Spring Statement 2019 - predictions for tax

08 Mar 2019 | 6 min read

The Chancellor of the Exchequer is due to deliver his Spring Statement on Wednesday 13 March 2019. The Lexis®PSL Tax team considers the business tax announcements and publications that could be expected on the day.

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On Wednesday 13 March 2019, the Chancellor is set to deliver the government’s second Spring Statement since the introduction of the new Budget timetable in autumn 2017. The publication of an annual Spring Statement was part of the move to holding Budgets in the autumn, rather than the spring. The primary purpose of the Spring Statement is to enable the government to respond to the Office of Budget Responsibility’s twice yearly economic and fiscal forecasts. The Spring Statement is also an opportunity for the government to publish consultations, including early stage calls for evidence, and is not intended to be an occasion for announcing immediate tax changes. The first Spring Statement, in March 2018, was true to this intention and did not announce any immediate tax changes, although this does remain an option if the government considers it to be necessary.

The first Spring Statement was accompanied by the publication of 13 new consultation documents. The Spring Statement of 2019 takes place at a time of high Brexit drama and it is possible that government resources being heavily directed towards preparations for Brexit could result in fewer ‘business as usual’ tax policy developments.

In light of Brexit, it is still possible that the Spring Statement could be upgraded to a full emergency Budget. Assuming that this does not happen, a ‘normal’ Spring Statement may be used to announce entirely new measures, some of which may be Brexit-related, or dependent on the ratification of a Brexit withdrawal agreement. It is also an occasion on which the government may publish responses, or next steps, relating to previous consultations or calls for evidence.

There are unlikely to be any developments in areas where consultations have closed very recently (the digital services tax consultation, for instance, only closed on 28 February 2019), but there could be further publications or announcements in relation to:

  • tax abuse and insolvency—at Budget 2018 the government announced that Finance Bill 2020 would include provisions enabling HMRC to make directors and other persons involved in tax avoidance, evasion or phoenixism jointly and severally liable for company tax liabilities where there is a risk that the company may deliberately enter insolvency. See News Analysis: Assessing the tax abuse and insolvency consultation proposals and the summary of responses published on 7 November 2018 to the consultation launched on 11 April 2018
  • stamp taxes on shares consideration rules—a consultation published in November 2018 considered extending the market value consideration rule, adopting the stamp duty reserve tax (SDRT) definition of ‘money or money’s worth’ for consideration for stamp duty purposes, and aligning the stamp duty and SDRT treatment of contingent, uncertain and unascertainable consideration. See News Analysis: Exploring the stamp taxes on shares consideration rules consultation
  • corporate capital loss restriction—a consultation published in October 2018 considered restricting companies’ use of carried-forward capital losses to 50% of their capital gains arising in an accounting period, see News Analysis:  Budget 2018—corporate capital loss restriction . The government announced at Budget 2018 that draft legislation would be published in summer 2019 for inclusion in Finance Bill 2020
  • HMRC’s civil information powers—a consultation published in July 2018 considered amending HMRC’s civil information powers, and in particular the way in which HMRC requests information from third parties, see News Analysis:  Removing taxpayer safeguards from HMRC information powers
  • off-payroll working (IR35) in the private sector—a consultation on this topic was published in May 2018. At Budget 2018 the government announced that there will be a further consultation in 2019, with draft legislation published in summer 2019, and the changes taking effect from April 2020. See News Analysis: Budget 2018—Tax analysis—Off-payroll working in the private sector
  • penalties for late filing and late submission—the draft Finance Bill 2019 provisions that were published in July 2018 included measures to harmonise and simplify the system for charging penalties for late payment of tax and late submission of tax returns. These clauses were dropped from the version of the Bill that was introduced to Parliament in autumn 2018, but the government announced that it still intends to implement them at a later date. See News Analysis: Legislation day: Draft Finance Bill 2019—Tax administration
  • amendments to tax returns—a call for evidence on modernising the process whereby taxpayers make amendments to tax returns was published in November 2018, see: Tax weekly highlights—8 November 2018
  • public sector licences and conditionality—at Budget 2018 the government announced that it is considering introducing legislation at Finance Bill 2020 that would require applicants for some public sector licences to provide proof that they are correctly registered for tax. See News Analysis: Budget 2018—Tax analysis—Tax avoidance and evasion
  • role of online platforms in ensuring tax compliance by their users—in November 2018 the government published a summary of responses to a previous call for evidence on this topic and indicated that it would take further steps in this area, including improving guidance and looking at technological solutions for data-gathering. This initiative is primarily about direct taxes, as the government already has powers to impose liabilities on online marketplaces in relation to VAT. See News Analysis:  Spring Statement 2018—Tax analysis—The role of online platforms in ensuring tax compliance by their users
  • carbon emissions—the government introduced a new carbon emissions tax in Finance Act 2019(which takes effect from 1 April 2019 in the event of a ‘no-deal’ Brexit scenario) and announced it will consult on the more detailed provisions during 2019 with the intention of laying legislation before Parliament in early 2020. See News Analysis: Budget 2018—Tax analysis — Carbon emissions tax, and
  • aggregates levy—in February 2019, the government promised to publish the terms of reference for a review of aggregates levy in ‘spring 2019’, with a view to devolving the levy to Scotland (the Welsh government and Northern Ireland executive will also be consulted)

     

Filed Under: Spring Statement

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