U.K. Officials to Assess EU Tax Transparency Laws With Companies

Trust Bloomberg Tax for the international news and analysis to navigate the complex tax treaty networks and global business regulations.

By Ben Stupples

U.K. businesses will have a chance to raise concerns with officials about the European Union’s latest efforts to increase tax transparency ahead of the government introducing the new regulations.

In a July 6 policy paper, the U.K.’s tax authority said it will “set up a working group” for companies and representative bodies affected by the EU’s data-exchange directive. Through the group, these businesses and bodies will be able to “discuss issues” with Her Majesty’s Revenue and Customs.

The policy paper, part of a range of measures set for publication in the U.K.'s Finance Bill 2018-19, comes amid growing uncertainty among tax and accounting firms over the impact of the EU’s latest mandatory disclosure directive, which took effect at the end of last month. Forcing tax advisers to disclose seemingly aggressive cross-border tax arrangements, intermediaries must now collect data on this activity before member states have implemented the regulations into domestic laws.

“It’s an interesting situation: firms are having to decide what’s reportable, and what’s not, from legislation we haven’t seen yet,” Daniel Lyons, an indirect tax partner at Deloitte LLP, told Bloomberg Tax June 21. Countries may still choose to add existing measures to the EU’s directive, he added.

Draft Finance Bill

Published July 6, the draft legislation includes several measures announced at the U.K.’s 2017 Autumn Budget statement, including a tax exemption for charging all electronic vehicles.

The government will seek input next year on the EU’s mandatory disclosure directive, HMRC said in its policy paper. Before then, the government’s consultation on the Finance Bill’s draft legislation will run until Aug. 31, according to a news release from HMRC and the U.K. Treasury.

The proposals included in the EU’s directive, involving countries automatically exchanging the cross-border tax data that advisory firms collect, will take effect across member states from July 2020.

The transparency measures will “impose a significant additional burden on tax advisers and other intermediaries,” global law firm Norton Rose Fulbright said in a March 13 post on the directive.

Other Developments

The government has published the draft bill before it is officially made available to U.K. lawmakers in parliament, aiming to improve the country’s process for examining new sets of tax legislation.

Alongside addressing the EU’s latest directive, the U.K. government issued July 6 developments on:

The changes to electric vehicles, companies’ intra-group financing, and corporation tax loss relief have immediate effect, U.K. Treasury financial secretary Mel Stride said in a parliamentary note.

Stride, who oversees the U.K.’s tax system, also highlighted that the government is still considering consultation responses on other proposals, including a levy on companies’ payments to tax havens.

Effective from April 2019, the tax would be deducted from U.K.-linked royalties that multinational companies send to low-tax overseas jurisdictions. The government expects to collect as much as 800 million pounds ($1.1 billion) from the measure by April 2023, according to official data.

The government will reply to the consultation responses “in due course,” Stride said.

To contact the reporter on this story: Ben Stupples in London at bstupples@bloombergtax.com

To contact the editor responsible for this story: Penny Sukhraj at psukhraj@bloombergtax.com

Copyright © 2018 The Bureau of National Affairs, Inc. All Rights Reserved.

Request International Tax