Frank Haskew, Head of the Tax Faculty, reports on recent developments at the Tax Faculty.
New Financial Secretary to the Treasury
In a government reshuffle on 9 September, the Right Honourable Lucy Frazer QC was appointed as the new Financial Secretary to the Treasury, replacing Jesse Norman, who had been in post since 2019. We have welcomed Lucy to her role and were delighted when, two weeks later, she announced a deferral of the start date of Making Tax Digital (MTD) – see below.
October 2021 Budget
In advance of the Budget on 27 October 2021, we wrote to the new Financial Secretary to the Treasury (as noted above, this is now Lucy Frazer) with our headline suggestions for changes to be made in the Budget. We also submitted a supporting document to HM Treasury’s Budget suggestions website providing further detailed technical recommendations for changes that the government should consider. We will be producing our usual range of supporting material for the Budget, including Budget commentary and a webinar.
Making Tax Digital start date deferred
On 23 September 2021, the government announced that MTD for income tax self assessment (ITSA) would be postponed a year to 2024 (and to 2025 for partnerships). The announcement followed extensive engagement by the Tax Faculty and other bodies with HMRC and government on the policy and details of the regulations. In light of this welcome announcement, the Tax Faculty will now be ramping up support for ICAEW members with the objective of ensuring that this extra time is put to good use and members are fully prepared for these changes.
Basis period reform
At the same time as announcing the postponement of the start date for MTD ITSA, the government also stated that basis period reform, if introduced, would not start until MTD ITSA in 2024 (with 2023/24 being the transition year). The final decision on the basis period reform proposals is expected to be announced in the Budget on 27 October 2021.
Despite the consultation closing at the end of August, members have continued to express their concerns about it to the Faculty, so we welcome this announcement – although we remain of the view that the proposals should be dropped rather than deferred.
Health and social care levy
The new health and social care levy was announced without any consultation or prior discussion and was followed the next day by publication of a Bill that passed all its House of Commons stages the following week. The approach adopted and the lack of consultation were disappointing, and we are concerned that this new tax will impose yet more costs and complexity on businesses and employers. We have raised these concerns with government and have made some suggestions about possible alternative ways that the money could have been raised without the attendant administrative burdens and costs.
HMRC service standards
HMRC service standards remain a matter of serious concern to our members and we continue to press HMRC for improvements. The welcome reinstatement of the agent dedicated line appears to be operating largely within the target time, but post processing delays continue to be a major concern for members; for example, we have received reports that the time to process the VAT form 484 to change various details is taking five months to process. Please continue to send examples to Caroline Miskin.
Consultations and representations
We continued to have extensive engagement with HMRC across a range of different areas of concern to members. In addition, we had a number of meetings with HMRC on special topics including a briefing on the tax gap, working with vulnerable clients and how we can work with HMRC to improve communications and education in the run up to the introduction of MTD. We also submitted representations on the draft legislation on the proposals to tackle the promoters of tax avoidance and the draft legislation and guidance on the notification of uncertain tax treatments – we remain unconvinced of the need for the latter provisions.
Committee meetings
During the period there were virtual meetings of the Tax Policy and Reputation Committee, the Technical and Oversight Committee, the Compliance and Investigations Committee and a meeting of the Tax Faculty Board.
TAXguides
One TAXguide (TAXguide 17/21) was published on off -payroll working and cross-border issues.
Webinars and other events
On 8 September Caroline Miskin joined Rebecca Benneyworth for the latest edition of TAXtalk.