Report on the work of the Technical Committee

6 Jul 2017

December 2003 update on the work of the Technical Committee since November 2003. A. GENERAL

Code of Practice on Consultation

We have responded to the Cabinet Office consultation on a revised code of practice due to be published in early 2004. We were represented at a workshop organised by the Cabinet Office as part of the consultation process.

Small businesses The CIOT and ATT are jointly organising a seminar on small businesses to be held on 5 February 2004.

B. CORPORATE AND INTERNATIONAL MATTERS

Corporation tax reform We are working on a response paper dealing with the proposed changes to the transfer pricing and thin capitalisation legislation.

Application of International Accounting Standards for tax purposes We have produced letters to the Revenue dealing with the treatment of debt and derivatives and business combinations.

Meeting with Revenue Policy International We attended a meeting on 28 November. Amongst other things, our paper on CFCs was discussed and we have subsequently received a detailed response from the Revenue.

We are still in disagreement over the issue of when an agency constitutes a PE, and there will be further discussions on this matter.

We are currently considering proposed changes to the Mergers Directive and the Interest and Royalties Directive.

Other matters We are working on response papers on the papers relating to R&D tax credits, Loan relationships, Property derivatives and Payment of interest and royalties.

Feedback Feedback on any of the above should be sent to Colin Davis, Technical Officer for Corporate and International Tax matters, at the Institute, or by e-mail to colin-g-davis [at] btconnect.com.

Colin Davis, Technical Officer for Corporate and International matters

C. PERSONAL TAXES

Pre Budget Report We are working on responses to the pensions simplification paper, papers on the modernising of trusts, a discussion paper on incentives for membership bodies to provide workforce development (joint with membership), the paper on a possible income tax charge on benefits from pre-owned assets, as well as anticipating draft legislation on the new CIS scheme and childcare proposals in the New Year. We have written to the Revenue urging immediate consultation on the changes mentioned in para 5.91 of the PBR report.

New Tax Credits 376 survey questionnaires were received and are currently being analysed for publication shortly. Initial findings were presented to an Inland Revenue General Complaints Conference on 4 December 2003. A substantial number of members expressed an interest in Pension Credit (not a tax credit) and an article on the basics of this Credit will appear in a future edition of Tax Adviser.Guidance on some aspects of the new Tax Credit amending regulations was published on the website on 22 December 2003. A follow-up article will appear in Tax Adviser in 2004 with some more detail on the renewals and finalisation processes for 2003/04 awards. A first article on this next stage of tax credits will appear in the February edition. On 10 December 2003 a Technical Committee Newsdesk article was published on the website giving the final dates for tax credit income returns and publishing the detail of some correspondence with the Revenue which reviewed tax credits operations to date.We continue to be in correspondence and consultation with the Revenue on various aspects of the renewals and finalisation processes.

Tax Law Rewrite We continue to be represented on the Consultative Committee of this project. The current paper under consideration is Gains from contracts for life insurance etc. The third Bill will be published, in draft, early in 2004 for comment by May. This is likely to result in the Income Tax (Trading and Other Income) Act (ITTOIA). Schedule 22 FA 2003 Correspondence on some of the outstanding technical issues in this legislation continues. It is hoped that this correspondence can be published shortly.

Joint IR/DWP working group on National Insurance Deficiency Notices We continue to be represented on this group.

CIS consultation We continue to be represented on the consultation meetings reviewing the Construction Industry Scheme (CIS) and, as noted above, anticipate draft legislation shortly.

S660A and Tax Bulletin 64 A joint working group of all the professional bodies continues to look at this issue. A joint response to the Revenue’s further guidance (for SA purposes and published on 4 December) has been sent to the Revenue.

Amendment to FRS5 – Revenue recognition An article on the tax implications of this revised accounting standard, which applies to accounting periods ending on or after 23 December 2003 will be published as soon as possible.

BRCC (Better Regulation Consultative Committee), OCC (Operations Consultative Committee) and Umbrella Group on Employment Issues We continue to be represented on the OCC, the BRCC and the Umbrella Group on Employment Issues and, where relevant, their various sub-groups.

Feedback Feedback on any of the above should be sent to Liz Lathwood, Technical Officer for Personal Taxes matters, at the Institute, or by e-mail to lathwood8 [at] aol.com.

Liz Lathwood, Technical Officer for Personal Taxes

D. INDIRECT TAXES

Anti-fraud measures We were represented at a meeting with the Economic Secretary on 25 November 2003 at which the working of the FA 2003 anti-fraud measures was discussed.

JVCC (Joint VAT Consultative Committee) We continue to be actively involved with the JVCC.

Land and Property Liaison Group We continue to be actively involved with the Group’s activities.

Place of supply of services We have responded to the European Commission consultation on the place of supply of services.

Share issues We have submitted a paper to Customs and Excise on the practical difficulties arising from recent case law in respect of share issues to third country beneficial owners using a UK nominee.

Simplified import VAT accounting We have been actively involved with the Customs and Excise working group considering the new arrangements (previously known as the delayed accounting for VAT at import scheme) introduced in December 2003.

Web site  We were represented at a presentation on the new Customs and Excise web site on 27 November 2003.

Feedback Feedback on any of the above should be sent to Charles Barcroft, Technical Officer for Indirect Taxes matters, at the Institute, or by e-mail to CharlesBarcroft [at] aol.com.

Charles Barcroft, Technical Officer for Indirect Taxes

E. CAPITAL TAXES

Pre-Budget Report  The Pre-Budget report has announced several important proposed changes in the area of capital taxes including the extremely controversial proposed income tax charges on pre-owned assets. These proposals will be discussed at the sub-committee’s forthcoming meeting on 27 January. As always, any representations in advance by members to the sub-committee would be most welcome. Budget Representations The Capital Taxes Sub-Committee is in the process of preparing representations to the Revenue on areas where we believe the law should be changed. In particular, we remain interested to hear from any members with suggestions as to the representations that should be made. The strategy is to identify areas where the Revenue are likely to be receptive to change in the hope of scoring “quick wins” rather than trying to change the Revenue’s mind on areas where our representations have previously been rejected. This will form the second major agenda item for the meeting on 27 January.

Feedback

Feedback on any of the above should be sent as soon as possible to Michael Thomas, Secretary to the Capital Taxes Sub-Committee, at the Institute, or by email to mt [at] taxbar.com.

Michael Thomas, Secretary, Capital Taxes Sub-Committee

F. WORKING TOGETHER WITH THE INLAND REVENUE

Steering Committee

The Steering Group last met on 4 December 2003 and the CIOT was represented by Nigel Eastaway – minutes will be circulated in due course.ISSUESWe continue to forward operational issues to the WT team on almost a daily basis, eg FBI problems, global tax payments by partnerships, flat management companies, missing calculations.

Feedback Feedback on any of the above should be sent to the Technical Department at the Institute or by e-mail to Richard Mannion at richard_mannion [at] solomonhare.co.uk or Nigel Eastaway at eastawayn [at] wjbchiltern.com.

Richard Mannion and Nigel Eastaway, CIOT representatives on Working Together

G. WORKING TOGETHER WITH HM CUSTOMS AND EXCISE The CIOT website now has a split Working Together area covering, separately, Working Together with the Inland Revenue and Working Together with HM Customs.Regional champions have been appointed for each of the local areas where Customs have a Working Together contact. Most areas have had at least one meeting. Anyone interested in being involved should contact Bianca Marsden at the Institute or at bmarsden [at] ciot.org.uk. Bianca Marsden, Head of Technical Department, CIOT H. TAX POLICY SUB-COMMITTEE

1. Reasonable Business Expense: The CIOT has commissioned a short piece of research. The paper is expected to be finalised during January 2004.2. Robert Chote, director of the Institute for Fiscal Studies, has accepted an invitation to join the sub-committee.3. Suggestions are invited for research topics, together with any thoughts as to who might be commissioned to undertake the work.

Feedback

Feedback on any of the above should be sent to John Whiting at the Institute, or by email to john.whiting [at] uk.pwc.com.

John Whiting, Chairman – Tax Policy Sub-Committee

6 January 2004

Technical Department 020 7235 9381