December 2014 report

Transcription

Weekly Tax
Matters
KPMG LLP (UK)
19 December 2014
contents
TAX POLICY
•
•
•
•
•
Budget 2015 – 18 March
OECD BEPS update
BEPS Action 10: Transfer Pricing aspects of cross-border
commodity transactions
BEPS Action 10: Profit splits in the context of global value
chains
Evolving Landscapes: KPMG’s guide to taxation in Scotland
post referendum
CORPORATE TAX
•
•
FII GLO High Court decision
Amendments in respect of ‘permanent as equity’ loans
INDIRECT TAX
•
•
•
VAT relief on substantially and permanently adapted motor
vehicles for wheelchair users
Revenue and Customs Brief 46/14: VAT rule change and the
VAT Mini One Stop Shop
Commission v Spain: Insurance Premium tax – Requirement to
appoint a fiscal representative
© 2014 KPMG LLP, a UK limited liability partnership, is a subsidiary of KPMG Europe LLP and a member firm of the KPMG
network of independent member firms affiliated with KPMG International Cooperative, a Swiss entity. All rights reserved.
contents
EMPLOYMENT TAX
•
•
•
•
•
Employment intermediaries: travel and subsistence for
temporary workers
PAYE - the new Penalty and Appeals Service
PAYE - Changes to year end process 2014/2015
Real Time Information and Universal Credit
EBT settlement opportunity
PERSONAL TAX
•
•
Latest HMRC campaign targets solicitors
HMRC release updated Statutory Residence Test indicator for
individuals
INTERNATIONAL STORIES
•
International round up
OTHER NEWS IN BRIEF
© 2014 KPMG LLP, a UK limited liability partnership, is a subsidiary of KPMG Europe LLP and a member firm of the KPMG
network of independent member firms affiliated with KPMG International Cooperative, a Swiss entity. All rights reserved.
TAX POLICY
BUDGET 2015 – 18 MARCH
The Chancellor has announced that
next year’s Budget will take place on
Wednesday 18 March.
Chris Morgan
 +44 (0)20 7694 1714

[email protected]
The Chancellor has announced (during Treasury questions on 17 December) that next
year’s Budget will take place on Wednesday 18 March. Given the usual Parliamentary
timings, we would expect that the Budget speech will start at around 12.30,
immediately after Prime Minister’s Questions.
We already knew that Parliament is due to be dissolved on Monday 30 March, ahead
of the general election in May. With the Budget now scheduled for mid-March, there
will be very little Parliamentary time available for Finance Bill 2015 (which needs to
receive Royal Assent before dissolution). This makes the opportunity to look in detail
at draft clauses for the Bill, published on 10 December, even more valuable. The draft
clauses are open for consultation until 4 February 2015, and our commentary on the
key measures can be found here. We would encourage readers to take the time to
look at those areas which might have an impact on them or their business and respond
to the consultation where needed. If you have any queries on the draft clauses, please
get in touch with your usual Tax and Pensions contact.
© 2014 KPMG LLP, a UK limited liability partnership and a member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative (“KPMG International”), a Swiss entity. All rights reserved.
1
OECD BEPS UPDATE
There have been a number of BEPS
discussion drafts published this week
following the OECD webcast on 15
December.
On 15 December 2014 the OECD held the fifth update webcast to report on progress
on the base erosion and profit shifting (BEPS) action plan. A recording of the webcast
is available on the OECD website. Following this, on 16 December 2014 two
discussion drafts on Action 10 were published covering transfer pricing proposals.
These are discussed in more detail in separate articles below. Then on 18 December
2014 the following were published:
■ Discussion drafts on two new elements of the OECD International VAT/GST
Robin Walduck
 +44 (0)20 7311 1816

[email protected]
Chris Morgan
 +44 (0)20 7694 1714

[email protected]
Guidelines related to Action 1 with comments requested by 20 February 2015.
■ A discussion draft on Action 4 (Interest deductions and other financial payments)
with comments requested by 6 February 2015.
■ A discussion draft on Action 14 (Make dispute resolution mechanisms more
effective) with comments requested by 16 January 2015.
Further details will be provided in future editions of Weekly Tax Matters.
BEPS
ACTION
10:
TRANSFER
PRICING ASPECTS OF CROSSBORDER
COMMODITY
TRANSACTIONS
On 16 December 2014, the OECD issued a public discussion draft under BEPS Action
Plan 10, entitled Transfer Pricing aspects of cross border commodity transactions. This
draft proposes updated guidance on the determination of arm’s length prices to
multinationals engaged in intra group cross border purchases/ sales of commodities.
The OECD has provided draft
guidance on transfer pricing of
related
party
commodity
transactions.
The draft seeks to address perceived tax avoidance concerns faced in demonstrating
the arm’s length price of traded commodities. In particular:
■ It provides a preferred methodology – An amendment is proposed to Chapter II of
the OECD Guidelines to promote the application of a Comparable Uncontrolled
Price (CUP) method for traded commodities as the most appropriate transfer pricing
2
John Neighbour
 +44 (0)20 7311 2252

[email protected]
Richard S Murray
 +44 (0)20 7694 8132

[email protected]
method. In particular, the advice describes how publicly available market prices,
such as those quoted on an exchange, can be used as a reliable benchmark.
■ Deemed pricing date – A deemed pricing date is proposed in order to tackle the
potentially abusive action by taxpayers of selecting a preferred transaction date to
book a commodities trade, with the outcome of manipulating the price payable for
the product and therefore the multinational group’s tax outcome.
■ Appropriate use of comparability adjustments – To limit subjectivity in undertaking
adjustments to quoted prices further research is required. Comments are sought by
the OECD on typical adjustments applied in the pricing formulae used in third party
trades.
While the validation of the CUP method is useful, there are still significant unaddressed
issues which could have a substantial impact on some multinational taxpayers if left
unsolved.
Comparability adjustments remains a complex issue, in particular where there are real
functions and risk management activities being performed within intermediary trading
entities. No mechanism for adjusting available prices for these risk bearing/ managing
activities is proposed in the draft. Further, an implication of the draft guidance is that
price risk for commodities should be borne at least in part by resource companies –
this could lead to profit volatility throughout a value chain, which is not unreasonable,
but it could also mean a real risk of persistent losses in more costly mining locations.
Further, it imposes more potentially onerous compliance requirements on
multinationals which buy and sell commodities.
Taxpayers and practitioners are invited to comment by 6 February 2015 on the various
issues raised.
3
BEPS ACTION 10: PROFIT SPLITS IN
THE CONTEXT OF GLOBAL VALUE
CHAINS
The OECD’s new discussion draft on
BEPS invites clarification on applying
transactional profit split methods to
global value chains.
Komal Dhall
 +44 (0)20 7694 4498

[email protected]
Richard S Murray
 +44 (0)20 7694 8132

[email protected]
In its paper on Action 10 of the BEPS Action Plan, the OECD seeks to clarify the
application of the profit split method (PSM) in the context of global value chains with a
view to ensuring transfer pricing outcomes are properly aligned with value creation.
The draft adopts a consultative approach wherein the OECD seeks answers and
examples in response to key aspects of when and how to implement the PSM.
The draft suggests the PSM may provide an appropriate solution to practical difficulties
associated with applying a one-sided transfer pricing method to the transactions of
integrated multinational (MNE) groups. Various scenarios are provided to raise key
issues. The issues covered by the draft include:
■ Value chains in which it is noted that one-sided methods may not reliably account
for the interdependence of key functions and risks and the synergies and benefits
created by such integration;
■ The appropriate scope for the application of the PSM. In particular, circumstances
involving unique and valuable contributions by entities to the MNE group’s business,
integration and sharing of risk between group members, fragmentation of functions
in an integrated supply chain and the potential lack of reliable comparables;
■ Aligning taxation with value creation, including objectivity in profit split factors;
■ The application of PSM to hard-to-value intangibles;
■ Addressing differences between ex ante and ex post results in situations where
strategic risks are shared between associated enterprises; and
■ Dealing with the application of PSM to losses.
Taxpayers and practitioners are invited to comment by 6 February 2015 on the various
issues raised.
4
EVOLVING LANDSCAPES: KPMG’S
GUIDE TO TAXATION IN SCOTLAND
POST REFERENDUM
This update looks at tax in Scotland
post-referendum and the process for
further devolution following the
Smith Commission’s report.
Jon Meeten
 +44 (0)131 527 6678

[email protected]
Following on from the first edition of Evolving Landscapes in July we have seen a great
deal of change with regards to tax in Scotland. The majority of voters on 18 September
decided that Scotland should remain part of the UK. The devolution of power for
certain aspects of taxation has already begun and, post referendum, new powers for
the Scottish Parliament have been recommended.
In this edition of Evolving Landscapes, we focus on what has changed, what those
changes mean, and the direction of travel for the future. Our discussion paper provides
an update on tax in Scotland post referendum and the process for further devolution
following the publication of the Smith Commission’s report on 27 November.
We can expect the continued evolution of taxation - not only in Scotland but throughout
the UK - and we reflect on how different tax policies in different jurisdictions are already
driving change in other parts of the UK.
In our view, whatever further powers are devolved to Scotland or to the other
constituent parts of the UK, they must be coherent, sustainable and workable for
people and businesses – wherever they are based and do business.
Changes to the tax landscape will impact on both businesses operating in Scotland,
and individuals living here. Visit www.kpmg.com/UK/scotlandtaxes to keep abreast of
the changing tax landscape in Scotland with regular updates on proposals as they
develop.
If you would like to refer back to Evolving Landscapes Part I then please click here.
5
CORPORATE TAX
FII GLO HIGH COURT DECISION
The High Court has published a
judgment on the quantification and
remedies aspects of the FII Group
Litigation.
Chris Morgan
 +44 (0)20 7694 1714

[email protected]
Stephen Whitehead
 +44 (0)20 7311 2829

[email protected]
On 18 December 2014 the High Court published its decision in The Test Claimants in
the FII Group Litigation v HM Revenue and Customs [2014] EWHC 4302 (Ch). The
decision runs to 471 paragraphs and further details will be provided in future editions of
Weekly Tax Matters.
As a reminder, the key point at issue in this long-running case is the legality of the pre
July 2009 dividend taxation regime in the UK. It has already been determined that the
old rules were in breach of EU law and the High Court had 29 subsequent issues for
consideration in this latest decision. Among other points, Mr Justice Henderson:
■ Accepted the claimants’ argument that a credit should have been given for the
higher of the actual underlying tax paid and the ‘foreign nominal rate’;
■ Decided that in the case of overseas subsidiaries (as opposed to portfolio holdings)
the foreign nominal rate should be that of the company in which the underlying
profits were actually subject to tax (not necessarily the paying company);
■ Accepted the claimants’ proposed ‘CT61 method’ for calculating overpaid advance
corporation tax (ACT) at the level of the ‘water’s edge’ company rather than
attempting to trace dividend flows through to the parent company where a group
election was made;
■ Rejected HMRC’s arguments on the treatment of foreign income dividends and the
effect of ACT utilisation; and
■ Rejected HMRC’s defences against mistake-based claims and held that the
claimants were entitled to restitution with compound interest.
We are currently reviewing the judgment in detail in order to provide advice on the next
steps for clients with dividend exemption claims in place. Please speak to your usual
Tax and Pensions contact who will be able to assist you further in due course.
6
AMENDMENTS IN RESPECT OF
‘PERMANENT AS EQUITY’ LOANS
Final regulations published on the
transition to new GAAP accounting
standards and loans accounted for as
permanent as equity.
Rob Norris
 +44 (0)121 232 3367

[email protected]
Mark Eaton
 +44 (0)121 232 3405

[email protected]
Regulations will come into force on 31 December 2014 to preserve the existing tax
treatment for loans accounted for as permanent as equity on transition to new
generally accepted accounting practice (GAAP) accounting standards.
The effect of the regulations is that a company is not required to bring into account the
foreign exchange transitional adjustment on permanent as equity loans when new
GAAP accounting standards are adopted.
In addition, exchange differences
subsequently recognised in the accounts on such loans up to the date of repayment or
disposal are also not taxable. Instead, the net exchange gain or loss is taxed or
allowed when the loan is repaid or otherwise disposed of.
The regulations have retrospective effect, applying where there is a change in
accounting standards, which brings to an end the permanent as equity accounting, in a
period of account beginning on or after 1 October 2012. The retrospective application
of the commencement prevents companies from adopting new GAAP accounting
standards early to circumvent the rules.
The treatment of loans entered into after the adoption of new GAAP will not be affected
by these grandfathering provisions, with exchange differences being fully taxable as
they are taken to profit and loss.
Companies may consider options for mitigating the exposure to taxable exchange
differences on a prospective basis, for example by putting the loan asset in a company
with the same functional currency as the loan or making an election to prepare the
computations in the currency of the loan asset. In either case, no exchange
differences would be recognised for tax purposes.
The detail of the regulations is considered further in this note.
7
INDIRECT TAX
VAT RELIEF ON SUBSTANTIALLY
AND
PERMANENTLY
ADAPTED
MOTOR VEHICLES FOR WHEELCHAIR
USERS
HM Revenue & Customs (HMRC) have released a summary of the responses to their
consultation on the VAT relief on substantially and permanently adapted motor
vehicles for disabled wheelchair users. This consultation concerns the reform of the
zero rate relief and aims to address abuse of the relief and clarify the legislation, whilst
ensuring that eligible wheelchair users can still benefit from zero rating.
HMRC have released a response to
the consultation on the VAT relief on
substantially
and
permanently
adapted motor vehicles for disabled
wheelchair users.
The response document confirms that the Government will proceed with reform of the
relief. Further informal discussions will be held to work through some of the details of
the changes. Legislative changes will be included in Finance Bill 2016 and new
guidance will be issued. The main changes confirmed are:
■ There will be a limit of one adapted motor vehicle per person in any three year
Steve Powell
 +44 (0)20 7311 2746

[email protected]
Karen Killington


+44 (0)20 7694 4685
[email protected]
period. However, provision will also be made to allow more than one vehicle in
exceptional circumstances;
■ ‘substantially’ and ‘permanently’ will be defined in the legislation but there will be no
minimum cost of adaptation rule;
■ Motor vehicle suppliers will be required to submit details of zero-rated sales to
HMRC;
■ Use of eligibility declarations will be mandatory and penalties will be introduced for
the provision of false declarations; and
■ Clarification will be given in the guidance to confirm that users of lower limb
prosthetics are entitled to relief.
8
REVENUE AND CUSTOMS BRIEF
46/14: VAT RULE CHANGE AND THE
VAT MINI ONE STOP SHOP
Ahead of the impending 2015 VAT
changes for certain B2C services
HMRC have issued their final
guidance.
Steve Powell
 +44 (0)20 7311 2746

[email protected]
Karen Killington


+44 (0)20 7694 4685
[email protected]
COMMISSION V SPAIN: INSURANCE
PREMIUM TAX – REQUIREMENT TO
APPOINT A FISCAL
REPRESENTATIVE
The CJEU has found that the
requirement for insurers to appoint a
fiscal representative in Spain is an
obstacle to the free movement of
services.
HM Revenue & Customs (HMRC) have released a further Brief on the 2015 VAT
changes. The Brief is split into a number of sections. Section 2 gives further guidance
on what supplies are covered by the changes and goes onto consider what is meant by
‘electronically supplied’.
Section 3 considers the issue of UK businesses who currently trade below the UK VAT
registration threshold and who are supplying qualifying e-services to qualifying
customers in other Member States and, therefore, will be affected by the 2015
changes. The Brief confirms HMRC’s policy that such businesses can split their UK
and EU businesses without falling foul of the disaggregation provisions, as the split is
not done with a view to avoiding UK VAT. They can register the EU part for UK VAT
voluntarily, so as to then be able to register for the Mini One Stop Shop (MOSS). Such
businesses can still benefit from the UK VAT registration threshold for their UK taxable
supplies, and will not have to account for UK VAT on those supplies while the level of
these remains under the UK threshold.
The Brief also has a section that addresses when to apply for a MOSS registration and
a further section on record keeping and how to collect two pieces of non-contradictory
evidence to determine where the EU customer lives or belongs.
The Court of Justice of the European Union (CJEU) has released its Judgment in the
case of Commission v Spain (c-678/11), concerning non established insurers who
operate under the freedom to provide services. Spain requires such insurers providing
insurance for risks located in Spain to appoint a local tax fiscal representative. The
Commission considered that this requirement acted as an obstacle to the free
movement of services, in so far as it imposed additional restrictions and burdens on
non-established insurers that are not imposed on domestic Spanish insurers.
The Court noted that there are sufficient cooperation mechanisms in existence
between the authorities of the Member States at EU level to enable a Member State to
recover tax due in one Member State from a supplier who is not established in that
Member State. Therefore, the requirement for a fiscal representative went beyond what
9
Adrian Smith
 +44 (0)20 7311 2427

[email protected]
is necessary for the effective fiscal supervision and the prevention of tax evasion, and
meant Spain had failed to fulfil its obligations under Article 56 of the Treaty on the
Functioning of the European Union (TFEU).
The second argument from the Commission was, however, dismissed. This argument
is that under Article 36 of the EEA Agreement (which is similar to Article 56 TFEU) the
requirement to appoint a fiscal representative would also restrict the freedom to
provide services. As there was not the same framework of cooperation between the
authorities of Member States and countries party to the EEA Agreement which are
non-EU members, the requirement to appoint a fiscal representative does not go
beyond what is necessary to achieve the objective of ensuring the effectiveness of tax
supervision and the prevention of tax avoidance. Spain has, therefore, not failed to fulfil
its obligations under Article 36 of the EEA Agreement. The Judgment can be accessed
here.
10
EMPLOYMENT TAX
EMPLOYMENT
INTERMEDIARIES:
TRAVEL AND SUBSISTENCE FOR
TEMPORARY WORKERS
The Government has issued the
promised
discussion
document
looking at the use of overarching
contracts of employment.
Steve Wade
 +44 (0)20 7311 2220

[email protected]
Mike Lavan
 +44 (0)20 7311 1437

[email protected]
In the Autumn Statement, the Government said that it was “concerned at the growing
use of overarching contracts of employment (OACs) by employment intermediaries
such as ‘umbrella companies’, which allow some temporary workers to benefit from tax
relief for home-to-work travel expenses that is not generally available to other workers”
(at an Exchequer cost of £400m annually). It promised a discussion document: that
has now been published.
As the document notes, obtaining tax relief for travel expenses is not the only reason
that an intermediary might choose to use overarching contracts of employment to
engage temporary workers. Using these contracts means (generally) that temporary
workers are treated as employees and, therefore, have more rights than other agency
workers, including the right to receive redundancy pay. The foreword to the discussion
document notes that the intention is to address avoidance “whilst ensuring that
arrangements that do not seek to exploit the tax rules are not affected”. Two
possibilities for changes to the legislation are outlined: amendments to the general
rules on travel and subsistence expenses, or the introduction of rules specifically
restricting relief where individuals are employed under OACs.
The Government is seeking views on 18 specific questions, including:
■ The reasons that OACs are used;
■ The extent to which OACs are used, and recent trends in usage;
■ Whether there is a “strong case” for a change in the rules;
■ The likely impact of each of the potential options for change; and
■ Whether any removal of relief should extend to Personal Service Companies.
The document states that although responses to the document will “inform decisions for Budget 2015”, any measures would not take effect until 2016
at the earliest. Responses have been requested by 10 February 2015.
11
PAYE - THE NEW PENALTY AND
APPEALS SERVICE
HMRC’s December Employer Bulletin
contains details regarding PAYE
penalties and the new on-line
process for appealing penalties.
Steve Wade
 +44 (0)20 7311 2220

[email protected]
Mike Lavan
 +44 (0)20 7311 1437

[email protected]
HM Revenue & Customs’ (HMRC’s) December Employer Bulletin explains that in
February 2015 PAYE late filing penalties will be issued for the quarter from 6 October
to 5 January 2015 in respect of employers with 50 or more employees. Employers
using an agent should note that agents will not receive a copy of the penalty notice and
HMRC, therefore, ask that you copy any penalty notice to your agent.
You should also note that one notice can contain more than one penalty: it will contain
details of all the penalties for the quarter. Each penalty will, however, have a separate
penalty reference or Unique ID. This will be required if a penalty is to be appealed.
A penalty can be appealed using the Penalty and Appeal Service (PAS), which allows
employers and their agents to appeal penalties online. This is intended to be the
quickest way to make an appeal and have HMRC process it. Further details on using
this service are given in the Bulletin, which explains that:
“For an appeal to be successful:
■ We [HMRC] must have raised the penalty on an incorrect understanding of the facts
(e.g. the submission was made on time or the size of the employer is wrong); or
■ there must be reasonable grounds for late submission.”
When the appeal is made HMRC will automatically issue one of two GNS messages:
1) “HMRC has received the appeal which has been accepted and settled, the penalty
has been cancelled and a revised penalty notice will be issued in due course”. As
HMRC note, this “will cancel the penalty and reduce the charge to nil.” ; or
2) “The appeal has been received and referred for further consideration.”
The Bulletin also explains that appeals can be made in writing and gives guidance on
how to avoid penalties.
Penalties for employers with fewer than 50 employees will begin from 6 March 2015.
12
PAYE - CHANGES TO YEAR END
PROCESS 2014/2015
HMRC
have
announced
that
commencing with the year ended 5
April 2015 employers will not have to
complete the “P35 questions”.
Steve Wade
 +44 (0)20 7311 2220

[email protected]
On December 17 HM Revenue & Customs (HMRC) published a revised Tax Information
and Impact Note on improving the operation of PAYE. This note contained the following
statement:
“The end of year checklist is a box on the FPS [Full Payment Submission] that, when
ticked, opens the end of year declaration, consisting of seven questions. This was a
feature of the now defunct P35, which has been incorporated into the design of the FPS.
Having evaluated the process with internal and external stakeholders we are now
removing the mandation for completing the checklist from 6 March 2015 and the PAYE
Regulations are being amended to remove this requirement from that date.”
Although the document refers to 7 questions, HMRC’s latest data item list for 2014/2015
has the following 6 P35 questions:
Mike Lavan
1) Did you make any free of tax payments to an employee?
 +44 (0)20 7311 1437
2) Did anyone else pay expenses or in any way provide vouchers or benefits to any of
your employees while they were employed by you during the year?

[email protected]
3) Did anyone employed by a person or company outside the UK work for you in the
UK for 30 days or more in a row?
4) Have you paid any of an employee’s pay to someone other than the employee, for example to a school?
5) Completed forms P11D and P11D(b) are due?
6) Are you a Service Company?
This a welcome simplification but employers should remember, for example, that forms P11D will still need to be completed. It is the superfluous
requirement to report separately that the forms need to be completed that has been removed. It is also unfortunate that this positive change was not
mentioned in the Employer Bulletin published this week when HMRC explained that:
“We would remind employers that the filing deadline of 19 May following the end of the tax year doesn’t apply for the tax year 2014-15 onwards.
Instead, employers should continue to report their PAYE for month 12 as they would for the rest of the tax year.”
Due to the late notice of this change some software developers will not be able to amend their products in time to meet this year end and
consequently some employers may find they have to answer the questions in order to use their software. HMRC’s basic payroll tool is not expected to
be updated for this change until July 2015.
13
REAL TIME INFORMATION
UNIVERSAL CREDIT
AND
The latest issue of Employer Bulletin
includes an update on how RTI is
used to deliver UC.
Steve Wade
 +44 (0)20 7311 2220

[email protected]
Universal Credit (UC) has been in the news recently, as the Department for Work and
Pensions have expanded the number of individuals who receive it rather than existing
benefits and tax credits. HMRC’s latest Employer Bulletin includes an article looking at
how PAYE information gathered under RTI is used to support the delivery of UC.
The article notes that “RTI has been used in nearly all Universal Credit payment
assessments where the claimants are in work”. The intention is that the RTI
information allows UC payments to be adjusted month-on-month to give individuals the
right level of support on an ongoing basis. HMRC note that this increased
responsiveness has benefits for employers, particularly those trying to fill temporary or
seasonal positions, or those who would otherwise have to spend time verifying
earnings for employees in receipt of Jobseekers Allowance.
UC uses RTI data automatically (that is, there are no checks on the accuracy of the
data before it is used to calculate the level of UC payments).
HMRC note that it is, therefore, important that the RTI data received is as accurate as possible. They identify the following best practice points:
■ Ensuring pensions and earnings are both properly categorised;
■ Ensuring that year to date figures are correct; and
■ Using the BACS process appropriately, and using the BACS hashtag where appropriate.
Even following the latest expansion of UC, it is worth noting that it has currently only been rolled out to a limited selection of claimants in a particular
geographical area. As more claimants are moved to UC, employers should expect an increased emphasis on delivering quality RTI data to support
the Universal Credit system.
14
EBT SETTLEMENT OPPORTUNITY
HMRC’s Employee Benefit Trust
settlement opportunity is due to
close on 31 March 2015.
Matthew Hunnybun
 + 44 (0)113 2313204

[email protected]
Jayesh Lad
 + 44 (0)115 9353450

[email protected]
HM Revenue & Customs’ (HMRC’s) current Employee Benefit Trust (EBT) settlement
opportunity is due to close on 31 March 2015. This means that anybody wishing to
take advantage of a negotiated settlement must enter into a dialogue with HMRC by
that date (even though negotiations may not complete until after 31 March). At the
moment, we are not aware that HMRC are looking to extend this window.
EBTs that were established with a Disclosure of Tax Avoidance Scheme number,
which have open enquiries with HMRC, are the subject of much uncertainty in relation
to potential tax liabilities, which can have an impact on cash flow forecasting through to
the potential impact on company value at an exit. The introduction of Accelerated
Payment Notices (APNs) (currently for tax only, although the National Insurance
Contributions Bill, which will apply APNs to NICs, is expected to be enacted soon),
means that companies with open enquiries into EBT issues may be required to obtain
funding and make payment of the perceived tax advantage obtained to HMRC within
90 days, where an APN is issued.
In order to plan ahead we would recommend that businesses to which the settlement
opportunity might be relevant carry out an initial review by no later than 31 January
2015, allowing sufficient time to liaise with HMRC.
15
PERSONAL TAX
LATEST HMRC CAMPAIGN TARGETS
SOLICITORS
This voluntary disclosure opportunity
is aimed at those solicitors who need
to bring their tax affairs up to date.
Derek Scott
 +44 (0)20 7311 2618

HM Revenue & Customs (HMRC) have launched the Solicitors’ Tax Campaign, a
voluntary disclosure opportunity for those who work in the legal profession as a
solicitor who need to bring their tax affairs up to date.
Those participating need to register their intention to make a disclosure by 9 March
2015. The disclosure and payment needs to be made by 9 June 2015.
HMRC have stated that information gathered has allowed them to identify solicitors
who have not paid the correct amount of tax. HMRC’s data analysis tools already allow
them to pull together data from a wide range of sources and this is increasing both
through agreements with other countries and by acquiring new UK data.
[email protected]
In addition to untaxed income received as a solicitor the disclosure needs to include
any other untaxed income (e.g. investment income) and capital gains.
HMRC have used a number of Campaigns targeting specific professions or types of circumstances for some time (doctors, electricians, plumbers, let
property, offshore assets, and so on) and they have proven over many years to be an effective mechanism for taxpayers to bring their tax affairs up to
date. Our advice to any taxpayer with outstanding tax issues is to resolve the matter with HMRC as soon as possible. However, with a number of
campaigns and disclosure facilities running concurrently, it may be that there is more than one route to making a tax disclosure and it’s important to
take professional advice on deciding which option is most appropriate.
For careless behaviour tax would be due for 6 years whereas for deliberate behaviour this could extend up to 20 years. Penalties for those using the
Campaign will typically be 20 percent of the tax liability whereas those who are later investigated by HMRC can expect far higher penalties or even
criminal prosecution.
Whilst the Campaign does not offer an immunity from prosecution, HMRC have set out that a complete and unprompted disclosure would generally
suggest that a civil (rather than criminal) investigation was appropriate.
If you have any questions on this or disclosure facilities in general, please get in touch with your usual Tax and Pensions contact.
16
HMRC RELEASE UPDATED
STATUTORY RESIDENCE TEST
INDICATOR FOR INDIVIDUALS
HMRC have released an updated
Statutory Residence Test indicator,
which now covers the split year
cases and taxpayers who die within
the year.
HM Revenue & Customs (HMRC) have released an updated Statutory Residence Test
(SRT) indicator for individuals on their website.
The earlier version did not consider any of the split year cases, nor taxpayers who died
in the year. Two further indicators have, therefore, been added to determine the
residence position for these scenarios.
There are now three separate indicators:
■ the full year SRT indicator;
■ the split year cases indicator; and
Steve Wade
 +44 (0)20 7311 2220

[email protected]
Kiran Guraya
 +44 (0)20 7694 5381

[email protected]
■ an indicator for those who died in the year.
As with all such HMRC online indicators, HMRC include a disclaimer that they cannot
be bound by the result where the information provided does not accurately reflect the
taxpayer’s facts and circumstances. As a taxpayer’s residence position may well
depend on the interpretation of some widely drafted elements of the SRT, there may
be some taxpayers who complete the indicator in full faith and honesty, but who find
that HMRC later disagree with the entries due to their interpretation of the SRT.
Additionally, changes in circumstances after the year end may change the residence
status of the individual. When this happens amended tax returns may be required.
Users should be aware that, though this is a useful tool in navigating the SRT rules,
having a favourable result from the indicator will not necessarily provide a defence
against a successful enquiry from HMRC, and taxpayers should continue to seek
professional advice.
17
INTERNATIONAL
STORIES
INTERNATIONAL ROUND UP
This week: withholding tax in
Nigeria; FATCA guidance from the
Cayman Islands and the Channel
Islands; proposed tax changes in
Brazil and Peru; an EU report on
patent boxes; changes to German
VAT; the French draft Finance Bill;
and the EC investigation into tax
rulings.
Every week, KPMG member firms around the world publish updates on developments
in their country. In Weekly Tax Matters we’ll highlight a selection that may be of interest
to our readers.
Africa
Nigeria – a recent tribunal decision has found that dividends paid by a gas exploration
and production company, paid out of profits from the company’s gas operations in
Nigeria, are subject to withholding tax.
More TaxNewsFlash – Africa can be found here.
Americas
Cayman Islands – the tax authorities have issued updated guidance notes on the implementation of the FATCA intergovernmental agreements
between the Caymans and the US and the Caymans and the UK.
Brazil – legislation is currently being considered which would revise the rules for withholding on dividend payments.
Peru – changes have been proposed which would gradually decrease the corporate income tax rate, but increase the dividend tax rate.
More TaxNewsFlash – Americas can be found here.
Europe
Channel Islands – revised versions of draft guidance notes on the implementation of the FATCA regime have been issued.
EU – The Code of Conduct Group for Business Taxation has reported to ECOFIN on various matters, including the status of EU patent boxes and
hybrid entity mismatches.
Germany – The German Parliament has passed legislation amending the VAT rules.
18
France – the second draft Finance Bill for 2014 (including measures affecting corporates) has been passed by both the Assembly and the Senate.
It is expected to be enacted by the end of the year.
More TaxNewsFlash – Europe can be found here.
Transfer Pricing
EU – the EC has announced that it is expanding its investigation into the tax ruling practice under EU State aid rules to cover all EU Member States.
More TaxNewsFlash – Transfer Pricing can be found here.
19
OTHER NEWS IN BRIEF
A ROUND UP OF OTHER NEWS THIS
WEEK
This week: more on the Draft Finance
Bill; consultation on enquiry closure
rules; progress of the NICs and
Taxation of Pensions Bills; the UKIceland DTC; a new way of paying
HMRC by debit card; research on
anti-microbial resistance…and it’s
the Christmas holidays!
Our detailed commentary on the Draft Finance Bill is now available in an e-booklet
form here. Any readers particularly interested in the implications of the draft clauses
for assignees and their employers might also want to take a look at our recent Flash
Alert.
As announced at the Autumn Statement, HMRC have now published a consultation
document titled ‘Tax Enquiries: Closure Rules’. This consultation seeks views on a
proposal to achieve earlier resolution and certainty on one or more aspects of an
enquiry into a tax return.
The National Insurance Contributions Bill 2014/15 has completed its Committee stage
in the House of Lords. Report stage is scheduled for 6 January 2015.
The Taxation of Pensions Bill has received Royal Assent as the Taxation of Pensions
Act 2014.
HMRC have confirmed that the Double Taxation Convention between the UK and
Iceland signed in London on 17 December 2013, entered into force on 10 November
2014.
HMRC have announced that from 15 December 2014, they are trialling a new online
payment service for those paying VAT or Self Assessment income tax by debit card.
New research from KPMG in the UK shows that low income countries are likely to
suffer the greatest loss of population and economic output if anti-microbial resistance
(AMR) continues to spread unchecked.
And finally…you’ll have noticed from the bumper size of this edition that there has
been a pre-Christmas flurry of activity from both Government and the courts. We’ll
now be taking our usual break over the Christmas and New Year period, and will be
back with the first Weekly Tax Matters of 2015 on 9 January. In the meantime we
wish all our readers a happy holiday.
20
www.kpmg.co.uk
© 2014 KPMG LLP, a UK limited liability partnership and a member firm of the KPMG network of independent
member firms affiliated with KPMG International Cooperative (“KPMG International”), a Swiss entity. All rights
reserved.
The information contained herein is of a general nature and is not intended to address the circumstances of any
particular individual or entity. Although we endeavour to provide accurate and timely information, there can be
no guarantee that such information is accurate as of the date it is received or that it will continue to be accurate
in the future. No one should act on such information without appropriate professional advice after a thorough
examination of the particular situation.
The KPMG name, logo and "cutting through complexity" are registered trademarks or trademarks of KPMG
International.

December 2014 report

Transcription

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