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Spring Budget 2017: Administration and HMRC

ICAEW Tax Faculty provides analysis of the announcements relating to tax administration and HMRC in the Spring Budget 2017.

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The government response to the MTD consultations, published on 31 January 2017, deferred decisions on two important issues:

  • the turnover threshold below which businesses and landlords will not be required to comply with the MTD requirement to maintain electronic accounting records and to submit quarterly updates to HMRC; and
  • the start date for mandatory compliance with MTD for a further tranche of non-exempt businesses and landlords.

The Spring Budget announced that MTD will not become mandatory for small businesses and landlords with turnover below the VAT threshold until April 2019.

ICAEW welcomes this deferral of a year for smaller businesses which will allow more time for the software to be tested and for the necessary communication and training to take place. It will also allow for the gathering of data on the impact, including the cost to businesses and the impact of the tax gap which the government expects to be reduced by better record-keeping under MTD.

There was no mention of the turnover threshold which was previously announced at £10,000, other than draft legislation is to be introduced to allow the level of the exemption to be introduced through regulations.

MTD timetable

The latest timetable for the start of MTD, subject to exemptions, is:

  • April 2018 for income tax businesses and landlords with turnover above the VAT threshold, which is £85,000 from April 2017 (excluding some larger partnerships);
  • April 2019 for income tax businesses and landlords with turnover below the VAT threshold and for VAT; and
  • April 2020 for corporation tax and income tax for partnerships with turnover of more than £10m.

MTD consultations and legislation

As anticipated, a consultation document with specific proposals for late submission penalties and penalty interest for late payment will be published on 20 March 2017. A consultation document on MTD for corporation tax and larger partnerships is also expected but is not listed in the schedule of future consultations.

The draft Finance Bill 2017 legislation published on 31 January 2017 will be expanded to:

  • allow income-based exemptions to be introduced by regulations;
  • allow income tax businesses to provide information on chargeable gains and other non-business sources outside their end of period statement;
  • make consequential amendments to Taxes Management Act 1970; and
  • amend Schedule 11 of VAT Act 1994 to extend the MTD exemptions and regulations to VAT.

In respect of the second bullet point above, we await more detail but this may provide an alternative way of reporting non-business income outside of self assessment.

Future consultations

The OOTLAR provides a list of all upcoming consultations relating to Budget measures, as follows:

Title Start date
Employer-provided accommodation 20 March 2017
Withholding tax exemption for debt traded on a multilateral trading Facility 20 March 2017
Non-resident companies chargeable to income tax and non-resident CGT 20 March 2017
Landfill tax – extending the scope to illegal disposals 20 March 2017
Alcohol duty rates and bands 20 March 2017
Heated tobacco consultation 20 March 2017
VAT: fraud in the provision of labour in construction sector 20 March 2017
Digital tax administration 20 March 2017
Employee business expenses 20 March 2017
Taxation of benefits in kind
20 March 2017
Oil and gas – tax for late life oil and gas assets
20 March 2017
Red diesel call for evidence 20 March 2017
VAT – split payment model 20 March 2017
HGV road user levy Spring 2017
Rent-a-Room relief Summer 2017
Plant and machinery leasing – response to lease accounting changes Summer 2017
HMRC Large Business Risk Review Summer 2017
Tackling disguised remuneration avoidance schemes Later in 2017

 

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