A weekly round-up of tax stories from the national press...

BUSINESS

The Conservatives have accused the prime minister of making false claims about the number of businesses given Government help with their tax bills.

Independent & Telegraph

The Conservatives have pointed out that while £5 billion in tax has been postponed, this is in respect of 160,000 businesses, many of which have been able to make multiple agreements. Gordon Brown said the number of firms was nearer 300,000, suggesting he had been looking at the number of agreements.

Alistair Darling has warned that Conservative plans to press ahead with a banking tax, to claw back some of the billions of taxpayer funds spent bailing out the financial sector, would pose 'a hell of a risk' to City jobs unless it had international support.
Guardian, Telegraph & Financial Times 22.3.10; Financial Times 24.3.10


This looks like a case of extracting the maximum amount of feathers with the minimum amount of hissing from the goose. Banks are an easy and popular target for a levy of some description. The only question is whether going alone on this, as the Conservatives suggest, would mean the goose flies south to sunnier and less heavily taxed climes. International action as proposed by Labour would presumably make alternative destinations less attractive.

The chairman of Lloyd's of London, Peter Levene, has called for lower taxes to stem the exodus of insurance companies to offshore centres.
Guardian 25.3.10

Every industry will say it is a special case for tax cuts. However, in the current economic climate, neither party has said it is prepared to reduce income tax. The general election may see the Conservatives saying they will cut corporation tax (and pay for the reduction by cutting other allowances), but Labour has made no such promises.

CORPORATION TAX
Multinationals are paying 'much more tax' to resolve cross-border disputes, according to HMRC.
Financial Times 22.3.10

HMRC’s focus on transfer pricing issues is paying off, according to the department, because it carries out stringent checks ensuring companies are dealing with transfer pricing correctly.




GENERAL
Higher-rate taxpayers and older people are being urged to claim their share of hundreds of millions of pounds of overpaid tax and missed reliefs, ahead of a shortening in the time limit for tax refunds.
Financial Times 20.3.10

Hopefully, practitioners will, as a matter of course, have ensured their clients have claimed all the reliefs and repayments to which they are entitled. This might be an opportunity to remind clients of the shortened deadlines, particularly for 2004/05 and 2005/06, just in case any reliefs have been overlooked.   

Labour is likely to backtrack on plans to implement a so-called death tax to pay for long-term care, saying the party will not introduce any definitive final reform in the next parliament.
Guardian 22.3.10

Having already been burnt on this issue, Labour would probably prefer to seek a cross-party approach to the problem of paying for long-term care. This will not happen during the run-up to the general election, when parties will seek to emphasise the differences between them.

Tax inspectors are for the first time to get wide-ranging powers to open people’s post without their permission.
Telegraph 26.3.10

This measure is aimed at smuggled goods, not taxpayers’ general mail.

INCOME TAX

Tax relief on donations to UK charities are being extended to some organisations in the European Union, Norway and Iceland.
Financial Times 25.3.10

This is to be retrospective, in that donations made after 27 January 2009 (the date of the ECJ judgment in Porsche, which is the reason for extending gift relief) may also be considered for relief. It may be worth making protective claims for clients who made relevant donations. 

Personal allowances will be frozen at their current rate despite inflation growing at 3%, in move widely criticised as a stealth tax.
Telegraph & Independent 25.3.10

Although widely reported, this story is nonsense. Personal allowances are announced in the pre-Budget report, and the baseline is uprating in line with September RPI. In September 2009, RPI was 1.4% negative, so leaving personal allowances unchanged was an increase in real terms. For 2008/09, allowances were increased by 7.3%, based on a 5% RPI figure in September 2008 and a further addition as part of the 10% tax rate abolition debacle. By the time of the Budget in 2009, RPI had turned negative, but the same politicians and newspapers did not call for the personal allowance increase to be reversed.

Ten million middle income households are worse off under the changes made to the tax system by Labour since 1997, but the incomes of the poorest have been improved.
Guardian & Telegraph 26.3.10

These are the findings of a report from the Institute for Fiscal Studies. They will not be a surprise, given Labour’s policies, which are designed to improve the lot of the lower-paid.

The Treasury faces a wave of demands from international sports stars that they be exempt from tax when they compete in the UK, to match the tax waiver announced in the Budget for foreign-based footballers playing in next year's Champions League final at Wembley.
Financial Times 26.3.10

International sportsmen and women, other than footballers, may feel discriminated against as only the latter may be exempt from income tax when they play in the UK.

INHERITANCE TAX

Thousands more Britons face paying inheritance tax after the Chancellor announced that he would not increase the level at which the levy is payable for the next four years.
Telegraph & Independent 25.3.10

A relatively small number of estates have to pay inheritance tax; while freezing the annual exemption will increase this number, it is unlikely to cause the Chancellor sleepless nights given Labour’s attitude is that the wealthiest percentage of the nation is not the party’s priority in terms of tax cuts.

INTERNATIONAL (no comment, just news)The French government will abandon its plan to introduce a carbon tax on domestic energy and road fuels unless there is agreement on a European Union-wide levy.
Financial Times, Guardian & Telegraph 24.3.10
Bulgaria plans to introduce a tax on the rich and put a limit on public salaries as it battles a deepening recession and tries to keep down its fiscal deficit.
Guardian [not online] 22.3.10

The German government is to introduce a tax on large lenders that indulge in high-risk investment behaviour, such as proprietary trading.
Times 23.3.10
Credit Suisse has severely restricted travel to Germany by private bankers working for rich German clients with accounts in Switzerland, amid fears that such employees could be detained by tax authorities across the border.
Financial Times 22.3.10
Chile's new conservative government plans to introduce 'moderate' tax rises to help rebuild the country after last month's earthquake and tsunami, according to finance minister Felipe Larraín.
Financial Times 24.3.10

INVESTMENTS
Wealthy investors seeking to beat the rise in the top rate of tax to 50% on 6 April have sparked a last-minute rush for tax-efficient venture capital trusts.
Times 21.3.10
…so the promoters of several leading VCTs say in an article appearing in a weekend money supplement, in which such companies advertise regularly. No doubt the freedom from tax on the returns has proved to be even more attractive with the prospect of a 50% tax rate, but it would be unwise to read too much into such assertions.

The Tories have backed business protests at Government plans to include complex cuts to pension tax relief for high-earners in the pre-election Finance Bill
Financial Times 22.3.10

Tax experts and pensions organisations say the proposed new rules relating to higher-rate tax relief for pension contributions are unworkable and complex. However, there has been no indication the Chancellor is prepared to give way on this because higher-rate taxpayers are not his current priority. 

NATIONAL INSURANCE
David Cameron will make a firm general election pledge to halt next year's planned rise in National Insurance contributions for workers and companies, according to senior Conservative sources.
Independent, & Times 26.3.10

The party cannot guarantee to make such move given the UK needs all the tax revenues it can get.

STAMP DUTYThe UK has missed out on £90 million in tax revenue from corporate takeovers in the past two years as an increasing number of companies have used a 'scheme of arrangement' structure to avoid paying stamp duty on their purchases.
Telegraph 22.3.10
 

Stamp duty avoidance schemes must be reported to HMRC under the disclosure of tax avoidance scheme rules. If the Revenue can close down a scheme, it will do so.


A Conservative government would not reverse the stamp duty increase or most of the other tax rises unveiled in the Budget, senior Tories have said.
Financial Times 25.3.10
Until the UK’s fiscal state improves, the Government both now and after the election will be keen to collect all the tax it can get into its coffers.