Tax and the 2019 Spring Statement

18 March 2019

The Chancellor had very little to say about tax matters in his Spring Statement to the House of Commons but, as ever, the devil is in the detail. Closer examination of his Written Ministerial Statement reveals a collection of future consultations to be issued by HMRC and HM Treasury in the coming months.

These include the following:

  • Measures to prevent the abuse of R&D tax reliefs for small and medium-sized enterprises
  • A restriction of the NICs Employment Allowance to businesses with an employer NICs bill below £100,000
  • Potential simplification and improvement of the VAT Partial Exemption regime and the Capital Goods Scheme
  • Powers for HMRC to set appropriate conditions and for approving fund vehicles eligible for the Enterprise Investment Scheme
  • Changes, as announced in Budget 2018, to lettings relief and the final period exemption, for the purposes of capital gains tax private residence relief.

The Government also published a policy paper, No Safe Havens 2019 , setting out the direction for HMRC’s updated strategy for offshore tax compliance. The intention is to move away from concentrating specifically on tax evasion and looking across the whole spectrum of non-compliance behaviour through:

  • Championing international tax transparency
  • Increasing taxpayers’ awareness and understanding of their responsibilities
  • Taking a proportionate approach to risk and behaviour

In addition, the Government announced that Making Tax Digital (MTD) (due to be introduced from 1 April 2019 for VAT matters) will not be extended to other taxes until 2021 at the earliest. It had already confirmed a one-year soft landing period for filing and record-keeping penalties where a business has done its best to comply with MTD.

Finally, the Government published draft legislation in respect of the Structures and Buildings Allowance (SBA) announced in Budget 2018. This provides relief for qualifying expenditure on new commercial buildings and structures at a flat rate of 2% p.a. The legislation now provides for:

  • The continuance of allowances during periods of disuse
  • The demolition of a building or structure to be treated as a disposal event for capital gains purposes, with any unrelieved expenditure being claimed as a deduction in the resulting capital gains computation
  • Different rules for leases that are wasting and non-wasting. This ensures that all eligible expenditure is relieved once, and only once

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