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UK Tax Overhaul: ICAEW Warns of Burdens
10 Jun
Summary
- ICAEW urges government to simplify uncertain tax treatment rules.
- Proposal to extend rules to individuals and trusts faces caution.
- Institute backs capital gains tax inclusion but rejects others.
The Institute of Chartered Accountants in England and Wales (ICAEW) has advised the UK government to proceed with caution as it considers changes to the uncertain tax treatment (UTT) rules. The ICAEW supports initiatives aimed at narrowing the tax gap but emphasizes the necessity for new measures to be precisely targeted and avoid imposing disproportionate compliance burdens on taxpayers.
The current UTT regime requires large businesses to inform HM Revenue & Customs (HMRC) of any discrepancies between their tax law interpretations and HMRC's views. Ministers are contemplating an extension of these rules to individuals and trusts, and the inclusion of additional taxes.
However, the ICAEW recommends delaying the inclusion of individuals and trusts until HMRC completes its review of personal tax offshore anti-avoidance legislation and implements any resulting reforms. The institute also highlighted that many individuals and trusts lack dedicated HMRC customer compliance managers, unlike large corporations, potentially complicating the regime's application.
While the ICAEW expressed support for extending UTT to capital gains tax, it suggested that stamp duty land tax should only be added after improvements to anti-avoidance rules and guidance to mitigate existing uncertainty. The institute explicitly rejected the inclusion of the construction industry scheme, national insurance contributions, and inheritance tax within the UTT framework. For inheritance tax, the ICAEW advocated for clearer HMRC guidance rather than UTT inclusion, warning that the latter would increase complexity.
Additionally, the ICAEW opposes a proposed new trigger requiring notification when HMRC's view is unknown, citing that speculative interpretations already clash with HMRC guidance and existing tax planning standards. Katherine Ford, ICAEW Tax technical manager, stated, "We support the government's efforts to reduce the tax gap, but measures must be properly targeted and reasonable, and not impose disproportionate costs and burdens on taxpayers seeking to comply with the tax system."
In other news, the ICAEW appointed Caroline Smale as its president for 2026/27 last week.
