November Tax Tips & News

Welcome to the Benedicts Tax Tips & News monthly newsletter, bringing you the latest news to keep you one step ahead of the taxman.

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Newsletter issue - November 2015.

When a court or the tribunal issue a ruling that potentially resolves a large number of cases, many 'followers' (i.e. taxpayers with similar circumstances) agree to settle their affairs with HMRC, but some do not. They argue that small differences in the arrangements mean that the decision does not apply to them. HMRC will issue a follower notice to such taxpayers requesting them to settle the liability they believe is due.

Alongside the 'follower' rules are the accelerated payment rules. HMRC may issue an accelerated payment notice (APN) requesting the recipient to pay the disputed tax and/or NICs. This means that if a person is given a follower notice but decides not to settle up with HMRC, HMRC can still request the tax they believe is due under the accelerated payment rules. The broad effect of these double-edged rules is that the Exchequer gets to hold on to the tax during a dispute period, so removing any cashflow advantage from the taxpayer.

APNs should not be ignored - anyone receiving a notice has 90 days to either pay the amount requested or make appropriate representations. Failure to act by the due date could lead to late payment penalties or surcharges becoming due and potential enforcement action being taken to recover the tax or NICs.

It is also worth noting that an APN will only cover the tax or NICs advantage relating to the specific avoidance scheme covered by that notice. The amount shown may not be the final liability agreed, which may be larger or smaller than the amount of the APN. It will not include any interest, penalties or other tax that may be due in the year. Therefore when the enquiry or appeal is finalised, there may be additional amounts to pay.

HMRC may issue a 'follower notice' if the following four conditions are satisfied:

Condition A: There must be an enquiry in progress into a tax return or claim made by the taxpayer and there must be a 'live' appeal with HMRC or the Tribunal;

Condition B: the return, claim or appeal must be made on the basis that particular tax arrangements lead to tax advantages;

Condition C: HMRC are of the opinion that there is a judicial ruling which is relevant to the chosen arrangements. In addition, any follower notice must be given within 12 months of the later of:

• the date the claim, return or appeal was received; or
• the date the relevant judicial ruling was made;

Condition D: no previous follower notice has been given to the same person in the same circumstances.

When a person is served with a follower notice, they have 90 days from the date of the notice within which to make representations in writing to HMRC objecting to the notice on the grounds that:

• conditions A, B or D above are not met;
• the judicial ruling specified in the notice is not relevant to the arrangements entered into; or
• the notice was given outside the 12-month statutory limit.

HMRC must consider the representations taking into account the grounds for objection and must then decide whether to confirm (with or without amendment) or withdraw the notice and notify the taxpayer accordingly. There is no right to appeal against a follower notice, which means that the only way in which to challenge a HMRC decision is by making an application for judicial review.

With regards to APNs, HMRC may issue an APN where one or more of the following conditions are satisfied:

• a follower notice has been issued;
• a DOTAS notifiable arrangement has been used; or
• they are subject to a GAAR counteraction notice.

Further information and guidance on this subject can be found at: www.gov.uk/government/publications/follower-notices-and-accelerated-payments/follower-notices-and-accelerated-payments.

Newsletter issue - November 2015.

The government estimates that around £420m a year is lost in tax and NICs by taxpayers ignoring or manipulating the intermediaries' legislation (IR35). The September edition of this newsletter (see The future for intermediaries) contained details of the government's consultation on proposals to improve the effectiveness of the rules. The consultation document set out proposals that could see the onus to verify the employment status of an individual being put on the shoulders of the 'engager'. The option for aligning the IR35 test with that used for temporary workers in the agency rules, which is based on supervision, direction or control, was also discussed in the consultation document, along with the possible introduction of a rule that an engagement must last a certain minimum amount of time to be considered one of employment.

In response to the consultation, the Chartered Institute of Taxation (CIOT) has now suggested a new approach to tackle the problem.

With regards to whether the compliance obligation should be switched from the worker and his/her personal service company (PSC) to the organisation that they are physically working for, the CIOT does not believe this will simplify administration or reduce non-compliance. Instead the organisations that these workers are physically working for will simply err on the side of caution and deduct tax and NICs leaving it to the worker and HMRC to sort out the mess.

With regards to a 'supervision, direction or control' test, the Institute says that this is unlikely to increase compliance and the underlying danger with a broad brush IR35 test is that it would catch many who are genuinely in business for themselves and who would currently pass the hypothetical employment test.

The CIOT has suggested to HMRC that a better option would be to impose an annual reporting obligation on organisations that are engaging with these workers, based on the PSC notifying them whether or not it considers that IR35 applies. There should also be an obligation for the PSC to notify that organisation that it is committed to applying IR35. If this approach were to be adopted, the organisation would then report what it had been told by the PSC and whether or not it was in agreement. If the organisation was to wilfully mislead HMRC that IR35 does not apply, when in fact it did, then any debt owed by the PSC in relation to non-compliance with IR35 would fall back to the organisation concerned.

Feedback on the consultation, including the CIOT proposals, is currently being analysed and further announcements are expected in the 2015 Autumn Statement.

Newsletter issue - November 2015.

HMRC have announced that they have scrapped their compliance procedure known as 'business record checks' (BRCs) with immediate effect. However, businesses should be warned that keeping good records is still essential to enable them to produce accurate accounts and tax returns.

Broadly, BRCs were introduced in 2011 and used by HMRC to confirm that a business was keeping sufficient information on its income and expenses to produce an accurate tax return. The checks have, however, consistently been criticised for being ineffective and poorly targeted.

HMRC have acknowledged that the initiative has not proved a cost-effective way of achieving the desired result. Despite efforts by HMRC to identify businesses at 'high risk' of having inadequate records, most of those they called on were found to be keeping records to an acceptable standard. The evidence is that records are being kept to an appropriate standard by most small businesses in the UK.

It remains crucial for businesses of all sizes to keep records up to date and in good order. This is likely to become even more important as HMRC bring in digital tax accounts, which may require businesses to submit data more frequently.

Newsletter issue November 2015.

Many small businesses can choose to be taxed on the basis of the cash that passes through their books, rather than being asked to spend their time doing calculations designed for big businesses ('cash basis'). Where the cash basis is used, it is also possible for the business to use certain simplified arrangements for claiming expenditure in working out taxable profits for income tax purposes. Flat rate expenses can be claimed for business costs for vehicles, working from home, and living at your business premises.

Where a trader runs his business from his home, he will be able to claim flat rate expenses for business use of the property. Using flat rates means it is not necessary to work out the proportion of personal and business use, for example, how much of utility bills are for business. Instead a monthly deduction will be allowable provided certain criteria are satisfied. The current rates are as follows:

• 25 or more hours worked per month can claim £10.00
• 51 or more hours worked per month can claim £18.00
• 101 or more hours worked per month can claim £26.00

The number of hours worked in a month is the number of hours spent wholly and exclusively on work done by the person, or any employee of the person, in the person's home wholly and exclusively for the purposes of the trade.

Some businesses use their business premises as their home, for example, guesthouses. Where premises are used for both business and private use, the trader may, instead of making the standard deduction outlined above, make a deduction for the non-business use. The allowable deduction will therefore be the amount of the expenses incurred, less the non-business use amount. The non-business use amount is the sum of the applicable amounts (see below) for each month, or part of a month, falling within the period in question (usually the tax year). The applicable amounts are as follows:

• If there is 1 relevant occupant £350 can be claimed
• If there are 2 relevant occupants £500 can be claimed
• If there are 3 or more relevant occupants £650 can be claimed

A relevant occupant is someone who occupies the premises as a home, or someone who stays at the premises other than in the course of the trade.

Traders need to keep records of business miles for vehicles, the number of hours worked at home, and details of people living at the business premises over the year. A claim to tax relief can then be made on the relevant self-assessment return.

HMRC provide a simplified expenses checker, which can be used to compare what a trader can claim using simplified expenses with what he can claim by working out the actual costs. The checker can be found online at www.gov.uk/simplified-expenses-checker.

Newsletter issue - November 2015.

Q. I am a director and employee of a trading limited company (A Ltd), of which I also own 100% of the shares. I am about to set up a holding company in the European Union, which will own 100% of the shares in A Ltd. I will own 100% of the new EU company. Will there be any capital gains tax or stamp duty payable on the transfer of shares?

A The 'share for share' rules should apply to the transfer, so there should be no capital gains tax or stamp duty payable on the transaction. Further information on these rules can be found in the HMRC Capital gains tax manual at www.hmrc.gov.uk/manuals/cgmanual/CG52521+.htm, and www.hmrc.gov.uk/manuals/cgmanual/CG52800.htm.

Q. I have recently registered for VAT. I understand that I can use a flat rate for working out the VAT payable to HMRC, but I am not sure how the scheme works and how to register for it.

A This scheme is designed to help small businesses with a turnover of no more than £150,000 a year, excluding VAT, by taking some of the work out of recording VAT sales and purchases. If you use the scheme, you pay HMRC a single percentage of your turnover in a VAT period.

The percentages applicable to this scheme currently vary from 4% for food and children's clothing retailers up to 14.5% for builders and contractors who supply labour-only services.

In your first year of VAT registration you get a 1% reduction in flat rate, which means that you can take 1% off the flat rate you apply to your turnover, until the day before your first anniversary of becoming VAT registered.

The scheme works well for some but not others. On the positive side, the scheme may save you some admin because you don't have to work out every item of input and output tax, but if your customers are VAT registered, you do have to calculate the VAT and issue VAT invoices in the normal way. Financially, the flat rates averages may work out cheaper for you than normal accounting or you may find this scheme more expensive - use HMRC's ready reckoner to check.

Under the scheme, you pay the VAT quarterly and you can swap back to the normal VAT scheme at any time if your inputs rise. You can also claim VAT on any capital expenditure of more than £2,000 including VAT.

You can register to join the scheme online. See the GOV.UK website at www.gov.uk/vat-flat-rate-scheme/join-or-leave-the-scheme for further details.

Q. I am a self-employed painter and decorator. I own two properties, one of which I rent out. My next self-assessment payment on account is due for payment shortly. I will need to pay £13,500 to HMRC. The rental property is currently worth around £20,000 less than I paid for it. If I were to sell it now, would I be able to off-set the loss against my self-assessment tax bill?

A Sadly not! For capital gains tax purposes, allowable losses of an individual can generally only be set against capital gains in the same tax year or in future years.

The HMRC capital gains tax states:

"Allowable losses must be deducted:

• as far as possible from chargeable gains accruing in the same year of assessment; and
• any balance must be carried forward without time limit and deducted from chargeable gains accruing in the earliest later year. Losses brought forward are deducted after losses accruing in the year of assessment and cannot reduce the net chargeable gains to below the annual exempt amount. Any losses which thus cannot be deducted remain available for deduction in later years."

See the HMRC Capital Gains Tax Manual at www.hmrc.gov.uk/manuals/cgmanual/CG15810.htm for further details.

Newsletter issue - November 2015.

2 - Last day for car change notifications in the quarter to 5 October - Use P46 Car

19/22 - PAYE/NIC, student loan and CIS deductions due for month to 5/11/2015

Summary

In his 2015 Spending Review (the first to be delivered since 2010) and Autumn Statement speech, Chancellor George Osborne said that the government is delivering on its commitment to put both economic and national security first. He referred to this as being a 'big Spending Review by a government that does big things'.

The main headlining announcement concerned tax credits. As confirmed in the Summer Budget, the Chancellor said that the £12 billion of welfare savings the government has committed to will be delivered in full in a way that helps families during the transition to the new National Living Wage. However, in a huge U-turn, the Chancellor went on to say that after listening to recent representations made concerning controversial cuts to tax credits, improvements in public finances mean that the proposed changes will not be phased in as planned but 'avoided altogether'. Note though that the tax credits system is being gradually phased out in conjunction with the current phasing in of the universal credit. The announcement does, however, mean that the tax credit taper rate and thresholds will remain unchanged from 2016. The income fall disregard will be retained at its current level of £2,500. The Chancellor also said that there will be no further changes to the universal credit taper, or to the work allowances beyond those that passed through Parliament last week.

In the Summer Budget, the government announced that revenue of some £5 billion would come from measures on tax avoidance, evasion and imbalances. Building on this, the Chancellor announced new penalties for the General Anti-Abuse Rule (GAAR), action on disguised remuneration schemes and stamp duty avoidance, and he said there would measures to stop abuse of the intangible fixed assets regime and capital allowances. Energy generation is to be excluded from the venture capital schemes, to ensure that they remain well-targeted at higher risk companies.

In accordance with recent announcements concerning HMRC's 10-year modernisation plans, the Chancellor confirmed that HMRC will make savings of 18% in the departmental budget through efficiencies which include the restructure of 170 separate offices into thirteen regional centres, and the development of digital tax accounts to be managed online. Some of the savings are to be reinvested, with an extra £800 million, in the fight against tax evasion – an investment with an anticipated return of almost ten times in additional tax collected.

With regards to local and national finances, the Chancellor said that local councils will be given wider powers to control their own spending; Northern Ireland needs to deliver sustainable budgets so that the government can take forward its plans for a cut in the rate of corporation tax to 12.5%; and the devolution of income tax to Wales will take place without the need for a referendum.

This newsletter provides a summary of the key tax points from the Spending Review and Autumn Statement, based on the documents released on 25 November 2015. It is possible that changes will be made between now and the publication of the draft legislation. We will keep you informed of any significant developments.

Individuals

Starting rate of savings tax

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.

Employment intermediaries and tax relief for travel and subsistence

As announced at Summer Budget 2015, the government is to legislate to restrict tax relief for travel and subsistence expenses for workers engaged through employment intermediaries, such as umbrella companies or personal service companies, and working under supervision, direction or control. Relief will be restricted for individuals working through personal service companies where the intermediaries' legislation applies. This change will take effect from 6 April 2016.

Company car tax diesel supplement

The three percentage point differential between diesel and petrol cars, which was due to be abolished from 6 April 2016, will be retained until April 2021 when EU-wide testing procedures will ensure new diesel cars meet air quality standards even under strict real world driving conditions.

Employer-provided living accommodation

Following recommendations from the Office of Tax Simplification report on simplifying the administration of employee benefits and expenses, the government is to consult on the current tax treatment of employer provided living accommodation.

Sporting testimonials

Following a recent consultation the government will legislate to simplify the tax treatment of income from sporting testimonials. Broadly, from 6 April 2017, all income from sporting testimonials and benefit matches for employed sportspersons will be liable to income tax and NICs. 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 legislation will apply where the sporting testimonial is granted or awarded on or after 25 November 2015, and only to events taking place after 5 April 2017.

London Anniversary Games and World Athletics and Paralympics Championships

Non-resident competitors in the 2017 World Athletics and Paralympics Championships and the 2016 London Anniversary Games will be exempt from income tax on earnings from the events. This will be the last year that the exemption applies to the London Anniversary Games as the Olympic torch is passed to Rio de Janeiro.

Business investment relief

The government is to consult on revisions to the business investment relief provisions to encourage greater use of the relief to increase investment in UK. Broadly, the relief allows individuals eligible to use the remittance basis, to bring foreign income and gains to the UK tax-free for the purposes of making a qualifying investment.

VCTs: eligible investments

From 30 November 2015, the provision of reserve energy generating capacity and the generation of renewable energy benefiting from other government support by community energy organisations (as introduced in Finance (No. 2) Act 2015) will no longer be treated as qualifying activities. In addition, these activities will not be eligible for Social Investment Tax Relief (SITR). From 6 April 2016 all remaining energy generation activities will be excluded from VCTs as well as from the enlarged SITR. The government will also introduce increased flexibility for replacement capital within EIS and VCT, subject to state aids approval.

Employee share schemes: simplification of the rules

A number of technical changes to simplify aspects of the tax rules for tax-advantaged and non-tax-advantaged employee share schemes are to be introduced. The changes are aimed at providing more consistency, including putting beyond doubt the tax treatment for internationally mobile employees of certain employment-related securities (ERS) and ERS options. Any charge to tax will arise under the rules that deal with ERS options, rather than earnings. These simplification measures are to be included in the Finance Bill 2016.

Income tax exemption for certain World War II victims

Certain pension and annuity payments made by the Netherlands government payable to victims of national-socialist and Japanese aggression during World War II (under the Netherlands Benefit Act for Victims of Persecution 1940-1945) will be exempt from income tax with effect from April 2016.

Dependant scheme pensions

Legislation will be introduced in Finance Bill 2016 to simplify the test that takes place when a dependant's scheme pension is payable.

Bridging pensions

Following the introduction of a single-tier pension from 6 April 2016, legislation will be introduced to enable the pension tax rules on bridging pensions to be aligned with Department for Work and Pensions legislation. This measure will be included in Finance Bill 2016.

Individual savings accounts

There will be no change to the Individual Savings Account (ISA), Junior ISA or Child Trust Fund (CTF) annual subscription limits for 2016-17. The ISA limit will remain at £15,240, and the Junior ISA and CTF annual limits will remain at £4,080. The list of qualifying investments for the new Innovative Finance ISA, which will be introduced from 6 April 2016 for loans arranged via a P2P platform, will be extended in Autumn 2016 to include debt securities offered via crowdfunding platforms. The Government will continue to review the case for extending the list to include equity crowdfunding. Legislation will be included in Finance Bill 2016 to allow the ISA savings of a deceased person to continue to benefit from tax advantages during the administration of their estate.

CGT payment window

From April 2019, a payment on account of any capital gains tax (CGT) due on the disposal of residential property will be required to be made within 30 days of the completion of the disposal. This will not affect gains on properties which are not liable for CGT due to private residence relief. The government will publish draft legislation for consultation in 2016.

CGT on residential property gains

The legislation governing capital gains tax computations required by non-residents who dispose of UK residential property is to be amended so that a double charge that occurs in some circumstances will be removed. This change will apply with retrospective effect from 6 April 2015. Revised legislation will also correct an omission with effect from 25 November 2015. HMRC are to be given new powers to prescribe the circumstances in which a CGT return is not required by non-residents. CGT is to be added to the list of taxes that the government may collect on a provisional basis.

IHT exemption for compensation and ex-gratia payments to victims of persecution during the World War II era

Legislation will be included in Finance Bill 2016 to enact the provisions of the current extra statutory concession F20 (ESC F20), which gives an inheritance tax exemption in respect of certain compensation and ex-gratia payments for World War II claims. The legislation will include payments made under a recently created compensation scheme known as the Child Survivor Fund. The change will apply to deaths on or after 1 January 2015.

IHT and undrawn pension funds in drawdown pensions

The legislation will be included in Finance Bill 2016 to ensure a charge to inheritance tax will not arise when a pension scheme member designates funds for drawdown but does not draw all of the funds before death. This measure will be backdated to apply to deaths on or after 6 April 2011.

Businesses

Extension of farmers' averaging provisions

As previously announced, the averaging period for self-employed farmers is to be extended from two to five years from 6 April 2016, with farmers having the option of using either averaging period.

RTI relaxation for micro-employers to end

The two year temporary relaxation, allowing existing micro-employers (those with nine or fewer employees) using Real-Time PAYE 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 on 5 April 2016.

Apprenticeship levy

The apprenticeship levy will be introduced from April 2017 and will be set at a rate of 0.5% of an employer's pay bill. It will be collected through PAYE. Employers will each receive an allowance of £15,000 to offset against their levy payment such that the levy will only be paid on pay bills in excess of £3 million.

Corporation tax

Loans to participators, trustees of charitable trusts

Legislation will be introduced in Finance Bill 2016 to provide for an exemption from the tax charge on loans or advances to participators under Corporation Tax Act 2010, s. 455. The exemption will apply to some loans or advances made by close companies to trustees (corporate or individual) of charitable trusts which are currently liable to pay the tax charge because those trustees are participators or associates of participators in the close company. The exemption will apply where such a trustee receives a loan or advance, and it is applied wholly to the purposes of the charitable trust. CTA 2010, s. 455 will continue to apply to charities where loans or advances are made in any other relevant circumstances as will the charge to tax under CTA 2010, s. 464A.

Capital allowances and leasing

A policy document entitled Corporation Tax and Income Tax: capital allowances and leasing - anti-avoidance sets out proposals to prevent businesses obtaining tax advantages by either manipulating disposal values leading to excess capital allowances, or receiving a consideration in a non-taxable form in return for agreeing to take over tax deductible lease payments. The proposed measure is two parts:

• firstly, it prevents a person using an artificially low disposal value for capital allowances purposes on the disposal of plant or machinery where tax advantage is one of the main purposes of the arrangements which include that disposal; and
• it brings into tax as income, if not already so taxed, any consideration receivable by a person, or a connected person, for agreeing to take over payments under a lease for which that person can claim tax deductions.

For both parts the measure will apply to appropriate transactions that take place on or after 25 November 2015.

Intangible assets

Changes are to be made to the rules governing intangible fixed assets include specific provisions that will apply the commencement rules to partnerships and will confirm how these rules have effect with regard to intangible fixed assets that are acquired or disposed of by a partnership. The changes make it clear that transfers of intangible assets to a partnership with companies as members will not circumvent the intangible fixed assets commencement rules that would otherwise apply to those corporate members. The measure applies to transactions taking place on or after 25 November 2015.

Loan relationships and derivative contracts — interaction with accounting standards

The tax rules for loan relationships and derivative contracts are to be updated to ensure that they interact correctly with new accounting standards in three specific circumstances.

Close company loans to participators: partial exemption for charities

Following consultation, the government will legislate so that a tax charge will not apply to loans or advances made by close companies to charity trustees for charitable purposes. The legislation, which will be included in Finance Bill 2016, will apply to qualifying loans or advances that are made on or after 25 November 2015.

VAT

Support for women's charities

EU rules currently prevent the government from removing all VAT on sanitary products. A new fund will be created to make available £15m a year, equivalent to the annual VAT raised on such products, to support women's charities over the course of this Parliament, or until EU law is amended to enable the UK to zero-rate supplies of sanitary products.

Stamp taxes

SDLT on acquisition of additional properties

From 1 April 2016, higher rates of stamp duty land tax (SDLT) will be charged on purchases of additional residential properties (above £40,000), such as buy to let properties and second homes. The higher rates will be 3 percentage points above the current SDLT rates.

The higher rates will not apply to purchases of caravans, mobile homes or houseboats, or to corporates or funds making significant investments in residential property given the role of this investment in supporting the government's housing agenda.

The government will consult on whether an exemption for corporates and funds owning more than 15 residential properties is appropriate.

SDLT payment

A consultation is to be undertaken on possible changes to the SDLT filing and payment process, including a reduction in the filing and payment window from 30 days to 14 days. It is expected that any changes would take effect from 2017-18.

ATED and 15% higher rate SDLT

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

SDLT and Authorised property funds

A seeding relief will be introduced for Property Authorised Investment Funds (PAIFs) and Co-ownership Authorised Contractual Schemes (CoACSs) and changes made to the SDLT treatment of CoACSs investing in property so that SDLT does not arise on the transactions in units.

There will be a defined seeding period of 18 months, a 3 year clawback mechanism, and a portfolio test of 100 residential properties and £100 million value or 10 non-residential properties and £100 million value.

These changes will take effect from the date of Royal Assent to Finance Bill 2016.

Deep in the Money Options

Shares transferred to a clearance service or depositary receipt issuer as a result of the exercise of an option will be charged at the 1.5% higher rate of stamp duty based on either their market value or the option strike price, whichever is higher.

HMRC will prevent avoidance using 'Deep in the Money Options', which are options with a strike price significantly below (for call options) or above (for put options) market value. Share transfers made other than to a clearance service or depositary receipt system as a result of exercising an option will be unaffected.

This change will apply to options entered into on or after 25 November 2015 and exercised on or after Budget 2016.

Tax simplification

New method of assessment

A new, simpler process for paying tax will take effect from 2016-17. The new system will be used for self-assessment taxpayers who have simple tax affairs where HMRC already hold all the data needed 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, although taxpayers will be able to challenge and appeal the calculations.

Digital tax accounts

At the Spring Budget 2015 the government announced proposals for the introduction of personalised digital tax accounts to replace the current annual tax returns system. The government has now announced that companies, unincorporated businesses, self-employed people and landlords will all be required to keep track of their tax affairs digitally and update HMRC at least quarterly via their digital tax account. HMRC will ensure the availability of free apps and software that link securely to HMRC systems and provide support to those who need help using digital technology and will include features which will prevent errors and promote compliance. The measure will not apply to employees, or pensioners, with a secondary income source from self-employment or property and whose gross income from this secondary source is under £10,000 per year.

The measure will be implemented for income tax and NICs from April 2018, VAT from April 2019 and corporation tax from April 2020. The roll out will be staggered and there will be testing before the reporting becomes mandatory.

Self-assessment time limit clarification

The government is to publish draft legislation clarifying the time allowed for making a self-assessment, making it clear that the time limit is four years from the end of the relevant tax year. (This will be legislated in Finance Bill 2016).

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