So far in 2015 we have made 6 written submissions on a number of tax matters and have engaged in many consultations with Revenue and HMRC and other government bodies on matters of concern to our members. As a recap of the tax representational work of the Institute, and the CCAB-I tax committees so far in 2015, we summarise the written submissions made, and key areas of our representational work.

Written representations

BEPS Project

In January 2015 3 written submissions were made in connection with the OECD BEPS project. The approach within the BEPS project is to identify specific “Actions”. The OECD then issues discussion documents to garner public comment prior to finalising its recommendations to OECD governments in tackling the perceived areas of difficulty addressed by the Actions.

Action 6 concerns the prevention of the granting of treaty benefits in “inappropriate circumstances”. Our submission points out that many of the BEPS proposals to limit treaty benefits would be contrary to the interests of smaller countries. They would also give Revenue Authorities additional discretion to refuse benefits, which would be both resource intensive for the Revenue Authorities concerned and would increase uncertainty and administrative burdens for business.

Of the two other actions where submissions were made, Action 7 has to do with Permanent Establishment (PE) – the circumstances in which a company is brought into the charge to tax outside its home country. We suggested that some of the PE proposals would be contrary to EU treaty principles, and also that if PE is redefined, the definitions should at least be as clear as the ones currently in place.

Action 10 concerns transfer pricing guidelines relating to low value adding services. Our key point here for this specialised area is that the proposed simplification is made available as broadly as possible.

A further submission made in February on so-called “Preferential Regimes” highlights some risks for smaller economies which would arise on foot of draft conclusions already tabled by the OECD.

Ireland has a particular interest in Preferential Regimes because if implemented, the OECD conclusions would limit our Government’s scope to introduce a Knowledge Development Box. The current submission highlights two areas of difficulty for smaller economies; very narrow definitions of eligible innovation, and eligible cost apportionment by reference to spending on development rather than on the ultimate value of the development.

The Institute, as a member of CCAB-I, intends to make a submission separately to the Department of Finance on the Knowledge Development Box proposals.

The Corporation Tax (Northern Ireland) Bill

We responded to the Public Bill Committee call for evidence and commended the drafting of the Bill. The Northern Ireland Tax Committee also took the opportunity to highlight two particular areas of concern in relation to the eligibility of SMEs further reduced rate in the Province: and mobile workforces and the construction industry and the “in/out” test. The response is published on here. The committee will continue to engage with government on this important issue.

Tax Enquiries: Closure Rules

In its response to the consultation “Tax Enquiries: Closure Rules” the Northern Ireland Tax committee questions the need for the proposed power which would enable HMRC to unilaterally close one or more aspects of an enquiry by application to Tribunal. The committee agrees that HMRC should have the powers it needs to tackle tax avoidance effectively. However, there is no proposal for an equivalent power for taxpayers who want to resolve individual matters early where HMRC does not agree these should be taken to a tribunal. The response is published on here.

All our written representations can be read on our website.

Key areas of engagement

Irish Revenue

We continue to engage with Revenue on iXBRL filing of financial statements by corporate taxpayers. Specific focus is on:

• Revenue’s requirement for a Detailed Trading and Profit & Loss A/C
• Phase 2 of mandatory iXBRL filing
• The Revenue Online Service (ROS) iXBRL facility

Heads of Bill for a new Appeal Commissioners Tribunal were published by government earlier this year. In the past we have made a number of submissions and representations seeking reform of the tax appeals process. The Institute’s Tax Director addressed the Oireachtas Finance, Public Expenditure and Reform Committee in the debate on the Bill.

Revenue are proposing to exercise their powers to raise complaints to professional bodies without being in breach of their duties of confidentiality. As part of our engagement with Revenue we organised a briefing for them and conducted by CARB and representatives of the regulatory wings of the other CCAB-I bodies.

The area of travel and subsistence expenses, and the allowable travel expenses for non-executive directors, remains to be a focus of Revenue in 2015. We continue to make representations on this matter.

HMRC

The HMRC Agent Strategy Project (ASP) is aimed at helping streamline the relationship HMRC has with Tax Agents. The project comprises two main and distinct streams: Agent and Client Statistics whereby HMRC seek to build up a picture of agent performance and behaviour, and Agent Online Self-Serve (AOSS) where HMRC are seeking to develop online solutions to provide tax agents with varying degrees of power/freedom to perform certain tasks on behalf of a client.

The UK High Net Worth Unit (HNWU) deals with the tax affairs of the wealthiest individual taxpayers in the UK (net worth of £20 million+). The Northern Ireland Tax Committee has opened up a direct communication link with the head of HNWU which deals specifically with NI taxpayers. As a result the head of this unit met with the Northern Ireland Tax Committee in February to discuss HNWU matters pertinent to Northern Ireland.

We report of key tax developments in Ireland, the UK and internationally in each monthly issue of tax.point.