Highlights from the broader tax news for the week ending 20 September 2023, including: mandatory disclosure regime guidance; EU taxation; stamp taxes on certain share issues and transfers; and VAT zero rate for patient group directions.
MDR guidance published
HMRC has published its guidance on the mandatory disclosure rules (MDR) legislation in its International Exchange of Information Manual.
The MDR mailbox remains open for comments on the guidance and/or any wider queries concerning MDR.
The European Commission has adopted a package of initiatives aimed at reducing tax compliance costs for large, cross-border businesses in the EU. The Business in Europe: Framework for Income Taxation (BEFIT) proposal seeks to introduce a single set of rules to determine the tax base of groups of companies. These rules would be mandatory for groups operating in the EU with an annual combined revenue of at least €750m, where the ultimate parent entity holds at least 75% of the ownership rights or the rights giving entitlement to profit. Once adopted by the Council, the BEFIT proposals should come into force on 1 July 2028.
There are also proposals to harmonise transfer pricing rules within the EU and ensure a common approach to transfer pricing. Once adopted by the Council, the proposals should come into force on 1 January 2026.
Removal of 1.5% stamp taxes charges on certain issues and transfers
The government has announced that the existing stamp duty and stamp duty reserve tax 0% charge on the issue of UK shares (or other chargeable securities) onto foreign markets and on certain related transfers of shares, will remain in place and be brought permanently into UK law following the changes in the Retained EU Law (Revocation and Reform) Act 2023 taking effect. There had been concerns that current UK tax legislation requiring 1.5% stamp duty or SDRT charges on such issues and transfers would start to apply again from 1 January 2024 due to a repeal of the savings clause taking effect.
The government has published draft legislation for technical consultation ahead of its inclusion in an upcoming Finance Bill. The consultation will run for four weeks and will close on 12 October 2023.
New VAT zero rate to extend the scope of patient group directions
Under current VAT legislation, the zero rate of VAT for supplies of drugs and medicines does not include drugs and medicines supplied under a patient group direction. A zero rate will be introduced for these supplies by temporarily introducing an Item 1A into Group 12, Sch 8, VAT Act 1994. This will mean that supplies of drugs and medicines made in accordance with a patient group direction will be zero-rated between 9 October 2023 and 31 March 2027.
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.