The last couple of UK budgets have been quiet in relation to changes in pension legislation. The media and general financial services industry have often tried to second guess changes, including a number of areas such as tax-free cash, salary exchange and pension allowances. However, despite the almost annual speculation, not much has changed since the Pension Freedoms Act which was announced by the then Chancellor of the Exchequer, George Osborne, in his March 2014 budget.
During 2019 we have seen that Norway and Denmark continue to be attractive work locations for UK companies. UK companies who are working in Norway and Denmark continue to specialise in the traditional sectors of oil and gas but we have also seen an upsurge in other sectors such as renewables, aquaculture and agriculture. It is important to emphasise that UK companies who are working in Norway and Denmark and any other overseas territory must remain compliant with the local tax laws. With the increase of foreign companies working in these territories, the Norwegian and Danish authorities are actively seeking to ensure that these companies are compliant by paying the required taxes due and filing the correct returns.
With the focus being firmly on Brexit, UK businesses could be forgiven for not being aware of EU changes that came into effect on 1 January 2020. These have significant implications for cross border EU trade in the lead up to Brexit.
The world has changed considerably since VAT was first brought into the UK in 1973, nowhere more so than in the world of digital media. When the zero rating for newspapers was being drafted, the idea of digital publications was never considered. This means that, in many areas of the tax, we have products and solutions which were not written into the legislation.
With the festive season over, the start of a new year gives employers an ideal opportunity for a spring clean of their compliance processes and to identify any tax planning opportunities.
For those in the fishing industry, the investment in a new boat is significant regardless of the size and scale of the fishing enterprise. The Capital Allowances (CA’s) regime on boats over the years has been generous, particularly as certain reliefs exist only for this class of asset that aren’t available to other capital intensive industries such as farming.
Despite some positives it would be a fair assessment to note that deal making in 2019 has been somewhat of a challenge. However, as is widely known, when markets are in a state of uncertainty this can present opportunities, and this appears to be the case for non-UK headquartered, often well-funded, strategic acquirers who see Scottish based businesses as key targets.
Recently, members of the R2 team caught up with other insolvency practitioners and solicitors at our annual Scottish conference, which is a more entertaining event than it sounds! Over the course of the conference, the conversation covered all the normal topics of how the market in our various parts of the country was, what impact Brexit uncertainty was having, and a few war stories from recent cases that were worthy of some discussion.
On 7 January 2020 the Chancellor, Sajid Javid, announced that the Government will carry out a review of the off-payroll reform, known as IR35, which is due to come in to affect in April 2020.
As part of the review, the Government will be working with stakeholders representative of those affected by the reform, including contactor groups and medium and large sized businesses via a series of roundtables. The aim of the review is to identify and determine if any further steps can be taken to ensure the smooth and successful implementation of the off-payroll reform. In addition to the review, the Government is expected to carry out internal analysis, including re-evaluation of the enhanced Check Employment Status for Tax (CEST) tool as well as revisiting public sector bodies’ experience of implementing the reform to the off-payroll working rules in 2017.
It is anticipated that the review will be concluded by mid-February with the view that the off-payrolling changes will still be implemented in April 2020, following the scheduled UK Budget announcement on 11 March 2020. Although it is doubtful that the reform will be scrapped, it is possible that the review will take longer than anticipated and potentially the date of implementation could be postponed. However, this is not a certainty. Therefore, it is important that businesses continue to prepare for the off-payroll changes to be implemented in April 2020, ensuring compliance with the changing legislation.
What about IR35 and the Construction Industry Scheme?
Due to the temporary nature of projects in the construction industry, many construction companies use a large number of contractors. Those who pay subcontractors to deliver their construction work are already required to register and report under the Construction Industry Scheme “CIS”, which requires them to deduct a sum from their payments to their subcontractors and report on a monthly basis to HMRC. This is then paid over to HMRC as part of the subcontractor’s tax contributions.
The changes to the IR35 rules apply to medium and large sized private sector companies which will mean a large majority of construction companies will be required to apply these rules. Even though companies under CIS are deducting partial contributions towards the contractor’s liabilities, the IR35 reform effective April 2021 means they will need to be increasingly aware of the details of their contractors contracts as well as considering their working practices to determine if IR35 applies or now. Reviews of current contracting arrangements in place must begin immediately, as it is the end-user of the subcontractor’s services responsibility to determine whether their contractors fall inside or outside IR35. Engagements that are deemed inside IR35 and deductions required as a result will take precedence over the CIS rules.
For any further information on IR35 or the ongoing review, please contact Charlotte Edwards (firstname.lastname@example.org) or your usual AAB contact.
After many years of campaigning, the Parental Bereavement (Leave and Pay) Act 2018 is due to come into force in the new tax year, meaning that parents will be entitled to a day-one right to statutory leave of 2 weeks if they suffer the loss of a child under the age of 18 or suffer a stillbirth from 24 weeks of pregnancy commencing on or after 6 April 2020.