Mercer & Hole’s Business blog

Acceptance of the need for considered tax reform (presumably rather than trial by media) seems to be gaining ground, with a recent discussion at the OECD and a UN report.  There is a consensus among the G20 countries of the need for action to tackle "base erosion and profit shifting".  Apparently an action plan will be delivered to G20 finance ministers next month with a view to a short term impact on tax with proposals set to include dealing with mismatches, transfer pricing, tax treaties and promoting increased tax transparency. Meanwhile the UN report addresses the need for...

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HMRC is allowed to publish details of deliberate tax defaulters, that is people who have received penalties for deliberate non-compliance where the tax involved is more than £25,000. However, information will not be published if the person earns the maximum reduction of penalties by full disclosure.   The latest list of defaulters which does include some substantial sums can be found here.   ...

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The annual allowance on pension contributions reduces to £40,000 from the tax year 2014/15 onwards.  However, this may have an impact from an earlier date. The issue is that pension contributions are based on pension input periods.  If the input period ends in 2014/15, the £40,000 limit applies.  The pension input period does not have to match the tax year.  This means that any pension savings for pension input periods starting before 6 April 2014 (which could be as early as 7 April 2013), but ending in tax year 2014/15, will count towards the reduced annual allowance of £40,000. You may therefore want...

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British overseas territories, including Anguilla, Bermuda, the British Virgin Islands, Montserrat and the Turks and Caicos Islands, will provide information about bank accounts held in their jurisdictions.  Details will include names, addresses, dates of birth, account numbers, balances, and facts about payments made into the accounts.   ...

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The EC has set up a platform for good tax governance, as part of the ongoing drive against evasion and avoidance. Interested parties, including national tax authorities, businesses, academics, and non-governmental organisations, will monitor member states’ progress in tackling aggressive tax planning and clamping down on tax havens.   The first meeting of the platform is provisionally planned for 10 June 2013.   ...

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I read with some interest the PAC report on Tax avoidance: the role of large accountancy firms.  I am in total agreement with some of its conclusions and recommendations; although I have to say not all.  I give below, in no particular order, a summary of these: The UK tax system is too complicated and there is a need for radical progress on simplification - I think anyone involved in tax would agree with this. International tax rules need changing to reflect the way businesses now operate – again there should be little dispute. The Treasury need to...

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One key issue from HMRC’s guidance is that taxpayers are no longer free to reduce their tax bills by any lawful means as previously held by the Courts. The GAAR ‘rejects the approach taken by the courts in a number of old cases to the effect that taxpayers are free to use their ingenuity to reduce their tax bills by any lawful means’.  Several examples given in the guidance support the principle that ‘abusive use’ of what would otherwise be lawful transaction will now not work, including: the use of structures (such as...

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HMRC has published updated guidance on the GAAR.  This guidance now covers the purpose of the GAAR and provides examples that aim to cover the following broad categories: • Situations covered by law where Parliament has given taxpayers a choice, such as the main residence section – which are fine. • Long established practice – which is fine. • Situations where the law deliberately sets precise boundaries – which is generally acceptable. • Standard planning with some element of artificiality – which is a grey area. • Transactions demonstrably contrary to the spirit of the law – which will...

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The government has signed a tax international exchange agreement with France, Germany, Italy and Spain as a further attack on tax evaders. Under the agreement, banks in the five countries will have to reveal financial details of foreign clients to that person’s local tax authority.  It is an attempt to co-ordinate international action against tax evasion. ...

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Apparently, MPs on the Commons energy select committee criticised RWE npower after it emerged that the company’s tax liability had been eliminated by tax reliefs for substantial investment in infrastructure.  One MP claimed that observers would be ‘shocked’ to hear that the company believed it should not pay tax. The problem is that it is a well-established principle of UK corporation tax that depreciation charged in the accounts is disallowed for tax purposes and instead capital allowances are given for investment in plant and machinery. This does raise concerns over the quality of public debate...

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