Avoidance, evasion and unfair outcomes

Construction Industry Scheme (CIS) abuse

Legislation will be introduced in the Finance Bill 2020-21 to prevent non-compliant businesses from using the CIS to claim tax refunds to which they are not entitled. The government is also launching a consultation that considers options on how to promote due diligence in the supply chain.

Domestic reverse charge for building and construction services

The implementation of the VAT domestic reverse charge for building and construction services will be delayed until 1 October 2020, as previously announced.

Conditionality for granting business licences

Legislation in Finance Bill 2020-21 will make the renewal of licences to drive taxis and private hire vehicles (PHVs), operate PHV firms, and deal in scrap metal conditional on applicants completing checks that confirm they are appropriately registered for tax. This measure will take effect in England and Wales in April 2022. The government is considering extending this reform to Scotland and Northern Ireland in the future and will work with the devolved administrations to this effect.

In the spring a discussion document will be issued seeking views on the wider application of tax conditionality.

Loan charge

The forthcoming Finance Bill will legislate to implement the recommendations of the Independent Loan Charge Review that the government has accepted. A call for evidence on further action to stamp out disguised remuneration schemes will be issued shortly.

HMRC’s promoter strategy

HMRC will publish a new strategy for tackling the promoters of tax avoidance schemes in addition to the legislative changes in Finance Bill 2020-21.

A call for evidence will be published in the spring about raising standards for tax advice.

Large business notification

From April 2021 large businesses will be required to notify HMRC when they take a tax position that HMRC is likely to challenge.

Clarifying the treatment of Limited Liability Partnership (LLP) returns

The government will legislate prospectively and retrospectively in Finance Bill 2020 to put beyond doubt that LLPs should be treated as general partnerships under income tax rules.

Money laundering levy

The government intends to introduce a levy to be paid by firms subject to the Money Laundering Regulations to help fund new action to tackle money laundering. A consultation on the levy will be published later this spring.

Stamp duty and stamp duty reserve tax – transfer of unlisted securities to connected companies 

The targeted market value rule is intended to prevent artificial reduction of the tax due on share acquisitions when listed shares are transferred to a connected company. The rule is being extended to unlisted shares. The measure will be in Finance Bill 2020. As part of this change, the government will amend legislation to prevent a double tax charge arising on certain company reorganisations.