Draft Finance Bill 2019-20: Key provisions

On Thursday 11th July 2019, Government has published a raft of draft legislation for the Finance Bill 2019-20 including explanatory notes, and policy papers in respect of numerous provisions. The provisions, which are open for consultation until 5th September 2019, set out changes for the forthcoming tax year. Some of the key draft provisions are;

- Rules for off payroll working from April 2020

• The off payroll working rules will be extended to the private sector from 6th April 2020.
• Part 2 of the Income Tax Earnings and Pensions Act 2003 will be amended aligning the tax treatment between public sector organisations and medium or large private sector companies for payments made for workers’ services provided through intermediaries
• A company which can be defined as “small” in the private sector will be exempt from applying the new rules (the definition will follow that in the Companies Act 2006, section 382)
• For clients which are outside of the public sector and are small, the current provisions of Chapter 8 will continue to apply

Government has also published a summary of responses to the consultation on the ‘Off-payroll working rules from April 2020’. Aspire will be publishing further news analysing the off-payroll draft legislation so keep watch on our website for updates.

See draft legislation here.

- Tax abuse using company insolvencies

• Where  a company is subject to insolvency procedures, HM Revenue and Customs (“HMRC”) will be given power to issue notices to make directors of companies, together with shadow directors and certain others connected to a company, jointly and severally liable for the company’s tax liabilities where the company has engaged in tax avoidance or evasion  
• The notice may only be issued where a liability arises or is expected to arise from tax avoidance or evasion; and where the company begins insolvency proceedings or is expected to do so
• The new legislation will allow HMRC to recover tax and other liabilities generated through tax avoidance or evasion, or through repeated insolvencies where there are outstanding tax liabilities

See the legislation governing the new regime here.

- Changes to protect tax in insolvency cases

• This measure will introduce changes to the insolvency legislation from 6th April 2020
• This clause amends the Insolvency Act 1986 and the Bankruptcy (Scotland) Act 2016
• HMRC will be a priority in the recovery of VAT and certain other debts owed to HMRC in insolvency proceedings
• HMRC will be a secondary preferential creditor

See the legislation governing the new regime here.

- Technical and procedural amendments to the General Anti-Abuse Rule

• Procedural changes to the General Anti Abuse Rule (GAAR)
• Removes 12 month time limit for HMRC to conclude their investigation
• The schedule repeals legislation concerning provisional counteraction notices and replaces them with a procedurally simpler protective GAAR notice
• Legislation to remove ambiguity and to ensure that where HMRC decides not to pursue the GAAR, enquiries can still be pursued using technical non-GAAR arguments
• These procedural changes will apply from Royal Assent
• Provisional counteraction notices issued before the date of Royal Assent will not be affected

See the draft legislation here.

Income Tax relief and the Enterprise Investment Scheme approved knowledge-intensive fund

• Part 5 of the Income Tax Act 2007 (ITA 2007) will be amended to make provision for approved Enterprise Investment Scheme (EIS) funds to focus investments on knowledge-intensive companies
• Additional flexibility for fund managers to make subscriptions in shares and for investors over the years in which relief is given

See the legislation here.

- Introduction of the new Digital Services Tax

• The new Digital Services Tax (DST) will be implemented and HMRC will be responsible for its collection and management
• Will apply to large multi-national enterprises with revenue derived from social media platform provision, search engine provision or an online marketplace to UK users
• The DST will apply from 6th April 2020 and will be charged at a rate of 2% of group revenues derived from UK users of the relevant activities

See legislation here.

Aspire Comment

We are trawling through the legislative details and will provide further update on specific measures shortly.

To see all Government publications released today, click here. All pieces of draft legislation are open for consultation until 5 September 2019.