Spring Statement: Consultations

Lord Hammond of Runnymede Excerpts

Tuesday 13th March 2018 Written Statements

[The Chancellor of the Exchequer (Mr Philip Hammond)]

Today I set out the Government’s first spring statement, as part of the move to a single fiscal event. As described in the paper HM Treasury published in December, the new fiscal cycle provides opportunities for the Government to consult more openly at earlier stages of policymaking. This statement delivers on that commitment, it does not make tax or spending changes, but sets out some areas on which the Government will consult over the summer.

Tax and the digital economy

Today the Government will publish the following policy documents that set out our approach to adapting the tax system to meet the challenges and opportunities of the digital economy:

Corporate tax and the digital economy—an update on the Government’s position paper on the challenges posed by the digital economy for the international corporate tax framework. This sets out the Government’s proposed approach to addressing those challenges to ensure the corporate tax system is fair across different types of businesses, while protecting the UK's start-up culture and position as a global tech leader.

Alternative methods of VAT collection—split payment—a consultation on a proposed split payment model to reduce online VAT fraud and improve how VAT is collected.

The role of online platforms in ensuring tax compliance by their users—a call for evidence to explore what more online platforms can do to help their users pay the right amount of tax.

Cash and digital payments in the new economy—a call for evidence looking at the role of cash and digital payments in the new economy. This will explore how the Government can further support digital payments, ensure the ability to pay by cash is available for those who need it, and crack down on the minority who use cash to evade tax and launder money.

Business rates: delivering more frequent revaluations—a summary of responses to a consultation on the implementation of more frequent revaluations of non-domestic properties for business rates purposes, and the announcement that the next revaluation will be brought forward by one year to 2021. This means three-year revaluations will take effect in 2024.

Growth & productivity

Today the Government will publish the following consultations on changes to help boost productivity and growth across the UK economy:

Self-funded training—a consultation on improving the way the tax system supports self-funded training by employees and the self-employed. This will explore extending the scope of tax relief currently available to employees and the self-employed for work-related training costs to support upskilling and retraining.

The VAT registration threshold—as set out at autumn Budget 2017, the Government are not minded to reduce the VAT threshold. This call for evidence will seek views on whether the design of the VAT threshold could better incentivise small business growth.

Allowing Entrepreneurs’ Relief on gains made before dilution—a technical consultation on changes to entrepreneurs’ relief to ensure that it does not discourage entrepreneurs from seeking external finance for their companies.

Knowledge intensive Enterprise Investment Scheme (EIS) fund—a consultation on the introduction of a new knowledge intensive EIS fund structure with additional incentives to attract investment.

VAT, Air Passenger Duty and tourism in Northern Ireland—a call for evidence that will look at the impact of VAT and Air Passenger Duty on tourism in Northern Ireland.

In the coming months the Government will publish:

Improving business productivity—BEIS will publish a call for evidence to understand how best we can help the UK’s least productive businesses to learn from, and catch-up with, the most productive.

Delivering a fair payment culture for small businesses—BEIS will launch a call for evidence on how to eliminate unfair payment practices to small businesses.

Prompt payment by Government suppliers—the Cabinet Office will launch a consultation on making a supplier’s approach to payments to its own suppliers part of the selection process for larger government contracts.

Transferable Tax History (TTH) for oil and gas—a consultation on draft legislation to introduce a transferable tax history for oil and gas companies, to encourage new investment in UK oil and gas fields.

Petroleum Revenue Tax (PRT) deduction for decommissioning costs—a consultation on draft legislation to allow a petroleum revenue tax deduction for decommissioning costs incurred by a previous licence holder, to encourage investment in UK oil and gas fields.

Green growth

The tax system can be a lever to encourage people and businesses to make healthier, more environmentally responsible choices. The Government are committed to improving air quality in the UK’s towns and cities, and protecting the environment for future generations.

Today the Government will publish:

Single-use plastics waste—a call for evidence seeking views on how the tax system or charges could reduce the amount of single-use plastics waste, to protect the environment. This will look at the whole supply chain for single-use plastics, including alternative materials, reusable options and recycling opportunities, to consider how the tax system and charges can help drive technological progress and behavioural change.

In the coming months the Government will publish:

Red diesel use in non-agricultural, non-road mobile machinery—a call for evidence into whether the use of red diesel tax relief discourages the purchase of cleaner engines. The primary focus of this call for evidence will be on improving air quality outcomes, particularly in urban areas. Red diesel for agricultural use will be outside the scope of the call for evidence, as will home heating use and other static generators.

Reforming VED rates for vans—a consultation on reducing VED rates for the cleanest vans through creating a graduated first year rate, as is already in place for cars, to encourage cleaner choices and improve environmental outcomes.

Tax avoidance, evasion & non-compliance

Today the Government will publish:

Extension of security deposit legislation—a consultation on how to extend existing security deposit policy to include corporation tax and Construction Industry Scheme deductions for taxpayers deemed at high risk of not paying and with a history of non-compliance.

In the coming months the Government will publish:

Off-payroll working—a consultation on how to tackle non-compliance in the private sector, drawing on the experience of the public sector reform. The Government will work with businesses and individuals to mitigate the potential administrative burdens of any future changes.

Tackling Corporate Insolvency and phoenixism risks—a discussion document exploring further means for tackling the small minority who deliberately abuse the insolvency regime in trying to avoid or evade their tax liabilities, including through the use of phoenixism.

Tackling construction sector supply chain fraud—a technical consultation on draft legislation for a VAT reverse charge. This will help to eliminate the threat of ‘missing trader’ fraud in construction industry supply chains, which is where the supplier retains the VAT that it collects on its sales. The reverse charge will achieve this by shifting responsibility to the customer for paying VAT to HMRC where the customer is a VAT-registered construction business.

Profit fragmentation—a consultation on the best way to prevent UK traders or professionals from avoiding UK tax by arranging for UK trading income to be transferred to unrelated foreign entities.

Other/maintaining the tax system

Today the Government will publish:

Heated tobacco—a response to the consultation on the tax treatment of heated tobacco products.

In the coming months the Government will publish:

Gaming Duty: review of accounting periods—a consultation to seek views on bringing the administration of gaming duty more into line with the other gambling duties.

Short-term business visitors—a consultation on how to simplify the tax treatment of short-term business visitors from the foreign branch of a UK company, to ensure the UK is an attractive location to headquarter a business.

Capital Gains Tax payment window—a technical consultation on the design of the system requiring capital gains tax due on a disposal of residential property to be paid within 30 days of completion.

VAT and vouchers—a response to a consultation on changes to the VAT treatment of vouchers. This change will amend VAT law to ensure that when customers pay with vouchers, businesses account for the same amount of VAT as when other means of payment are used.

Taxation of trusts—a consultation on how to make the taxation of trusts simpler, fairer and more transparent.

Large business compliance—a response to the consultation into HMRC’s process for risk- profiling large businesses, to improve HMRC’s Business Risk Review process, reflecting and further enhancing the shift in large business compliance behaviours.

[HCWS541]