Under the current UTT regime, a large business must notify HMRC where it takes a different view from the department on how tax law should be interpreted or applied, but the government has consulted on extending this to individuals and trusts, as well as including more taxes in the regime.

In its response to the consultation, which closed on Thursday, ICAEW said that it was supportive of the government’s efforts to close the tax gap, but that measures to do so must be properly targeted, reasonable and not impose disproportionate costs and burdens on taxpayers.

Individuals and trusts should not be included in the extension of the UTT regime until after the HMRC’s review of the personal tax offshore anti-avoidance legislation has been concluded and any resulting changes have been enacted. Other considerations include ensuring sufficient resources are in place, as many individuals and trusts do not have access to a HMRC customer compliance manager in the same way that large businesses do.

While ICAEW supports in principle the proposals to extend the regime to capital gains tax, any extension to stamp duty land tax should come after improvements to anti-avoidance legislation and related guidance to reduce uncertainties. [1]

However, the Institute does not support the extension of the regime to the construction industry scheme, national insurance contributions or inheritance tax.

On inheritance tax, ICAEW recommends that HMRC improve current guidance to reduce areas of uncertainty, as extension to this tax would create further complexity for taxpayers.

The government proposals also look to introduce a third trigger condition, which would require businesses to report a tax position taken where HMRC’s position is not known and there is more than one credible way to interpret the tax law.

ICAEW said it was not supportive of this proposal as speculative interpretations of the law are already contrary to HMRC guidance and to the tax planning standards. Adding the third trigger could result in cases where taxpayers would need to seek two professional opinions resulting in additional advisory costs and the potential of delays to deals such as mergers and acquisitions.

Katherine Ford, ICAEW Tax Technical Manager, said:

“We support the government’s efforts to reduce the tax gap, but measures must be properly targeted and reasonable, and not impose disproportionate costs and burdens on taxpayers seeking to comply with the tax system.

“Rather than imposing additional burdens by including individuals and trusts in the uncertain tax treatment regime, the government should consider what it can do reduce legal uncertainties created by the volume and complexity of the UK’s tax system. This could include simplifying legislation, improving guidance and having better clearance procedures.

“To support the government’s growth agenda, it is essential that new measures must not create additional burdens on taxpayers and that adequate resources are in place to deal promptly with any potential uplift in uncertain tax treatment notifications.”

ENDS

Notes to editors:

1. The SDLT anti-avoidance legislation is included in s75A, Finance Act 2003.