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Chancellor Rishi Sunak laid out administration and compliance changes as part of his 2021 Budget, delivered on October 27. Here is everything you need to know...
Following a recent Upper Tribunal decision (R & C Commrs v Wilkes  BTC 530), legislation will be introduced to clarify that the discovery assessment provisions in TMA 1970, s. 29 can be used to recover tax charges arising on the high income child benefit charge, gift aid provisions, and certain pension charges.
These changes will apply retrospectively; however, taxpayers who have previously made an appeal on or before 30 June 2021 will be able to base their appeal on the legislation as currently enacted.
Clamping down on promotors of tax avoidance
Legislation will be introduced as part of Finance Bill 2021–22 to strengthen existing anti-avoidance measures in place to tackle promoters of tax avoidance schemes. The changes will enable HMRC to:
• seek freezing orders to prevent promoters from hiding their assets before paying any penalties charged as a result of them breaching their obligations under the anti-avoidance rules;
• charge significant additional penalties to a UK entity who facilitates the promotion of tax avoidance by offshore promoters;
• present winding-up petitions to the court for companies operating against the public interest; and
• name promoters and the details of the schemes they promote as soon as possible to warn taxpayers of the risks involved.
Economic Crime (Anti-Money Laundering) Levy
Finance Bill 2021–22 will introduce a new Economic Crime (Anti-Money Laundering) Levy. The levy will apply to entities that are regulated for anti-money laundering purposes under the Money Laundering, Terrorist Financing and Transfer of Funds (Information on the Payer) Regulations 2017 (SI 2017/692) and are medium, large or very large based on their UK revenue.
The levy will first be charged on entities that are regulated for the financial year 1 April 2022 to 31 March 2023, and the amount payable determined depending on their size with reference to their UK revenue for period of account ending in that year.
The amount payable will be a fixed fee dependent on the size of the entity, expected to be between £5,000 and £250,000. Final fixed fees will be set out in the final legislation.
Powers to tackle electronic sales suppression
New legislative powers are being introduced to tackle the form of tax evasion known as electronic sales suppression (ESS) and make offences of the possession, making, supplying and promotion of ESS software or hardware.
Under ESS, sales records are deliberately manipulated to hide or reduce the value of individual transactions and therefore the recorded turnover of the business. Businesses undertaking ESS will have to remove the software from their electronic point-of-sale (EPOS) systems and will be liable to penalties.
New legislation is also being introduced to allow HMRC to obtain details of those involved in the supply of ESS software and hardware, including details of ESS software developers’ source code and the structure of data within an EPOS system.
Making tax digital (MTD) for income tax self-assessment (ITSA)
As previously announced, MTD for ITSA will now be introduced from 6 April 2024 for sole traders and landlords with income over £10,000. General partners will not be required to join until 6 April 2025.
Office of Tax Simplification (OTS): Board governance
In advance of the publication of the review of the OTS, legislation will be introduced in Finance Bill 2021–22 to increase the independent representation on the OTS board by two members, taking the total overall membership to ten.
Budget 2021 - Overview of Changes
• Administration and Compliance Changes
• Capital Gains Tax (CGT) Changes
• Corporation Tax and Other Business Tax Changes
• Customs and Excise Duties Changes
• Employment Tax Changes
• Personal Tax Changes
• Property Tax Changes