For those who want to find all the fascinating details of the Chancellor's tax plans from the Autumn Budget, you can comb through HMRC/HMT's Overview of Tax Legislation and Rates (OOTLAR)- this is where most items of real substance for business and universities can be found - far, far from the Chancellor's speech. Otherwise you can look through the full budget document.

Items of interest to estates:

Community Infrastructure Levy

This is from the Charity Tax Group website:

Community Infrastructure Levy

Consultation – In this year’s Housing White Paper, the government committed to respond to the Community Infrastructure Levy (CIL) Review. DCLG will launch a consultation with detailed proposals on the following measures: 

• removing restriction of Section 106 pooling towards a single piece of infrastructure where the local authority has adopted CIL, in certain circumstances such as where the authority is in a low viability area or where significant development is planned on several large strategic sites.

• speeding up the process of setting and revising CIL to make it easier to respond to changes to the market. This will include allowing a more proportionate approach than the requirement for two stages of consultation and providing greater clarity on the appropriate evidence base. This will enable areas to implement a CIL more quickly, making it easier to set a higher ‘zonal CIL’ in areas of high land value uplift, for example around stations

• allowing authorities to set rates which better reflect the uplift in land values between a proposed and existing use. Rather than setting a flat rate for all development of the same type (residential, commercial, etc.), local authorities will have the option of a different rate for different changes in land use (agricultural to residential, commercial to residential, industrial to residential). All the protections for viability from CIL, such as the Examination in Public, will be retained

• changing indexation of CIL rates to house price inflation, rather than build costs. This will reduce the need for authorities to revise charging schedules. This will ensure CIL rates keep up with general housing price inflation and if prices fall, rates will fall too, avoiding viability issues

• giving Combined Authorities and planning joint committees with statutory plan-making functions the option to levy a Strategic Infrastructure Tariff (SIT) in future, in the same way that the London Mayoral CIL is providing funding towards Crossrail. The SIT would be additional to CIL and viability would be examined in public. DCLG will consult on whether it should be used to fund both strategic and local infrastructure

No mention has been made of a review of exemptions, which is welcome, given the value to the charity sector, but the CIL Review team had recommended “no or very few exemptions” for any successor Tariffs, so this needs to be monitored closely. More background is available here.

The relevant part of the Budget document (section 5.14) is this:

Developer contributions

5.14 Land value uplift – In this year’s Housing White Paper, the government committed to respond to the CIL Review. DCLG will launch a consultation with detailed proposals on the following measures: 

• removing restriction of Section 106 pooling towards a single piece of infrastructure where the local authority has adopted CIL, in certain circumstances such as where the authority is in a low viability area or where significant development is planned on several large strategic sites. This will avoid the unnecessary complexity that pooling restrictions can generate

• speeding up the process of setting and revising CIL to make it easier to respond to changes to the market. This will include allowing a more proportionate approach than the requirement for two stages of consultation and providing greater clarity on the appropriate evidence base. This will enable areas to implement a CIL more quickly, making it easier to set a higher ‘zonal CIL’ in areas of high land value uplift, for example around stations

• allowing authorities to set rates which better reflect the uplift in land values between a proposed and existing use. Rather than setting a flat rate for all development of the same type (residential, commercial, etc.), local authorities will have the option of a different rate for different changes in land use (agricultural to residential, commercial to residential, industrial to residential). All the protections for viability from CIL, such as the Examination in Public, will be retained

• changing indexation of CIL rates to house price inflation, rather than build costs. This will reduce the need for authorities to revise charging schedules. This will ensure CIL rates keep up with general housing price inflation and if prices fall, rates will fall too, avoiding viability issues 8 Section 106 agreements are legal agreements between local authorities and developers. They are a mechanism which makes a development proposal acceptable in planning terms, which would not otherwise be acceptable. Section 106 agreements provide site specific mitigations.

• giving Combined Authorities and planning joint committees with statutory plan-making functions the option to levy a Strategic Infrastructure Tariff (SIT) in future, in the same way that the London Mayoral CIL is providing funding towards Crossrail. The SIT would be additional to CIL and viability would be examined in public. DCLG will consult on whether it should be used to fund both strategic and local infrastructure

Rates – for London Universities 

Universities in London may wish to note that section 4.80 of the Budget document sets out a pilot scheme for London boroughs and the GLA for 100% rates retention in 2018-19. While the mandatory charity relief will remain, this may well put pressure on the discretionary relief which would have to be funded entirely by local government.

Domestic Reverse Charge on UK Construction Services

The Overview of Tax Legislation and Rates (OOTLAR) (section 2.40) confirms that the government has decided to go ahead with plans for a domestic reverse charge on construction services provided by UK suppliers with effect from October 2019, and will consult on this in the spring, with legislation and guidance issued by October 2018. A summary of responses to the original consultation will be issued on 1 December, which will hopefully provide more detail as to how the new reverse charge will be applied, for example, will final consumers of constructions services (i.e. universities) be affected or just contractors (i.e. university design and build subsidiary companies)?

General

Late Submission Penalties and Late Payment Interest

Section 2.70 of the OOTLAR confirms that there will be reform of the penalty system for late or missing tax returns, with a new points-based approach. Government will publish the summary of responses to the last consultation on this on 1 December, as well as a further consultation on whether to simplify and harmonise penalties and interest due on late payments and repayments across different taxes. Final decisions on both measures will be taken following this December consultation.

HMRC Resource

The government will invest a further £155 million in additional resources and new technology for HMRC to net £2.3 billion of additional tax revenues by allowing HMRC to:

• transform their approach to tackling the hidden economy through new technology;

• further tackle those who are engaging in marketed tax avoidance schemes;

• enhance efforts to tackle the enablers of tax fraud and hold intermediaries accountable for the services they provide using the Corporate Criminal Offence;

• increase their ability to tackle non-compliance among mid-size businesses and wealthy individuals; and

• recover greater amounts of tax debt including through a new taskforce to specifically tackle tax debts more than 9 months old. 

No detail is given on how the new resource will be split across these activities. (Section 3.88 of the budget document).

VAT

Making Tax Digital

HMRC will be issuing an updated ‘statement of impacts’ about the MTD programme on 1 December, but it is still planned to come into effect for VAT in April 2019.

Domestic Reverse Charge on UK Construction Services

The OOTLAR (section 2.40) confirms that the government has decided to go ahead with plans for a domestic reverse charge on construction services provided by UK suppliers with effect from October 2019, and will consult on this in the spring, with legislation and guidance issued by October 2018. A summary of responses to the original consultation will be issued on 1 December, which will hopefully provide more detail as to how the new reverse charge will be applied, for example, will final consumers of constructions services (i.e. universities) be affected or just contractors (i.e. university design and build companies)?

OTS Review of VAT

The Chancellor has issued a response to the Office of Tax Simplification’s report on its review of VAT. The response says very little.

Vouchers

HMRC intends to implement changes to the VAT treatment of vouchers with effect from 1 January 2019, and a consultation paper regarding the proposals, designed to simplify the treatment of vouchers, will be issued on 1 December. (Section 2.42 of the OOTLAR).

VAT Grouping Consultation

HMRC will publish a summary of responses to their VAT grouping consultation on 1 December.

Employment/Payroll Taxes

Expenses & Benefits

HMT has contacted us to confirm some developments around expenses and benefits, following their call for evidence (our response here):

• Self-funded training – The government will consult in 2018 on extending the scope of the tax relief currently available to employees and the self-employed for work-related training costs.

• Subsistence benchmark scale rates – To reduce the burden on employers, from April 2019 they will no longer be required by HMRC to check receipts when reimbursing employees for subsistence using benchmark scale rates. (This does not apply to actual amounts reimbursed, or reimbursements made under agreed bespoke scale rates and industry-wide rates.)

• Subsistence overseas scale rates – From April 2019 the existing concessionary accommodation and subsistence overseas scale rates will be placed on a statutory basis, to provide greater certainty for businesses.

• Guidance and claims process for employee expenses – HMRC will work with external stakeholders to improve the guidance on employee expenses, particularly on travel and subsistence and the process for claiming tax relief on non-reimbursed employment expenses.

IR35

Will the private sector be sharing the IR35 pain at some point? Well, possibly. Section 1.15 of the OOTLAR confirms that the government will consult carefully on this in 2018 and the consultation 'will draw on the experience of the public sector reforms' including looking at external research already commissioned by the government due to be published early next year.

Employment Status

Section 2.21 of the OOTLAR outlines a consultation (to be published at an unspecified time) on employment status which will cover the tests for both employment rights and tax, following the Taylor review of modern working practices.

Accommodation Benefit Consultation

There seemed to be no mention in the Budget documents of the previously mooted consultation on employer provided living accommodation. However, it seems that there are still plans for this to be published in the Spring, according to the CTG website.

Business Rates Retention

Universities in London may wish to note that section 4.80 of the budget document sets out a pilot scheme for London boroughs and the GLA for 100% rates retention in 2018-19. While the mandatory charity relief will remain, this may well put pressure on the discretionary relief which would have to be funded entirely by local government.

Gift Aid Donor Benefit Rules

These rules will be simplified with effect from April 2019 – see the Charity Tax Group’s Budget Update for further details.

Amanda Darley, BUFDG, 23 November 2017