While the Spring Statement speech itself was short on anything you might justifiably call a substantial announcement, there was some information of substance for businesses to be aware of squirreled away in supporting documentation.
Tax avoidance, evasion and non-compliance
The Government announced that since 2010 more than 100 measures had been introduced to reduce tax avoidance, evasion and other forms of non-compliance. In addition to publishing a policy paper setting out their results in tackling unpaid tax, a new policy paper has been published outlining HMRC’s updated strategy for offshore tax compliance.
Further consultations and reports will be published in the coming months on the following topics:
- Preventing abuse of research and development (R&D) tax relief for small or medium-sized enterprises, with a focus on how the measure can be applied without undue impact on genuine businesses.
- The operation of insurance premium tax (IPT) with a call for evidence on where improvements can be made to ensure that IPT operates fairly and efficiently.
- The VAT administration in the Isle of Man. Following the ‘Paradise Papers’ allegations, the Isle of Man Government invited HM Treasury to review its VAT administration procedures for the importation of aircraft and yachts. This report will present findings with recommendations to ensure the right VAT continues to be paid and collected.
Further to the announcement in Budget 2018 that the apprenticeship co-investment rate would be halved from 10% to 5%, and that the amount employers can transfer to their supply chains would increase to 25%, it was confirmed this will take effect from 1 April 2019.
Making Tax Digital
Mandatory digital record keeping for VAT comes into force from 1 April 2019 for businesses over the VAT threshold (that is, with turnover over £85,000). The Government has confirmed it will take what it calls a ‘light touch’ approach to penalties in the first year of implementation. The written announcement suggests that where businesses are doing their best to comply, no filing or record keeping penalties will be issued – clearly a subjective test, which will concern many.
Review of the aggregates levy
A discussion paper has been published to review the aggregates levy, setting out the terms of reference and providing information on its timing and scope. The levy has remained frozen at £2 per tonne since 2009 and the review is intended to establish its fairness, simplicity and clarity and whether its structure can be amended in line with the principles of tax design.
Structures and buildings allowance
The Government published further draft legislation on the introduction of the new capital allowance relief for non-residential structures and buildings, and has invited responses by 24 April 2019. A response will be published in May 2019, before the structures and buildings allowance (SBA) is passed into legislation.
The SBA is set to be at a flat rate of 2% per annum over a 50 year period and applies to eligible costs incurred on or after 29 October 2018. The draft legislation sets out certain exclusions, for instance, land-related costs or residential use.
Other key points of the relief include:
- costs for new conversions or renovations
- availability for overseas structures and buildings, where the business is within the charge to UK tax
- continuing relief even for periods of disuse
- sale of the asset will not result in a balancing adjustment, instead the remaining allowances are transferred to the purchaser
- where leases exceed 35 years and at least 75% of the interest in property is retained and 75% or more of the capital sum has been paid, the allowance is transferred to the lessee.
Minimum and living wage
The low pay commission (LPC) is charged with responsibility to ensure that work pays for lower paid workers. The Commission has also been given responsibility to recommend whether economic conditions allow for the rate effective from April 2020 to meet 60% of median earnings by October 2020.
The LPC intends to report later this year on whether the current youth rate structure best supports their stated remit. The Government wants to ensure these rates continue to support young people in the labour market.
The Government announced its aspiration to end low pay in the UK at Budget 2018. It was announced it would confirm a remit for the LPC for the years beyond 2020 and engage with employers and the Trades Union Congress (TUC), to gather evidence and views. The LPC’s remit post-2020 will be confirmed by Budget 2019.
At Spring Statement 2019, the Chancellor announced the appointment of Professor Arindrajit Dube (Professor of Economics, UMass Amherst) to review the international evidence on the impact of minimum wage.
The review will cover a range of areas including the impact on productivity and economic growth, as well as the ability of the labour market to absorb future minimum wages rises.