On 27 April 2023, the government announced a package of policy proposals, calls for evidence and consultations as part of this year’s Tax Administration and Maintenance Day (TAMD). The documentation is collectively intended to support the government’s stated “ambition to simplify and modernise the tax system, tackle non-compliance, make the tax system fairer for taxpayers and to make the customs system work better for traders.” Amongst the various publications, the government has launched the following noteworthy consultations:
- Modernisation of the Stamp Taxes on Shares Framework: This consultation follows on the government’s 2020 call for evidence, and considers the merits of a single tax for securities – in lieu of the current framework consisting of both stamp duty and stamp duty reserve tax – and proposals for the scope, basis, assessment and administration of any such single tax. The consultation is bound to be of broad interest, as it impacts anyone involved in the buying and/or selling of securities.
- Reserved Investor Fund: This consultation forms part of the government’s wider review of the UK funds regime, and considers the introduction of a new type of fund – the Reserved Investor Fund (RIF) – to be structured as an unauthorised co-ownership contractual scheme targeting professional investors, as well as certain other investor categories such as certified high net worth investors, certified sophisticated investors and self-certified sophisticated investors. It has been suggested that the main use of a RIF would be holding commercial real estate. The consultation seeks views on the proposed scope and design of the RIF tax regime. The government has noted that it is currently undertaking a review of the genuine diversity of ownership (GDO) condition, which would be relevant to the proposed RIF regime and is relevant to several other UK funds tax regimes such as those relating to QAHCs, NRCGT and the offshore funds regime.
- Tackling Promoters of Tax Avoidance: Further to its announcement at Spring Budget 2023, the government has published its proposals for tougher consequences for promoters of tax avoidance. The consultation sets out proposals for a new criminal offence for promoters who fail to comply with a “stop notice” from HMRC, and for HMRC to expedite the disqualification of company directors, as well as others who exercise control or influence over a company, where they have been involved in promoting tax avoidance.
- Charities Compliance Measures: Remarking that some rules for charity tax relief are “not working as intended”, this consultation aims to tackle non-compliance and preserve the integrity of the charity sector. It specifically seeks views on tainted donations, approved investments, non-charitable expenditure and filing obligations. The government has expressly stated that “any changes would not detract from the overall generosity of the reliefs or impact on legitimate charities.” The government has separately noted, amongst the TAMD announcements, that it will continue to work with the charity sector to improve the administrative operation of Gift Aid.
In addition to the foregoing, the government has announced its intention to launch a consultation on Diverted Profits Tax, transfer pricing and permanent establishment reform. That consultation, expected to be published sometime in May, will aim to simplify and update the relevant legislation to ensure that it is clear to taxpayers and applied in a manner consistent with underlying policy, international standards and double tax treaties.
Also on the horizon, the government has promised a consultation “later this year” on the use and effectiveness of the Employee Ownership Trust tax regime.
Please contact a member of the Weil London Tax team if you would like to discuss anything in greater detail.