Welcome to the first all-new digital version of Faculty news. Moving online means that we can provide more timely updates on developments.

Making Tax Digital

After extensive engagement with HMRC by the Tax Faculty throughout the year to highlight the fundamental design problems with Making Tax Digital for Income Tax Self Assessment (MTD ITSA), on 19 December 2022 HMRC announced significant changes to the MTD ITSA programme. This includes a two-year deferral of the start date for all self-employed individuals and landlords, and a move to some phasing in of the mandatory requirements coupled with a review of whether it should apply to smaller businesses with an income below £30,000. 

The changes were broadly welcomed by the profession and Caroline Miskin, Senior Technical Manager – Digital Taxation, was quoted in the Financial Times and the Times. Over the next few months, the Tax Faculty will be taking stock of the MTD programme and considering how further improvements could be made so that the benefits to businesses are maximised.  

Treasury Committee inquiry into tax reliefs

On 19 December 2022, Anita Monteith, Head of Taxation Policy, gave oral evidence as part of a panel to the Treasury Committee’s enquiry into the value for money and benefits of tax reliefs, to which the Tax Faculty had previously submitted written evidence. The oral evidence session focused on two particular reliefs – namely research and development tax relief and video games tax relief – using them to explore how tax reliefs can impact industry in the UK and the wider economy.

HMRC service standards

Poor HMRC performance continues to be a major concern for ICAEW members. Feedback was gathered at the Tax Faculty’s Practitioner Tax Committee and directly from members. This feedback was discussed with HMRC at a meeting of the Representative Bodies Steering Group (RBSG). We also attended a follow-up meeting of the RBSG that focused on problems with the VAT registration service.

Representations

The Tax Faculty responded to a Welsh Government consultation on the possible introduction of visitor levy to overnight visitors to Wales. Our response focused on the design and administrative aspects of the potential tax, emphasising that simplicity and ease of use should be prioritised. We also reported on feedback from ICAEW members in Wales, which was that given the current economic circumstances this is not the right time to introduce a new visitor levy.

The faculty team also continued to engage extensively with HMRC across a range of matters including the RBSG, the Tax Administration Forum and the Penalty Reform Forum.  

Other consultation forums and working groups

We attended a meeting of the Tax Professionals Forum to discuss the tax policymaking process and in particular the programme the government intends to follow. The Treasury Officials explained that the plan is to move back to the usual Budget/Finance Bill cycle. There will be another Finance Bill published in the spring of 2023 to set out the detailed legislative measures that have been announced previously. 

The Tax Faculty participated in the latest virtual meeting of the tax directors of the 10 professional bodies that form the Global Accounting Alliance (GAA). Topics discussed included the draft revisions to the ethical code on tax planning and related services published by the International Ethics Standards Board, the state of regulation of the tax profession in the countries concerned, the likelihood of the OECD BEPS 2.0 project being implemented in each of the GAA countries and what will happen if countries begin to adopt unilateral measures rather than implement the OECD agreement.

Presentations

The faculty participated remotely in a meeting of the global Heads of Tax of the Big Six firms to give a short presentation on ICAEW’s role in supporting trust and confidence in the tax profession. The presentation covered the steps we had taken in the UK to address the government’s challenge to the professional bodies to take a greater lead and responsibility in preventing tax avoidance, which led to the changes made to our professional conduct rules in February 2017. 

Caroline Miskin joined the tax session of the Information for Better Markets Conference 2022, where the topic was ‘The COVID-19 pandemic: lessons for the theory and practice of accounting’. She responded to a paper on tax systems’ adaptability and resilience during a global pandemic, where she added her perspectives and experiences on how the Faculty engaged with HMRC, HM Treasury and ICAEW members during that time.

Tax Faculty committee meetings

During the period there were meetings of the Tax Faculty Board, the Tax Policy and Reputation Committee, the Technical and Oversight Committee, the Employment Taxes & NIC Committee and the Compliance and Investigations Committee. 

Webinars

Our final webinar of 2022 was the latest instalment in our series of MTDtalks. It was a very timely talk as it took place the day after HMRC’s announcement of major changes to the MTD ITSA proposals. Many thanks to Anita Monteith and Caroline Miskin for providing a clear and comprehensive update, and to Ed Saltmarsh, the faculty’s VAT and Customs Manager, for providing an update on the MTD VAT programme and the VAT registration service. If you missed the webinar, you can catch up with the Tax Faculty’s MTDtalks series here.