Consultations

Corporate tax and the digital economy

The government will explore ways to raise revenue from digital businesses such as introducing a tax on revenues that they derive from the UK market. The government is ready to take unilateral action in the absence of sufficient progress on multilateral solutions.

There will also be immediate action against multinational groups, primarily in the digital sector, who achieve low-tax outcomes by holding their valuable intangible assets such as intellectual property in low-tax countries where they have limited economic substance.

VAT split collection

The government is launching a consultation on VAT split payments, with an emphasis on overseas sales into the UK. It is seeking views on options for using payments industry technology to collect VAT on online sales and transfer the tax directly to HMRC.

VAT threshold

The Chancellor has said he would consult on whether the design of the VAT threshold could incentivise growth more effectively. In the meantime, the threshold will remain at £85,000 for two years from April 2018. The EU is also proposing reform and key parts include:

• National thresholds will be capped at €85,000 (about £75,000).
• There will be a EU-wide threshold of €100,000 (about £89,000). So that if a business’s total supplies in the EU reaches this threshold, they will no longer be able to benefit from any national thresholds.
• Small businesses up to a turnover of €2 million (about £1.77 million) will benefit from simplification schemes such as removing interim payments and increasing return periods to a year.

Future of digital payments

The government is supporting delivery of a revamped payments architecture, which will increase the efficiency of the UK’s payments infrastructure, and is consulting on this. The Bank of England is also renewing its settlement system, which will be more adaptable to new technologies and offer greater functionality for all users. The consultation also covers the future of cash.

Entrepreneurs’ relief

The government proposes that individuals who have ceased to hold a 5% interest in a company should be able to claim entrepreneurs’ relief, where the reduction in their percentage shareholding is because of the company issuing shares to raise capital for its trade. New rules in the Finance Bill 2018-19 will apply to latent gains in shares and securities held at the time of fundraising events on or after 6 April 2019.

Financing growth in innovative firms

Many knowledge-intensive companies struggle to receive the capital they need to grow and scale up. The government is consulting on the introduction of a new approved fund structure within the enterprise investment scheme (EIS), and possible extra incentives to attract investment. Such a fund structure would be focused on mainly investing in knowledge-intensive companies.

Business rates

The government sought views on how to deliver more frequent revaluations for business properties in England. A summary of responses was published alongside the Spring Statement with an announcement that the first of the new three-yearly revaluations will be in 2021, a year earlier than previously proposed.

Taxation of self-funded work-related training

The government is consulting on extending the existing tax relief available for self-funded work-related training by employees and the self-employed. The focus will be on lessons from previous initiatives, and ways to extend the existing tax relief, preventing its misuse, and making it sustainable for the public finances, as well as simple to understand and administer.

Online platforms

The government is consulting on how online platforms could help their users understand and comply with their obligation to pay tax on their earnings.

Extending the tax security deposit scheme

HMRC has the power to require high-risk businesses to provide an upfront security deposit, where it believes that there is a serious risk to the revenue. The scope of this security deposit legislation will be extended to include corporation tax and Construction Industry Scheme deductions with effect from April 2019.

Tax and insolvency

HMRC will seek views in Tax Abuse and Insolvency: A Discussion Documenton how to tackle taxpayers who abuse the insolvency regime to avoid or evade their tax liabilities through the use of companies or other limited liability entities.

Single-use plastic waste

The government is consulting on how changes to the tax system or initiatives like deposit return schemes could be used to encourage more sustainable behaviour.