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Highlights from the broader tax news for the week ending 11 May 2022, including: late payment interest rate increase; guidance on changes to VAT penalties and VAT interest charges; revocation of recognised status for Moscow Stock Exchange; a GAAR Advisory Panel Opinion; exclusivity clauses in employment contracts; and HMRC’s Residential Property Developer Tax Manual.

HMRC increases late payment interest rates

As HMRC interest rates are linked to the Bank of England base rate, the increase in the base rate from 0.75% to 1% on 5 May 2022 has triggered an increase in rates for late payments of tax. The rate is increased from 1.75% to 2% from 16 May 2022 for quarterly instalment payments. Late payment interest for other payments is increased from 3.25% to 3.5% from 24 May 2022. The rate of interest paid by HMRC on repayments remains unchanged at 0.5% as this rate is calculated as the higher of:

  • 0.5%; and
  • the Bank of England rate minus one.

HMRC publishes guidance on changes to VAT penalties and VAT interest charges

HMRC’s new guidance confirms that there will be a period of familiarisation with the new rules. HMRC will not charge a first late payment penalty in the first year from 1 January 2023 until 31 December 2023, if the business pays in full within 30 days of its payment due date. Read more on the new regime from ICAEW’s Tax Faculty.

Moscow Stock Exchange’s recognised status revoked

Following a short consultation period, the designation of the Moscow Exchange (MOEX) (formerly MICEX Stock Exchange) as a recognised stock exchange has been revoked from 5 May 2022. Revoking recognised stock exchange status will limit the ability of people who have invested in assets traded on the MOEX to access certain UK tax reliefs which are contingent on that status – such as an exemption from withholding tax on interest bearing Qualifying Eurobonds and eligibility for inclusion in an Individual Savings Account. However, access to those treatments and reliefs for existing MOEX investments should remain unaffected. View the revocation order.

GAAR Advisory Panel opinion

The general anti-abuse rule (GAAR) Advisory Panel has published its opinion on rewards via the creation and sale of pension obligations. The panel’s opinion is:

  • entering into the tax arrangements is not a reasonable course of action in relation to the relevant tax provisions;
  • carrying out the tax arrangements is not a reasonable course of action in relation to the relevant tax provisions.

 

Exclusivity clauses

Following a consultation, the government will legislate on extending the ban on exclusivity clauses, making them unenforceable in employment contracts where the guaranteed weekly income is below or equivalent to the lower earnings limit, currently £123 a week.

For this type of contract, the legislation will also extend the following rights for workers:

  • not to be unfairly dismissed;
  • not to be subjected to a detriment for failing to comply with an exclusivity clause;
  • to claim compensation.

This will apply in Great Britain, but not Northern Ireland where employment law is a devolved responsibility.

Residential Property Developer Tax Manual

HMRC has published a new manual on residential property developer tax.

 

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