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In brief: debt cap; securities; oil fields; employee shareholders; transfer pricing; FATCA…

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Debt cap: financing costs

The Tax Treatment of Financing Costs and Income (Excluded Schemes) Regulations, SI 2013/2892, come into force on 4 December 2013. These regulations specify certain types of scheme which are excluded from anti-avoidance provisions in respect of the ‘worldwide debt cap’ rules on financing costs of international groups of companies. The purpose of the regulations is to ensure that particular commercial arrangements are not caught by the anti-avoidance provisions.

Updated guidance on employment related securities

HMRC has updated its manual on employment-related securities (ERSM). Changes include new guidance on: legal options (ERSM110015); phantom options (ERSM110020); the treatment of share options plans where the employer has the right to substitute cash (ERSM110025); split-year treatment for individuals coming to or leaving the UK (ERSM20310); the interaction between the chargeable event gain and the ITEPA 2003 Ch 3B charge on non-commercial reductions (ERSM110510); and earn-outs (ERSM110900).

Oil fields order

The Additionally-developed Oil Fields Order, SI 2013/2910, specifies the conditions a project must satisfy for an oil field to be an ‘additionally-developed oil field’ for the purposes of the new ‘brown field’ allowance against the corporation tax supplementary charge. The order is treated as having come into force on 1 April 2013.

Employee shareholder take-up

In response to a parliamentary question, the exchequer secretary said the government estimates that between 50–80,000 employees will have taken up the new employee shareholder scheme by April 2017. The estimated cost is £15m next year, rising to £75m by 2016/17.

OECD public consultation on transfer pricing

Topics discussed at the OECD’s public consultation on transfer pricing, held on 12–13 November in Paris, included the BEPS action plan proposals for country-by-country reporting, transfer pricing documentation and the revised discussion draft on transfer pricing aspects of intangibles, intended for completion by September 2014. Also discussed were other transfer pricing aspects of the BEPS action plan for completion by the end of 2015.

FATCA: France signs IGA with US

France became the 10th nation to sign an inter-governmental agreement on the implementation of FATCA with the US. It is a reciprocal agreement, based on the Model 1A agreement.

Hungary & Liechtenstein

Hungary became the 61st signatory to the Multilateral Convention on Mutual Administrative Assistance in Tax Matters. Hungary’s Minister of State for Taxation and Financial Policy Affairs Orbán Gábor signed the Convention during a ceremony at the OECD in Paris on 12 November. Liechtenstein announced that it will sign the Convention during the sixth meeting of the Global Forum on Transparency and Exchange of Information for Tax Purposes, which is being held on 21–22 November.

Personal service companies: House of Lords select committee

A new House of Lords select committee has been formed to consider the consequences of the use of personal service companies for tax collection. Its first meeting was held in private on 18 November 2013. The committee will start taking evidence in November 2013 and expects to finalise its report in March 2014.

Devolving powers to Wales

The government has published its full response to the recommendations of the Commission on Devolution in Wales (Silk Commission), having announced on 1 November its intention to devolve landfill tax and SDLT and provide for further powers to vary income tax rates or hold a referendum on full devolution of income tax.

HMRC toolkit survey

HMRC has launched a survey for agents who have used any HMRC toolkit with a view to making future toolkits easier to use.

CIOT survey on HMRC protocol

Following the CIOT request for a general protocol governing contact between HMRC and represented taxpayers, HMRC has agreed to work with the professional bodies to establish a practical protocol, with the intention being that this will clarify the circumstances when HMRC will correspond only with the agent, or with the agent but copying in the client (or vice versa), or with just the client.

NIC and entertainers

Revenue & Customs Brief 35/13 explains HMRC’s position in relation to the NIC liability of entertainers from 6 April 2014 onwards, subject to the proposed changes being approved by Parliament.