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The wettest of damp squibs

The wettest of damp squibs

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An Ashcroft take on tax day

The build-up and sense of anticipation were unprecedented. The Government, we were told, had so many announcements to make about their plans for future tax policy and so many consultations to launch that they couldn’t be accommodated on Budget Day and needed to be released on a separate, dedicated “Tax Day” – but Tuesday, 23 March came and went with barely a whimper and we were all left wondering what all of the fuss was about. It was a bit like eating a Chinese meal and immediately feeling hungry again.

Leaks to the weekend press had suggested that there would, at the very least, be major announcements about Inheritance Tax and Capital Gains Tax. These didn’t materialise but the delay in issuing the documents until after lunch on Tax Day, when professional tax advisers had spent all morning searching HMRC’s website, suggests that the Government may have had some last minute second thoughts and decided to delay some of the more controversial announcements they had been planning.

We had the publication of the results of earlier consultations, with the Government confirming that they intended to do nothing about the taxation of trusts and the introduction of a Carbon Emissions Tax. There was also a reannouncement of thoughts which had been aired previously and some new consultations in niche areas of tax such as a review of how the rules for Aggregates Levy apply to borrow pits used in construction.

HMRC’s dislike for promoters of tax avoidance schemes and what they view as “incompetent, unprofessional and malicious” tax advisers was again apparent. A consultation with the seemingly benign title, “Helping taxpayers get offshore tax right”, which was to be welcomed for not calling taxpayers “customers”, as has become HMRC’s practice in recent years, showed its true intent by its choice of email address for responses – nosafehavens@hmrc.gov.uk.

The most controversial proposal came in a consultation launched with the innocent title, “Timely Payment”. The Government needs to improve its cash flow from tax receipts at a time when tax increases are, in the main, politically unacceptable. The route it appears to have chosen is to bring forward the payment dates for all taxes. We have already seen Stamp Duty Land Tax become payable within fourteen days of a land purchase and Capital Gains Tax on the sale of a residential property becoming due thirty days after completion instead of up to 22 months later.

The new proposal is that all companies and all non-PAYE Income Tax payers should pay their tax bills quarterly in-year instead of several months after the end of their financial years. This has its roots in George Osborne’s crowd-pleasing announcement in his 2015 Budget speech that he was going to abolish the annual tax return. What he kept quiet was that he intended to replace it with four quarterly tax returns. This is being launched for, among others, the self-employed and buy-to-let investors in 2023. It was only a matter of time before HMRC announced their obvious intention to collect tax along with the quarterly returns. They are keen to emphasise in the consultation document that the change is for the benefit of taxpayers who, apparently, are desperate to be allowed to pay their tax bills much earlier than they are currently required to do. This is clearly for the birds. The Government appears not to realise that small businesses usually recognise their income as having been earned at the point of billing and not when their bills are paid, which could be much later. The new system could result in tax becoming due before income has been received. Unfortunately, while the Government has said that it currently has no plans to legislate for this change, the direction of travel is obvious and probably irreversible.

Apart from this sting in the tail, Tax Day proved to be fairly uneventful. Will it become a regular feature of the tax calendar or, based on this year’s experience, will we revert to announcements being restricted to Budget Day? Only time will tell.

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