Changes to the VAT rate, new rules on capital gains tax for non-UK residents and a crackdown on tax avoidance schemes are all likely to figure in the chancellor's Autumn Statement next week, as George Osborne sets out his plans to ensure the UK remains on course for economic recovery.
John Cassidy, partner, tax investigations, at Crowe Clark Whitehill, predicts a strong 'no hiding place' message from the chancellor, with new regulations covering the use of offshore tax havens. Action on the use and taxation of offshore employment intermediaries is also likely.
'I expect to see the announcement of a big crackdown on tax avoidance schemes - aimed primarily at the promoters of those schemes and possibly at the users of the schemes. This follows a consultation document issued in August, so the timing is right and it will strike a chord with the public,' said Cassidy.
Baker Tilly predicts the chancellor will say the UK needs to do more to update the tax regime to meet challenges of new business models as a result of e-commerce and the digital economy. The firm says that potentially HMRC's response to the OECD's Base Erosion and Profit Shifting (BEPS) action plan could see 'the biggest shake-up of the rules governing international taxation in a generation'.
ICAEW is calling for VAT to be cut to 5% to boost the construction industry and enable some of the 710,000 empty homes in the UK to be brought back into use. According to Baker Tilly, a reduced VAT rate could also be applied to the repair and maintenance of private dwellings, restaurant and catering, hotel accommodation and admissions to amusement parks, concerts and other cultural events.
But Richard Rose, tax partner at BDO, argues that while reductions in VAT could stimulate activity in some specific sectors, an overall increase in the standard rate of VAT is likely to be the easiest way of raising substantial tax revenues to balance the books and would not make the UK look out of line with the rates in use in other EU countries.
'To encourage exporters to grow and take on new workers, the chancellor may give in to lobbying to reduce employers' national insurance costs either by way of a rebate or holidays,' Rose said.
The Autumn Statement is also set to provide further detail to the way partnerships are taxed, following on from a consultation which closed in August.
Many are also anticipating fundamental changes to Real Time Information (RTI) extending the temporary relaxation of the 'on or before payment' reporting rule and a rethink of the relationship between RTI and Universal Credit (UC).