In its first ever “tax day”, the UK government made its current priorities clear, namely: modernising tax administration and tackling non-compliance. All other policies and consultations – ranging from aviation tax reform to the taxation of trusts – were lumped together in one ”further tax policy announcements” category.

eprivateclient has compiled an overview of the announcements that could have the biggest impact on the private wealth industry.

No Safe Havens

The latest ‘No Safe Havens’ strategy was published in 2019 and aims to ensure taxpayers comply with their UK tax obligations regardless of where their income or gains are made. The strategy focuses on assisting taxpayers to comply and responding appropriately if they do not.

In order to determine the best way to implement this, the government has published two discussion documents to help inform future policy measures.

These are:

Helping taxpayers get offshore tax right

This focuses on:

• How data could be used in different ways to help taxpayers get their tax right
• How HMRC could better support taxpayers with their offshore tax obligations
• How HMRC could work with agents and intermediaries to help promote offshore tax compliance

Preventing and collecting international tax debt

This focuses on:

• Whether HMRC has correctly identified the causes of international tax debt
• What more can be done to help taxpayers avoid accruing such debt
• Identifying barriers to collecting it

The taxation of trusts

This consultation – which ran in 2018 and 2019 - sought views and evidence on whether and how to make trusts more transparent and their taxation fairer or simpler. 

The responses did not indicate a desire for a comprehensive reform of trust tax at this stage. The government will keep the issues raised under review.

On transparency, industry leaders expressed concerns about “disproportionate and burdensome” disclosure requirements compared to individuals and the possible implications of those details being placed in the public domain.

But, others supported measures that made it more difficult to hide or obscure who controls or benefits from trust assets, such as publicly accessible beneficial ownership registers.

Many respondents stressed the positive role trusts play in society and explained that trusts are often the most appropriate legal mechanism for passing on, or managing and protecting, wealth and assets.

Respondents warned that the current tax rules can be perceived as creating barriers to using a trust. 

The main areas where respondents sought reform concerned Income Tax and Inheritance Tax.

Reducing inheritance tax reporting requirements

IHT has been a contentious topic for a long time, so it’s hardly surprising the government has amended the requirements.

However, rather than some of the radical changes many hoped for, the government is simply easing reporting regulations.

From 1 January 2022 over 90 percent of non-taxpaying estates each year will no longer have to complete IHT forms for deaths when probate or confirmation is required.

Additionally, the current temporary provision for those dealing with a trust or estate to provide an IHT return without requiring physical signatures from all those involved will be made permanent.

Reporting regulations will be updated to clarify the requirement for estates to submit an IHT account where the deceased was never domiciled in the UK but owned indirect interests in UK residential property.

Clamping down on promoters of tax avoidance

First announced in November 2020, the government is publishing a consultation on measures to clamp down on promoters of tax avoidance.

The proposals include:

• Ensuring HMRC can protect their position by securing or freezing a promoter’s assets so all penalties are paid.
• Tackling offshore promoters and the UK entities that support them.
• Closing down companies that promote avoidance schemes and disqualifying their directors.
• Helping taxpayers to identify and exit avoidance schemes.

Tackling promoters of tax avoidance draft guidance

The government is introducing legislation to strengthen the sanctions against those who promote or enable tax avoidance scheme, which changes the following anti-avoidance regimes:

• Disclosure of Tax Avoidance Schemes (DOTAS)
• Promoters of Tax Avoidance Schemes (POTAS)
• Penalties for Enablers of Defeated Tax Avoidance
• General Anti Abuse Rule (GAAR)
• Disclosure of Avoidance Schemes: VAT and other indirect taxes (DASVOIT)

Raising standards in the tax advice market

This consultation will seek views on the definition of tax advice and a requirement to make professional indemnity insurance compulsory for all tax advisers.

The government is looking to improve tax advice and provide taxpayers with better access to rectify the situation where they have received bad advice.

The tax administration framework

The government is publishing a call for evidence on the tax administration framework.

This covers: the core legislation; processes and guidance which underpin obligations for HMRC; taxpayers, agents and third parties.

The call for evidence will explore how to make tax easier to pay and harder to get wrong, improve people’s experience of the tax system, and build and maintain trust between HMRC and taxpayers.

Review of the Office of Tax Simplification

As required by Finance Act 2016, the Treasury will conduct a review of the effectiveness of the Office of Tax Simplification in its role as independent adviser to the Chancellor on simplifying the tax system.