General

The Chancellor of the Exchequer, Sajid Javid, has announced that he is planning to hold his first Autumn Budget 2019 on Wednesday, 6 November 2019. However, this date is based on the UK leaving the EU with a deal on 31 October 2019. At the time of going to press, this was certainly not a foregone conclusion.

The Chancellor did confirm that if the UK leaves the EU without a deal then the Government would act quickly to announce emergency measures to support the economy, businesses and households. This would then be followed by a Budget in the weeks thereafter. No announcement was made as to what will happen if there is a further extension to Brexit.

The Chancellor said:

'This will be the first Budget after leaving the EU. I will be setting out our plan to shape the economy for the future and triggering the start of our infrastructure revolution. This is the right and responsible thing to do – we must get on with governing.'

HM Treasury has also confirmed that the opportunity to submit representations for the Budget 2019 is now available. A Budget representation is a written representation from an interest group, individual or representative body to HM Treasury with the aim of commenting on Government policy and / or suggesting new policy ideas for inclusion in the Budget. Any submissions should be sent to HM Treasury by 30 October 2019.

Details of all the Budget announcements will be made on a special section of the GOV.UK website which will be updated following completion of the Chancellor’s speech.

The Chancellor is set to announce a new package of measures to help the UK prepare for a post-Brexit future. We are told that these measures will also help to support the next generation and promote economic growth.

It has also been confirmed that British organisations that are receiving certain EU funding, will continue to do so even after a no-deal Brexit. If the EU cease to fund UK organisations, the Government has guaranteed to commit funding. This will replace certain EU programme funding (such as the European Regional Development Fund and Horizon 2020). The Chancellor said that the total amount covered by the guarantee would be £4.3bn in 2019/20, and £16.6bn over its lifetime – providing reassurance to charities, businesses, universities and other affected organisations.

There is now less than one month until the expected Brexit date of 31 October 2019, and if you listen to the Prime Minister's rhetoric the prospect of a no deal exit still remains a strong possibility. The Government has certainly ramped-up its Brexit planning and it will be interesting to see the full package of post-Brexit measures from the Chancellor as they are announced.

The Treasury has announced that Sir Amyas Morse, the former Comptroller and Auditor General and Chief Executive of the National Audit Office (NAO), will lead an independent review of the loan charge. This announcement gives some hope to many people affected by the contentious loan charge. This review will consider concerns raised by MPs and campaigners lobbying for the withdrawal of the loan charge.

The review will examine whether the loan charge is an appropriate way of dealing with loans schemes (also known as disguised remuneration tax avoidance schemes) that have been used by a number of employers and individuals in order to avoid paying Income Tax and National Insurance contributions (NICs). HMRC has never approved these schemes and has always said they are ineffective.

HMRC has confirmed that whilst the review is under way, the Loan Charge remains in force. As part of this announcement, HMRC has confirmed that, if you are not settling your disguised remuneration scheme, you will still need to complete an additional information return by 30 September 2019. If you fail to do so HMRC reserves the right to charge penalties.

HM Treasury has asked Sir Amyas Morse to report back with his recommendations by mid-November. This will give taxpayers who are liable to the charge time to prepare ahead of the planned January 2020 deadline for making payment.

The Help to Save scheme can help those on low incomes to boost their savings. The scheme was launched in September 2018, and new figures published by HMRC have revealed that over 132,000 people have signed up, depositing more than £31.4 million into Help to Save accounts. These savers are now eligible for bonuses totalling around £14 million.

Under the scheme, those receiving Working Tax Credit or entitled to Working Tax Credits and in receipt of Child Tax Credits, can save up to £50 a month for two years and receive a 50% Government bonus. The scheme is also open to those who are claiming Universal Credit and had a household or individual income of at least £569.22 for their last monthly assessment period. Payments from Universal Credit are not considered to be part of household income.

Payments under the scheme can be made by standing order on a weekly, fortnightly, or monthly basis and one-off payments by debit card are also possible. Account holders will then be able to continue saving under the scheme for a further 2 years and receive another bonus. This could see those on low incomes receive a bonus of up to £1,200 on maximum savings of £2,400 for 4 years from the date the account is opened. After the 4 years, the Help to Save account will be closed and savers will not be able to reopen or open another Help to Save account. The account balances are expected to be rolled over into successor accounts.

There are no limits on how the money used can be spent, but it is hoped that the money will be saved for urgent costs. Money paid into the account can be withdrawn at any time, but this could affect the size of the bonus payment. The Government is urging anyone else eligible to use the scheme, to look at the benefits as the take-up of the scheme has been far less than expected. It is estimated that some 3.5 million people could use the scheme.

The Help to Buy ISA scheme will close to new savers after 30 November 2019. This leaves less than 4 months to open an account before the product is due to be withdrawn by the Government. Once opened, account holders can continue to save in their ISA account until 30 November 2029 when accounts will close to additional contributions. Bonuses can be claimed until 1 December 2030.

The scheme allows savers to claim a Government bonus of 25% on monthly savings of up to £200 on savings towards their first home. The bonus translates to an extra £50 added to every £200 saved up to a maximum governmental contribution of £3,000 on £12,000 worth of savings.

Savers can make an initial deposit of £1,200 (the monthly maximum plus an extra £1,000). The bonus is only payable on the purchase of a first home. The scheme is limited to one per person (not one per home) so two people buying a home together can both receive a bonus. The bonus is available on home purchases of up to £450,000 in London and £250,000 outside London and can only be claimed against the deposit for a new home. It cannot be used to pay solicitors, estate agents or any other costs associated with buying a home.

If you are a first-time buyer and planning to buy a property in the short to medium term future, you should consider whether you would benefit from this scheme. The scheme is open to first-time buyers aged over 16.

Within hours of entering 10 Downing Street for the first time as Prime Minister, Boris Johnson had filled most of the senior cabinet roles by undertaking a major overhaul of cabinet members.

After three years in the job, the previous Chancellor of the Exchequer, Philip Hammond resigned his position to the outgoing Prime Minister, Theresa May rather than face the sack. He has been replaced in the job of Chancellor by Sajid Javid who was already in the cabinet as Britain’s foreign secretary. The new Chancellor is a leading Brexiteer and has already vowed to release significant extra funding to ensure Britain leaves the EU on 31 October 2019 with or without a deal.

The holder of the role of Chief Secretary at the Treasury has also changed with Rishi Sunak replacing Liz Truss who has been appointed the new Secretary of State for International Trade. There was also one further new appointment to the ministerial team at the Treasury with Simon Clarke appointed Exchequer Secretary. Jesse Norman, Financial Secretary and John Glen, Economic Secretary have been reappointed to their previous roles by the new Prime Minister.

The Government has published the draft legislation for Finance Bill 2019-20, along with accompanying explanatory notes, tax information and impact notes, responses to consultations and other supporting documents. The Bill will contain the legislation for some of the tax measures that were announced by the Government at Autumn Budget 2018 many of which have since been the subject of further consultation.

The publication of the Finance Bill is in line with the approach to tax policy making set out in the Government’s documents 'Tax Policy Making: a new approach', published in 2010, and 'The new Budget timetable and the tax policy making process', published in 2017 whereby the Government committed to publishing most tax legislation in draft for technical consultation before the legislation is laid before Parliament.

This Finance Bill will see the introduction of a number of measures from April 2020 including:

• The extension of off-payroll working rules to the private sector from April 2020. These rules will be similar to those already in effect for the public sector and small firms will be exempt.
• The Digital Services Tax which will see major social media, search engine and online retailers subject to a 2% tax on revenues generated from UK users of their services
• The Corporate Capital Loss Restriction will mean that companies who accrue chargeable capital gains will only be able to offset up to 50% of those gains using carried-forward capital losses, subject to certain reliefs.  

The consultations on the draft legislation will close on 5 September 2019, with measures included in the next Finance Bill. The Finance Bill will become known as Finance Act 2020 after Royal Assent is received.

You can use the Digital Disclosure Service (DDS), if you need to make a voluntary disclosure of income or other taxable events that have not previously been reported to HMRC. 

Other current HMRC campaigns that facilitate disclosure by taxpayers, include the Card Transaction Programme – a disclosure opportunity for businesses that accept card payments and have not paid the right amount of tax due – and the Let Property Campaign for landlords who have undeclared income from residential property lettings in the UK or abroad.

There are three main stages to making a disclosure, notifying HMRC that you wish to make a disclosure, preparing an actual disclosure (within 90 days from the date HMRC acknowledged your notification), and making a formal offer together with payment.

Avoiding or reducing penalty charges

It is important to remember that there are usually lower penalties if you make a voluntary disclosure. The actual rate of the penalties will vary depending on the specific circumstances and in some limited cases there may be no penalties due. There are higher penalties for offshore liabilities. For undisclosed liabilities, the penalties could be up to 100% of the unpaid liabilities if the income or gain arose in the UK, or up to 200% for offshore liabilities.

The process of reporting income and gains in this way needs to be handled carefully, and we recommend that readers who are mindful to "bring matters up-to-date" take professional advice. Please call if you are considering your options, we can help you through the disclosure formalities. 

The security deposit legislation was extended to both Corporation Tax and Construction Industry Scheme (CIS) deductions from April 2019. The security deposit regime allows HMRC to obtain security from high-risk businesses for the protection of revenue where there is a serious risk that taxes owed will not be paid.

HMRC’s security deposit powers previously applied to VAT, PAYE and National Insurance contributions, Insurance Premium Tax (IPT) and some environmental and gambling taxes. This measure gives HMRC the power to require securities in relation to Corporation Tax and CIS deductions where there is a risk to the revenue.

There are many reasons for non-payment of tax to HMRC including phoenixism where businesses evade tax by becoming repeatedly insolvent only for a new company to be set-up again seeking to defraud HMRC. These measures also target businesses that build up large debts to HMRC. The extension of these powers to Corporation Tax and Construction Industry Scheme (CIS) deductions will help HMRC to target businesses that fail to comply with their tax obligations.

The required security will usually be payable by electronic payment to a specified HMRC bank account, by cheque, by banker’s draft, a specified bank guarantee or by way of a payment into a joint HMRC/taxpayer bank account. The amount of security required is calculated on a case by case basis. If the business does not meet HMRC’s security deposit requirement, they will have committed an offence and will be subject to a fine. Businesses required to pay a security deposit will have the option to appeal any decision by HMRC.

The House of Commons summer recess has been confirmed after parliament voted 223 to 25 in favour of the move. This means that the House will rise on Thursday 25 July and return on Tuesday 3 September.

The timing of this five-week break whilst the Brexit issue continues to dominate the headlines has been criticised by many on different sides of the political divide. The next leader of the Conservative Party and new Prime Minister is to officially take over from the outgoing Prime Minister, Theresa May, on Wednesday 24 July. There are now just two remaining candidates for the position, Boris Johnson and Jeremy Hunt.

The agreed six-month extension to Brexit of 31 October 2019 is also fast approaching.