CIOT welcomes news of changes to Diverted Profits Tax

In the Budget the Government confirmed that legislation introducing a new Diverted Profits Tax (DPT) will be in next week’s Finance Bill and that the legislation has been revised to narrow the number of companies who will need to provide information to HMRC.  The Chartered Institute of Taxation (CIOT) welcomes the news of the revision, but has cautioned that we will have to wait until next week to see whether the reduced notification requirements will significantly affect the compliance burden for companies that will not pay the tax.

In the consultation process on DPT, the CIOT suggested that such a modification to the rules was required to ensure that businesses at which the new tax is not aimed will not have to unnecessarily meet the notification requirements to HMRC. This would not affect the basic aims or fundamental workings of the tax. The aim is to avoid a large amount of unnecessary work for taxpayers and HMRC.

Glyn Fullelove, Chairman of the CIOT’s International Taxes Sub-Committee says:

“The Government announced today that the legislation introducing DPT has been revised to narrow the notification requirement.  This is welcome as the legislation published in December would have meant that many companies who would not be expected to pay any DPT would have been faced with a substantial amount of compliance, as the notification criteria were significantly broader than the rules for actually charging the tax.  This seemed to us to be an unhelpful position, giving rise to unnecessary work for taxpayers and HMRC, particularly if, as the Government has stated, the tax is only aimed at a small group of aggressive tax avoiders.

“We will see the revised legislation in the Finance Bill next week. We hope that the changes have gone far enough to ensure that the many businesses which are not the target of the new rules, will not have to provide unnecessary notifications to HMRC.”

Notes for editors:

1.       The CIOT’s response to the proposed Diverted Profits Tax can be viewed here.

2.       The Chartered Institute of Taxation

The Chartered Institute of Taxation (CIOT) is the leading professional body in the United Kingdom concerned solely with taxation. The CIOT is an educational charity, promoting education and study of the administration and practice of taxation. One of our key aims is to work for a better, more efficient tax system for all affected by it – taxpayers, their advisers and the authorities. The CIOT’s work covers all aspects of taxation, including direct and indirect taxes and duties. Through our Low Incomes Tax Reform Group (LITRG), the CIOT has a particular focus on improving the tax system, including tax credits and benefits, for the unrepresented taxpayer.

The CIOT draws on our members’ experience in private practice, commerce and industry, government and academia to improve tax administration and propose and explain how tax policy objectives can most effectively be achieved. We also link to, and draw on, similar leading professional tax bodies in other countries.  The CIOT’s comments and recommendations on tax issues are made in line with our charitable objectives: we are politically neutral in our work.

The CIOT’s 17,000 members have the practising title of ‘Chartered Tax Adviser’ and the designatory letters ‘CTA’, to represent the leading tax qualification.