Exchequer Chambers prepares to host Tax Disputes seminar, PE execs “bag ready” to leave the UK, and France, Reeves sets the stage for autumn tax hikes
THE HOT STORY
Exchequer Chambers prepares to host Crucial Issues in Tax Disputes seminar in London
Exchequer Chambers, part of The Barrister Group, prepares to host its first tax seminar in London on September 5th. The event, taking place in The Inner Temple, will feature talks by a number of leading tax practitioners, on topics such as current enquiry trends, HMRC’s civil approach to tax fraud, and alternative remedies for tax disputes, among others.
Registration is open, and bookings can be made on the event website.
PRIVATE EQUITY
PE execs “bag ready” to leave the UK, and France
The Daily Telegraph ? City A.M. ? Daily Mail ?
Private equity executives in the UK are considering leaving the country to avoid Labour's carried interest policy, which would tax the tool as income rather than a capital gain. The move has raised concerns in the industry, with lawyers receiving more calls than ever about a potential move away. Some executives have already spent money to be "bag ready" to leave. While Labour has clarified that the policy would not apply to managers and investors putting their own capital at risk, industry figures claim that more advice is being sought now than when Corbyn was leader. It’s unlikely they’ll be heading for France, however, as an extreme left alliance threatens a 90% income tax on high earners. The Mail reports that lawyers in Paris are inundated with calls from high-end clientele worried about a wealth tax. This comes as finance minister Bruno Le Maire warned of an “immediate financial crisis” after the New Popular Front scored its narrow victory over Emmanuel Macron's centrists and the right wing National Rally. Moody's has warned it could downgrade its credit score for France’s more than €3trn debt pile over the NFP’s plans.
ECONOMY
Reeves sets the stage for autumn tax hikes
The Chancellor has said the Labour party had inherited the worst set of circumstances since the Second World War following “14 years of chaos and economic irresponsibility.” In a speech on Monday, Rachel Reeves said she had ordered a review of Tory spending ahead of an autumn Budget. Reeves said difficult choices would need to be made, prompting critics to assert Labour’s review was simply a pretext for tax rises. “This is exactly what we said they would do when we said they would up taxes,” one former Tory minister said, adding that all details of public spending were in the public domain already. Analysts at Citi have said they expect a package of tax increases in the autumn worth around ￡15bn while the IFS has warned that wealth taxes, such as inheritance tax and capital gains tax, are one of the few options left on the table for a Labour government.?
Blair warns taxes may need to rise by over ￡50bn
The Daily Telegraph ? The Times ?
Sir Tony Blair has warned that Sir Keir Starmer will have to put taxes up by more than ￡50bn unless he comes up with radical new ways to improve productivity, according to a report from the Tony Blair Institute. The report suggests that tax rises would be needed to meet increasing health costs caused by an ageing society, to plug the decreasing tax take from oil and gas, and to avoid austerity. Sir Tony calls for greater use of artificial intelligence to boost growth as Britain faces high taxes, heavy debt, and poor outcomes. The report also suggests that AI could enable up to a million public sector workers to be cut.
HMRC
Labour to boost HMRC’s power to tackle avoidance
Daily Express ?
HMRC is set to receive ￡855m and strengthened powers to crack down on tax avoidance and hunt down tax dodgers if Labour fulfils a manifesto promise. Labour plans to use money raised by closing non-dom status and offshore trust loopholes to fund the tax avoidance clampdown. The party aims to increase registration and reporting requirements, invest in new technology, and build capacity within HMRC.?
HMRC taking an ever-larger slice of savings
Sunday Express ?
More people are paying tax on savings than ever before, with HMRC expected to collect over ￡10bn this year. The tax on savings has increased ten-fold in the past four years, and this year it's expected to reach ￡10.4bn. The frozen tax allowance thresholds and lack of ISA usage contribute to the rise in the nation's tax bill. The tax bands being frozen means more people are pushed into higher tax brackets, resulting in a reduction or loss of their Personal Savings Allowance. The tax paid by additional rate taxpayers is predicted to rise to ￡8.3bn this year. AJ Bell's Laura Suter commented: “The Government is a big winner from rising savings rates. While savers have been enjoying higher rates, the taxman is dipping its hand into their back pocket and nabbing a chunk of the spoils.”
INCOME TAX
Jeremy Vine battling HMRC over tax
Daily Mail ?
BBC presenter Jeremy Vine is facing a court battle with HMRC over a tax bill. The tax office is chasing Vine for income tax and National Insurance contributions on money he earned from the BBC between 2013 and 2015. While this type of set up is legal, HMRC believes that Vine should be treated as an employee and payments should have been made for tax and National Insurance. Vine has been appealing against HMRC's decisions and the amount owed is not revealed. Vine is the latest star to be caught up in HMRC's clampdown on TV stars who are not paid as staff members. Other stars, including Gary Lineker, Eamonn Holmes, Adrian Chiles, and Lorraine Kelly, have also faced tax battles with HMRC. Jeremy Vine's representative declined to comment.?
CORPORATE
Row erupts over suggestion subsidies should be clawed back
Bankers and entrepreneurs are in disagreement over whether investors in privately owned British companies should have tax relief clawed back if they later choose to float the business overseas. UK Finance suggests that taxpayer-funded subsidies should be clawed back if the companies opt to list on Wall Street or in other foreign jurisdictions. This proposal potentially affects investors who benefit from tax relief through the Enterprise Investment Scheme and the Seed Investment Scheme or by buying shares in venture capital trusts. The Startup Coalition, representing entrepreneurs and venture capitalists, calls the proposal a "dumb and dangerous" idea that verged on calling for capital controls.
领英推荐
TAX AVOIDANCE
Tax officials under pressure to publish offshore tax avoidance figures
The Observer ?
Tax officials are facing pressure to publish estimated figures on offshore tax avoidance by wealthy individuals. The figures were withheld in a report released during the election campaign. The tax gap, which is the difference between the amount of tax that should be collected and what has been paid, was estimated to be ￡39.8bn for the 2022-23 tax year. A breakdown of noncompliance by UK residents failing to declare their offshore income was not released within the election period. Investigative thinktank TaxWatch has challenged this decision, stating that if the offshore tax gap figures were too controversial to publish, the other tax gap figures should have been delayed as well. HMRC has been under pressure to estimate the size of the tax gap after it was revealed that UK taxpayers held nearly ￡570bn in tax havens. The common reporting standard now enables the automatic exchange of financial information between partner countries to combat tax evasion. Steven Porter, head of tax disputes and investigations at law firm Pinsent Masons, doubts that there will be a significant amount of offshore tax avoidance. He expects most of the schemes to have been identified by HMRC. The total estimated tax gap for individuals who completed self-assessment tax returns is about ￡2bn. Labour intends to raise more than ￡5.2bn by 2028-29 by reducing tax avoidance and closing loopholes.?
People with offshore trusts may face higher taxes
BBC News ?
People with assets in offshore trusts in the Channel Islands may end up paying more tax under the new Labour-run UK Government, according to finance expert Andy Shaw. Shaw, a tax director at Grant Thornton in Jersey, believes that trustees will be closely monitoring the Government's approach to tax on such assets. The Labour Party has indicated potential major changes in this area, which could affect non-doms who live in the UK but pay no tax on offshore earnings. Labour has also stated that existing inheritance tax protection for trusts will be abolished. Shaw advises the industry to be resilient and agile to change, as there may also be opportunities arising from these developments.
TAX EVASION
Tate brothers accused of tax evasion
The Daily Telegraph ? The Times ? The Guardian ? The Independent UK ?
A Westminster court heard on Monday how Andrew Tate and his brother Tristan had evaded tax on ￡21m of revenue from their online businesses, including Only Fans. Devon and Cornwall Police are bringing a civil claim against the brothers seeking around ￡2.8m in seven frozen bank accounts. Sarah Clarke KC for Devon and Cornwall Police said: “Andrew Tate and Tristan Tate are serial tax and VAT evaders. She explained how the Tate brothers paid no tax in any country between 2014 and 2022 and how Andrew had admitted to refusing to pay tax in England. The brothers had washed money through “a huge number of bank accounts” in the UK, Clarke explained, adding that an individual named “J” had also been involved in the money laundering. The court was told the Tate brothers are accused of tax evasion and money laundering in Britain and Romania. Both men are awaiting trial in Romania on separate criminal charges of human trafficking, rape and forming a criminal gang to sexually exploit women.
NON-DOMS
Chancellor targets non-doms to raise ￡2.6bn
Daily Express ?
Chancellor Rachel Reeves is targeting non-doms to raise an additional ￡2.6bn during the current parliament. The move involves taxing foreign income and closing a loophole that allows non-doms to avoid inheritance tax. However, finance industry experts warn that this could drive many wealthy foreigners and their families out of the country, potentially reducing the predicted tax revenue. Rachel de Souza of RSM warned: “The most concerning point is Labour's proposals to end the inheritance tax exemption for trusts settled by non-doms with non-UK assets," saying: “This one change will likely prove key in driving wealthy non-doms to leave the UK." “The issue for UK plc is that many of those planning to go are exactly the people with the skills and abilities to grow businesses and the economy. In other words, exactly the sort of people that Rachel Reeves is keen to encourage,” Ms de Souza added.
Non-doms contribute ￡9bn in tax and NICs, highest amount since 2017
Financial Times ? The Times ? City A.M. ?
Non-doms contributed nearly ￡9bn to the exchequer through tax and national insurance contributions (NICs) in the 2022/23 tax year, the highest amount since new rules around the regime were brought in in 2017. The average non-dom paid over ￡120,000 in tax. The total non-dom tax take in the year was enough to fund spending on the public health service for 18 days. The number of non-dom taxpayers increased by 7%. Both the Conservatives and Labour have pledged to clamp down on the 200-year-old regime. Nicholas Hyett, investment manager at Wealth Club, said: “Non-doms will soon be extinct in the UK… and these numbers are a glimpse into the past. ￡8.9bn of tax revenue is not to be sniffed at.” But Rachael Henry of Tax Justice UK said: “It is only fair and right that those choosing to make their lives in the UK, benefiting from shared services, infrastructure and opportunity, pay their fair share.”
TAX BREAKS
Reeves urged to protect start-up tax breaks
Joanna Jensen, chairwoman of the Enterprise Investment Scheme Association, has urged Chancellor Rachel Reeves to ensure that generous tax breaks which encourage investors to back young companies are protected. The Enterprise Investment Scheme (EIS) provides income and capital gains tax reliefs to investors to encourage them to risk capital in early-stage businesses. Ms Jensen warns that the schemes are under threat as the EU must approve extension of their use beyond April 5, 2025, due to a sunset clause implemented when EIS came into use. She says ministers must “ensure that it is renewed, regardless of what the EU says.” Ms Jensen notes that the EIS and Seed Enterprise Investment Scheme have helped raise ￡32bn for 56,000 businesses. A spokesperson for the Treasury said discussions with the EU were at an “advanced stage,” adding: “We are a government of wealth creation and are committed to supporting start-ups to raise the capital they need to invest and grow our economy.”
INVESTMENT
CBI urges Starmer to rethink North Sea tax raid
Daily Mail ?
The boss of the Confederation of British Industry (CBI) has called on Labour to reconsider its proposal for a new tax on North Sea oil and gas producers. Rain Newton-Smith, CEO of the CBI, expressed concerns that the policy could deter investment and stated her intention to hold talks with government officials. David Latin, chairman of Serica Energy, a North Sea producer, warned that Labour's plan could harm the industry. Labour aims to increase the tax rate for North Sea production companies to 78% and eliminate tax breaks, potentially leading to significant job losses.
REGULATION
Reeves urged to bring back the Office of Tax Simplification
Rachel Reeves has been urged to resurrect a strengthened version of the Office of Tax Simplification in one of the first pleas from business to the newly appointed Chancellor. Tax experts argue that a beefed-up agency is needed to tackle the tax traps and cliff edges that complicate the tax system and distort incentives in the economy. The Office of Tax Simplification was set up in 2010 but abolished in 2022. MPs and the Treasury select committee have called for its reinstatement. Phil Blackburn, senior tax partner at Lubbock Fine, says that a re-created "OTS on steroids" is necessary to lobby for improvements to the tax system. Andrew Snowdon, head of tax at UHY Hacker Young, adds: "Tax simplification needs to be put back on the agenda.”
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