KPMG held one of its regular UK and Manx Tax Briefings at the Claremont on Tuesday the 31st of March, attracting nearly 200 local professionals and business leaders. As with previous sessions, the speakers covered a wide range of topics and covered a lot of ground in their respective presentations.

Having opened proceedings in his inimitable style, Director Greg Jones’ first topic was the UK 2015 Budget. Although the Budget itself might have been short of new developments in tax, most of the “announcements” having been trailed in the 2014 Autumn Statement, it was clear that the Diverted Profits Tax will need to be considered by larger Manx companies. It is intended to tackle circumstances where companies aim to divert their profits offshore and reduce their UK corporate tax liability.

Greg also mentioned the wide-ranging changes that will be occurring in the savings/ pensions market. Although it is the UK Government’s intention to deregulate this market, there are clearly still pitfalls for taxpayers to avoid.

Greg flagged up the possible removal of the UK Tax Return and, in the next session from Harley Richards (Tax Manager), this point was considered in more detail. Harley’s view was that, while pre-population of Tax Returns for individuals might be a relatively straightforward and welcome development – it seemed an altogether more complex undertaking for businesses.
Harley went on to outline the actions currently being taken by the Tax Office in respect of payments made to Personal Service Companies, and HMRC activity around the issuing of Accelerated Payment Notices.

Sandra Skuszka (VAT Senior Manager) then delivered an update on VAT matters which centred primarily on the use of structures involving non-EU companies. Sandra talked the audience through a number of recent tax cases where taxpayers had fallen foul of the relevant legislation and flagged up the areas where businesses looking to utilise non-EU companies should exercise caution. Sandra also explained the operation of a typical “Carousel Fraud” arrangement, and outlined what steps a business can take to reduce the risks of unwittingly becoming involved.
Sandra was followed by Sarah Brunswick (Audit Manager). Sarah’s presentation tackled the new UK GAAP (Generally Accepted Accounting Practice) regime which provides a significant reduction, and simplification, to the current standards and guidance. Sarah outlined the key areas that will be impacted by the changes and suggested that it may now be appropriate for businesses to consider adopting full IFRS (International Financial Reporting Standards) for their accounting systems.

David Parsons (Tax Director) then examined the 2015 Manx Budget and provided an update on the Auto Exchange regime for financial information. The Manx Budget, as has been pointed out elsewhere, was not an exciting event but it did increase the rate of tax paid by companies in respect of Manx land and property income from 10% to 20%. David also referred to the ongoing, and potentially far-reaching, consultation on National Insurance and benefit reform.
David’s comments on the Auto Exchange regime made it quite clear that this is an issue which will continue to require diligence from businesses and individuals alike, and is seen by governments as an integral part of their challenge to tax evasion. David also referred to the withdrawal of the current disclosure facilities in the UK and their replacement with altogether less financially favourable options.

The morning’s final session was from Greg who outlined changes to UK legislation which introduce a potential Capital Gains Tax charge for non-UK resident entities who sell land/ property in the UK. Greg’s message was that any Isle of Man based companies who dispose of UK land/ property should now give careful consideration to the possibility of a UK tax charge arising.

Image: KPMG tax team, pictured left to right: Harley Richards, Sandra Skuszka, Greg Jones, Sarah Brunswick and David Parsons

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