The latest tax news hitting the headlines

Tax is an ever changing, highly complex area of law, and one that affects every single one of us. Changes in legislation have huge implications for the economy and the way in which we all live our lives. Here we report on the latest tax stories hitting the headlines.

Feature… Office of Tax Simplification

This week Chancellor George Osborne set up the Office of Tax Simplification to streamline Britain’s complicated tax system. The panel of experts making up the quango includes Tax Policy Director of the Chartered Institute of Taxation, John Whiting, who talked to Newsnight about the aims of the office. Newsnight’s report featured Tolley's Yellow and Orange Tax Reference Handbooks throughout.

'I don't think this is an exercise in radically reducing or, dare I say it, increasing tax bills.’ Whiting confirmed. ‘This is about trying to make sure that at the end of the day, a few years down the track maybe, people say 'Yes, it is getting easier to deal with small business taxation.’… It's the ease of dealing far more than the absolute tax bills.’

He also acknowledged concerns that tax simplification benefits only the rich, 'There is a risk, clearly, that if you simplify you start taking away valid things that are there to help the less able in society and the more vulnerable. That's one of the challenges and it’s certainly one that I identify with. Working with groups like TaxHelp for Older People, I know the sort of problems that the vulnerable have. I want to try and make sure that if we do simplify it's to help those sort of people, help those on low incomes, rather than actually give them burdens.'

News round up…

W/C 6th September

One in five big businesses consider leaving UK
The UK tax regime has prompted around 20% of large British businesses to consider relocating abroad, research has found. The data, collected by TNS-BNRB, revealed that companies are concerned about the lack of transparency in HMRC decisions. It also showed that 64% of bis businesses felt red-tape burdens had increased during the past year. The research, which was commissioned by HMRC, has been described by Roy Maugham of UHY Hacker Young as a ‘poor result’. He continued, ‘These results show businesses are increasingly dissatisfied with the way the tax system and HMRC is working.’

NI contributions holiday for start ups
This week sees the launch of a one-year National Insurance holiday for start ups. The Treasury will give a much-needed tax break for start ups worth up to £5,000 for each of the first ten staff. However, some sectors and regions of the country will be ineligible for the holiday. New businesses in agricultural, fishing and coal sectors won’t be able to claim the break, neither will businesses based in Greater London, the South East and Eastern regions. The move is part of the government’s ongoing attempts to promote growth in the UK economy. Naomi Smith of accountants Grant Thornton, said, ‘If you are going to start up a new business you will probably start one anyway, it just makes it a bit easier as your costs have been brought down in the first year.’

W/C 30th August

Beer and wine, feel fine?
Diageo, the world’s biggest spirits maker, has called for an increase in tax on beer and wine. Submitting proposals to a Treasury consultation, the company suggests that one unit of alcohol is taxed at the same rate, regardless of the drink. Currently wine is taxed at around 19p a unit, lager 21p a unit, and spirits 22p a unit. According to Diageo, equalising the tax rate would earn the government between £524m and £1.9bn a year. Diageo, makers of Smirnoff, Baileys and Guinness, trades in around 180 markets and has offices in 80 countries around the world.

Taxpayers could make ‘significant profit’ from banks
Bank bail outs could earn the UK taxpayer £19billion profit in the next five years, according to analysis in The Banker magazine. If equity prices rise in line with predicted economic growth, the taxpayer could see a turnaround of earlier predictions that propping up banks could cost the taxpayer as much as £850bn. The government’s holdings in British banks is set to earn almost £30bn; a sum that could fund the UK’s primary schools for an entire year. Brian Caplen, editor of The Banker, said, ‘While the banks remain at fault for decisions that led to some of them needing a rescue package, the UK taxpayer could make a significant profit from bailing out the banks by 2015.’ Currently UK taxpayers are breaking even on shares in Royal Bank of Scotland and Lloyds TSB, once dividends and other earnings are considered.

News archive: July | August