Frank Haskew, Head of the Tax Faculty, reports on recent developments at the Tax Faculty.
New government and Treasury team
The UK now has a new government and a new Treasury team. Following a change in ministerial responsibilities, the Economic Secretary to the Treasury, Richard Fuller, will now have responsibility for the tax system as a whole and for HMRC. We hope to have an early meeting with him to discuss areas of mutual concern.
The fiscal events of September and October
During the period, we have had two Chancellors setting out their fiscal plans. We reported on the statements in ICAEW Daily and our weekly TAXwire. The key policy aim of the government is to deliver better growth, which includes removing burdens on businesses. However, plans to make extensive tax cuts to achieve growth were quickly reversed. By mid-October, the message was that there will be more difficult decisions to take on both tax and spending. By the time you read this magazine, we should have more detail from the medium-term fiscal plan on 31 October.
If the new emphasis on cutting business burdens and costs is retained, it is a welcome recognition that implementing new tax changes costs time and money, often with no obvious benefit to the business. We will be writing to the new economic secretary with our suggested priority areas for review, including a review of Making Tax Digital (MTD) and whether it needs to be refocused to ensure that it works with the grain of business and keeps burdens to a minimum.
Consultations and representations
The Treasury Committee has launched an inquiry into tax reliefs available to individuals and businesses, with a focus on the overall impact of tax reliefs on the UK economy. We held several meetings with Tax Faculty committee members from across the tax system to identify areas of interest and concern. We followed this up with written evidence and are waiting to see if we will be invited to give oral evidence.
On the raising standards agenda, Tax Faculty staff, supported by colleagues in ICAEW’s regulatory and members teams, met with HMRC staff to explain how ICAEW helps support high standards, including how we monitor member firms and investigate poor conduct. We also liaised extensively with the Tax Faculty Board and ICAEW’s Brussels Office on how ICAEW should respond to the consultation document published by the European Commission on options for addressing the role of enablers of tax evasion and aggressive tax planning.
On MTD VAT, we raised concerns about the closing of the existing VAT online service from 1 November 2022. Although businesses should be using the new MTD VAT service, at the time of writing there are at least 600,000 or more VAT-registered businesses that have yet to sign up for the new service and may not be aware that unless they make the switch to the new system, they will not be able to file a VAT return.
Finally, we submitted comments on the proposals to develop a new ‘Single Trade Window’ for those businesses importing and exporting goods.
Service standards
Our members’ electronic postbag continues to be full of concerns about poor service standards from HMRC – the latest being the problems agents are experiencing with the new VAT registration service. It does appear that the system was not working correctly when it first went live.
Tax Faculty Committee meetings
There were meetings of the Tax Faculty Board, Technical and Oversight Committee, the Tax Policy and Reputation Committee, the Compliance and Investigations Committee and the Practitioner Tax Committee.
Meetings with others
There was a meeting of the pan-professional body responsible for Professional Conduct in Relation to Taxation (PCRT). The main item for discussion was the draft revisions by the International Ethics Standards Board for Accountants (IESBA) to the existing ethical code arising out of the tax planning and related services project. These revisions would insert new material on tax-related ethical matters into our existing codes. The professional bodies will be considering how the proposed IESBA changes could be incorporated into, and be reconciled with, the existing PCRT.
Making TAXline digital
From 2023, TAXline will be in a digital only format, available at icaew.com/TAXline. Its regular features will continue alongside new digital media. Given the current pace of change in tax, one key advantage of digital delivery is the ability to be current. Tax Faculty members will receive a monthly email bulletin with links to the latest collection. Also, if you are an ICAEW member, from 1 January 2023 your Faculty subscription will be included in your ICAEW membership at no additional cost. More details will follow next month.