The Office of Tax Simplification (OTS) has published a note evaluating its work on corporation tax and providing a stock take of its work on the taxation of self-employed people.
Highlights include the following:
Simpler tax for smaller companies: the OTS looks forward to contributing to any future work by HMRC on the recommendation to explore following the accounts more closely, at least for smaller companies, with only a minimum number of tax adjustments being required.
Personal service companies: the OTS suggests renewed consideration of enabling a small personal service style business to operate through a UK limited company while being treated as transparent for tax, removing the business from corporation tax (salaries, dividends and loans to participators being ignored for tax purposes), together with the relative ease of a self-employment style tax calculation.
Tax administration: the OTS reiterates comments in its tax reporting and payments review about the merit in HMRC doing more to enhance the personal tax account and to integrate it with the business tax account, to provide an end-to-end tax reporting and payment service and facilitate the simplification of tax administration for self-employed people.
Employment and self-employment: the OTS is interested in the possibility of a statutory definition of employment for tax purposes being developed. This need not be an attempt simply to codify the current case law principles but could have different features.
In a client briefing, EY observes: ‘Of particular note in relation to corporation tax, the paper suggests that, for the largest companies, stability of the operating environment and the degree of tax certainty that is realistic and proportionate for them to be able to secure may be more important than simplicity. Among its other specific recommendations, the OTS suggests it will particularly encourage the government to continue to consider the potential disproportionate burden in making and reporting small adjustments for UK/UK transfer pricing adjustments and the penalties that can arise even where any adjustments needed are self-cancelling. It will also highlight the scope to remove overlapping or legacy anti-avoidance legislation or provide greater clarity about situations where provisions such as the ‘unallowable purpose’ test would not apply in practice. Finally, the OTS notes that implementing making tax digital (MTD) for corporation tax, which the government has promised to consult on in the autumn, would be more challenging than for VAT, where quarterly and monthly returns are the norm.’
‘In respect of other issues, the OTS is reviewing the short life asset regime and the processes around fixtures elections as part of its claims and election review,’ EY added.
The Office of Tax Simplification (OTS) has published a note evaluating its work on corporation tax and providing a stock take of its work on the taxation of self-employed people.
Highlights include the following:
Simpler tax for smaller companies: the OTS looks forward to contributing to any future work by HMRC on the recommendation to explore following the accounts more closely, at least for smaller companies, with only a minimum number of tax adjustments being required.
Personal service companies: the OTS suggests renewed consideration of enabling a small personal service style business to operate through a UK limited company while being treated as transparent for tax, removing the business from corporation tax (salaries, dividends and loans to participators being ignored for tax purposes), together with the relative ease of a self-employment style tax calculation.
Tax administration: the OTS reiterates comments in its tax reporting and payments review about the merit in HMRC doing more to enhance the personal tax account and to integrate it with the business tax account, to provide an end-to-end tax reporting and payment service and facilitate the simplification of tax administration for self-employed people.
Employment and self-employment: the OTS is interested in the possibility of a statutory definition of employment for tax purposes being developed. This need not be an attempt simply to codify the current case law principles but could have different features.
In a client briefing, EY observes: ‘Of particular note in relation to corporation tax, the paper suggests that, for the largest companies, stability of the operating environment and the degree of tax certainty that is realistic and proportionate for them to be able to secure may be more important than simplicity. Among its other specific recommendations, the OTS suggests it will particularly encourage the government to continue to consider the potential disproportionate burden in making and reporting small adjustments for UK/UK transfer pricing adjustments and the penalties that can arise even where any adjustments needed are self-cancelling. It will also highlight the scope to remove overlapping or legacy anti-avoidance legislation or provide greater clarity about situations where provisions such as the ‘unallowable purpose’ test would not apply in practice. Finally, the OTS notes that implementing making tax digital (MTD) for corporation tax, which the government has promised to consult on in the autumn, would be more challenging than for VAT, where quarterly and monthly returns are the norm.’
‘In respect of other issues, the OTS is reviewing the short life asset regime and the processes around fixtures elections as part of its claims and election review,’ EY added.
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