Autumn Statement non-IR35 tax matters
The Autumn Statement proved to be a non-event in terms of its silence regarding IR35 reform but, other than the announcement that travel and subsistence tax relief for contractors will be linked to IR35 status, there were some other matters of tax interest.
Tax simplification
OTS review of employment status
Having responded to the final report of the Office of Tax Simplification’s (OTS) review on employment status the government will take forward the majority of recommendations. Although IR35 was not part of that report there are some ideas that could filter into future IR35 reform, such as expanding the Employment Status Indicator (ESI) tool, a statutory employment test and the ‘third way’ – a middle status between employed and self-employed.
Simple assessment
Draft legislation will be published that will enable a new, simpler process for paying tax. This will be used for taxpayers in Self Assessment who have simple tax affairs where HMRC already holds all the data it needs to calculate the tax liability, and where existing payment processes are not available. Taxpayers will be sent a calculation which will be a legally enforceable demand for payment, and taxpayers will be able to challenge and appeal these calculations. This process will come into effect in the 2016-17 tax year
Digitalising tax
At the March 2015 Budget the government committed to transform the tax system over the Parliament by introducing simple, secure and personalised digital tax accounts, removing the need for annual tax returns.
All small businesses and individuals will have access to digital tax accounts by 2016-17 and by 2020 most businesses, self-employed and landlords will be required to keep track of their tax affairs digitally and update HMRC at least quarterly via their digital tax accounts. HMRC will ensure the availability of free apps and software that link securely to HMRC systems and provide support to those who need help using digital technology. This will not apply to individuals in employment or pensioners, unless they have secondary incomes of more than £10,000 per year from self-employment or property. The government will consult on the details in 2016.
The government will also consult on options to simplify the payment of taxes, including whether to align payment dates and bring them closer to the point when profits arise, so that taxpayers make a single regular payment that covers all their tax affairs.
Tax avoidance
Serial avoiders
Tough new measures will be introduced for those who persistently enter into tax avoidance schemes that are defeated by HMRC. These include a special reporting requirement and a surcharge on those whose latest return is inaccurate due to use of a defeated scheme, the names of such avoiders being published and, for those who persistently abuse reliefs, restrictions on them accessing certain tax reliefs for a period.
General Anti-Abuse Rule (GAAR)
A new penalty will be introduced of 60% of tax due, to be charged in all cases successfully tackled by the GAAR. The government will also make small changes to the way the GAAR works to improve its ability to tackle marketed avoidance schemes.
Disguised remuneration
Action will be taken against those who have used or continue to use disguised remuneration schemes and who have not yet paid their fair share of tax. The government will also consider legislating in a future Finance Bill to close down any further new schemes intended to avoid tax on earned income, where necessary, with effect from 25 November 2015.
Capital Gains Tax (CGT)
Upfront payment
From April 2019, a payment on account of any CGT due on the disposal of residential property will be required to be made within 30 days of the completion of the disposal. This will not affect gains on properties which are not liable for CGT due to Private Residence Relief but rather the likes of landlord property owners. The government will publish draft legislation for consultation in 2016.
Entrepreneurs’ Relief
The government will consider bringing forward legislation to amend the changes made by Finance Act 2015 to entrepreneurs’ relief, in order to support businesses by ensuring that the relief is available on certain genuine commercial transactions.
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