This was the Chancellor’s fourth tax speech in under a year. And whilst new tax announcements were few and far between compared to the Summer Budget, the proposed move to quarterly on-line record keeping for taxpayers has the potential to be transformative.

Digital Taxes proposal

This proposal was born in the March 2015 Budget with scant details emerging since then. If delivered, the changes could have a significant impact on the nature of tax compliance work for members in industry and practice alike. However, HMRC’s track record of delivery on digital services has not been particularly strong in recent times.

Under the government’s “Making Tax Digital” strategy, £1.3 billion is to be spent to transform HMRC into “one of the most digitally advanced tax administrations in the world”. HMRC plan to launch free apps and software available for smaller businesses who in future will be required to update these at least quarterly via digital tax accounts.

Neither pensioners nor employees will be required to join this brave new world, unless they have other income of more than £10,000 per year. This strategy follows the recent announcement of tax office closures over the next five years across the UK as part of the next steps in HMRC’s ten year modernisation plan. The government will consult on the details of “making tax digital” next year.

Payment of taxes

This proposal will also look at 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.

Chartered Accountants Ireland is in touch with HMRC about these plans; a HMRC briefing for stakeholders is due to held mid-December. We’ll keep you updated on developments in this area via Chartered Accountants Tax News and tax.point.

So what else did the Chancellor have to offer? We’ve poured over the documents to bring you the details in our summary below.

“The devolution revolution”

The Spending Review and Autumn Statement documents were awash with talk of the devolution revolution.

Northern Ireland

In the context of Northern Ireland, the Chancellor welcomed the setting of a rate (12.5 per cent) and date (1 April 2018) for corporation tax devolution.

But this is still subject to the Northern Ireland Executive demonstrating that its finances have been put on a sustainable footing and that the range of commitments entered into in the Stormont House Agreement have been met. As we said in Chartered Accountants Tax News on Monday 23 November, it’s over to Stormont.

Avoidance, Evasion et al

A continuing trend from previous speeches, this area contained the bulk of the tax announcements.

The General Anti Abuse Rule (GAAR)

The government will introduce a new penalty of 60 per cent of the tax due to be charged in all cases successfully tackled by the GAAR. Changes will also be made to the GAAR’s procedure intended to improve its ability to tackle marketed avoidance schemes.

Avoidance schemes

To reduce opportunities for income to be converted to capital to gain a tax advantage, the government is planning to open a consultation on the company distributions rules. Amendments are also expected to the Transactions in Securities legislation. And a targeted anti-avoidance rule will also be introduced.

The government also looked at tax planning around the intangible fixed assets regime in cases where more generous corporation tax relief is obtained than is intended by the legislation. This regime will be amended to stop arrangements that use partnerships to obtain relief.

Legislation will also be introduced to counter two types of avoidance involving capital allowances and leasing.

Evasion

A new criminal offence will be introduced that removes the need to prove intent for the most serious cases of failing to declare offshore income and gains. And the government will also increase civil penalties for deliberate offshore tax evasion. This will include the introduction of a new penalty linked to the value of the asset on which tax was evaded and increased public naming of tax evaders.

Civil penalties will be introduced for those who enable offshore tax evasion, including public naming of those who have enabled the evasion. A new criminal offence for corporates failing to prevent tax evasion will be introduced.

The government will also consult on an additional requirement for individuals to correct any past offshore non-compliance with new penalties for failure to do so.

HMRC is publishing a call for evidence to seek a better understanding of what implications the trend away from cash has for tax compliance, and in particular evasion and the hidden economy.

Serial avoiders

For “serial avoiders”, the government will introduce new measures 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 will be published and, for those who persistently abuse reliefs, restrictions will be imposed on them accessing certain tax reliefs for a period.

The Promoters of Tax Avoidance Schemes regime will be widened by bringing in promoters whose schemes are regularly defeated by HMRC.

Large business tax strategy

At Summer Budget 2015, the government announced new measures to improve large business tax compliance, with a consultation over the summer to refine the detail. Following this consultation, the government will legislate to introduce a new requirement that large businesses publish their tax strategies as they relate to or affect UK taxation planning.

Capital gains tax (CGT)

Residential property

CGT due on residential property by UK residents is currently paid between 10 and 22 months after a disposal is made, depending on the disposal date. The government views this as being out of step with the position for other taxpayers. And, in some cases, the delay can also cause problems where a taxpayer forgets to pay, or no longer has enough of the disposal proceeds to pay the tax.

To address this, the Autumn Statement announced a requirement for the CGT due to be paid within 30 days of completion of any residential property disposal. Currently, a non-resident person disposing of UK residential property has 30 days to file and pay the tax due. This requirement will be introduced from April 2019.

In a call with HMRC on the day of the Autumn Statement, Chartered Accountants Ireland made the initial point that this payment deadline could prove problematic in cases where the consideration hadn’t been received yet the contract had completed or where a chain of transactions existed. HMRC acknowledged this point; there will be a full consultation on the matter in 2016.

Non-residents CGT

The government will amend the CGT computations required by non-residents on the disposal of UK residential property by removing, with retrospective effect from 6 April 2015, a double charge that occurs in some circumstances and correcting an omission. These changes will take effect from 25 November 2015.

HMRC will also be given powers to prescribe circumstances when a CGT return is not required by non-residents and will add CGT to the list of taxes that the government may collect on a provisional basis.

Entrepreneur’s relief 2015 changes

The government is also considering 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.

Stamp taxes

Second homes tax

From 1 April 2016, higher rates of stamp duty land tax (SDLT) will be charged on purchases of additional residential properties, such as buy to let properties and second homes. The higher rates will be 3 percentage points above the current SDLT rates. That means a potential maximum rate of 15 per cent for consideration above the current 12 per cent threshold of £1.5 million.

The higher rates will not apply to purchases of caravans, mobile homes or houseboats. Nor will it apply to corporates or funds making significant investments in residential property given the role of this investment in supporting the government’s housing agenda.

A consultation will be launched on the policy detail including considering whether an exemption for corporates and funds owning more than 15 residential properties is appropriate.

SDLT payment date

In 2016, the government will consult on changes to the SDLT filing and payment process, with a proposal to reduce the filing and payment window from 30 days to 14 days. These changes are planned to take effect in 2017–18.

Stamp duty and annual tax on enveloped dwellings reliefs (ATED)

From 1 April 2016, reliefs available from the ATED and the 15% higher rate of SDLT will be extended to equity release schemes (home reversion plans), property development activities and properties occupied by employees.

Inheritance tax

World War II exemption

The government will legislate Extra Statutory Concession F20, which gives an inheritance tax exemption in respect of certain compensation and ex-gratia payments for World War II claims. This will include payments made under a recently created compensation scheme known as the Child Survivor Fund. The legislation will apply to deaths on or after 1 January 2015.

Pension scheme drawdowns

Legislation will also be introduced to ensure a charge to inheritance tax does not arise when a pension scheme member designates funds for drawdown but does not draw all of the funds before death. This will be backdated to apply to deaths on or after 6 April 2011.

Deeds of variation

Following the review announced in the March 2015 Budget, restrictions will not be introduced on how deeds of variation can be used for tax purposes though the matter will be kept under review.

Income tax and national insurance

There were very few announcements in this area despite much speculation beforehand that the new dividend tax rules would be brought forward to start on the day of the Autumn Statement and not 6 April next.

2016/17 rates and allowances

The Autumn Statement did not make any changes to the tax rates and allowances previously announced for 2016/17. A useful summary of these has now been published. The band of savings income that is subject to the 0% starting rate will be kept at its current level of £5,000 for 2016–17.

Tax-free childcare

Tax-free childcare is due to start from early 2017, providing up to £2,000 a year per child to help working parents with their childcare costs. The Autumn Statement and Spending Review sets an upper income limit per parent of £100,000 and a minimum weekly income level per parent equivalent to 16 hours to the extended free childcare entitlement and tax-free childcare.

Charities

Small donations scheme

As announced in 2014, the government will review the gift aid small donations scheme to ensure that it is operating as effectively as possible. A call for evidence will be published this month.

Close companies

Following consultation, the government will legislate so that a tax charge is not applied to loans or advances made by close companies to charity trustees for charitable purposes. This will apply to qualifying loans or advances made on or after 25 November 2015.

Miscellaneous

Some other matters of interest announced are outlined below.

Self-assessment

Draft legislation clarifying the time allowed for making a self-assessment (4 years from the end of the relevant tax year) will be published.

The government will also publish draft legislation that will enable a new 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.

Employment issues

The government has responded to the final report of the OTS review of employment status and is taking forward the majority of recommendations. More details are expected soon on this. And the 3 per cent diesel supplement in company car tax is staying until 2021.

Micro-employers are advised that the 2 year temporary relaxation on reporting PAYE in real-time which currently allows them to report all payments they make in a tax month on or before the last payday in the tax month (rather than on or before each and every payday) will end as planned on 5 April 2016.

The government will introduce a number of technical changes to streamline and simplify aspects of the tax rules for tax-advantaged and non-tax-advantaged employee share schemes. Further evidence on the growth of salary sacrifice arrangements will be gathered to consider the way forward in this area.

Miscellanea

To ensure the tax-advantaged venture capital schemes continue to provide effective and sustainable support to small and growing businesses, the government will amend the eligibility criteria of the schemes to exclude all energy generation activities.

In the area of creative sector reliefs, the case for introducing a new tax relief for museums and galleries will be explored.

Following the consultation announced at Summer Budget 2015, the government will legislate to simplify the tax treatment of income from sporting testimonials. From 6 April 2017, all income from sporting testimonials and benefit matches for employed sportspersons will be liable to income tax. In addition, an exemption of up to £50,000 will be available for employed sportspersons with income from sporting testimonials that are not contractual or customary.

The Northern Ireland Tax Committee responded to the consultation on extending the averaging period for self-employed farmers. It is confirmed that this will be extended from 2 years to 5 years as of April 2016, with farmers having the option of either averaging period.

Conclusion

Our summary above has been focused solely on new tax announcements, setting aside changes previously announced. The figures and commentary in our Autumn Statement coverage rely heavily on the official documents published.

All the relevant publications can be found on gov.uk on the Spending Review and Autumn Statement 2015 page. As usual, the devil is in the detail. Until we see the draft Finance Bill clauses, proceed with tax caution. These are expected to be published this month.

Leontia Doran is UK Taxation Specialist for Chartered Accountants Ireland.

Email: leontia.doran@charteredaccountants.ie

Website: www.charteredaccountants.ie