In this week’s miscellaneous updates, HMRC’s has published updated details of its stakeholder forums many of which the Institute participates in. HMRC has published amended regulations in respect of the reporting rules for digital platforms and the expert panel commissioned in December 2023 to report on corporate re-domiciliation has published its report. HMRC has also published a spotlight on GDPR and corporation tax relief and the GAAR panel has published its advisory opinion on certain employment award arrangements. And finally, HMRC has published updated guidance on employment related securities.
Amendments to reporting rules for digital platforms
The OECD’s Model Reporting Rules for Digital Platforms took effect in the UK from 1 January 2024 and require operators of digital platforms to collect and report to HMRC information about people selling goods and services on their platforms. Earlier this month, The Platform Operators (Due Diligence and Reporting Requirements) (Amendment) Regulations 2024 were laid and make two changes as follows which aim to align the UK’s rules with those of the OECD:
- UK reporting platform operators must report UK seller information to HMRC. Previously there was an exception to this if adequate assurances had been obtained that another operator would report that information, and
- The various thresholds which mean a seller is an ‘excluded seller’ are no longer proportionally reduced in certain circumstances.
These changes take effect from today, 25 November 2024.
Corporate re-domiciliation report published
In December 2023, an independent expert panel was established to develop a proposal to change the legal framework to allow companies incorporated overseas to become UK companies, whilst retaining the same legal personality. Last month the panel published its report setting out proposals to enable this. The Government intends to consult in due course on a proposed regime design.
HMRC spotlight on GDPR and corporation tax
Spotlight 65 is being used by HMRC to highlight the incorrect use of R&D tax relief and other claims being used to reduce a company’s corporation tax liability in the context of General Data Protection Regulation (GDPR). HMRC is aware of tax agents that target businesses to claim corporation tax refunds linked to potential GDPR fines/civil claims.
These claims are designed to reduce business profits through the recognition of a provision and a corresponding expense. Provisions and related expenses should only be recognised in accordance with relevant Generally Accepted Accounting Practice.
HMRC’s view is that these and similar claims are not in accordance with the law. HMRC will challenge anyone:
- making such claims, and
- who encourages or facilitates businesses to make false claims that reduce tax liability or seek a repayment.
GAAR opinion on employment award arrangements
The GAAR advisory panel has published its opinion on tax arrangements involving:
- the creation by A of an obligation to make pension payments to an employee,
- the transfer of that obligation to a third party (B), and
- the making of a payment by A to B in exchange for B taking on that obligation.
The panel’s view is that:
- entering into the tax arrangements is not a reasonable course of action in relation to the relevant tax provisions, and
- carrying out of the tax arrangements is not a reasonable course of action in relation to the relevant tax provisions.
HMRC employment related securities (ERS) guidance
HMRC has published guidance on its view of what constitutes an 'arrangement' for the purposes of an enterprise management incentive (EMI) scheme and thereby leads to loss of independence for the purposes of being able to qualify for an EMI scheme. It has also updated its guidance on the EMI deeming provisions in the ERS legislation following the outcome of the case of Vermilion.
HMRC's position is that an option made available by an employer will automatically be considered an ERS option and liable to income tax and national insurance rather than capital gains tax.
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