Latest Tax Day in 2021

On 30 November, the newly introduced ‘Tax Day’ – as part of the government’s new approach to fiscal events, providing detailed updates and consultations on a separate day to Budget, allowing Parliament and wider stakeholders to better scrutinise tax policy – has brought much needed clarity to some of the key aspects announced in the Autumn Budget 2021.

This ‘Tax Day’ (formally Tax Administration and Maintenance Day) delivered on its main purpose: the government has published its summary to previous consultations, along with newer consultations for the policies announced at the Autumn Budget.

Key announcements:

Reforming R&D tax relief

The government published the responses to the R&D Tax Relief review, yet it seemed to be merely a summary of stakeholder input. The review lacked the usual commentary from government on next action steps: this is a marked difference from the usual response, and it confirms what we have heard – the review is still ongoing and there is still plenty of opportunity for your business to contribute to the continued reform of the R&D Tax Credit.

This ‘Tax Day’ provided much-awaited detail behind Budget announcements to the R&D tax credit, including taking expenditure on data and cloud computing into consideration for tax relief, and providing additional clarity on the eligibility of R&D activity overseas going forwards, and where they fall in or outside the scope of tax relief.

The government also presented measures to tackle abuse of R&D tax relief, going beyond the wider compliance requirements for Corporate Tax. Your business insight is key to shape this policy, ensuring a balanced approach that targets abuse and ensures compliance, whilst not being prohibitive to businesses’ ability to access this investment-boosting relief.

The CBI is keen to take your views to the government consultation until 8 February 2022. Email here to take part.

Business Rates Consultation

The government continues to engage with businesses about the specifics of the Autumn Budget announcements: from moving to 3-yearly revaluations and minimising the burden of new administrative changes, to the best ways to implement green rates exemptions and improvement relief – by removing barriers for investment and lowering business rates, we could see savings of £200m/year for businesses.

Your business input on how these are applied is key to shape the future of business rates policy.

As expected, the consultation on Online Sales Tax will be held in 2022.

Tax administration: a step in the right direction

Earlier this Spring, we welcomed HMRC’s informal review of tax administration for large businesses, recognising the role that tax administration plays in promoting investment and market competitiveness across the UK – at the CBI, we have been championing this and launched our Need of a Reset report on how to create a clearer, simpler tax system in 2018.

This review has set out action steps – from improving HMRC guidance to ensuring co-operative compliance best practice – but whether this is the game changer that moves the UK up the ladder of world-class tax administration will depend on how it is delivered in practice.

The CBI will be working closely with HMRC to deliver your thoughts.

Corporate Tax: going digital

This ‘Tax Day’ also introduced the responses to the making corporation tax digital consultation. This won’t be mandated until 2026 at the earliest, so whilst this gives businesses some breathing space, the summary of responses laid the groundwork for further stakeholder consultation and for you to share your views into the design of this policy – this remains key to ensure that the MTD requirements are targeted and proportionate.

Transfer Pricing Documentation

The CBI is pleased to hear that the views of the CBI and other stakeholders were at the forefront of delivering a measured approach to documentation requirements – in comparison to some of the proposals consulted on.

The full detail of the scope of the new requirements will be published in draft legislation in 2022, and the CBI looks forward to reviewing this – along with our members – in due course.

Further consultations

The government has also set out the following consultations:

• Landfill Tax: call for evidence on the government’s ambition of zero avoidable waste by 2050.
• Umbrella companies: call for evidence on their role in the labour market, and how they interact with the current tax and employment rights systems.

How to get involved

Get in touch here to share your views on anything from new tax measures to comments on the Budget 2021 – the CBI will actively collaborate with HMT and HMRC throughout 2022, and your business feedback is key.