Where shall I start?

I think I will start with the small matter of Scotland’s constitutional future.  The news coverage this week shows that this is no longer a strictly Scottish debate.  I personally have found it fascinating watching and listening to UK political commentators trying to get up to speed as quickly as possible.  It won’t be long before they realise that a yes vote will mean tax competition, a Scottish Exchequer, the end to the Barnett formula and less Liberal MPs (there is a bigger loss in percentage terms of MPs to the Liberals than Labour).  I am sure I will come back to this topic regularly throughout 2012.

Not to the sudden upsurge in interest on tax avoidance and the likelihood of the UK Government introducing a general anti-avoidance rule (“GAAR”).  Recent statements by both the PM and Deputy PM strongly suggest that such a provision will be approved this year. The Deputy PM has said: “there should be a general rule that you can’t play the system” and that a “simpler, more open, fairer tax system in which everyone pays their fair share should be created.”  The UK Government’s own report on GAAR came out in favour of a narrowly focused GAAR.  It seems after many years of lurking in the shadows GAAR’s time has come.  I for one welcome this as it is a step on the road to a simpler tax system.

Now back to an old favourite from 2011.  The PM has insisted that the 50p tax rate on higher earners is “temporary” and has hinted that the issue will be reviewed in the run-up to the UK Budget.  The news coverage on this issue suggests that the PM is coming under pressure from business leaders and backbench Conservative MPs.  The question is who will the PM listen to?  There is an equally strong lobby arguing for its retention.  This includes his coalition partner.  I expect to see a report within the next few weeks pointing out how little revenue the higher rate produces.  That though is only part of the debate.  The bigger picture cannot be ignored and I am sure the PM is well aware of this.

Now to a Scottish Government tax proposal.  This proposal was dubbed the “Tesco tax”.  The Scottish Government prefer to refer to this as a “public health levy”.  The supermarkets’ campaign against this proposal started in earnest this week.  The supermarkets claim that the new levy on all major stores selling alcohol and cigarettes will reduce their profits by 10%.  This debate, for debate read battle, has just begun.  An article from the Scotsman on this can be found here.

I like to remind people from time that on one side there is taxation and on the other there is public spending.  The National Audit Office produced another eye watering figure this week.  They said that more than £31 billion of taxpayers’ money has been wasted across government departments in the past two years.  They analysed more than 70 reports and found both annual overspending and waste from delayed and abandoned projects in areas ranging from welfare and capital projects to farm payments.

Now to HMRC and two positive stories.  Following a concerted campaign from numerous business and other professional bodies HMRC is reconsidering its Business Records Check project under which small businesses can be fined £3,000 for not keeping full records during the current tax year even if it later turns out that their tax affairs are in order.  While the review is under way HMRC will not penalise taxpayers and agents for poor record-keeping “except in extreme cases.”  This announcement is to be welcomed.

HMRC is also piloting a new method of resolving its disputes with small business. The Alternative Dispute Resolution (ADR) procedure will use ‘independent’ HMRC facilitators to resolve certain kinds of dispute during a compliance check but before a decision or assessment has been made.  More information can be found here.  Again a positive move by HMRC.

Europe is rarely out of the news for long.  I was interested to read that President Sarkozy is insisting that France must press ahead with a tax on financial transactions to force the issue in Europe.  It seems that the French will introduce legislation next month even without knowing if other countries will follow.  Expect to see this raised at the next European summit.

Finally to football and HMRC’s continuing interest in the so called “beautiful game”.  HMRC has sent a questionnaire to all of the UK’s leading football clubs asking about remuneration and perks for players and their families.  Can you imagine what might be disclosed?

Have a good weekend.