Jersey tax experts highlight key changes in UK’s Budget
CLOSER examination of the apparently benign UK Budget announced by UK Chancellor Philip Hammond on 22 November has revealed a number of changes of importance to offshore jurisdictions, according to tax specialists.
This includes a number of consultation documents addressing taxation of property, trusts and offshore structures, all of which are expected to affect practitioners locally.
Commenting on the Budget overall, John Shenton, director at Grant Thornton, said: ‘The devil is most certainly in the detail, although in Philip Hammond’s speech he said very little to worry the Channel Islands.’
Wendy Martin, EY’s Channel Islands head of tax, said: ‘On the face of it, it seemed to be a boring Budget with little impact on the islands. However, there are a number of measures of particular relevance to individuals and businesses.’
Probably the most significant proposal is to tax non-UK residents on all UK ‘immovable’ property, with the intention to bring commercial investment property in line with residential property.
The stated intention is to ‘reduce the incentive for multinational groups to hold UK property through offshore structures, often in low-tax or no-tax jurisdictions’.
Currently a non-UK resident does not generally pay tax on the disposal of a UK commercial property. If the consultation is adopted as drafted, tax will be charged from April 2019. Concern has been voiced that the changes will affect Jersey Property Unit Trust (JPUT) structures. However, the UK government intends to include targeted exemptions for institutional investors, such as pension funds.
Other measures include:
- A consultation document on how to make the taxation of trusts ‘more transparent, fairer and simpler’.
- A consultation response, to be published on 1 December, regarding the disclosure to HM Revenue and Customs of offshore structures and those using them, specifically structures that could be misused to evade taxes. This work is being undertaken in conjunction with the OECD and European Union.
- An additional paper on tackling tax avoidance, evasion and non-compliance, commenting on the Paradise Papers and Panama Papers and including 18 additional initiatives giving HMRC additional powers.
- Extending the assessment time limits for non-deliberate offshore tax non-compliance from six years to at least 12 years of back taxes, with consultation early next year.
Mrs Martin added: ‘These are significant changes, with further information to follow as the UK government issues more detail.’