Making Tax Digital (MTD)

Mandatory digital record keeping for VAT for businesses over the VAT threshold (with turnover over £85,000) comes into force from 1 April 2019. What exactly does Making Tax Digital Mean?  In short, this is where all records need to be submitted through digital accounting software ie from a spreadsheet, using a piece of software that converts this to enable HMRC to read the transactions or through other mainstream accounting software such as Xero (cloud system) or through desktop accounting software such as Quickbooks/Sage etc. This is an important first step in this modernisation of the tax system to which the government remains committed. In the WMS, the Chancellor confirmed the government's 'light touch approach to penalties in the first year of implementation'. Where businesses are doing their best to comply, no filing or record keeping penalties will be issued. The focus will be on supporting businesses to transition and the government will therefore not be mandating MTD for any new taxes or businesses in 2020.
Capital allowances for new non-residential structures and buildings
The Chancellor announced the introduction of a new capital allowance for new non-residential structures and buildings (SBA) at the 2018 Autumn Budget, designed to support business investment in the UK, improve the case for developing new structural assets and enhance tax relief for such assets. A technical note published at that time, outlined the key features of the policy and included consultation questions on residential use exclusion, leasing provisions, overseas property treatment and disuse provisions. 
For the second part of the consultation process, the Government is now inviting views on the legislative detail, before it is laid before and approved by the House of Commons. An overall response to consultation responses will be published in May 2019 and the final published version of this legislation will be in the form of a Statutory Instrument.
Broadly, the structure of the relief is summarised as follows:
* relief will be given at a flat rate of 2% over a 50-year period
* relief will be available for new commercial structures and buildings, including costs for new conversions or renovations
* relief is available for UK and overseas structures and buildings, where the business is within the charge to UK tax
* relief will be limited to the costs of physically constructing the structure or building, including costs of demolition or land alterations necessary for construction, and direct costs required to bring the asset into existence
* relief is available for eligible expenditure incurred where all the contracts for the physical construction works were entered into on or after 29 October 2018
* claims can only be made from when a structure or building first comes into use
* land costs or rights over land will not be eligible for relief, nor will the costs of obtaining planning permission
* the claimant must have an interest in the land on which the structure or building is constructed
* dwelling houses will not qualify, nor any part of a building used as a dwelling where the remainder of the building is commercial
* sale of the asset will not result in a balancing adjustment - instead, the purchaser takes over the remainder of the allowances written down over the remaining part of the 50-year period
* expenditure on integral features and fittings of a structure or building that are currently allowable as expenditure on plant and machinery, will continue to qualify for writing down allowances for plant and machinery including the Annual Investment Allowance (AIA) up to its annual limit
* SBA expenditure will not qualify for the AIA
* where a structure or building is renovated or converted so that it becomes a qualifying asset, the expenditure will qualify for a separate two percent relief over the next 50 years
The consultation documents can be found here.
Comments are invited by 24 April 2019.

Aggregates Levy review
The government is to publish a discussion paper launching a review of the Aggregates Levy, including the Terms of Reference, information on timing and scope of the review as well as membership of an expert working group.

Under the same heading of Maintaining the tax system, in the coming months the Government will publish the following:

Offshore receipts in respect of intangible property
Draft regulations to ensure the provisions apply as intended, and draft guidance relating to the practical application of the measure.

View the 2018 Autumn Budget policy paper here.

Hybrid and other mismatches
Draft regulations to update the definition of regulatory capital instruments that are entitled to an exemption within the hybrid mismatch rules.

View the original policy paper (6 July 2018) here.

General Anti-Abuse Rule (GAAR) Amendments
A technical note alongside draft legislation on minor procedural and technical changes to the GAAR legislation to ensure that it works as intended.

National Insurance Contributions (NICs) Employment Allowance draft regulations
A document inviting technical comments on the draft regulations implementing the reform, as announced at Budget 2018, of the NICs Employment Allowance to restrict it to businesses with an employer NICs bill below £100,000.

View the 2018 Autumn Budget proposal document here.

Child Trust Funds (CTF): consultation on maturing CTFs
Draft regulations to ensure that CTF accounts can retain their tax-free status after maturity.
Enterprise Investment Scheme (EIS) approved funds guidelines
Draft guidelines will be published for comment alongside draft legislation. The document will contain guidelines stating HMRC's proposed policy and practice for approving funds. The legislation will include powers for HMRC to set appropriate conditions and approve funds.

CGT private residence relief
A consultation is to be launched on the changes, announced at 2018 Autumn Budget, to lettings relief and the final period exemption, which extend private residence relief in capital gains tax.

View the 2018 Budget document here.
Corporate Capital Loss Restriction
A consultation is to be launched on a change announced at the 2018 Autumn Budget to restrict, from 1 April 2020, the amount of carried-forward capital losses a company can offset to no more than 50% of the chargeable gains arising in a later accounting period.

Broadly, the government will legislate in Finance Bill 2019/20 to restrict companies' use of carried-forward capital losses to 50% of capital gains from 1 April 2020. The provisions will include an allowance that permits companies unrestricted use of up to £5m capital or income losses each year, meaning that 99% of companies will be financially unaffected. A consultation paper was published on 29 October 2018 and draft legislation will be published in Summer 2019. An anti- forestalling measure to support this change took effect on 29 October 2018.

Stamp Taxes on shares consideration rules
A consultation on aligning the consideration rules of Stamp Duty and Stamp Duty Reserve Tax and introducing a general market value rule for transfers between connected persons.

Digital Services Tax
A consultation will be launched on the detailed design and implementation of the Digital Services Tax that will take effect from 1 April 2020.
Broadly, from April 2020, the government will introduce a new 2% tax on the revenues of certain digital businesses which derive value from their UK users. The tax will:
* apply to revenues generated from the provision of the following business activities: search engines, social media platforms and online marketplaces;
* apply to revenues from those activities that are linked to the participation of UK users, subject to a £25m per annum allowance;
* only apply to groups that generate global revenues from in scope business activities in excess of £500m per annum; and
* include a safe harbour provision that exempts loss-makers and reduces the effective rate of tax on businesses with very low profit margins.

Amendments to tax returns
There is to be a call for evidence on simplifying the process of amending a tax return.

Added By: Sharon Worger on 15th Mar 2019 - 12:07
Last Updated: 15th Mar 2019 - 12:20

Number of Views: 328
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