HMRC launched six consultations on 20 April 2016, and closed its 'top secret' one on 22 April. We summarise the issues for you.
Gift Aid Small Donations scheme
- Proposals to reform the scheme, including a relaxing of the eligibility requirement for charities and community amateur sports clubs.
- See HMRC consultation: Gift Aid Small Donations Scheme
Tackling tax evasion: a new criminal offence for companies
- This would see companies being held liable for the actions of individuals acting on its behalf.
- Companies must take reasonable steps to prevent individuals acting on their behalf from facilitating tax evasion in the UK or overseas.
- The consultation asks for views on what would constitute reasonable steps for the company to take.
- See HMRC consultation: criminal offence for corporate facilitation of tax evasion
Creating a secondary annuity market
- A secondary annuity market would enable pensioners to sell their annuity income stream in exchange for a lump sum. This consultation explores the detail of the proposed tax framework for the market.
- Subject to meeting various conditions, it is proposed that the lump sum proceeds paid on the surrender of an annuity would be subject to PAYE income tax at the individual’s marginal rate.
- Any money remaining from a lump sum would form part of the taxable estate on death.
- HMRC consultation: Creating a secondary annuity market: tax framework.
Part surrenders and part assignments of life insurance policies
- In some circumstances disproportionate gains can arise compared with the underlying policy gain.
- The issue was highlighted in the case of Lobler v HMRC when the Upper Tribunal allowed a taxpayer to rectify a mistake he made when withdrawing funds from a life policy which saw him facing a 700% tax liability.
- The consultation invites views on three options for change:
- Retaining the current 5% tax deferred allowance but taxing a proportionate fraction of any underlying gain when amounts in excess of 5% are withdrawn.
- Deferring any gain until all of the premiums paid have been withdrawn. The cumulative annual 5% allowance would be replaced with a lifetime 100% tax deferred allowance.
- Retaining the current method for calculating gains but deferring a gain which exceeds a pre-determined amount of the premium (e.g. a cumulative 3% for each year of the policy) until the next part surrender or part assignment.
- HMRC consultation: Part surrenders and part assignments of life insurance policies.
Employee share schemes: NIC elections
- Currently an NIC election transfers to the employee the Employer’s Class 1 NIC obligations on the occasion of chargeable events in connection with employment related securities options, and restricted or convertible employment related securities.
- This consultation seeks views and evidence about whether to retain the NIC election.
- HMRC consultation: Employee Share Schemes: NIC elections.
Tax Avoidance Disclosures for Indirect Taxes and Inheritance Tax
- The consultation seeks views on proposals to reform the VAT Disclosure Regime (VADR).
- The government is considering aligning the VADR requirements more closely with the DOTAS requirements; currently VADR requires disclosure to be made by users of an avoidance scheme, whereas DOTAS requires the promoters of schemes to disclose them.
- The government is considering bringing other taxes such as Gambling taxes, Insurance Premium tax and environmental taxes within the scope of a reformed VADR.
- The consultation also seeks views on proposed changes to the DOTAS regime for Inheritance taxes.
- HMRC consultation: Strengthening the Tax Avoidance Disclosure Regimes for Indirect Taxes and Inheritance Tax.
HMRC's top secret Client Notification consultation into proposed regulations requiring advisers to notify their clients about the "Common Reporting Standard".
- This consultation was not published on HMRC’s website.
- Details were forwarded only to the Chartered Institute of Taxation (CIOT) on 1st February with a request for responses by 12th February.
- After some protests, HMRC subsequently changed the deadline to 22 April 2016.