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4 | Consultations
CONSULTATIONS
There were no tax changes and, as a result,
there was a push towards dealing with potential
alterations to the tax system via consultation.
ALLOWING ENTREPRENEURS’ RELIEF ON
GAINS MADE BEFORE DILUTION
It was announced that a consultation would be
launched in relation to a possible change to the
qualifying conditions for entrepreneurs’ relief.
In some cases, an individual may lose eligibility
for entrepreneurs’ relief when their company’s
fundraising efforts and strategy for growth result in
their shareholding becoming diluted below 5%. This
may act as a barrier to growth for some irms.
The proposals include a new process by which
individuals may remain entitled to entrepreneurs’
relief on gains on shares in, or securities of,
a company that relate to the time before the
individual’s shareholding became diluted.
The government proposes thismay be achieved through:
•
allowing individuals to elect to be treated as
having disposed of and reacquired their shares at
the then market value
•
allowing individuals to defer the taxation of this
gain until an actual disposal of the shares.
TAXATION OF SELF-FUNDED
WORK-RELATED TRAINING
One focus of the government is to create a more
skilled workforce, which has led to a consultation
on the extension of tax relief for self-funded training
by employees and the self-employed to support
improving their skills and retraining.
At present, tax relief for employees or the self-employed
who pay for their training can be highly restricted.
For example, a self-employed individual can
normally deduct the costs of training incurred
wholly and exclusively for their business where
it maintains or updates existing skills, but not
generally when it creates new skills.
This consultation is at an early stage and does not
specify how to extend the existing scope of tax
relief for self-funded, work-related training.
EXTENSION OF SECURITY
DEPOSIT LEGISLATION
At Autumn Budget 2017, the government announced
it would extend existing security deposit legislation
to include corporation tax and the construction
industry scheme (CIS) deductions from April 2019.
This consultation seeks to determine the most
effective means of introducing this change.
HMRC considers most businesses meet their tax
obligations and pay the right amount of tax at the
right time, but a small minority choose not to pay
the tax they owe or seek to unfairly reduce their tax
bill. HMRC already has the power to require high-risk
businesses to provide an upfront security deposit,
where it believes there is a serious risk of
non-payment of tax.
This approach may be taken by HMRC where a
signiicant amount of revenue, relative to the size of
the business, is at risk. For the rules to apply, there
must have been a failure to comply with return iling
and payments of tax, or alternatively may apply where
the personnel actively involved in the current business
failed to pay the taxes due in another business.