Welcome to the latest edition of RPC's Tax Bites - providing monthly bite-sized updates from the tax world.
As always, if there are any areas you would like more information on (or if you have any questions or feedback), please let us know or get in touch with your usual RPC contact.
HMRC publishes guidance on Finance Act 2022 penalties for UK entities facilitating avoidance schemes involving offshore promoters
HMRC has recently published guidance on its new power, introduced in section 91 and Schedule 13, Finance Act 2022, to charge an additional penalty on a UK entity for facilitating a tax avoidance scheme involving a non-UK resident promoter. The new power took effect from 24 February 2022.
The guidance covers the amount of additional penalty payable, which can be up to 100% of the total fees received by all members of the promotion structure in connection with the scheme. Such fees do not include VAT, but fees paid to another person (such as a separate management company) under an arrangement with a member of the promotion structure are included. The power to assess the additional penalty applies only where the UK entity's activities giving rise to the original penalties were carried out on or after 24 February 2022. However, the guidance confirms that where an additional penalty is assessed, its amount will be determined by reference to all fees received by members of the promotion structure in connection with the scheme, whether they were received before or after 24 February 2022.
HMRC publishes updated guidance on settling disguised remuneration scheme use and paying the loan charge
HMRC has recently published an updated version of its guidance on settling disguised remuneration (DR) scheme use and paying the loan charge.
There are some notable amendments included in the new guidance, including when HMRC will take into account expenses of a trade or employment when looking at settlement agreements for DR schemes. HMRC will take allowable expenses into account, but will consider these on a case by case basis, and in addition require detailed evidence in support of the claim. Another important amendment is in relation to when HMRC will not collect residual tax liabilities for loans that were subject to the loan charge. Where the loan charge has been paid, the annual income provided to the taxpayer through DR schemes is £75,000 per tax year or less and no litigation has commenced in relation to the residual tax or the loan charge, HMRC will not seek to collect the residual liability.
In addition, the guidance contains detailed information on how the annual income amount through DR schemes is calculated.
OECD consults on exchanging information about crypto assets
At the request of the G20, the OECD has released a public consultation document on proposals concerning the exchange of information about crypto assets. At present, the framework in place for jurisdictions to exchange financial information on taxpayers automatically captures only limited information on cryptoassets. The framework proposed by the OECD provides for the collection and exchange of tax-related information between tax administrations in respect of certain transactions. The proposals would apply to electronic money products, digital currencies, and indirect investments in cryptoassets that can be held and transferred in a decentralised manner.
The consultation seeks comments on proposals for a global framework for the automatic exchange of information on cryptoassets and closed on 29 April 2022. A public consultation meeting will be held at the end of May 2022. The OECD intends to report back to the G20 on the framework at its October 2022 meeting.
HMRC updates guidance on uncertain tax treatment notification requirements
New statutory guidance has been introduced to HMRC's Uncertain Tax Treatments by Large Businesses Manual specifying what must be included in a valid uncertain tax treatment notification, under paragraph 8(2), Schedule 17, Finance Act 2022.
The notification must include the reference period affected by any uncertainty and confirmation of whether notification is being made under paragraph 10(2) (where a provision has been recognised in the accounts to reflect the probability that a different tax treatment will apply) or paragraph 10(3) (where the taxpayer takes an interpretation that is different to HMRC's) of Schedule 17, Finance Act 2022. The notification must also include the transaction or position that created the uncertainty, the uncertainty and alternatives to the tax treatment, any relevant statute, case law and HMRC guidance relating to the uncertainty and an indication of the amount of tax relating to the uncertainty.