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In brief: Pensions Bill; securities bulletin; companies register; hedging products; promoters; APNs; micro-entities; EC VAT; guidance

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Taxation of Pensions Bill 2014

Following the announcement of pension reforms in the Budget 2014, which include fundamental changes to the ways that members of defined contribution pension schemes can take their benefits at retirement, the government published the Taxation of Pensions Bill 2014. HMRC has now published a briefing note, which provides an overview of the measures included in the bill and aims to explain the impact of the proposed legislation in each of the seven schedules.

Checking service for annual returns & employment-related securities bulletin

HMRC has released the eighteenth Employment-Related Securities Bulletin, which provides further information on the online annual returns for employee share schemes to be used from the 2014/15 tax year. The updates include:

  • a checking service for annual returns, available from 31 October 2014. The service will assist in picking out formatting errors so companies to correct them before the filing deadline of 6 July 2015. The checking service will be available to employers and their agents if they have access to the ERS service and the employer has registered at least one scheme;
  • screenshots which will show what the annual returns service for each type of share plan might look like;
  • reworded questions in the template spreadsheets in order to make them clearer. A second version of the template spreadsheets is due to be released in the new year, along with updated guidance;
  • a technical note for ODS formats is now available for companies that wish to write their own spreadsheets or software programs, and additional notes for other formats will be available later in the year.

Consultation on control over companies public register

The government is proceeding with plans for a public register of people with significant control over companies following consultation, and will legislate for this in the Small Business, Enterprise and Employment Bill that is currently going through Parliament. The Department for Business, Innovation & Skills is now consulting on how information on the register to indicate how a person exercises control over a company should be recorded, and to exclude some information from the register, such as home addresses, dates of birth and details of people who would be at risk of serious harm if they were to be identified. Comments are invited by 9 December.

Guidance on interest rate hedging products redress payments

HMRC has issued guidance on the tax position on redress payments for interest rate hedging products (IRHPs) following a review of the way some banks sold these products, which resulted in some customers being entitled to or in receipt of redress payments. These redress payments are taxable as income, with the interest taxed in the year of receipt as interest income. However, there are a few cases where capital gains treatment could apply, e.g. where: the business has stopped trading; the product was for a non-business loan; or the product was a hedging product and its fair value was recognised in the accounts.

Draft promoters legislation

HMRC has published a second set of draft regulations, the Finance Act 2014 (Schedule 34 Prescribed Matters) Regulations, SI 2015/Draft, for technical consultation until 27 November 2014 as part of the promoters of tax avoidance schemes (POTAS) legislation. The initial draft regulations were published in early October 2014. The new draft regulations define the type of misconduct, actions and penalties that will lead to a promoter meeting the POTAS threshold conditions in relation to disciplinary action by a professional body or regulatory authority. If a promoter of tax avoidance schemes meets these threshold conditions, and it is determined by an authorised officer of HMRC that this is significant, such a promoter would be issued with a conduct notice. Conduct notices last for up to two years and require promoters to change their behaviour in relation to the schemes that they promote. The regulations also add two additional bodies to the list of professional bodies set out in the primary legislation.

HMRC updates list of schemes at risk of APNs

HMRC has now published an updated list of avoidance schemes on which users may receive a notice to make an accelerated payment of tax. Phil Berwick, partner at law firm Irwin Mitchell, said: ‘[Affected] taxpayers may be tempted to settle using one of HMRC’s disclosure opportunities, but that might not be the best route for an individual. It is vital that they make an informed decision and taking specialist legal advice early on is essential in ensuring all of the options are understood.’.

Corporation tax online improvements for micro-entities

HMRC has announced that its corporation tax online service has now been improved to offer the option of simplified filing for micro-entity customers following an EU directive. Micro-entities now have the option to file simplified accounts with HMRC, and from mid-November 2014 companies will also be able to send basic micro-entity accounts to Companies House using HMRC’s filing software. HMRC’s online filing software allows certain companies to choose to prepare and publish simplified financial statements (profit & loss account and balance sheets) if:

  • turnover £632,000 or less; and either
  • balance sheet assets total £316,000 or less; or
  • average number of employees in the year is 10 or fewer.

To file basic micro-entity accounts with Companies House, companies must meet two out of the three criteria above.

EC paper on future VAT regime

The EC has published a working paper setting out proposals for how to ensure a simpler, more effective and fraud-proof VAT system tailored to the single market in the EU. The document sets out what the EC considers to be five possible options to achieve these goals as listed below:

  • the supplier is responsible for charging and paying VAT and supplies would be taxed according to where the goods are delivered;
  • the supplier is responsible for charging and paying VAT and supplies would be taxed according to where the customer is established;
  • the customer, rather than the supplier, is liable for VAT, with taxation taking place where that customer is based (reverse charge);
  • the customer, rather than the supplier, is liable for VAT, with taxation taking place where the goods are delivered; or
  • the status quo is maintained, with some modifications.

HMRC guidance

HMRC has issued the following on its website:

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