Report on the work of the Technical Committee - November 2003
Residence and domicile review A paper was submitted in August 2003 in response to the April 2003 background paper published by the Treasury and the Revenue. Budget representations 2004
These were submitted to the Revenue and the Treasury in July 2003. B. CORPORATE AND INTERNATIONAL MATTERS
Stamp Duty Land Tax We have participated in further discussions with the Inland Revenue, mainly regarding lease rental duty and complex commercial transactions. Corporation tax reform We are working on a paper in response to the consultation document issued in August. Application of International Accounting Standards for tax purposes
We have produced a lengthy paper on this subject. Controlled Foreign Companies We have produced a paper calling for a review of the CFC legislation and highlighting problems with the legislation. This will be issued in conjunction with the response to the Corporation Tax Reform consultation. Making the UK tax system EU-compliant Our two discussion papers on EU compliance issues were discussed at meetings with Revenue Policy International and HM Treasury. We are participating in further discussions with the Revenue on transfer pricing and thin capitalisation as part of the corporation tax reform consultation.
Defining innovation We are working on a paper in response to the consultation document issued in July. A working group has been formed to consider the matter in detail. EC Directives We have commented on a Revenue paper on the implementation of the Savings Directive and are considering proposed changes to the Parent and Subsidiaries Directive and the Mutual assistance Directive. CTOCC We continue to be represented on this committee. 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 Davis.
C. PERSONAL TAXES
Income Tax Self-assessment (ITSA) We continue to be involved in meetings with the Revenue looking at various aspects of ITSA. We would particularly welcome feedback from members on the new Short Tax Return piloted this year. New Tax Credits We continue to be involved in meetings and correspondence on new tax credits both as an Institute and as part of the Working Together project. We hope to survey members this Autumn to find out more about the members‚ involvement in new tax credits. Tax Law Rewrite We continue to be represented on the Consultative Committee of this project and await the publication of the final version of the rewritten PAYE regulations. There has been considerable debate and correspondence on the matter of Schedule 22 FA 2003. CIS consultation We are represented on the consultation meetings reviewing the Construction Industry Scheme (CIS). S660A and Tax Bulletin 64 Along with all the other professional bodies we have been talking with the Revenue about the practical implications of the Tax Bulletin article and on 11 September 2003 together published a detailed note setting out the main concerns. This can be viewed on the CIOT website at Note. Doctors and dentists and ESC A9 Following correspondence from a member we published some guidance from the Revenue on this matter. BRCC, OCC and Umbrella Group on Employment Issues
We continue to be represented on the Operations Consultative Committee, the Better Regulation Consultative Committee and the Umbrella Group on Employment Issues and, where relevant, their various sub-groups. Consultations As well as responses to specific papers issued by the committees mentioned above, since the last report we have submitted responses to consultations on mandatory e-payment for large employers, changes to PAYE regulations 42 and 49, employer-provided vans and employer-provided childcare. Feedback Feedback on any of the above should be sent to Liz Lathwood, Technical Officer for Personal Taxes matters, at the Institute, or by email to Liz Lathwood. D. INDIRECT TAXES
Anti-fraud measures We were represented at a Customs and Excise seminar held in June to discuss the anti-fraud measures announced in the Budget. We worked closely with the ICEWA in preparing for this meeting. We also responded to the Customs and Excise consultations on draft statements of practice regarding joint and several liability and deduction of input tax without a valid VAT invoice. Face value vouchers We are preparing a paper for submission to Customs and Excise regarding practical problems arising from changes introduced in the Finance Act 2003. Input tax We have responded to the Customs and Excise consultation ‚ Making Input Tax Recovery Fairer‚ . Joint VAT Consultative Committee We continue to be actively involved with the JVCC and were represented at the meeting held in July. Land and Property Liaison Group We continue to be actively involved with the Group‚ s activities and were represented at the meeting held in September. Place of supply of services We have responded to the European Commission consultation on the place of supply of services. Share issues We have prepared a paper on practical difficulties arising from recent case law in respect of share issues to third country beneficial owners using a UK nominee. This will be submitted to Customs and Excise shortly. Simplified import VAT accounting We continue to be actively involved with the Customs and Excise working group considering the new arrangements (previously known as the delayed accounting for VAT at import scheme) to be introduced in December. The Sixth Directive The European Commission is consulting on the proposed consolidation of the Sixth Directive (77/388/EEC). A response to the draft text published by the Commission is in course of preparation. Feedback Feedback on any of the above should be sent to Charles Barcroft, Technical Officer for Indirect Taxes matters, at the Institute, or by email to Charles Barcroft.
E. CAPITAL TAXES
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 are interested to hear from any members with suggestions as to the representations that should be made. The strategy will be 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. CGT Review Group Members of the Capital Taxes Sub-Committee are continuing to represent the Institute in this ongoing consultation with the Inland Revenue.
Residence and Domicile Review As mentioned above, a paper was submitted by the Institute during August. Further developments are awaited and the Capital Taxes Sub-Committee is watching this area with particular interest.
Feedback on any of the above should be sent to Michael Thomas, Secretary to the Capital Taxes Sub-Committee, at the Institute, or by email to Michael Thomas.
F. WORKING TOGETHER WITH THE INLAND REVENUE
A generally disrupted quarter as we lost both the Revenue‚ s WT team leader David Ellis and the Director of Local Services Stephen Banyard.
Keith Lang has been appointed as David Ellis‚ s replacement and Marjorie Williams has taken over from Stephen Banyard. Service Delivery The Revenue have continued their stance of public denial that there are any major service delivery problems following the chaotic introduction of Tax Credits and we have given blunt messages to Ann Chant and Stephen Banyard. Unfortunately it seems that it is politically incorrect for anyone within the Revenue to criticise the ‚ programme‚ which is proclaimed as a major success. Tax Credits Sub-Group Liz Lathwood has continued to represent CIOT at Working Together meetings on the development of the tax credits system. Steering Committee The Steering Group last met on 18 June 2003 ‚ minutes have been circulated. Enquiry Toolkit The IR Enquiry Toolkit CD is now available and a copy is on its way to Upper Belgrave Street. Working Together Bulletin Working Together Bulletin 14 will be published shortly. Compliance Sub-Group The sub-group met with Graham Black on 22 July and extracted a promise that no full enquiries will be started in future before the Inspector has reviewed any additional information provided. Enabling Initiative The professional representatives have expressed considerable disquiet about Susanna Wright‚ s Enabling Initiative:
The FAQs contradicted the Revenue manuals; and The letters issued to taxpayers incorrectly suggest that the initiative has been endorsed by WT locally and nationally.
Communications To Members One of the commitments that CIOT undertook in signing the Working Together Agreement was to get urgent messages to and from members. Consequently it is important that we complete the planned ‚ members only forum‚ on the website as soon as possible. Meeting held on 29 September 2003 There was a meeting on 29 September chaired by Marjorie Williams, who had taken over responsibility for WT. Ann Chant was present and there was a report on how the Revenue were intending to implement the compliance regime for new tax credits. There was some discussion as to how the profession thought this could be improved and the requirements of tax agents involved in tax credits, which was followed up by the CIOT in the form of a letter to Dave Hartnett and Ann Chant. There were also further discussions on the Revenue review of Self Assessment under John Marshall. 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 or Nigel Eastaway at Nigel Eastaway. G. TAX POLICY SUB-COMMITTEE The TPSC had a meeting via conference call on 10 July. This was a successful way of monitoring progress. Particular points to report: Tax Credits Research Project Katy Pilkington‚ s research project is approaching publication stage.
3 October 2003
Technical Department 020 7235 9381
We identified the subject of Tax Credits and Agents ‚ looking further into the role of agents with regard to the new Tax Credits. This is being set in motion. Reasonable Business Expense Project We picked up a suggestion from Heather Self about possibly replacing the old Schedule E expenses test by one of ‚ reasonable business expense‚ . This would be more of a thought provoking paper than a research project but we will be pursuing this during the autumn. Quick Wins We want to try and get some more mileage out of the Quick Wins idea. That means trying to identify some more quick wins and there will be an action point for each of the Technical Committee‚ s sub-committees to try and think of one or two in the coming months. Review of Inland Revenue and HM Customs and Excise The President has written to Gus O‚ Donnell offering the CIOT‚ s comments on his IR/C&E review. Policy on Tax Avoidance We have a continuing action point for the TPSC Chairman to draft a CIOT paper on tax avoidance although following the discussions at the Council Strategy Day getting to an agreed paper looks ever more difficult! Feedback on any of the above should be sent to John Whiting at the Institute, or by email to John Whiting.