Hardman Lecture

The annual Hardman Lecture was held on 22 November on the topic ‘The worst features of the UK tax system and how we fix them’. It was presented to a packed audience by Dan Neidle, former Head of Tax at Clifford Chance. Dan is fast establishing a name as a fearless tax campaigner and astute commentator on tax policy. He also demonstrated that he is a great speaker and feedback from attendees was excellent. A detailed report is included in this edition of TAXline. On behalf of the Tax Faculty, I would like to thank Dan for delivering such a thought-provoking speech and his candid approach at the Q&A session.

Autumn Statement 2023 and Finance Bill

The Chancellor’s Autumn Statement announcement on 22 November included more than 100 changes to the tax system. As always, the Tax Faculty produced a number of news items on the day covering the key issues. My thanks to TAXline’s Editor and Senior Technical Manager, Lindsey Wicks, for masterminding the Tax Faculty’s output on the day and subsequently. At the time of writing, the Finance Bill is expected to be published imminently. Keep a look out for our analysis of what it will include. 

As part of the government reshuffle, Nigel Huddleston MP was appointed as the new Financial Secretary to the Treasury in place of Victoria Atkins. ICAEW’s CEO wrote to the new minister setting out ICAEW’s priority areas for tax.

Making Tax Digital (MTD)

An announcement on the outcome of the MTD ITSA small business review and next steps was made at Autumn Statement 2023 – read ICAEW’s reaction. While some of the changes made were welcome, the faculty’s view was that the opportunity for a wider rethink of the MTD programme was missed. Two days later, the Public Accounts Committee (PAC) published a very critical report on the MTD programme. The PAC report concluded that any benefits to taxpayers have been lost and that the potential costs of the programme for taxpayers and HMRC need to be far better quantified. Subsequently, Tax Faculty staff attended a catch-up meeting with HMRC’s new Director of MTD and a roundtable workshop to consider HMRC’s MTD roadmap in more detail. 

HMRC service standards

HMRC’s service standards remain a topic of major concern for ICAEW members. The Tax Faculty was quoted in the Daily Telegraph in relation to HMRC’s continued poor service standards. The Autumn Statement also confirmed what we expected: that HMRC’s budget will fall from £5.7bn in 2023/24 to £4.7bn in 2024/25. Given that the freezing and reduction of thresholds and allowances is likely to increase demand on HMRC’s services, the reduction in resources could not have come at a worse time. The current outlook appears to be increasingly unsustainable. Unfortunately, we are unlikely to see any improvement in HMRC’s service standards any time soon. 

Ethical standards in tax

The International Ethics Standards Board for Accountants (IESBA) is continuing to develop its revised ethical code on tax planning. A further draft has now been laid in advance of the next meeting in New York in early December 2023. If all goes to plan, the IESBA Board will approve the final draft for adoption. Once that is published, the faculty’s attention will turn to how the IESBA tax planning code reconciles with the existing requirements of the Professional Conduct in Relation to Taxation (PCRT), and what changes might be needed to align the two documents. 

R&D claims

Members continue to report major problems with HMRC’s checking, processing and repayment of R&D tax credits. Faculty staff continue to discuss these concerns with HMRC at various meetings and in conjunction with colleagues at CIOT and ICAS. With the publication of HMRC’s guidelines for compliance and following discussions with volunteers, the Tax Faculty has taken the opportunity to update its guidance note on what information on what now needs to be submitted with R&D claims: TAXguide 07/23: Making R&D claims – what information must be submitted and when?

Regulation of the tax profession

Tax Faculty staff attended a meeting at HMRC, along with senior colleagues from other professional bodies, to consider the regulation of tax advisers. HMRC appears to be coming down in favour of a regulatory model based on mandatory membership of a professional body. HMRC’s aim is to publish a consultation document in the first quarter of 2024. The Tax Faculty will report further on this development in the New Year. 

Tax Faculty committee and other meetings 

During the month there were meetings of the Tax Faculty Board, the Tax Policy and Reputation Committee, the Private Client Committee and the Practitioner Tax Committee. Tax Faculty staff and members of the Tax Faculty Board also attended a catch-up dinner with colleagues from the CIOT where opportunities for collaboration and joint events were discussed.

Caroline Miskin attended a meeting of the HMRC Charter Stakeholder Group, the independent advisory group of which Caroline is a member and which oversees how HMRC is implementing and complying with its Charter standards.

Ed Saltmarsh appeared in the third and final film from ICAEW’s Resilience and Renewal campaign on engaging with international markets and was quoted in the accompanying articles. Tax Faculty staff joined an ICAEW West Midlands and CIOT Midlands branch joint event for the Green Tax Debate. 

I also attended the latest meeting of the Heads of Tax of the Global Accounting Alliance. It was particularly interesting to hear that most of the issues we face in the UK, including poor service standards, are very similar to those faced by our colleagues around the world. 

ICAEW Director of Public Sector and Taxation Alison Ring attended a round-table discussion in Greece with representatives from the large firms and with the Greek tax authority on how to make the tax system work better. A hot topic of debate was transfer pricing, which applies to all group transactions, including non-cross border ones. The tax authority was interested in the work the Tax Faculty is doing in the UK to support a training framework for tax inspectors. Ring also met with the UK Ambassador to Greece, who expressed an interest in the work ICAEW does through the Tax Faculty to support the tax profession and challenge economic crime.

TAXguides

Updated: TAXguide 02/22: Basis Period Reform

Updated: TAXguide 07/23: Making R&D claims – what information must be submitted and when?