Tax Administration
Collection of Self Assessment debts
The Budget included an announcement that HMRC will use new technology to recover additional Self Assessment debts closer to real-time by adjusting the tax codes of individuals with PAYE income. These changes will take effect from 6 April 2019. It is not yet clear how significant this will be, but it is likely that it will advance the payment of tax that is currently paid later by self employed people and landlords.
Making Tax Digital
In July 2017, the Government recognised that the introduction of ‘Making Tax Digital’ (MTD) for all income tax traders with turnover above the VAT registration threshold in April 2018 was very risky – the system had not been sufficiently tested. It was therefore decided to postpone the introduction of MTD for income tax until 2020 at the earliest, at which point it will probably be optional to start with.
The Government intends to press ahead with the introduction of MTD for VAT as originally timetabled in April 2019. Although this may seem a lesser change, because most VAT-registered businesses already file online returns every quarter, the detailed requirements of MTD are very different from the present rules. All VAT-registered businesses will have to make preparations in good time in order to have compliant software to record their transactions. The details are still being worked on, and it is still possible that the Government will decide that the introduction of such a change at almost exactly the same moment as the scheduled date for Brexit is still too risky – but until and unless such a decision is taken, it will be necessary to assume that the new system will be introduced.
Avoidance and evasion
As usual, the Chancellor announced a number of measures to crack down on tax avoidance and evasion. These included the announcement of an extra £155 million in resources allocated to HMRC to fund:
- Transformation of their approach to the hidden economy through the use of technology.
- Further tackling of people marketing tax avoidance schemes.
- Enhancement of efforts to tackle enablers of tax fraud and to hold intermediaries accountable for the services they provide.
- Increased action against non-compliance by mid-sized businesses and wealthy individuals.
- A new taskforce specifically aiming to collect tax debts more than 9 months old.
Charities
The Budget included an announcement of plans to simplify and clarify some of the conditions for Gift Aid relief to be claimed by charities from April 2019, where a benefit is provided to the donor. At the moment there are three monetary limits on such benefits that must be considered, and a number of extra-statutory concessions that allow the harsher effects of the law to be ignored. The limits will be simplified from three to two, and the concessions will be enacted in the law to provide certainty.