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Chartered Institute of Taxation hits out at HMRC

Chartered Institute of Taxation hits out at HMRC

The Chartered Institute of Taxation has hit out at the government’s new disguised remuneration legislation, saying it is far too complex.

The new regulations were announced in the Finance Bill and run to 59 pages. They target third party arrangements which avoid or defer income tax on employment rewards, such as bonuses, or avoid the restrictions on pensions tax relief.

The CIoT claims that the scope of these new rules is very wide, and says the new exclusions, which were added after the original plans were disclosed, are ‘intricate and heavily qualified.’ The regulations include 14 different tax avoidance tests that govern how and when the new exclusions apply.

The chairman of the Institute’s employment taxes sub-committee, Colin Ben-Nathan, said the new legislation was penal and overrides the longstanding rules for taxing benefits in kind.

He went on to say that some pension schemes, employee share plans, smaller businesses, joint ventures and international businesses looking to relocate employees to the UK could all be impacted by these regulations. A lot of employers will turn to HMRC for clearance of their arrangements but it is not clear whether the Revenue has the resources to cope or how long it will take for them to make a decision.

Ben-Nathan concluded by saying employers could face real difficulties in assessing where they stand with these new regulations. HMRC may not agree with their view and employers will be left uncertain as to their tax liabilities.

It will probably come as no surprise to learn that the relationship between the CIoT and HMRC is at an all time low.

The incoming president of the Institute, Anthony Thomas, says he hopes to turn this situation around and return to the healthy tension that used to exist between the two bodies 10 or 20 years ago.

As well as complaints about the disguised remuneration legislation, the CIoT is dissatisfied with the Revenue’s stance over the registration of tax agents and its desire to indirectly regulate the tax community.

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