Welcome to August’s Bite Sized which contains a few recent updates that you need to be aware of.
HMRC’s Offshore Assets reminder
Hopefully you will all have seen and read the reminder from HMRC, the deadline having been the end of August for circulation of said factsheet to all tax clients. If you haven’t seen the HMRC factsheet, please click on this link to read it.
New corporate offence of failure to prevent tax evasion
The Criminal Finances Act 2017 introduces a new corporate criminal offence of failure to prevent the facilitation of tax evasion from 30 September 2017.
The new offence responds to concerns that there was previously no way to target businesses that either encouraged or turned a blind eye to facilitation of tax evasion by their employees and other associates. Readers are encouraged to check now that they have adequate policies and procedures in place to comply with the legislation.
HMRC’s GAAR Advisory Panel releases first ever opinion
HMRC’s GAAR Advisory Panel which was formed in 2013, reviewed an arrangement whereby gold bullion was allocated to key employees, using an EBT arrangement.
The recently released opinion of the Advisory Panel was that the entering into and carrying out of these arrangements was not a reasonable course of action in relation to the relevant tax provisions. HMRC is now issuing Accelerated Payment Notices to the relevant taxpayers, and other implications include sanctions under the Serial Tax Avoiders Regime and Promotors of Tax Avoidance Regime. Penalties of up to 60% of the counteracted tax advantage can be applied where arrangements entered into on or after 15 September 2016 are counteracted under the GAAR.
In this case the company bought gold, which seems to have been allocated to the employee in exchange for an obligation to pay an EBT for it a long way in the future. The employee sold the gold immediately for cash. It is likely neither the employee nor the EBT ever held the physical assets. Economically, this meant that the employee had a loan from the EBT. If it had been an actual loan it would have fallen squarely within the disguised remuneration legislation. HMRC contested that the employees and employer were seeking to avoid charges to income tax and NIC on the funds made available to them. Both the employer and employees challenged this contention.
The GAAR advisory panel agreed with HMRC, finding that it was abnormal for employees to be rewarded with gold, it was abnormal for the asset to be immediately sold, and that there was no reason to undertake these steps other than for tax purposes. The conclusion was that the steps taken were“abnormal and contrived”.
UK Register of Beneficial Ownership of Trusts
On the 26 June 2017, the 4th Anti-Money Laundering Directive, known as 4MLD, was enacted in to law.
The 4MLD contains regulations which require:-
1) Trustees to maintain accurate and up to date records in writing of all of the beneficial owners (including potential beneficial owners) and controlling persons of a trust; and
2) For HMRC to maintain a register of beneficial owners (including potential beneficial owners) and controlling persons of taxable relevant trusts (a taxable relevant trust includes both UK and non-UK trusts that have a UK tax liability).
The deadline for providing the information is the 31 January 2018 or 31 January after the tax year in which the trustees first come within scope.
2017 eprivateclient Top 35 Under 35 Awards
We are pleased to announce that Hetal Sanghvi, a Partner within the Tax team, has been named in the prestigious Top 35 Under 35 women awards for the third year running. Hetal is a key member of the Tax team and we are delighted that her expertise, hard work and commitment has once again been recognised by eprivateclient.
If you would like more detail on any of the above topics, please do not hesitate to contact me or any of my team.
Partner | Head of Tax
For Edwin Coe LLP
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