Rangers v HMRC which was before the Scottish Court of Session. Since then the Court of Session and the Supreme Court have ruled in favour of HMRC, dismissing the effectiveness of EBTs and loans as tax avoidance mechanisms.  HMRC has stated that it intends use t...

The General Anti-Avoidance Rule (GAAR) Advisory Panel has published its opinion that companies cannot pay employees in gold bullion in order to avoid tax. This is the first application of the GAAR Advisory Panel since it was introduced in 2013 in order to bring an end to abusive tax arrangements and the decision reinforces the power of the GAAR in tackling abusive tax avoidance. The GAAR Advisory Panel is independent of HMRC and gives their opinion on whether certain arrangements come within the GAAR rules. The GAAR guidance rejects the proposition that taxpayers have unlimited freedom to use their ingenuity to reduce their tax bills by any lawful means and the panel only challenges transactions where a course of action has been taken ...