It has previously been reported that the Enterprise Management Incentive scheme State Aid approval lapsed on 6 April 2018. HMRC had previously warned that EMI share options granted in the period from 7 April 2018 until EU State Aid approval was received may not be eligible for the tax advantages afforded to option holders but have now confirmed the scheme will operate as before.
On 15 May EU approval was granted and HMRC has now confirmed that the Enterprise Management Incentives scheme will continue to operate as before and no changes have therefore been made to the scheme.
The Enterprise Management Incentive (EMI) allows selected employees (often key to the employer) to be given the opportunity to acquire a significant number of shares in their employer through the issue of options. An EMI can offer significant tax advantages as the scheme allows options to be granted to employees which then allows shares to be acquired without any tax bill arising until the shares are sold.
Internet link: GOV.UK bulletin
HMRC proposes to introduce new VAT rules for construction services which are subject to consultation.
HMRC has published a draft statutory instrument for technical consultation together with a draft explanatory memorandum and a draft tax information and impact note.
Under the draft legislation supplies of standard or reduced-rated construction services between construction or building businesses will be subject to a domestic reverse charge. This means that the customer will be liable to account for VAT due, instead of the supplier.
The legislation will not apply to specified supplies made to customers who are consumers, or to those that use specified supplies to make other supplies, such as those selling new houses.
The legislation is expected to take effect from 1 October 2019. More details of the proposed new rules can be found at the following link.
Internet link: GOV.UK consultation
HMRC has extended the payroll Real Time Information (RTI) late filing easement until April 2019.
Under RTI payroll obligations employers must submit details of payments made to employees on or before the day that wages are paid via a Full Payment Submission.
The updated guidance extends the easement, introduced in April 2015 to April 2019. The easement applies where an employer’s FPS is late but all reported payments on the FPS are within three days of the employees’ payday. This easement applies from 6 March 2015 to 5 April 2019. However, HMRC go on to clarify that employers who persistently file after the payment date but within three days may be contacted or considered for a penalty. Potential monthly penalties range from £100 to £400 depending on the size of the employer.
Please contact us for help or advice with payroll matters.
Internet link: GOV.UK PAYE guidance
HMRC has confirmed that the tax gap for 2016/17 has fallen to 5.7%.
The ‘tax gap’ is the difference between the tax that should theoretically be paid to HMRC and the actual tax that has been paid. HMRC believes that the tax gap is lower as a result of its work to help taxpayers get things right from the start, and the department’s sustained efforts to tackle evasion and avoidance.
Key findings from the Measuring the Tax Gap publication include:
- small businesses made up the largest proportion of unpaid tax by taxpayer group at £13.7 billion
- taxpayer errors and failure to take reasonable care made up £9.2 billion of unpaid taxes by behaviour, while criminal attacks made up £5.4 billion
- income tax, national insurance contributions and capital gains tax made up the largest proportion of the tax gap by tax type at £7.9 billion for 2016/17; equivalent to 16.4% of self assessment liabilities
- the VAT gap showed a declining trend over time, falling from 12.5% in 2005/06 to 8.9% in 2016/17.
Mel Stride, Financial Secretary to the Treasury, said:
‘These really positive figures show that the tax gap is the lowest in the last 5 years, which reflects the hard work that HMRC and I have been doing to ensure we support businesses to pay the right tax at the right time and clamp down on tax evasion and avoidance.
Collecting taxes is essential for funding our vital public services such as the NHS – indeed, had the tax gap remained at its 2005/06 level the UK would have lost £71 billion in revenue destined for public services, enough to build 200 hospitals.’
Internet link: GOV.UK tax gap