Business of tax 2017

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The Business of Tax

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arge businesses are vital to the UK’s economy.

In supporting the strategic business decisions that underpin that success story lies the need for clarity and certainty.

Our approach is very straightforward. We aim to be even-handed and impartial with all of our taxpayers irrespective of whether you’re a multinational corporation or an individual paying your tax through the Self Assessment system.

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Central to our work with large business is making sure that those businesses – the majority - who play by the rules - don’t spend more time than absolutely necessary on tax. We deliver on that by focussing our resources where we believe there is the greatest risk of tax going unpaid. That means identifying business or individuals that might not be playing by the letter or spirit of the law - intentionally or otherwise, so we focus our technical expertise where it’s needed and is most likely to deliver material results. The tax risk that

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Jo Wakeman Director of large business, HMRC

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we aim to tackle is identified by our world-leading intelligence and data analysis teams, supported by our cutting-edge software.

For large businesses we add to our risk-based approach, as the money at stake and the complexity of the businesses’ tax affairs means we have to take a more hands-on approach. We assign a highly-trained senior tax expert to each of the UK’s largest companies whose primary role is to make sure the business pays everything they owe and on time. These tax experts also gain an in-depth knowledge of the @MediaplanetUK

business to provide the business with clarity around the rules and better understand the sector, tax strategy and any preparedness to push the boundaries.

In practice, being open and transparent with HMRC pays dividends, significantly reducing the time spent on tax administration and compliance and that’s in everyone’s interests.

London is the most vibrant city in the world and businesses, large and small play a vital role in that success.

We wish CityAM and its readers well through 2017 and well beyond.

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COMMERCIAL FEATURE

Q&A

Name Surname Title

Kevin Nicholson Head of tax, PwC

Why is Brexit a stay-awake issue for your clients?

Brexit touches on so many aspects of business - you could be a Fintech eyeing future investment, a UK manufacturer heavily reliant on EU labour, or a multinational needing access to pretty much every market. It’s relevant to most businesses in some way. But Brexit isn’t an isolated issue. It’s interconnected with broader challenges and opportunities around technology and skills, and the new political landscape. For some businesses, US policies could have an equal bearing.

Are clients thinking about the tax ramifications of Brexit?

For some clients there are some pressing tax issues to grapple with, such trying to get their heads around likely changes to customs duties. We’re finding that even if clients understand the direct impact of potential tariffs on their own business, this is only part of the story; they now want to know the impact on their suppliers or customers as well.

Tax needs to be considered alongside all the other issues that Brexit is bringing to the fore. For instance, if you’re thinking about what it means for your workforce, there will be employment law issues, immigration and visa requirements, the ability to work cross-border; as well as the tax and pension implications. Clients want a joined up plan to deal with Brexit.

Do you think the UK will become more tax competitive post Brexit?

The current Government has made no secret of its desire to keep the UK attractive for business and investment. It’s already committed to reducing the main rate of Corporation Tax to 17 per cent by April 2020. I suspect it will want to keep any further potential cuts firmly up its sleeve until after broader trade negotiations with the EU. However, competitiveness is much more than corporation tax. If anything, corporation tax is becoming a less significant factor. There are the other taxes to consider – not just the taxes businesses bear such as business rates and industry specific taxes like the bank levy – but personal and property taxes. If we want more businesses here, it’s about attracting their people too.

Then there’s the compliance burden of tax. Our research shows a clear correlation between cutting tax compliance and GDP growth.

I think tax competitiveness in the round will definitely remain on the Government’s agenda. A competitive tax system should ultimately bring more business; with the resulting employment and payroll taxes and increased consumer spending and consumption taxes.

What do you think are the biggest tax changes that Brexit poses?

For me it’s the opportunity for real reform to the UK tax system. There’s been a lot of talk about the need to update the tax system for today’s world. A world where technology and automation are only going to become more important, and sources of tax revenues will invariably change. Brexit isn’t just about the tax changes forced upon us, but the opportunity it creates for fundamental reform.

Outside the EU we’ll have more freedom on tax – can we create a simpler, more streamlined system, which at the same time supports and nurtures particular regions and sectors. Linking with the Government’s Industrial Strategy, we need to think about the nation we want to be, the areas where we excel, and how we can build that position further.

Consultation on the role of tax needs to start now.

Business and Brexit: adding up the tax challenges Brexit will undoubtedly force changes to UK tax.

So what will the tax landscape look like once we have left the EU — and how will it affect British businesses?

I

f you asked business leaders for their top Brexit-related challenges, the chances are that tax might not figure prominently on their list.

Trade deals and movement of people seem to be commanding most attention at present. But tax is part and parcel of these issues, and companies are starting to wake up to the potential challenges they could face when the UK parts company with the EU.

toms border, too. “Customs declarations contain a lot of data and can be difficult things for businesses to complete, particularly if they have never traded outside the EU before,” says Clark. “We are speaking to a lot of businesses now to identify early which of their supply chains will be affected, in order for them to have enough

Customs One such issue is the potential for greater customs formalities and costs when UK businesses move goods to and from Europe. “At present, it appears that the UK will leave the Customs Union,” says Matthew Clark, head of UK customs, excise & international trade team at PwC. “That means a customs border will come into force between the UK and continental Europe and the Republic of Ireland. In order to process goods across this new border, businesses will need to submit two customs declarations upon export from the UK and import into the EU. They’ll also be faced with charges from customs agents to submit these customs declarations of anything between £20 for simple consignments to £100 for complex ones.”

UK importers and exporters will have to get to grips with the extra administration associated with a cus-

Panny Loucas International Tax Partner, PwC

“Accounting standards require tax to be measured based on current law not based on assumptions as to what the law might be” time to plan and enact the necessary changes to ensure business continuity post Brexit.”

People In the same way that some businesses are reviewing the movement of goods, many are reviewing the movement of what is often their most important asset – their people. And this brings tax challenges.

“Some firms are considering moving jobs outside the UK but the reality of moving the current occupiers of these jobs is different”, says Iain McCluskey, HR and mobility tax partner at PwC. “We are likely to see an increase in international commuters – people living in the UK but working overseas, or from home. The tax system is simply not designed for this type of working, with all sorts of complexity created not just in relation to income tax and social security, but also corporate tax as well.”

Tax reliefs and exemptions Another big challenge is identifying which tax reliefs and exemptions will continue to apply post Brexit, as a number rely on Britain being a member of the EU. This could have an immediate effect on financial reporting. “If a business is going to suffer a material impact from Brexit — because certain tax exemptions will no longer apply, for example — then it needs to consider disclosure in its financial statements now,” says Panny Loucas, international tax partner at PwC. “Accounting standards require tax to be measured based on current law

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MEDIAPLANET 3

USA

Germany

Ease of paying taxes

Ease of paying taxes

36

48

(out of 189)

44.0

175

11

93.12

Total Tax Rate

Time to comply (hours)

Number of payments

Post filling

(out of 189)

48.9

218

9

97.45

Total Tax Rate

Time to comply (hours)

Number of payments

Post filling

France

United Kingdom

Ease of paying taxes

Ease of paying taxes

63

10

(out of 189)

62.8

139

8

92.42

Total Tax Rate

Time to comply (hours)

Number of payments

Post filling

(out of 189)

Spain

China

Ease of paying taxes

Ease of paying taxes

37

131

(out of 189)

49.0

152

8

92.55

Total Tax Rate

Time to comply (hours)

Number of payments

Post filling

(out of 189)

30.9

110

8

87.44

Total Tax Rate

Time to comply (hours)

Number of payments

Post filling

68.0

259

9

48.62

Total Tax Rate

Time to comply (hours)

Number of payments

Post filling

SOURCE: PWC/WORLD BANK GROUP

not based on assumptions as to what the law might be. But to the extent that there may be material tax impacts which are difficult to accurately assess, a company may need to disclose the assumptions and judgements it is making. This means that businesses need to carefully think through the potential tax impacts of Brexit.”

An example of a tax relief that could cease to apply is the parent/subsidiary directive. “Many UK businesses with operations across Europe benefit from this directive”, he says. “If certain conditions are met, dividends from EU subsidiaries of EU parent companies can be sent back to the parent country free of withholding tax.” Post Brexit, in the absence of additional agreements, UK groups with profitable EU subsidiaries in countries such as Germany and Italy may have to consider ways of bringing profits back to the

UK without bearing extra tax costs.

“This is just one example of why it’s worth businesses thinking through how they might be affected so they can plan ahead” Loucas adds.

Competitiveness

Sarah Prior Financial Services Tax Partner, PwC

“The sector is undoubtedly one of the nation’s strategic strengths”

Yet there are areas where the UK can set the agenda. In a post-Brexit world, it’s essential the UK remains an attractive location for business and investment. The Government may therefore introduce tax changes to boost competitiveness, such as a further cut in the rate of corporation tax, as some have speculated — although this could be controversial and antagonise EU states.

More likely is a broader package of competitiveness-improvement measures, and the UK’s financial services sector could be a key recipient of these.

“The sector is undoubtedly one of the

nation’s strategic strengths, and its success can be harnessed to support the growth of the economy as a whole,” says Sarah Prior, financial services tax partner at PwC. “Tax has a key role to play in creating the conditions for the UK’s financial services sector to thrive and the approach of Brexit provides an opportunity for the Government to review its policy in this area.”

Reform Ultimately, the Government may use Brexit as a springboard for fundamental tax reform, notes Andrew Sentance, senior economic adviser at PwC. “Certain taxes — particularly VAT and excise duties — are constrained by European Legislation,” he says. “Outside of the EU, the UK can have more flexibility in these areas.

For example, under EU law, only two rates of VAT are available: standard

and reduced. Post-Brexit, the Government could set as many VAT rates as it wanted.”

But might this new found flexibility also cause problems? That’s a possibility, admits Sentance. For example, without careful thought, there’s a risk that the already complicated UK tax system could become even more complex. “Our tax system is needlessly complicated and hasn’t undergone root-and-branch reform since the 1980s,” he says. “We should try to use the flexibility we could have postBrexit to make it much simpler.”

Read more on pwc.co.uk/the-eureferendum.html

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MEDIAPLANET

NEWS INSIGHT

Miguel Silva Pinto Executive Secretary, Intra European Organisation of Tax Administrations

Service oriented tax administrations In the dynamic modern society, tax administrations are transforming themselves in order to adapt to the needs of society, introducing simplified e-services and online tax accounts where citizens can comply with their tax obligations from home and in a few minutes. Mobile platforms and enhanced websites are put at the disposal of taxpayers for filing returns. Data from third parties is being gathered in order to allow tax return to be filled in advance by the tax authorities.

Within the framework of IOTA, the Intra European Organisation of Tax Administrations, tax officials from our member countries meet on a regular basis to discuss practical issues and they bring back home new and innovative ideas and can use networking for strengthening cooperation across the membership.

In 2015, the theme of our General Assembly was “Self-service for tax compliance,” addressing the use of modern information and communication technology to improve taxpayer services, compliance and internal efficiency.

Last year we set an international conference, attracting more than 80 participants who discussed the ways tax administrations are transforming to respond to the modern needs of the society and taxpayers. Already this year, IOTA organized a workshop on “Transparency and Personalisation in the delivery of e-services”, focusing on how our members tax administrations have developed simple, personalised and secure online tax accounts.

IOTA is doing its share by providing opportunities for its members to learn about new trends and to exchange experiences on new models and formats for delivering their services, thus contributing to their advance and modernisation as well as to the overall improvement of tax compliance in the European region.

Making Tax Digital:

what you need to know With extensive changes to how taxpayers record and report income to HMRC, what are the new timelines of implementation and how can business prepare for action changes.

By Anita Monteith

M

aking Tax Digital (MTD) was first announced in the March Budget 2015, when it was to be about making tax simpler. Within a year it had become clear that this was a much larger project and was about digitalisation of the entire tax system. The proposed changes are the most significant to the operation of the tax system since self assessment was introduced in the 1990s and will require businesses to keep their accounting records digitally using software or an app and to make quarterly reports to HMRC of their income and expenses. The introduction of a modern tax system using digital technology, which will make it easier for businesses to comply with their tax obligations, is good news, but many of the actual details have yet to be confirmed and we have serious concerns about the speed with which it is being implemented.

The latest timetable for the start of MTD, subject to exemptions, is: • April 2018: income tax for businesses and landlords with turnover above the VAT threshold, which is £85,000 from April 2017 (excluding some larger partnerships).

• April 2019: income tax businesses and landlords with turnover below the VAT threshold. VAT for all businesses.

• April 2020: for corporation tax and income tax for partnerships with turnover of more than £10m.

In the Spring Budget, the Chancellor announced a one year deferral for small businesses and landlords with turnover below the VAT threshold to

Anita Monteith Tax Manager, The Institute of Chartered Accountants in England and Wales (ICAEW)

April 2019. This will allow more time for software to be designed and tested and for the necessary communication and training to take place. It will also allow for the gathering of data on the impact, including the cost to businesses and the impact on the tax gap which Government expects to be reduced by better record-keeping under MTD. By requiring businesses to report the totals of their income and expenses every three months, nearer to real time, HMRC is hoping that income will be reported more accurately. Our experience is that it is usually expense receipts which are lost rather than income.

Government has been listening and some improvements to help businesses have been announced but MTD will still be compulsory for most businesses. There was no mention in the Budget of the turnover threshold for individuals and businesses which was previously announced at £10,000.

Below this threshold, MTD reports will not be required. The vast majority of small businesses which have

“The proposed changes are the most significant to the operation of the tax system since self assessment was introduced in the 1990s”

turnover below that figure are unlikely to be paying tax anyway. The exemption should be set at a level of turnover where most businesses are likely to be paying tax and it should be a matter of choice for business owners based on a compelling business case for change. Businesses should be able to move to the new system over time when they are ready.

Although the original timetable for introducing these changes for smaller businesses has been deferred by a year, the timescale for implementation remains worryingly short. The results of an ICAEW survey of businesses showed that only 25 per cent of UK businesses maintain electronic accounting records, so there is a huge amount to be done by businesses, HMRC and the software industry in a very short period.

Given this, businesses should start to plan for the changes now. If they already use software, they should approach their supplier to ask when their new MTD compliant updates will be released. Not all software companies will be making the switch and if a business is looking to invest in something new, it will be important to choose a product which will have longevity.

Many suppliers will be participating in software pilots from April 2017. For anyone who likes to be ahead of the game, getting involved in a pilot will be a great way to start. HMRC won’t be offering any free software, but some commercial suppliers will. There is little information about who will be eligible for these, but they are likely to be limited to use by only the smallest businesses.

Above all, speak to your accountant who will be able to help you through the changing system as details are released in the coming months.

COMMERCIAL FEATURE

The changing face of tax: why the future is digital

Photo: helloquence

The digitalisation of tax may prove to be a headache for many SMEs — but it’s happening around the world and coming to the UK, so every company has to be prepared for it.

By Tony Greenway

T

he technological revolution has changed every part of our lives: even the way we submit our tax returns. You can run but you can’t hide from this brave new tax world. In countries around the globe, paper filing is out (or on the way out) and digital is becoming the new normal.

“There’s a strong trend away from the old world of self-assessment where businesses would file a summarised return once a year, once a quarter, or once a month,” says Kid Misso, Senior Director Solution Consulting at Avalara, the automated tax software company. “Now we’re moving closer towards government assessment, and from periodic online filing to real-time filing.”

Transactions

Take Spain, says Misso. From 1 July, the Spanish tax authority is introducing a new electronic VAT reporting system which requires businesses to send in their customer and supplier invoices within four days of their issue. Hungary is another example. “This year, the Hungarian tax authorities are rolling out an electronic invoicing initiative,” says Misso. “It means that before Hungarian businesses submit an invoice (with a VAT value of more than HUF 100,000) they’ll need to contact the tax authority over a real-time connection to ask: ‘Can I invoice my customer?’ They’ll then be sent a number which they put on their invoice. In effect, what the Hungarian authorities are doing is collecting transactions up front — a process that has been standard in Brazil for quite some

time. It’s very sophisticated and means that the tax office has all the information about a business’s transactions, even before it submits a return.”

The reason for this is simple: in the EU, countries are losing billions in VAT revenues because of fraud, omissions and poor tax collection. “Last year the VAT gap in the EU was estimated to be around €160 billion,” says Misso. “There has to be a way of closing that gap, so they’ll impose whatever mechanism they can to make it more difficult for people to avoid VAT.”

implement than they expect. Looking at the global situation, it’s very common for these things to be delayed multiple times.”

Preparation

Kid Misso Senior Director Solution Consulting, Avalara

Transformation

In the UK, the Government’s Making Tax Digital initiative aims to transform the tax system and make it “more effective, more efficient and easier for taxpayers, through the implementation of a fully digital tax system.” What this means requires more clarity from HMRC; but, ultimately, the government’s vision is for “the end of the tax return by 2020.” Previously, it was announced that most UK businesses would need to file their income/expenditure quarterly using an online digital tax account from April 2018.

In the Spring budget, however, Chancellor Philip Hammond stated that non-VAT registered companies (ie, those with an annual turnover below £83,000) will not have to use the system until April 2019.

So could this advance towards digital be delayed further? Maybe, says Misso. “It’s already had to change two or three times, so there’s every chance it could get held up again. When the government brings in an electronic initiative it often takes longer to

“We’re moving closer towards government assessment, and from periodic online filing to real-time filing”

But, he cautions, tax digitalisation is coming, so UK businesses have to be prepared for it.

“Essentially they are going to have a choice,” he says. “They either have to work out how to file themselves and build their own technology and systems to talk to an HMRC gateway, or find a company with a solution for automating that process to do it for them.”

It isn’t going to be pain-free. “I would say that businesses around the world are unanimously resistant to digital, because it means a cost for them,” says Misso. “It’s a whole new process that requires system change and setting up from an IT perspective.”

Yet there are positives to automation. “The potential for errors in spreadsheets is alarming, yet some of the largest organisations in the world are filing VAT returns in this way,” says Misso. “Technology can speed up the process and remove all of those risks. And if you’re selling across borders but don’t speak the language of the country you’re selling into, you might not be able to work out what your compliance obligations are and how to file a VAT return. In that situation, automation technology would be quite helpful — or, rather, essential.” n Read more on avalara.com

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NEWS

Tax in a post-Brexit environment So, in two years time the bell will toll, the ‘Great Repeal Bill’ will take effect and the UK will leave the European Union. What will this mean for our tax system?

Responsible tax: More important now than ever

By John Cullinane

By Rt Hon Dame Margaret Hodge MP, Chair of the APPG on Responsible Tax

T

he short answer is, in all probability, nothing especially dramatic. We probably won’t abolish any big taxes. We probably won’t become a tax haven. We probably won’t change all that much, at least initially.

Customs duties are one area where we can expect to see change. When we leave the EU we will (the government has confirmed) leave the customs union at the same time. Ahead of this day the government will need to legislate for a new customs system. Of course they might choose to import much of the EU system, but they will at the very least need to start treating trade with the continuing EU as imports and exports, with the bureaucratic challenges this will bring. World Trade Organisation (WTO) rules will mean that, if the UK and EU do not agree a free trade deal, the EU will have to place tariffs on the UK and, if we want to apply tariffs on any country, the UK will have to place tariffs on the EU.

T

John Cullinane Tax Policy Director, Chartered Institute of Taxation

“Counter-intuitively one effect of Brexit may actually be less change to the tax system”

The Great Repeal Bill VAT is a European tax, though as it is already incorporated into UK law it would stay in place even without the ‘Great Repeal Bill’ (the not entirely accurately named mechanism for incorporating all existing EU law into UK law on the day we leave). Outside the EU we will be free to raise, cut, tweak and fiddle with VAT to our heart’s content - and no doubt dozens of lobby groups will argue their cases – but that won’t make it a good idea. Abolishing VAT is probably out of the question, given the amount of revenue it raises.

But one thing we can anticipate is uncertainty, both as the status of rulings by the EU court comes into question, once we leave its jurisdiction, and if we lose the guiding principles of EU law (proportionality, legal certainty, etc).

Direct taxes such as income tax and corporation tax, and transaction taxes like stamp duty, are little affected by EU law, so leaving is unlikely to see much change here either. The EU’s ‘state aid’ rules would cease to apply - though there are some WTO rules in this area which we would still need to follow - so the government could, if it chose, offer selective tax advantages to particular taxpayers or groups of taxpayers. Similarly we would no longer be bound by rules on free movement of capital so would be

free to discriminate between resident and non-resident companies and individuals, should we wish to.

Selective tax breaks are one of the inducements the government could offer if it wants to follow through on its threat to adopt an aggressively low-tax, pro-deregulation model if the EU attempts to impose ‘punitive’ terms on us. Further cuts to corporation tax are another lever that would move us in this direction. But the Chancellor has stated that Britain’s aim is to remain “a recognisably European-style economy with European-style taxation systems” so this would appear unlikely.

Counter-intuitively one effect of Brexit may actually be less change to the tax system. Up to 15 Brexit bills are predicted to hit Parliament over the next two years, leaving precious little time for other measures. This month’s slimline Budget (just 14 tax measures) may be a sign of things to come.

Brexit then, will probably not set the tax heather alight. Events elsewhere – US tax reforms, changes to the labour market, digitalisation – will likely change the tax system more in the next decade than our departure from the EU does.

he All Party Parliamentary Group (APPG) on Responsible Tax was established after the 2015 election. The issue of who pays tax, how much they pay and whether the system is fair has touched a raw nerve with people of all ages and backgrounds. During my time as Chair of the Public Accounts Committee we saw tax move from being a niche concern to businesses and tax professionals to becoming a topic of conversation for people in the pub, and around the dinner table. Not paying your fair share of tax used to be seen as cool and clever. Now most people strongly disapprove of it. Aggressively avoiding tax damages your reputation. We want to grasp this moment to try to build a consensus for a fairer and sustainable tax system that works for all.

We are a cross-party group of parliamentarians who believe that Parliament should play a role in ensuring that we build an efficient, fair and transparent tax system which creates sustainable growth, shares prosperity, and commands the confidence of all taxpayers.

We want to stimulate a debate that includes everyone from the tax campaigners to the accountants and from small businesses to multinationals. As parliamentarians we are uniquely placed to provide a neutral space for stakeholders to come together, debate ideas and find consensus on the key issues.

We have held thought provoking seminars on the future of corporation tax and had public sessions with Pascal SaintAmans from the OECD on the effectiveness of their BEPs process.

In the week that Theresa May triggers Article 50 the need for the group becomes ever more important. One key aspect of Brexit has yet to be widely aired; the impact it will have on the tax system.

Of course the huge uncertainties on what the final Brexit deal will look like makes it difficult to have an informed debate on tax.

We know that Britain could get control of VAT rates but VAT raises around one fifth of the money that is spent on public services.

With the deficit still high, the economy fragile and the impact of a hard Brexit on growth

and prosperity uncertain, reducing VAT becomes more remote as a realistic policy option.

We know that both the Prime Minister and the Chancellor have threatened to turn us into a tax haven. But it seems unrealistic. Can we really afford to lose more revenue by further cuts in Corporation Tax? Unlike Ireland or Luxembourg the tax brings in substantial amounts. Can public services really cope with further cuts?

And what action will the EU threaten if we embark on a ‘tax haven’ strategy. They could make tax transparency a condition of passporting for the financial services sector. They could nullify any tax haven benefits we might want to offer by adopting a common consolidated tax base.

Time for debate We also want to use Brexit to stimulate a wider debate on other topical issues. Is tax an effective competitive tool that really brings growth and jobs? Can we build a consensus around how to simplify the tax system? How effective is HMRC and what will the impact of digitisation be? How do we create a fair and progressive tax system that is both attractive to businesses whilst providing enough money for quality public services we all want and need?

There is something that this Government could do now to signal that they are ready to become a responsible global leader postBrexit. They could live up to the commitment made by David Cameron, to implement public registers of beneficial ownership in the Overseas Territories. Just last week, almost a year since the release of the Panama Papers, we saw the ‘global laundromat’ leaks that exposed yet again how secretive shell companies are being used to launder illicit funds, involving some of our UK banks. The APPG is sponsoring an amendment to the Criminal Finances Bill that would help to put an end to this corrosive practice by insisting on transparency.

In the House of Commons our amendment has the support of nearly 90 MPs from across eight political parties. It is now being moved in the House of Lords. By insisting on transparency we will do much to curtail the tax evasion and avoidance that takes place in the UK tax havens.

COMMERCIAL FEATURE

Photo: Getty images

Final Spring Budget – ACCA’s views The final Spring Budget was met with mixed reactions from ACCA. While it was great to see that the government listened to the concerns of the business community with regard to business rates and the upcoming rollout of Making Tax Digital (MTD), ACCA was concerned on Budget day itself when the Chancellor announced an increase in the NIC for the self-employed. We said immediately that this would be harmful for UK growth and entrepreneurship.

S

o we were pleased that the Chancellor, almost a week after the Budget, reversed the class-4 national insurance contributions (NICs) increase.

We see this as a positive move for British businesses.

Clearly, the government listened to the concerns of the business community, ACCA included. As we outlined in our statement on the Spring Budget on the 8 March, these measures could have been harmful to British entrepreneurship and competitiveness.

Creating barriers for British small business is the last thing we want during a time when we are trying to encourage innovation and create a Britain that is ‘open for business’. Instead, we should be focussing on measures that improve the competitiveness of UK Plc, and of Britain as a place to work and locate a business.

If these proposals are revisited in this Parliament, I suggest that the government thinks carefully about measures to align the level of benefits received by self-employees in comparison to their employed counterparts before increasing taxes on the former.

What has to be remembered is that self -employees are subject to a lower national insurance contribution (NIC) because they

small business that MTD would create. We welcome the move to delay the implementation of MTD for one year, for businesses with turnover less than £83,000. However, we would encourage the government to continue with this carve-out indefinitely: excluding businesses within this threshold altogether as they are most impacted by the additional administrative burden that MTD filings would create.

do not receive the same entitlements and benefits as their employed counterparts – such as holiday and sick leave. Before raising this tax, the government needs to think carefully about ways to align the level of benefits.

At a time when we are trying to encourage innovation and create a Britain that is ‘open for business’, we should not be creating barriers to entrepreneurship and self-employment.

Business rates relief welcome, but not enough ACCA welcomed the news that the government has listened to the serious concerns of the business community around the upcoming revaluation, and has allocated reliefs accordingly. However, we are not sure that these measures will go far enough to address the pressures on our bricks and mortar small businesses. There is just not enough money in the relief fund (£300 million) for local authorities to significantly help hard-hit businesses in their community.

Making Tax Digital: a welcome change It was also good to see that the government has listened to the concerns of ACCA, amongst others, about the undue burden on

Chas Roy Chowdhury Global Head of Tax, ACCA

“At a time when we are trying to encourage innovation and create a Britain that is ‘open for business’, we should not be creating barriers to entrepreneurship and self-employment”

Dividend allowance The Chancellor’s reduction in the dividend allowance is a major policy u-turn in less than two years.

I would be concerned if this meant that the government is considering removing the allowance altogether when it was originally proposed as an offset for increases in dividend taxation. If it is removed altogether, the taxation on dividends should be reduced.’ n Read more on accaglobal.co.uk