Highlights from the broader tax news for the week ending 19 January 2022, including: changes to business rate eligibility for holiday homes; draft guidance for uncertain tax treatments; proposed changes to the disregard rules; and an update on social security coordination with France.
Changes to business rate eligibility criteria for holiday homes
The Department for Levelling Up, Housing and Communities has announced that from 1 April 2023, a property will only be assessed for business rates rather than council tax if the owner can provide evidence that:
- it will be available for letting commercially, as self-catering accommodation, for short periods totalling at least 140 days in the coming year;
- during the previous year, it was available for letting commercially, as self-catering accommodation, for short periods totalling at least 140 days; and
- during the previous year, it was actually let commercially, as self-catering accommodation, for short periods totalling at least 70 days.
HMRC publishes second draft of uncertain tax treatments guidance
The new regime requiring notification by large businesses to HMRC of uncertain tax treatments in their corporation tax, VAT and PAYE returns comes into force on 1 April 2022. HMRC prepared initial draft guidance on this new regime in August 2021. Updated draft guidance was published on 18 January 2022. HMRC is consulting on this new draft until 1 February and ICAEW will be reviewing and responding. If you have any comments on the draft, please send them to Richard.Jones@icaew.com by Thursday 27 January 2022.
Consultation on changes to the disregard rules
HMRC has published draft legislation amending rules which defer gains and losses on derivative contracts taken out to hedge the foreign exchange risk on certain assets, such as foreign denominated shares. The rules are being amended to bring into scope derivative contracts entered into on or after 1 April 2022 to hedge foreign currency risk on an anticipated future acquisition or disposal of a substantial shareholding. At present, only contracts hedging existing shareholdings are within the scope of the regulations. The change is being made as part of the introduction of a new tax regime for asset holding companies but will apply to all companies regardless of their activities.
French social security coordination update
Following reports in December 2021 that the French social security authorities were not agreeing PDA1 applications under Article 16 of Regulation (EC) 883/2004 that extend beyond 30 June 2021 as a matter of policy, HMRC and the French social security authorities have agreed to review the process by which PDA1 applications from individuals in scope of the Withdrawal Agreement are considered. In the meantime, the French social security authorities have agreed that individuals who have been UK-insured while working in France but their PDA1 has expired and have applied to HMRC for an Article 16 exception to extend their previous PDA1 which remains outstanding should continue to pay UK national insurance pending further advice from HMRC and the French social security authorities.
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.