Just as the weather in Scotland likes to tease us, so do the Tories over tax powers for the Scottish Parliament.  You can sense the nervousness growing in those opposing substantial tax and fiscal powers for the Scottish Parliament.  They feel that need to be saying something substantial but they just don’t know what to say.  They think that a hint of something substantial will be enough.

Look how the Liberal Democrats talked up their recent ‘Home Rule Commission’ report and the amount of power being devolved under Scotland Act 2012.  The reality as usual being very different.  My earlier blog on this can be found here.

So what have the Tories been saying, or rather hinting at?  Ruth Davidson has announced that yet another group will examine the existing devolution settlement in order to set out a clear alternative to independence in next year’s referendum.  A “clear alternative to independence”, I think not more a clear case of déjà vu.  More on this from the Scotsman can be found here.

The UK Government’s nervousness on the devolving of tax powers is not confined to Scotland.  The negative reaction it has received to one particular announcement shows how difficult a position it is now in.  The recent move to put off the decision to devolve corporation tax to Northern Ireland has not gone down well.  Peter Robinson, Northern Ireland’s First Minister said he had told the Prime Minister: “What, effectively, you are saying to the people of Scotland is that if you want more fiscal autonomy than you have at the present time, the only way to have it is through independence.”  More on this from the Herald can be found here.

Now to HMRC.  So much is happening with them just now it is difficult to keep up.

HMRC has announced that it is postponing payroll reforms for small businesses that require businesses to send real time information to HMRC amid fears that small businesses are unprepared for the changes.  More on this from the Financial Times can be found here.

The House of Commons Public Accounts Committee has also criticised HMRC target of answering 80% of tax enquiry calls within 5 minutes as “unambitious and woefully inadequate”.  It also found that Britons waste £136m a year attempting to get through to HMRC, with about 20 million of the 79 million calls received by HMRC going unanswered each year, despite spending £900m on improving customer service.  HMRC’s premium rate phone lines are also to be replaced.  Phone company Cable and Wireless is making a profit of about £1m a year from callers to HMRC’s 0845 enquiry numbers, according to a report by the House of Commons Public Accounts Committee.  The lines are to be replaced with cheaper 03 numbers. More on this from the BBC news website can be found here.

HMRC is also to close all of its 281 Enquiry Centres, which gave face-to-face help to 2.5 million people with tax queries last year.  The closures in 2014 by HMRC, which aim to save £13m a year, are expected to add 2 million extra calls to phone lines while also putting 1,300 jobs at risk, though the authority aims to deploy these staff elsewhere.  HMRC aim is to replace the Enquiry Centres with interviews in a range of convenient locations.  This might include a person’s own home or business.  We shall see.  More on this from the BBC news website can be found here.  The matter of how we deal with tax enquiries is an issue that we in Scotland also need to look at as we create a Scottish tax system.

Now to attempts by the UK Government to reduce tax avoidance.

A tax loophole that allows firms to escape £100m a year in National Insurance will be closed under a new scheme targeting offshore payroll services.  From April 2014 the UK government will prevent employers avoiding National Insurance Contributions by paying their staff through an offshore intermediary.  It estimates that at least 100,000 workers are now being employed through an offshore agency, often without their knowledge, losing tax contributions of £100m a year.  More on this from the BBC News website can be found here.  The question is: why has it taken so long to try and put a stop to this.

The number of UK-resident non-domiciles has fallen by almost a fifth since the “remittance basis charge” was introduced in 2008.  Non-doms can elect to pay tax on UK income alone and keep their overseas income out of the UK tax net.  But if they elect to use this system long-term, they must pay the annual remittance basis charge after seven years of residence. The charge starts at £30,000 and increases to £50,000 after 12 years of residence.  More on this from the STEP journal can be found here.

HMRC is to launch a campaign aimed at people who have failed to declare capital gains on the sale of a second home, possibly going back many years.  This is yet another long overdue measure.  More on this from the STEP journal can be here.

The Charity Commission for England & Wales has been criticised by the House of Commons Public Accounts Committee for failing to provide more substantial oversight of the sector after 50 organisations were found to be using charity rules to avoid tax.  More on this from the Telegraph can be found here.

Now to matters slightly further afield.

Let’s start with Cyprus and yet another banking disaster.  After much wrangling, Bank of Cyprus depositors with more than €100,000 could now lose up to 60% of their savings.  The original proposal was a one-off levy of up to 10% to be imposed on all bank accounts held on the island.  More on this from the BBC news website can be found here.

The UK should withhold extra aid to Pakistan unless the country does more to gather taxes from its wealthier citizens and tackle corruption, the House of Commons International Development Select Committee has suggested.  The UK Government is planning to increase the amount of aid to Pakistan to £446m by 2015 and the Chairman of the Committee, has said that it is a question of “how justified it is to increase [aid] at a time when [the] wealthiest people in Pakistan are paying little or no tax”.  More on this from the BBC news website can be found here.

Now to France.  President Hollande has announced that French companies will be taxed at 75% on any salaries they pay over €1m.  His original plan for a 75% top rate of income tax on individuals was struck out by the constitutional court earlier this year.  More on this from the Guardian can be found here.

Let’s end with a story from China.  According to reports, China’s property market has been thrown into turmoil by the announcement that capital gains tax on residential property is to be raised to 20%.  At the moment, the seller of a residential property pays between 1 and 2% of the total sale price. Officially, gains from selling second homes have been taxable for several years, but the tax has not been strictly enforced.  The measure is one of several just issued by the People’s Republic State Council in an effort to cool off the booming housing market.  More on this from the STEP journal can be found here.

One last thing.  Congratulations to Ryan Mania.  An absolute fantastic achievement today on winning the Grand National.  Another reminder of just how great it is to be from the Scottish Borders.

Where to start.

In a speech to mark her first year as Scottish Conservative leader, Ruth Davidson outlined an aspiration to cut income tax by more than 1p when new powers come to Holyrood.  More on this from the Scotsman can be found here.  Now compare this with a survey that claims that three quarters of Scots think taxes should be raised for those with the highest incomes and wealth. More on the survey from the Herald can be found here.  These stories show how Scotland, both the politicians and the general public, are beginning to wake up to the fact that tax is not necessarily just a UK matter.

The Scottish Government has backed the latest call for control over air passenger duty to be passed to the Scottish Parliament.  This is a matter worth remembering when you hear comments from the NO campaign on how they “hope” to give the Scottish Parliament further powers.  Let’s not forget how few tax powers are included in the latest Scotland Act.  It is “Calman minus” just as the Liberals recent Home Rule Commission is “Steel minus”.  More on this can be found here.

First it was Rangers now it is Hearts that is in trouble with HMRC.  The surprise is no-one is surprised.  Hearts owe HMRC approximately £500,000 in unpaid tax.  More on this from the Scotsman can be found here.

The UK Government seems to be doing a fair bit of thinking just now which is always worrying.

The UK’s Chancellor of the Exchequer, George Osborne, has called for a change in international tax standards to reflect changes in business, such as the rise of e-commerce, which makes it easier for companies to shift taxation away from jurisdictions where profit is being generated.  More on this from the Guardian can be found here.  In addition, Danny Alexander, the Chief Secretary to the UK Treasury, has pledged to crack down on corporate tax avoidance following revelations that the supermarket chain Asda may have used overseas transfers to its parent company Walmart to avoid up to £250m in tax.  More on this from the Times can be found here.  Lots of words but can we expect real action?

The Chief Executive of HMRC, Lin Homer, has been put under pressure by the UK Treasury Select Committee to explain why multinationals have been allowed to pay less tax than small businesses in the UK.  The Comptroller and Auditor-General of the National Audit Office, Amyas Morse, said that large companies often put pressure on HMRC by threatening to pull out of the country altogether.  More on this from the Times can be found here.  A connected story from the Daily Mail and involving Margaret Hodge, chairman of the UK Public Accounts Committee, can be found here.

Under “road charging” proposals being considered by the UK Government, motorists could face a new two-tier system in which drivers would pay a lower rate of tax if they do not use the UK’s trunk road network.  Have any of the UK media outlets considered the fact that this is also a matter for the Scottish Parliament?  Of course not.  The new system would comprise a basic charge for the use of local roads, and a secondary charge for those motorists wanting to use motorways and A-roads.  More on this from the Guardian can be found here.

Is it just me or is it really the case than almost every change in the law is met with the accusation that it breaches some part of EU law?  The latest example is the UK Government’s planned changes to child benefits.  The UK Treasury has dismissed the claims by the Institute of Chartered Accountants of England and Wales.  More on this from the Telegraph can be found here.

David Gauke, Exchequer Minister to the UK Treasury, has argued that HMRC needs to pay more to recruit the best tax experts in order to combat tax avoidance by major multinational companies.  Edward Troup, Director-General for Tax and Welfare at HMRC, welcomed the proposal, saying: “I think it’s on the record now to have more staff and higher pay”.  More on this from the Times can be found here.  This is an issue that we in Scotland will also have to respond to when setting up our own tax system.

It is often claimed that that the UK Government favours London and the south-east of England. This is another such claim.  The UK Communities Secretary, Eric Pickles, has faced criticism from property groups and retailers after his announcement that a revaluation of business rates has been pushed back to 2017.  The British Property Federation said that it was unfair to expect tenants to continue to pay a levy based on “top-of-the-market” 2008 rents. The UK Government argues however that a revaluation would lead to rate increases for many businesses, especially in the south-east.  More on this from Accountancy Age can be found here.

Now to a story that keeps bubbling up to the surface and clearly is not going away.  First it involved government officials such as the head of the Student Loans Company, then it was the BBC now it is teachers.  HMRC has said that supply teachers hired via recruitment agencies using off-shore firms are causing a shortfall in National Insurance contributions.  An HMRC spokesman said: “These kinds of arrangements are not compliant with tax and National Insurance legislation and the end client, or the employment businesses, may be liable for any underpaid tax and National Insurance”.  More on this from the BBC news website can be found here.

Anyone who regularly looks at HMRC press releases will see HMRC increasingly publicising stories such as this.  An Isle of Wight tax advisor who stole £52,000 by claiming tax repayments using his clients’ names was jailed today at Newport Crown Court.  The press release from HMRC can be found here.

Let’s end with matters slightly further afield.  Hong Kong has imposed a 15% emergency tax on foreign buyers of residential property in an attempt to hold back the island’s property bubble. Stamp duty for short-term speculators has also gone up from 15 to 20%.  Similar measures have been imposed by the Singaporean Government.  More on this from the excellent STEP Journal can be found here.

One last point.  Patriotism takes many forms and that includes paying your taxes.

Have a good week.