Highlights from the broader tax news for the week ending 13 April 2022, including: naming tax avoidance scheme promoters; managed service company rules; marginal relief calculator; and a survey on NINOs.
HMRC names avoidance scheme promoters
On 7 April, HMRC used its new power to publish information about tax avoidance schemes for the first time. The power, contained in s86, Finance Act 2022, came into force from Royal Assent. The first two schemes named are subject to the disclosure of tax avoidance scheme rules. The details published by HMRC include the scheme reference numbers.
Managed service company rules
Where the managed service company (MSC) legislation applies, amounts paid to an MSC for those services that are not already subject to income tax collected by PAYE and class 1 national insurance contributions (eg, amounts paid as dividends), are treated as employment income. A company is an MSC if:
- its business consists wholly or mainly of providing (directly or indirectly) the services of an individual to other persons;
- payments are made (directly or indirectly) to the individual (or associates of the individual) of an amount equal to the greater part or all of the consideration for the provision of the services;
- the way in which those payments are made would result in the individual (or associates) receiving payments of an amount (net of tax and national insurance) exceeding that which would be received (net of tax and national insurance) if every payment in respect of the services were employment income of the individual; and
- a person who carries on a business of promoting or facilitating the use of companies to provide the services of individuals (an MSC provider) is involved with the company.
HMRC has highlighted a case where these rules were successfully applied in Managed service company legislation (Spotlight 32)
Test HMRC’s new corporation tax marginal relief calculator
The rate of corporation tax is due to increase to 25% from 1 April 2023 for companies with annual profits over £250,000. A small profits rate of 19% will also be introduced for companies with annual profits of £50,000 or less. Companies with profits between £50,000 and £250,000 will pay tax at the main rate reduced by a marginal relief providing a gradual increase in the effective corporation tax rate.
In preparation for this change, HMRC is testing a prototype marginal relief calculator, that will be available on gov.uk. Contact HMRC if you are interested in testing and providing feedback on the prototype calculator.
Help HMRC improve systems and processes for national insurance numbers
HMRC’s national insurance number (NINO) team is looking at the at the challenges that employers face with employees’ NINOs. The team has devised a quick survey to find out about:
- situations when new employees don’t know their NINO;
- processing non-UK nationals; and
- NINO payroll issues.
It wants to hear from people who:
- onboard new employees;
- manage payroll; and
- may experience challenges with employee NINOs.
The survey – which is anonymous as it doesn’t ask for a name or organisation – should take less than five minutes to complete. HMRC would appreciate responses by Wednesday 27 April 2022. Complete the survey.
This guidance is created by the Tax Faculty, recognised internationally as a leading authority and source of expertise on taxation. The Faculty is the voice of tax for ICAEW, responsible for all submissions to the tax authorities. Join the Faculty for expert guidance and support enabling you to provide the best advice on tax to your clients or business.