Budget 2012 What it means for you KPMG Commentary

Budget 2012
What it means for you
KPMG Commentary
March 2012
Contents
Our view
1
Economic Implications
3
Business Implications
4
Public Sector Implications
6
Tax Policy Development
8
Corporate Tax
12
Indirect Tax
21
Employee Issues
29
Personal Tax
37
© 2012 KPMG LLP, a UK limited liability partnership, is a subsidiary of KPMG Europe LLP
and a member firm of the KPMG network of independent member firms affiliated with
KPMG International Cooperative, a Swiss entity. All rights reserved.
Our view
The Chancellor of the Exchequer proclaimed that
this reforming budget was to reward work, to
enable Britain to earn its way in the world, and to
back aspiration and business. But did the tax
changes meet those aims?
Chris Morgan
Head of Tax Policy
The main tax change for large business announced at the Budget was the
reduction of corporation tax to 24% with effect from 1 April 2012, with
further reductions planned bringing the rate down to 22% from 1 April
2014. The 24% rate will bring the UK, effectively, to 15th in the EU league
table of corporation tax rates – there is still some way to go before the UK
has such a low rate as countries like Ireland. This rate reduction will be
welcomed by business, enabling a greater proportion of their profits to be
reinvested to enable their companies to grow.
The Chancellor also confirmed the details of the modernised controlled
foreign companies (CFC) régime with a new gateway test to simplify the
administration. This will enable British companies to invest overseas,
whilst HMRC will maintain a close watch on multinational companies to
prevent them diverting profits away from the UK. The introduction from 1
April 2013 of a special tax system for Patents, with an eventual tax rate of
10% on patent linked profits, and also an above the line research and
development tax credit will help high tech businesses, both profit making
and start ups. Other specific business areas which will have focused tax
assistance, from 1 April 2013, will be the video gaming and the high
quality television production companies.
Business will also gain from a successful integration of the operation of
income tax and the national insurance scheme.
The Government has also announced changes to the enterprise
management incentive scheme (EMI) to double an individual’s maximum
limit to £250,000. There are also proposals to improve the position of
capital gains entrepreneurs’ relief (10% tax rate) for individuals with EMI
options.
Smaller business with turnovers of less than £77,000 will gain from the
proposed cash basis for computing income tax profits with effect from 1
April 2013.
However, one big cloud on the horizon is the proposed introduction of a
general anti avoidance rule (GAAR) aimed at preventing highly aggressive
tax avoidance. Time will tell whether such a GAAR will impede business
transactions, as the current intention is for no specific clearance
mechanism to be available. This could well put the UK at a disadvantage
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1
compared with other jurisdictions which have a tax clearance system
alongside their GAAR.
The main headlines from this Budget will be on the personal tax side with
a reduction from 6 April 2013 of the 50% top income tax rate to 45%. The
delay between the announcement and the implementation of this measure
is going to create significant incentives for individuals to delay income
receipts until after 6 April 2013. In addition, the restrictions on income tax
reliefs also coming into effect from 6 April 2013 will bring forward claims
before this date. The Government has estimated that the immediate loss
of tax revenue in 2012/13 as a result of these timing effects will be £2,400
million, although this will be recovered over the next two years. This
creates a significant cash flow impact to the Government’s finances as a
result of early notice of these changes. Whilst charities may well have a
bumper year of gifts coming up this may not be good news for them in the
future.
The changes to stamp duty land tax on £2 million properties acquired by
companies, and the proposals for annual tax charges on such companies
from 1 April 2013 will significantly affect how these expensive properties
are held, but there will be some time to change structures. Whether it will
affect the housing market in Kensington and Chelsea, where the majority
of these properties are located, is another question.
The largest tax give away as part of this Budget is the increase in personal
allowances from 6 April 2013 to £9,205, bringing a significant number of
taxpayers out of income tax. In contrast, the largest tax take comes from
the freezing of the additional personal allowances given to pensioners with
effect from 6 April 2013. This is a direct shift in taxation from the retired to
the working population.
So did the Chancellor meet his aims? In the main yes. The big
disappointment though was there was no mention of specific tax reliefs
given for infrastructure projects, which we have asked for in the past and
could have facilitated the development of the much needed modernised
backbone that Britain requires.
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KPMG International Cooperative, a Swiss entity. All rights reserved.
2
Economic Implications
After November’s savage downgrading of the UK’s
economic and financial prospects, the Office for
Budget Responsibility found scope for a minor
upward tweak to growth and downward tweak to
borrowing projections. But its latest forecasts still
make grim reading.
The downturn is already worse than the 1930s slump, when it took four
years for GDP to return to its pre-recession peak. This time round, four
years on output is still 4% down. And the OBR expects the recovery to
remain sluggish. Growth of less than 1% is forecast for this year and,
although accelerating thereafter, output will not fully recover until
sometime in 2014.
Andrew Smith
Chief Economist
Government borrowing was revised down marginally, and no further
measures were deemed necessary to meet the fiscal targets of, first,
current budget balance within (a rolling) five year time-frame and, second,
net debt peaking as a percentage of GDP by 2015-16.
But the targets are tight and left no room for a net giveaway. The
accelerated increase in the personal allowance at the bottom end of the
income scale, reduction in the 50p rate at the top and further fall in
corporation tax rates were paid for by a combination of additional spending
cuts, higher stamp duty on top end properties and tightening up on reliefs
and allowances.
This allowed the Chancellor to describe the Budget as ‘neutral’. However,
there is still a £100 billion hole in the public finances to be filled and the
fiscal stance will continue to tighten progressively in each of the next five
years.
But broadly flat output over the last 18 months – and last autumn’s
extension of spending cuts for a further two years into 2016/17 to
compensate for the consequent revenue shortfall – hardly suggests that
the policy of ‘expansionary fiscal contraction’ is working as hoped.
And the real test is yet to come. The bulk of the planned tax increases
may already be in place but there is a mountain of public spending cuts to
come.
The big question is whether private demand will expand to fill the gap.
Experience so far is not terribly encouraging as exports have yet to take
off and many businesses prefer to hoard cash rather than invest. The
Chancellor must be hoping that a recovery in our major export markets,
and a return to consumption growth as falling inflation boosts personal
incomes, sparks the long-awaited investment boom.
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KPMG International Cooperative, a Swiss entity. All rights reserved.
3
Business Implications
Malcolm Edge, UK Head of National Markets,
comments on the impact on UK Business of the
announcements made by the Chancellor in his
Budget today:
Businesses in the UK would have wanted to have seen three things from
the announcement today, how to improve competitiveness, how to declutter legislation and how to stimulate growth, and the Chancellor has
gone some way to making sure that he achieved all three.
Malcolm Edge
Head of UK National
Markets
Lowering the corporate tax rate by an extra 1% to 24%, improving
broadband speeds in ten key cities and increasing apprenticeships all help
to make the UK a more competitive place to be based, while relaxing
planning laws and the simplification of the tax regime for small businesses
so that they pay tax on a cash basis, will help to simplify their life.
It is growth however that is the number one issue and there were some
helpful measures around credit easing, relaxation of employment laws,
enterprise loans for young entrepreneurs and key reliefs for the film,
animation and games sector.
Also positive is the confirmation of an Above the Line (‘ATL’) Credit for
qualifying Research & Development expenditure for large companies, as
outlined in the Autumn Statement, with the rate of the ATL credit set at at
least 9.1% before tax, and loss making companies able to claim a payable
credit. This has been lobbied for by UK business and is a really positive
move for UK competiveness. The ATC will hopefully result in a migration
of R&D expenditure to the UK, with the consequential impact on jobs and
wealth creation.
Developing new markets both in the UK and overseas is vital and
expanding the amount available under the UK Export Finance Scheme is
absolutely essential, particularly to the SME community. However take up
rates currently are just so low that more will need to be done to give SMEs
the confidence to look at export markets, and to make sure they know how
to access the finance available. UK Trade and Investment has done a lot,
but there is a lot more that needs to be done here. Britain has to export if
we are going to stay competitive on the world stage, so these measures
are a step in the right direction.
To help the business community to grow it is vital that the ‘feel in people’s
pockets’ is there and the new personal tax rate changes should help to lift
the mood and encourage consumers to start spending again.
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KPMG International Cooperative, a Swiss entity. All rights reserved.
4
The Chancellor tried to give something to everyone today, with lots of
promises of transport investment particularly in the North West of England
and an extension of the enterprise zones (and enhanced capital
allowances in some), as well as lots planned for London.
Much of what was said today, however, has been on the horizon for a
while, and people will need to see the promises turned into action; but
many businesses will feel that the horizon is that much closer.
© 2012 KPMG LLP, a UK limited liability partnership, is a subsidiary of KPMG Europe LLP and a member firm of the KPMG network of independent member firms affiliated with
KPMG International Cooperative, a Swiss entity. All rights reserved.
5
Public Sector Implications
For public sector organisations and employees, this
was a budget which contained few surprises. There
has been little change in the economic outlook and
no-one expected to see any change in the
government’s deficit reduction strategy. The
Chancellor’s message is ‘more of the same’: more
belt tightening, more pay restraint, further cuts to
services that are deemed to be low priority and
increasing pressure to improve productivity in order
to make the available cash go further.
Alan Downey
Head of Public Sector
There are signs that the more confident and reform-minded public sector
leaders are stepping up their efforts to find innovative ways to reduce cost
while preserving the quality of key services. In recent weeks we have seen
the Prison Service enter into a partnership with a private company (the
MITIE Group) to bid for nine prison management contracts, and two police
forces (West Midlands and Surrey) contemplate the outsourcing of
services which could include some front-line operations. These may well
be a sign of things to come.
There are also signs that financial pressure is beginning to produce real
stresses and strains, particularly in public sector organisations that have
exhausted their reserves and are struggling to compete in the markets that
have been created in health, education and elsewhere. It is rare for a
public sector body to go to the wall, but we should expect to see more
mergers and acquisitions: failing organisations will be taken over by other
public sector bodies with a better track record, and we may well see more
deals on the lines of the takeover of Hinchingbrooke hospital by the Circle
Partnership, which is part-owned by its employees and backed by private
capital.
What is interesting is the emergence of new forms of public-private
partnership. Rather than straight privatisation or outsourcing to the private
sector, we are seeing the development of more sophisticated joint
ventures which combine private sector funding and commercial know-how
with employee engagement and ownership.
One significant feature of the Budget announcement, which was widely
trailed, is the move towards regional pay for public sector employees. The
Chancellor announced that government departments will have the option
to move to regional pay structures for civil servants when the current pay
freeze ends. Although this will attract criticism from the public sector
unions, we should remember that local public sector pay markets already
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6
exist for a limited number of public sector jobs. There is some evidence
that where the public sector has reduced the gap between its pay bill and
the private sector equivalent, it has been possible to retain public sector
jobs that would otherwise have been lost. It is also plausible to predict that
a faster move to localised public sector pay rates could help the private
and third sectors compete more successfully to deliver public services.
In its White Paper ‘Open Public Services’ published last July, the
government indicated its commitment to ‘opening up public sector
monopolies…to competition’. We may well find that the primary impact of
this Budget, as far as the public sector is concerned, is to speed up that
process of competition and diversification.
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KPMG International Cooperative, a Swiss entity. All rights reserved.
7
Tax Policy Development
The big announcement from a policy point of view,
was, as expected, that the Government intends to
go ahead with the introduction of a General AntiAvoidance Rule (GAAR) for tax. Protecting tax
revenues by tackling artificial avoidance is – as
shown by other Budget announcements – clearly a
priority for the Government. However, while the
overall aims of a GAAR are clear, it can be difficult
to apply in practice.
Chris Morgan
Head of Tax Policy
If it is limited to stopping transactions with no business purpose, the GAAR
should be relatively easy to apply. The difficulty arises where it also affects
commercial transactions which are perceived to include unacceptable tax
driven steps.
We think it is important that any GAAR has a clearance system, which can
give pre-approval to (for example) business structures, and that this is
currently a serious omission from the proposals. Overall the UK has
become much more attractive to corporates thanks to the declining
corporate tax rate and changes to the way in which profits earned
overseas are taxed. A GAAR with no system for agreeing whether a
business structure is agreeable to the tax authorities prior to
implementation would mean that corporates would face significant
uncertainty and would be a backwards step. The GAAR could also pose
uncertainty for top earners. With the 50% rate of Income Tax set to fall in
2013, there would be a financial advantage in accepting bonuses and
other payments in later tax years – but would this be considered
inappropriate tax planning under the terms and conditions of a GAAR?
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KPMG International Cooperative, a Swiss entity. All rights reserved.
8
Measures featured in this Tax Policy
Development Commentary
Page
Proposed introduction of a General Anti-Avoidance Rule (GAAR)
Other Budget Measures that relate to Tax Policy Development issues
Finance Bill 2013
10
11
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KPMG International Cooperative, a Swiss entity. All rights reserved.
9
Proposed
introduction of a
General AntiAvoidance Rule
(GAAR)
Finance Bill 2013
The Government has today announced that it will introduce a
GAAR, and will consult with a view to bringing forward legislation
in Finance Bill 2013. The Government will consult on: new draft
legislation which will be based on the recommendations of the
Aaronson Report; establishment of the Advisory Panel; and the
development of full explanatory guidance. The consultation will be
issued in summer 2012.
The announcement to consult is in line with our expectations: at the
time of the publication of Graham Aaronson QC’s report (November
2011), the Government advised that they would consider and respond
fully at Budget 2012. Given the complexity of the matter and the
difficulties of appropriate drafting, it is not unexpected that the
Government’s response today is limited to a headline statement of
intentions.
It is intended that the GAAR will apply to income tax, corporation tax,
capital gains tax, petroleum revenue tax and national insurance
contributions – and announced today, SDLT. VAT will be excluded
from the scope of the GAAR.
We welcomed the basic principles outlined by Mr Aaronson which
make it clear that the GAAR is aimed at artificial tax planning while
allowing ‘responsible tax planning’. If introduced effectively it should
mean that tax planning which is an integral part of commercial
arrangements is not affected, and should reduce the need for more
targeted anti-avoidance rules.
However, what has become clear from the debate in the five months
since the report’s publication is that clarity is needed and there are
many aspects of the proposals which will need detailed and
considered attention. The key aspect is undoubtedly how the
‘reasonable tax planning’ safeguard will apply. Other significant areas
of debate have been the need for certainty (such as a clearance
procedure), the impact on the UK’s competitiveness and how the
GAAR should be drafted to apply only to those transactions that it
properly should. We have been an active member of these
discussions and fully support these concerns.
KPMG will respond fully to the consultation once it is published. We
welcome your views, and in particular how it would apply to real life
transactions.
Contacts:
Chris Morgan
+44 (0)20 7694 1714
[email protected]
Sarah Beeraje
+44 (0)20 7694 4705
sarah.beeraje @kpmg.co.uk
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KPMG International Cooperative, a Swiss entity. All rights reserved.
10
Other Budget Measures that relate to Tax Policy
Development issues
The following other measures were also announced or confirmed in the Budget.
Where a measure has been previously announced, we have only included it here
where a change has been made. A list of previously announced measures which
will be included in Finance Bill 2012 unchanged can be found in section 1.69 of the
HMRC document Overview of Tax Legislation and Rates (OOTLAR).
Further information on each of the measures listed here can be found in the OOTLAR – we have included the relevant
section and Annex numbers for ease of reference.
OOTLAR ref
Disclosure of Tax Avoidance Schemes – extension of hallmarks
1.66
Tax Agents – dishonest conduct
1.68
Simplification of regulatory penalties
2.62
Withdrawing a notice to file a self-assessment tax return
2.63
Information powers for US FATCA purposes
2.65
Criminal investigations
2.66
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KPMG International Cooperative, a Swiss entity. All rights reserved.
11
Corporate Tax
There was only one main surprise for businesses in
today’s Budget as most of the corporate tax
measures announced were as expected.
The main headline has been a further 1% decrease in the main
corporation tax rate to 24% in April with a knock-on effect in future years
so that the rate will eventually reduce to 22% in 2014. The imminent
reduction to 24% takes the UK from joint 18th highest in the EU to 15th
and also puts the UK below the global average rate of around 24.5%. This
further reduction will be widely welcomed by companies with larger profits,
although it will have no impact on smaller businesses with profits below
£300,000. Banks will also not benefit from the reduction as the Bank Levy
rate has been increased, the fourth successive increase in the rate.
Jane McCormick
Head of Corporate Tax
Although not aimed purely at corporates, today’s announcement that the
Government intends to go ahead with the introduction of a General AntiAvoidance Rule or ‘GAAR’ will be of great interest to business. We do not
yet have any details, just an intention to proceed and consult based on the
recommendations of the Aaronson Report. If introduced effectively a
GAAR should mean that tax planning which is an integral part of
commercial arrangements is not affected, and should reduce the need for
more targeted anti-avoidance rules. However, clarity is needed on many
areas and business will be asking for certainty, perhaps in the form of a
clearance system.
Many businesses will welcome the Chancellor’s confirmation of his
intention to introduce an Above the Line (ATL) Credit for qualifying
Research & Development expenditure for large companies and, in
particular, that the rate of the ATL credit will be at least 9.1% before tax.
The Chancellor also confirmed the details of a more modern and
competitive controlled foreign companies (CFC) regime with a new
gateway test to simplify the administration, as well as the introduction of
the new Patent Box with its beneficial 10% corporation tax rate from 1
April 2013, albeit with some less welcome restrictions for small claims
which will add complexity for some businesses.
Specific industry sectors affected by the Budget announcements include
the life insurance industry where there is wholesale change of the
corporate tax regime. Unfortunately, despite extensive consultation over
the past two years, there remain significant areas where the draft
provisions appear flawed or their meaning is less than clear. Another
sector affected is the oil industry which will be relieved, after the shock
announcements in last year’s Budget, that the oil tax measures
announced today are generally positive.
© 2012 KPMG LLP, a UK limited liability partnership, is a subsidiary of KPMG Europe LLP and a member firm of the KPMG network of independent member firms affiliated with
KPMG International Cooperative, a Swiss entity. All rights reserved.
12
Measures featured in this Corporate
Tax Commentary
Page
Further reduction in main rate of corporation tax
Finance Bill 2012
Finance Bill 2013
14
Increase in the bank levy rate
Finance Bill 2012
14
Controlled foreign companies
Finance Bill 2012
15
Patent Box
Finance Bill 2012
15
Above the Line Research & Development Credit for Large Companies
Finance Bill 2013
16
Corporation tax reliefs for the creative sector
Finance Bill 2013
17
A number of changes announced in respect of capital allowances
Finance Bill 2012
Finance Bill 2013
17
New corporate tax regime for life insurers
Finance Bill 2012
18
Oil tax measures
Finance Bill 2012
Finance Bill 2013
19
Other Budget Measures that relate to Corporate Tax issues
20
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13
Further reduction
in main rate of
corporation tax
Finance Bill 2012
Finance Bill 2013
It has been announced that the main rate of corporation tax will
now fall by 2% on 1 April 2012, to 24%. The Finance Bill 2011 had
previously included a provision for a 1% reduction to 25%. This 2%
reduction will be included in Finance Bill 2012 along with the next
planned annual reduction of 1% to 23% on 1 April 2013. A further 1%
reduction to 22% at 1 April 2014 will be legislated in Finance Bill 2013.
The small profits rate of tax will remain at 20% for the financial year
commencing 1 April 2012.
Corporation tax rates for ring fence profits (those arising from oil
extraction and oil rights in the UK and the UK continental shelf) will
remain at 30% and 19% respectively.
This further reduction in the main companies rate will be
welcomed by companies with larger profits, although it will have no
impact on smaller businesses with profits below £300,000.
Companies will need to consider the tax accounting implications of the
rate changes:
■
The incremental rate reduction from 25% to 24% from 1 April 2012
will be substantively enacted before 31 March 2012 on the basis
that, as set out in the Budget resolutions, this rate change is given
statutory effect under the Provisional Collection of Taxes Act 1968
before 31 March 2012. This is consistent with the incremental rate
reduction from 27% to 26% that was announced in the 2011
Budget.
■
The proposed rate reduction from 24% to 23% to apply from 1 April
2013 will NOT be substantively enacted for IFRS and UK GAAP
purposes until Finance Act 2012 passes through the House of
Commons.
■
For US GAAP purposes the incremental rate reduction from 25%
to 24% and the proposed rate reduction from 24% to 23% will NOT
be enacted until Finance Act 2012 receives Royal Assent.
Contacts:
Increase in the
bank levy rate
Finance Bill 2012
Stephen Hemmings +44 (0)20 73114071
[email protected]
Mark Couch
[email protected]
+44 (0)12 12323640
The Chancellor has also announced changes to the rate of the
bank levy which is charged on a bank’s chargeable equity and
liabilities. The rate applied to short term liabilities will be increased
from 0.088% to 0.105% from 1 January 2013, whilst the reduced rate
for long term equity and liabilities will increase from 0.044% to
0.0525%. Although it is stated that the rate changes are in part aimed
to ensure that banks do not benefit from the additional reduction in
corporate tax rates, it is more likely that revenues from the first full
year of the Bank Levy have fallen short of expectation. The change is
expected to generate £450 million of additional annual revenue but the
expected total revenues generated by the Bank Levy remain at £2.5
billion per annum.
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14
This is the fourth successive increase in the rate of the Bank
Levy and such uncertainty will be a concern for banks operating
in the UK.
Contacts:
Andrew Seagren
Controlled
foreign
companies
Finance Bill 2012
+44 (0)20 73116184
[email protected]
It has been confirmed that the new controlled foreign companies
(CFC) rules, to be introduced in Finance Bill 2012, will apply to
accounting periods of CFCs beginning on or after 1 January
2013. The introduction of what is a more modern and competitive CFC
regime should enhance the UK’s position as a holding location for
multinational businesses.
The new rules will focus on the artificial diversion of profits from the
UK, using ‘gateway’ provisions to specifically define those profits
which are caught. Where a CFC’s profits fall within the gateway
provisions and are not otherwise excluded by the entry conditions,
safe harbours and exemptions, they will be apportioned to the UK and
taxed on any UK resident company with a 25% assessable interest in
the CFC. The CFC charge will be reduced by a credit for any foreign
tax attributable to the apportioned profits and by the offset of relevant
UK reliefs. The new regime will also include a favourable finance
company exemption, which will normally result in 75% of the profits
from overseas intra-group financing being exempt (producing an
effective UK tax rate on such profits of 5.5% from 2014), although full
exemption will be available in certain circumstances.
Contacts:
Patent Box
Finance Bill 2012
Michael Bird
+44 (0)20 76941717
[email protected]
Alastair Munro
+44 (0)20 73114786
[email protected]
Profits generated by qualifying patent interests will be taxed at
10%. The objective of the regime is to encourage innovative
businesses to invest in the UK and to locate high value jobs and
activity associated with the development, manufacture and exploitation
of patents in the UK. The regime will take effect from 1 April 2013.
Benefits will be phased in over the first five years (i.e. 60% of the
Patent Box benefit will be available in 2013/14 increasing to 100% by
2017/18).
We understand from announcements today in the Overview of Tax
Legislation and Rates document (section 1.21) that the legislation will
be updated so that it explicitly states that worldwide income from
qualifying patent interests will qualify. Additionally, the Government
has stated that it will provide some clarity regarding the heads of
expenditure which have to be marked up in Stage 2 (routine profits
element) of the patent box calculation.
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15
Also announced were changes to the small claims safe harbour. The
draft legislation released in December 2011 extended this to all
companies. The change limits the safe harbour to companies making
profits with residual profits of no more than £3 million. This denies
large companies the option of using a simplified patent box claim
methodology which avoids the need to determine an arm’s length
return on marketing assets.
It is useful to note that patent box will also benefit UK businesses
which currently shelter UK taxable profits through use of brought
forward losses, group relief or other reliefs. Making use of patent box
will, for these companies, enable losses or reliefs to be used more
efficiently (as the mechanics of the rules exclude an amount of profits
from the tax charge) while at the same time preserving a nil taxpaying
position in the UK.
With just over 12 months until the regime comes in to force, we would
urge businesses holding patent interests to act now and assess what
patent box could mean for them.
Contacts:
Above the Line
Research &
Development
Credit for Large
Companies
Finance Bill 2013
Jonathan Bridges
+44 (0)20 76943846
[email protected]
Andrew Hickman
+44 (0)20 76944478
[email protected]
As previously announced, the Government is to bring in an
above the line (ATL) credit for large companies incurring
expenditure on qualifying Research and Development (R&D). This
is intended to make the credit more visible in order to boost its
incentive effect. The essence of such a credit is that it is convertible to
cash in some way without depending on the status of the company’s
tax computations. Previously the benefit of the R&D tax credit for large
companies was derived in the form of an increased deduction from
taxable profits, which produced no immediate benefit to a company
that was in a loss making position. By making the credit receivable in a
cash form instead, loss making companies will see an immediate
benefit from the R&D incentive.
The measure is also likely to be of interest to internationally owned
companies carrying out R&D in the UK which may previously have
been put off claiming UK R&D tax relief by the knock-on effects to their
double tax relief computations.
It has been confirmed that the rate will be set at a level of at least
9.1% of qualifying expenditure before tax, effectively confirming there
will be no fall in the value of the relief compared to the current regime.
The detailed rules and the specific rates of the credit remain to be
established and the Government will shortly commence a consultation
on these points. This consultation will lead to new legislation to be
included in the 2013 Finance Bill. The Chancellor has indicated
previously that the credit will be introduced from April 2013.
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It is anticipated that the ATL credit for large companies will run in
parallel with the existing R&D tax credit regime for small or medium
enterprises and the more generous benefits available under this
regime will not be reduced.
Contacts:
Corporation tax
reliefs for the
creative sector
Finance Bill 2013
Gavin Bate
+44 (0)20 76941191
[email protected]
David Woodward
+44 (0)20 76944171
[email protected]
The Government has announced its intention to introduce corporation
tax reliefs for the production of culturally British video games,
television animation programmes and high-end television productions.
Precise details of the reliefs have not yet been released. Consultation
on the design will take place over the summer.
Legislation will be in Finance Bill 2013 and will take effect from 1
April 2013, subject to State aid approval.
This is a welcome announcement which will provide a boost to the
UK’s creative industries. It forms part of the Government’s ambition to
make the UK the technology hub of Europe.
Contacts:
Lucy Parry
A number of
changes
announced in
respect of capital
allowances
Finance Bill 2012
Finance Bill 2013
+44 (0)20 7311 2006
[email protected]
The following measures will be included in Finance Bill 2012:
■
The extension of the Business Premises Renovation Allowance
relief until April 2017 for the renovation, conversion or restoration
of business property in disadvantaged areas;
■
A new statutory mechanism for claiming plant and machinery
allowances on the acquisition of existing fixtures (fixed plant and
machinery);
■
The limitation of 100% First Year Allowances for plant and
machinery on which payments are received in respect of Feed-inTariffs and Renewable Heat Incentives. Solar panels will attract
relief at 8% per annum reducing balance;
■
The availability of 100% allowances on plant and machinery in the
designated enterprise zones at Royal Docks – London, Irvine,
Nigg, Dundee and Deeside (North Wales); and
■
A widening of the capital allowances anti-avoidance rules in
respect of plant and machinery included in Chapter 17 of the
Capital Allowances Act 2001.
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17
The following measures will be included in Finance Bill 2013:
■
The extension of 100% First Year Allowances for gas refuelling
equipment until 31 March 2015;
■
A reduction in the C02 thresholds for business cars. 100% First
Year Allowances will be eligible for cars with 95g/km threshold or
less. 18% writing down allowances will be due for cars with a
threshold greater than 95g/km but not in excess of 130g/km. 8%
writing down allowances will be due on cars with C02 emissions in
excess of 130g/km. The associated lease rental charge will be
similarly changed. These changes come into effect from April
2013; and
■
An extension to the First Year tax credit for loss making companies
until March 2018 in respect of energy and water efficient plant and
machinery qualifying for a 100% First Year Allowance.
Contacts:
New corporate
tax regime for
life insurers
Finance Bill 2012
David Woodward
+44 (0)20 76944171
[email protected]
Harinder Soor
+44 (0)20 73112729
[email protected]
There are to be wholesale changes to the corporate tax regime
for life insurance companies, with effect from 1 January 2013.
The changes ought to simplify the taxation of life insurance companies
by bringing their taxation more in line with other companies and
aligning it more closely with the commercial realities of life insurance
business.
Despite extensive consultation over the past two years, there remain
significant areas where the draft provisions appear flawed or their
meaning is less than clear. Today saw the publication of revised antiavoidance provisions covering the transition. This is now better
targeted and has a start date of 21 March 2012. Also welcome is that
HMRC now has the power to give clearance to a taxpayer that they
will not apply the provision in appropriate circumstances.
The legislation governing the new regime will form part of Finance Bill
2012, to be issued on 29 March 2012, hopefully along with the
associated regulations.
Contacts:
Laura Kochanski
+44 (0)117 905 4640
[email protected]
Rob Lant
+44 (0)20 7311 1853
[email protected]
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18
Oil tax measures
Finance Bill 2012
Finance Bill 2013
Decommissioning certainty
The Chancellor announced the intention to guarantee the expected tax
relief on decommissioning expenditure in the UK and UK Continental
Shelf (UKCS):
■
Finance Bill 2013 will give the Government authority to sign
contracts to provide decommissioning certainty; and
■
The Government will consult further on the form and details of the
contracts in the coming months (we expect this to be through
payments where full tax relief is not achieved).
The industry will consider this announcement positive and if
implemented should release tied up capital to be deployed in UKCS
investments.
Field allowance
Field allowances have been used to encourage marginal investments
by reducing the Supplementary Charge to Corporation Tax (SCT)
which is currently 32%. The following broadening of the regime has
been announced:
■
Introducing a new deep water allowance of up to £3 billion
(targeted at the West of Shetland area);
■
Increasing the existing small field allowance to up to £150 million;
and
■
Introducing the power for HMRC to introduce new field allowances
in respect of existing fields to support brown field developments.
This can be seen as the Chancellor accepting that many investments
were rendered uneconomic by the 12% tax rate increase announced
in Budget 2011.
Trigger price
A ministerial statement was released on Budget Day which set out
how the Government intends to operate the fair fuel stabiliser and
more particularly the trigger price for the reduction in SCT.
The statement says that the trigger price will be set at $75 as indicated
in Budget 2011 however it does not establish the potential rate
reduction that would occur when the trigger price is met. This
statement does not provide certainty to the industry.
Contacts:
Andrew Lister
+44 (0)20 76943751
[email protected]
Claire Angell
+44(0)20 76943327
[email protected]
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19
Other Budget Measures that relate to Corporate
Tax issues
The following other measures were also announced or confirmed in the Budget.
Where a measure has been previously announced, we have only included it here
where a change has been made. A list of previously announced measures which
will be included in Finance Bill 2012 unchanged can be found in section 1.69 of the
HMRC document Overview of Tax Legislation and Rates (OOTLAR).
Further information on each of the measures listed here can be found in the OOTLAR – we have included the relevant
section and Annex numbers for ease of reference.
OOTLAR ref
Tax treatment of regulatory capital
1.26
Grouping rules – change to equity rules
1.27
Tax transparent fund – introduction from summer
1.28
Community amateur sports clubs – entitlement to Gift Aid
1.17
Community amateur sports clubs – in-year repayment of Gift Aid
1.18
Tax credits for expenditure on environmentally beneficial plant or machinery
2.31
Lease premium relief
2.33
Foreign currency assets and corporate chargeable gains
2.36
Corporation tax – NHS bodies
2.37
REITs
2.39
Loan relationships – debt buybacks
1.54
Corporate investors in authorised investment funds
1.55
Sale of lessor companies
1.62
Plant or machinery leasing
1.63
Site restoration payments
1.65
Manufactured payments
2.59
Review of the taxation of unauthorised unit trusts
2.60
Enhanced capital allowances for energy saving technologies
1.33
Employer asset – backed pension contributions
1.16
Claims equalisation reserves
1.30
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20
Indirect Tax
On the whole there was little in this Budget that had
not already been pre-announced. The imminent
introduction of the cost sharing exemption and the
abolition of the Low Value Consignment Relief for
imports from the Channel Islands have been widely
discussed already. The usual inflationary increase
in annual VAT registration and deregistration limits
from £73,000 to £77,000 and £71,000 to £75,000
respectively will apply from April 2012.
Gary Harley
Head of Indirect Tax
The surprise announcement was the consultation on VAT anomalies and
loopholes aimed at levelling the playing field where similar supplies have
been taxed differently, in sectors such as hot food, self storage and sports
drinks. It will be interesting to see the responses to this consultation.
These changes are planned for October 2012.
There was also an announcement about a proposal to move to taxing
offshore betting companies where their customers are located, from the
end of 2014 (though this date may change), again presumably to level the
playing field between UK and non-UK suppliers targeting the same
customer base.
The proposed removal of the zero rate relief for approved alterations to
certain protected buildings, (for supplies made on or after 1 October 2012,
but subject to some transitional rules), designed to remove the VAT
incentive to alter non commercial listed buildings rather than repair them,
will no doubt cause some consternation to the owners of these buildings.
The proposed removal of the reduced rate relief for energy saving
materials in charitable buildings in the 2013 Finance Bill seems baffling at
first sight, since it will discourage ‘green’ expenditure by charities and will
mean charitable buildings are in a worse position than dwellings and
residential properties when it comes to the VAT cost of making these
buildings more energy efficient.
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21
Measures featured in this Indirect
Tax Commentary
Page
VAT: Addressing Borderline Anomalies
Finance Bill 2012 (anti-forestalling)
Secondary Legislation
23
VAT: Grouping extra-statutory concession
Finance Bill 2012
23
VAT: liability of Freight Transport Services performed wholly outside the EU
Future Finance Bill
24
VAT: Charitable buildings
Finance Bill 2013
24
Remote gambling
Future Finance Bill
24
Machine Games Duty
Finance Bill 2012
25
Climate Change Levy: Carbon Price support rates
Finance Bill 2012
Future Finance Bill
25
Consultation on simplification of the Carbon Reduction Commitment (CRC)
Future Finance Bill
26
Other Budget Measures that relate to Indirect Tax issues
27
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22
VAT: Addressing
Borderline
Anomalies
Finance Bill 2012
(anti-forestalling)
Secondary
Legislation
Budget 2012 announced a consultation (closing on 4 May 2012)
on proposed legislation aimed at ensuring that similar products
are taxed consistently. The consultation also covers proposed
changes aimed at closing loopholes.
Put simply the intention underpinning this series of measures is the
levelling of the ‘playing field’ in a number of areas. The result should
be to ensure that similar products (within the areas listed below) will
be taxed in the same way:
■
Catering – Hot Take Away Food and ‘Premises’;
■
Sports Nutrition Drinks; and
■
Self Storage.
The proposal to close loopholes (and thereby prevent avoidance)
envisages VAT being applied to the following activities:
■
Hairdressers’ Chair Rentals;
■
Holiday Caravans; and
■
Approved Alterations to Listed Buildings.
Contacts:
VAT: Grouping
extra-statutory
concession
Finance Bill 2012
Chris Fyles
+44 (0)20 73112674
[email protected]
Peter Crush
+44 (0)20 73113105
[email protected]
This measure gives statutory effect to the concession concerning
the value of an anti-avoidance tax charge required within UK VAT
groups. This is currently extra-statutory concession 3.2.2 and is being
legislated following the post Wilkinson review of concessions. The new
legislation allows the valuation of the reverse charges to be capped on
the cost of services purchased by group members established
overseas. HMRC may direct an open market value, where the value of
any bought in supply is less than its open market value. The measure
will have effect from Royal Assent.
HMRC will maintain the current extra-statutory concession until the
legislation comes into force so there will be no impact on businesses.
Contacts:
Chris Fyles
+44 (0)20 73112674
[email protected]
Richard Iferenta
+44 (0)20 7311 2837
[email protected]
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23
VAT: liability of
Freight Transport
Services
performed wholly
outside the EU
Future Finance Bill
HMRC have announced their intention to formalise temporary
arrangements originally introduced by Revenue & Customs Brief
13/10, whereby supplies of freight transport and related services
taking place wholly outside the EU are not liable to UK VAT when
performed for UK businesses and charities.
The temporary arrangements were originally introduced to address the
scenario which arose with effect from 1 January 2010, whereby
business to business (B2B) supplies of freight transport and
associated services became subject to the new B2B general rule for
place of supply of services – where the business customer belongs –
regardless of the place of physical performance. This meant that
where the customer was in the UK, the place of supply was in the UK
even if the supply physically took place wholly outside the EU. HMRC
recognised that this change had a real impact on taxpayers and
produced an unintended anomaly in the treatment of supplies wholly
enjoyed outside the EU, which could also be taxed locally in the place
of performance.
The announcement confirms HMRC’s decision to give these
temporary arrangements permanent effect.
Contacts:
VAT: Charitable
buildings
Finance Bill 2013
John Feltham
+44 (0)20 76944882
[email protected]
Gordon Randall
+44 (0)20 73112601
[email protected]
It has been announced that the Government will withdraw
charitable buildings from the scope of the VAT reduced rate for
the supply and installation of energy-saving materials.
Few details have been released about this measure. At first glance
there seems little reason for removing this relief from charitable
buildings as it will simply increase the VAT cost for charities looking to
reduce their energy bills and be green by making their buildings
energy efficient and so could discourage such expenditure. The relief
remains for dwellings and residential buildings.
Contacts:
Remote
gambling
Future Finance Bill
Rob Hopes
+44 (0)161 2464290
[email protected]
Anant Suchak
+44 (0)20 73113493
[email protected]
The Government will introduce a place of consumption based
taxation regime for remote gambling. The announcement was
expected and follows the review of remote gambling taxation
announced in September 2011. Under the revised taxation regime,
operators will pay tax on gambling profits generated from customers in
the UK regardless of where the supplier is based. A consultation on
detailed design characteristics is expected shortly. It is proposed that
the 15% rate which applies to Remote Gaming Duty will apply. The
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24
measure is planned to be introduced in December 2014, although
the implementation date will be kept under review.
Affected businesses will need to consider the impact of the changes in
terms of their current structure and other indirect taxes such as VAT.
Contacts:
Machine Games
Duty
Finance Bill 2012
Gary Harley
+44 (0)20 73112783
[email protected]
Mike Camburn
+44 (0)20 76948686
[email protected]
The Machine Games Duty (MGD) rates have been announced for
its introduction in February 2013. There will be two rates of MGD.
The lower 5% rate will apply to machines with minimum stakes of 10
pence and maximum cash prizes of £8, and the standard 20% rate will
apply to all other dutiable machines. Skills with Prizes machines have
been included and as expected there is no scope to net off
irrecoverable VAT.
MGD replaces Amusement Machine Licence Duty and takings
from machines subject to MGD will become exempt from VAT
meaning that a number of operators will not be able to reclaim
VAT on related expenditure. There will be winners and losers as
businesses move to the new regime. Affected businesses will need to
calculate the overall financial impact which will depend on the mix of
machine types and the efficiency of their partial exemption method.
Contacts:
Climate Change
Levy: Carbon
Price support
rates
Finance Bill 2012
Future Finance Bill
Mike Camburn
+44 (0)20 76948686
[email protected]
Paul Stewart
+44 (0)161 2464917
[email protected]
The Government has announced it will set 2014–15 carbon price
support rates equivalent to £9.55 per tonne of carbon dioxide.
This is a significant increase from the previously announced 2014–15
rate of £7.28 per tonne of carbon dioxide. This is likely to have a
significant impact on the cost of electricity generated from fossil fuels.
The Government has also announced it will introduce a number of
additional legislative provisions with effect from 1 April 2013 (Finance
Bill 2012), including:
■
amendments to the treatment of solid fuels, including that coal
slurry will not be taxed;
■
fossil fuels used to generate heat in good quality combined heat
and power (CHP) plants will not be liable to the carbon price
support rates, subject to State aid approval;
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25
■
the introduction of a generating capacity threshold of two
megawatts before electricity generators will be liable to the carbon
price support rates of CCL; and
■
all generators will be required to self-account.
Contacts:
Consultation on
simplification of
the Carbon
Reduction
Commitment
(CRC)
Future Finance Bill
Barbara Bell
+44 (0)151 4735193
[email protected]
Neil Smith
+44 (0)20 73115417
[email protected]
The Government will be consulting on the Carbon Reduction
Commitment (CRC) energy efficiency scheme to reduce
administrative burdens on business. Simplification proposals are
already expected imminently from the Department of Energy and
Climate Change (DECC) and the information we’ve seen indicates that
significant savings can be achieved from a revised version of the
CRC.
Should significant savings not be deliverable, the Government has
announced that it may consider replacing CRC revenues with an
alternative environmental tax, although details of any new tax have not
yet been released.
Whilst many have proposed tax increases (such as raising the climate
change levy) and these would be far simpler than the CRC, the
introduction of a tax alone would be unlikely to deliver on all aspects of
the CRC: namely the reputational drivers and focus on energy usage
that are core to the scheme at present. To deliver the same objectives
as the CRC, any new tax would need to incorporate similar reporting
requirements. Any reporting requirements would create an
administrative burden on business and would need to be carefully
designed to ensure that any replacement actually reduces
administrative costs compared to the CRC.
We support the reduction of the administrative burden on business but
also recognise the need for a level playing field on carbon legislation
which helps the Government meet its climate change obligations.
Contacts:
Barbara Bell
+44 (0)151 4735193
[email protected]
Neil Smith
+44 (0)20 73115417
[email protected]
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26
Other Budget Measures that relate to Indirect Tax
issues
The following other measures were also announced or confirmed in the Budget.
Where a measure has been previously announced, we have only included it here
where a change has been made. A list of previously announced measures which
will be included in Finance Bill 2012 unchanged can be found in section 1.69 of the
HMRC document Overview of Tax Legislation and Rates (OOTLAR).
Further information on each of the measures listed here can be found in the OOTLAR – we have included the relevant
section and Annex numbers for ease of reference.
OOTLAR ref
Tobacco and alcohol duty
■
Alcohol duty rates
1.34
■
Black beer – repeal of relief
A111
■
Alcohol fraud
2.42
■
Tobacco duty rates
■
Herbal smoking products
1.35 and A67
2.43
Gaming duties
■
Combined bingo
2.41
Transport related duties
■
Air Passenger Duty – devolution of rate to Northern Ireland
1.38
■
Red diesel in private pleasure craft
1.39
■
Vehicle excise duty rates
1.40
■
Aviation tax – rates
2.44
■
Vehicle excise duty administration
2.45
Environmental taxes
■
Climate change levy rates
■
Climate change levy – removal of the exemption for indirect supplies of
combined heat and power electricity
■
Rates of landfill tax
1.44
■
Landfill tax – applicability to Scottish landfill sites
1.45
■
Landfill Communities Fund
1.46
■
Aggregates levy rates
2.46
1.42
1.43 and A81
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27
VAT
■
VAT – changes to registration and deregistration thresholds
1.48
■
VAT – revalorisation of fuel scale charges
1.49
■
VAT relief for European Research Infrastructure Consortia
1.50
■
VAT – zero-rate for adapted motor vehicles and boats for wheelchair users
2.48
■
VAT – fuel scale charges
2.49
■
VAT – refunds for NHS bodies
2.50
■
VAT – invoicing rules
2.51
■
VAT – Universal Credit consequential changes
2.52
■
VAT – exemption for education providers
2.53
■
VAT treatment of small cable-based transport
2.55
Stamp Duty Land Tax
■
Stamp Duty Land Tax – leases simplification
2.57
■
SDLT – sub-sales rules
1.59
Administration
■
Customs and excise modernisation
2.67
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28
Employee Issues
It is with much relief from an Employment taxes
viewpoint that today’s Budget did not contain too
many significant new measures, particularly as
employers are already wrestling with a large
number of changes and consultations, such as
Real Time Information, the Statutory Residence
Test, the integration of the operation of Income Tax
and National Insurance together with the
complication of introducing auto enrolment into
pension schemes.
Mike Linter
Head of Employee Issues
The key measure from today’s Budget is the change in the additional rate
of tax from 50% to 45% which is due to take effect from 6 April 2013. The
Government acknowledges that there is likely to be a behavioural
response to this announcement, resulting in individuals delaying receipt of
bonuses etc. which would under normal circumstances have been paid
during the tax year 2012/13 until a date post 6 April 2013 – effectively
taking advantage of a 5% tax saving. The Government’s own figures
suggest a potential loss to the Exchequer of £2.4 billion during 2012/13 as
a result of this change of behaviour, but this reverses in the subsequent
two years.
We are pleased to note that the limit of investment into the Enterprise
Management Incentive (EMI) scheme will more than double to £250,000
and that Entrepreneurs’ Relief will be extended to gains on shares
acquired through EMI. Both measures should have a positive impact on
the growth of the economy.
The changes to the taxation of company cars continue to encourage the
take up of more environmentally friendly and efficient cars with lower CO2
emissions, rewarding such drivers with lower benefit in kind charges.
As widely anticipated, further to the review carried out by Graham
Aaronson QC in 2011 into the feasibility of a UK general anti-avoidance
rule, the Government today confirmed that it will consult in the summer on
the introduction of a General Anti-Abuse Rule (GAAR). In the same vein, it
was also announced that they intend to introduce a package of measures
to tackle avoidance through the use of personal service companies. We
would like to think that once the GAAR is introduced it will enable the
Government to simplify the UK tax law by removing some of the current
complicated anti-avoidance legislation.
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29
Measures featured in this Employee
Issues Commentary
Page
Enterprise Management Incentive (EMI) plans
Statutory instrument in 2012 or later
Finance Bill 2013
31
Employee share plans
Finance Bill 2013
31
Statutory Residence Test, ordinary residence and SP 1/09
Finance Bill 2013
32
Personal Service companies and IR35 the anti-avoidance intermediaries legislation set out at
Chapter 8, Part 2 of Income Tax (Earnings and Pensions) Act 2003
32
Qualifying Registered Overseas Pension Scheme
Finance Bill 2012
Finance Bill 2013
33
Car and Fuel Benefit Charge and allowances
Finance Bill 2012
Future Bills
34
Tax Agreement between the UK and Switzerland
Finance Bill 2012
35
Other Budget Measures that relate to Employee Issues
36
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30
Enterprise
Management
Incentive (EMI)
plans
Statutory instrument in
2012 or later
Finance Bill 2013
The EMI plan limit is to increase to £250,000 and shares acquired
on exercise of an EMI option will count for entrepreneurs’ relief
(ER) purposes. These are positive changes.
The EMI plan is an employee share option plan specifically designed
for smaller trading companies with fewer than 250 employees and
gross assets of not more than £30 million. It offers potentially
significant tax and national insurance contribution savings for both the
employee and the employer.
Each employee can hold unexercised EMI options over shares worth
up to £120,000. This limit is to increase to £250,000. The change is to
be introduced via a statutory instrument as soon as EU State aid
approval can be obtained.
ER can reduce the rate of capital gains tax (CGT) on eligible gains to
10%. ER will be extended to gains on shares acquired on the exercise
of EMI options. Little detail is given at this stage but we assume the
way this will work is that in determining whether the ER requirement to
hold at least 5% of the ordinary share capital and voting rights in an
eligible company for at least 12 months prior to sale is met, shares
under EMI options will be counted from the date of grant of the option
rather than only counting from the date of exercise (similar to the old
provision for EMI options and CGT taper relief up until 2008). Subject
to State aid approval, the legislation on ER will be introduced in
Finance Act 2013 and will take effect for EMI share options
exercised on or after 6 April 2012.
The Government will also consult on ways to extend access to EMI for
academics who are employed by a qualifying company. Legislation will
be in Finance Bill 2013 to take effect from 6 April 2013.
Contacts:
Employee share
plans
Finance Bill 2013
Richard Rolls
+44 (0)20 7311 2912
[email protected]
Alison Hughes
+44 (0)20 7311 2626
[email protected]
On 6 March 2012 the Office of Tax Simplification (OTS) published a
report on tax advantaged employee share plans. The Government
will consult shortly on how to take the OTS proposals forward,
with a view to introducing legislation in Finance Bill 2013. Aside
from the changes to the Enterprise Management Incentive (EMI) plan
(on which see above) no other specific changes to employee share
plans have been announced at this stage.
It was also announced in the 2012 Budget that HM Treasury will
conduct an internal review to examine the role of employee ownership
in supporting growth and examine options to remove tax and other
barriers. This review will also consider the findings of the work on
employee ownership being led by Norman Lamb, due to report in the
summer 2012, and will conclude ahead of Autumn Statement 2012.
Contacts:
Richard Rolls
+44 (0)20 7311 2912
[email protected]
Alison Hughes
+44 (0)20 7311 2626
[email protected]
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31
Statutory
Residence Test,
ordinary
residence and
SP 1/09
Finance Bill 2013
The Chancellor confirmed the Government’s intention to
introduce a Statutory Residence Test for UK tax purposes with
effect from 6 April 2013.
The responses to the consultation on Statutory Residence and a
further consultation on draft legislation will be published within the next
few weeks.
The Chancellor today, however, confirmed that the concept of
ordinary residence for tax purposes will be abolished from 6 April
2013 but ‘overseas workday relief’ will be retained and put on a
statutory footing.
This statutory footing will include the administrative easement known
as SP 01/09. SP1/09 allows Resident but Not Ordinarily Resident
employees who elect for the remittance basis, and have their earnings
for non-UK duties only taxed in the UK if remitted to the United
Kingdom, to calculate the amounts remitted on an annual rather than
transaction by transaction basis. This situation where an employee’s
earnings for non-UK duties are not taxed in the UK because they are
not remitted is commonly known as ‘Overseas Workday Relief.’
It Is not clear how the relief will be incorporated into the legislation nor
whether it will be caught by the new restriction on reliefs to 25% of
earnings. For details of this restriction please refer to Cap on unlimited
tax relief in the Personal Tax Section on page 40.
Again, we expect further details on the inclusion of SP1/09 in the
legislation to also be published within the next few weeks.
Contacts:
Personal Service
companies and
IR35
the anti-avoidance
intermediaries legislation
set out at Chapter 8, Part
2 of Income Tax (Earnings
and Pensions) Act 2003
Marc Burrows
+44 (0)20 76945930
[email protected]
Steve Wade
+44 (0)20 73112220
[email protected]
The Government has confirmed that following on from the
response to the Office of Tax Simplification’s review of IR35 in
March 2012, this legislation will be retained. The Government’s
consideration of the various options confirmed that the IR35 legislation
is required to safeguard the tax revenue to the exchequer and tackle
cases of avoidance via personal service companies, where they are
used to disguise employment. The aim of the measures is to focus
specifically on those arrangements deemed high risk.
However, measures are also going to be introduced to address
ongoing concerns over the complexity of the legislation and to further
engender understanding.
The new measures will include:
■
Bolstering compliance teams – reviews will be restricted to ‘high
risk’ cases which will be undertaken by specialist teams; and
■
Further clarity and guidance from HMRC, including in respect of:
cases deemed to be outside the scope of IR35, having a helpline
manned by specialist staff and greater pre-transaction certainty.
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32
The effectiveness of the above measures will be gauged via an IR35
Forum.
Furthermore, and no doubt following on from a number of recent high
profile cases, it has been announced that there will be a consultation
in respect of requiring an engaging organisation to deduct PAYE/NIC
at source where office holders e.g. company directors or controlling
persons are integral to the running of an organisation by which they
are engaged.
Following the consultation, any further details in respect of this
measure will be outlined in Finance Bill 2013.
Contacts:
Qualifying
Registered
Overseas
Pension Scheme
Finance Bill 2012
Finance Bill 2013
Jayne Vaughan
+44 (0)20 76941381
[email protected]
Anne-Marie
Robinson
+44 (0) 121 3352726
[email protected]
The Government has confirmed its clampdown on tax avoidance
by using transfers to overseas pension schemes (QROPS).
The policy intention behind the QROPS regime is that an individual
who leaves the UK and transfers their pension savings should be in
broadly the same position as someone who remains in the UK with
their pension savings. But once someone has been non-resident for
five complete tax years there is no longer any requirement to inform
HMRC when benefits are paid, so in some quarters QROPS have
been marketed as a way of paying amounts or enabling the payment
of amounts that are not allowed under UK rules (in particular 100%
lump sums) once the UK tax rules no longer apply.
To counter this, regulations have been published which introduce:
■
new conditions that a pension scheme must meet to be a QROPS
– broadly, tax reliefs and tax exemptions on the contribution, build
up and receipt of benefits must apply equally to non-resident and
resident scheme members (regardless of when any resident
member actually became resident);
■
new information and reporting requirements extending the time
scale during which the QROPS must report payments to HMRC to
ten years from the point of transfer; and
■
shorter reporting time limits – UK registered schemes will have to
report transfers to a QROPS within 60 days.
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33
The new regime will apply to applications for transfers to QROPS
(and applications for QROPS status) from 6 April 2012.
The Government also announced in the Budget that where the country
or territory in which a QROPS is established makes legislation or
otherwise creates or uses a pension scheme to provide tax
advantages that are not intended to be available under the QROPS
rules, the Government will act so that the relevant types of pension
scheme in those countries or territories will be excluded from being
QROPS. These measures will be included in Finance Bill 2013.
Contacts:
Simon Mayho
+44 (0)20 7311 317
Andrew Scrimshaw +44 (0)20 7311 3102
Car and Fuel
Benefit Charge
and allowances
Finance Bill 2012
Future Bills
[email protected]
[email protected]
The appropriate percentage of list price subject to tax will increase by
1% for cars emitting more than 75g/km of carbon dioxide, to a
maximum of 35% in 2014-15, and by 2%, to a maximum of 37% in
both 2015-16 and 2016-17.
The five-year exemption for zero carbon and ultra low carbon emission
vehicles will come to an end as legislated in Finance Act 2010. The
appropriate percentage for zero emission and low carbon vehicles will
be 13% from April 2015 and will increase by 2% in 2016-17.
The Government will remove the 3% diesel supplement differential so
that diesel cars will be subject to the same level of tax as petrol cars
from April 2016.
The Fuel Benefit Charge multiplier for cars will increase from £18,800
to £20,200 from 6 April 2012, and will increase by 2% above the RPI
in 2013-14. The Government commits to pre-announcing the Fuel
Benefit Charge multiplier one year ahead.
The Government will exclude certain security enhancements from
being treated as accessories for the purpose of calculating the cash
equivalent of the benefit on company cars made available for private
use. These security enhancement changes take effect retrospectively
from 6 April 2011.
Changes have also been made to the capital allowances on company
cars – further details can be found in the corporate tax section of this
commentary.
Contacts:
David Chandler
+44 (0)20 76945819
[email protected]
Harvey Perkins
+44 (0)20 76945820
[email protected]
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34
Tax Agreement
between the UK
and Switzerland
Finance Bill 2012
On 20 March 2012 the UK and Switzerland signed a Protocol to the
original Tax Agreement between the two countries. There are four
main points included in this protocol.
Firstly, it allows for a one off charge to be applied to accounts that are
held by UK resident individuals in Switzerland unless permission is
given by the individual to disclose the existence of the account to
HMRC. The accounts can be held either directly or indirectly. Where
the levy is applied to assets held in Switzerland, no further liability to
UK tax will arise.
Secondly, there is clarification of the relationship between the
Agreement and the EU Savings Agreement (EUSA) with Switzerland.
Where a relevant person has suffered withholding tax under the EUSA
the agreement now provides for an additional 13% 'tax finality
payment' to settle all UK tax liabilities chargeable on those interest
payments. This achieves the same effect as the 48% withholding tax
levied under the original terms of the Agreement.
Thirdly, a new Inheritance Tax (IHT) levy is introduced which applies
on the death of a relevant person. The levy is 40% of the relevant
assets at the date of death. This levy will not apply if the personal
representatives authorise the Swiss bank to disclose the account
details to the UK. It will also not apply if it can be certified that the
deceased person was not domiciled within the UK and was not
considered as deemed domiciled for IHT purposes in the UK.
Finally, increased levels of information exchange between HMRC and
the Swiss tax authorities are provided for within the protocol.
Contacts:
Brent Copsey
+44 (0)20 73112836
[email protected]
Steve Wade
+44 (0)20 73112220
[email protected]
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35
Other Budget Measures that relate to Employee
Issues
The following other measures were also announced or confirmed in the Budget.
Where a measure has been previously announced, we have only included it here
where a change has been made. A list of previously announced measures which
will be included in Finance Bill 2012 unchanged can be found in section 1.69 of the
HMRC document Overview of Tax Legislation and Rates (OOTLAR).
Further information on each of the measures listed here can be found in the OOTLAR –we have included the relevant
section and Annex numbers for ease of reference.
OOTLAR ref
Car and van fuel benefit charge 2012/13 and 2013/14
1.14
Pensions tax relief
2.13
Pensions tax – abolition of contracting out
2.14
Income tax and NIC reform
2.24
PAYE late payment and filing penalties
2.64
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36
Personal Tax
This was a well trailed Budget from the Private
Client perspective.
There was the welcome increase in the Income Tax Personal Allowance
for the 2013/14 tax year to £9,205, not far off the Government’s stated
target of £10,000. However, for the elderly this was largely neutralised – or
worse – by the unexpected abolition of the Age Related Personal
Allowance from 2013/14 for those not yet 65, and the freezing of the
allowance for those who are.
Then there was the leaked reduction in the highest rate of Income Tax
from 50% to 45% from 2013/14. It seems likely that taxpayers may wish to
delay income receipts until after 5 April 2013, if they are able.
David Kilshaw
Chairman Private Client
In contrast to the reduction in the top rate of Income Tax, there was a
focus on increasing the take from other taxes, with a number of new
measures aimed at raising more revenue from the wealthy.
The new higher 7% SDLT rate on properties costing more than £2 million
will have a significant effect, particularly in London. Also, the UK will now
copy many other countries in taxing the gains realised by non-residents on
UK property disposals. However, this will (at least initially) not apply to
individuals, and will apply only to gains realised on residential property.
And child benefit will now bring a reduced benefit for those with income of
over £50,000. It will be taken back through the tax system at increasing
rates, and those with incomes of over £60,000 will have to pay back the
entire amount.
The first steps were also taken to limiting the amount of tax reliefs such as
charitable gifts, losses, and loan interest. From 2013/14 the total relief will
be limited to £50,000, or 25% of the individual’s income, whichever the
greater.
The war on tax avoidance continues. It was no surprise that the headline
measure was the new SDLT rate of 15% for residential properties
acquired for more than £2 million by certain ‘non-natural’ persons (i.e. –
not individuals). This will apply immediately. It is also planned to introduce
an annual charge for properties owned by these non-natural persons, but
only from 2013. The Chancellor made it clear that attempts to circumvent
the new rules would be blocked retroactively. There will be obvious
concerns that bona fide property investors will be hard hit.
Other welcome measures included a proposal to increase the IHT
threshold from £55,000 for gifts from a domiciled to a non-domiciled
spouse (or civil partner); and for the non-domiciled spouse to elect to be
treated as domiciled – thus allowing full IHT exemption.
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37
Many previously announced measures remained unaltered, such as the
limits for tax-favoured investments in Enterprise Investment Scheme (EIS)
shares (£1 million from 6 April 2012) and Venture Capital Trusts (VCT)
shares (£200,000 from 6 April 2012), and the IHT threshold (remaining at
£325,000).
George Osborne has a thankless task in these tough times. Those who
have to pay more tax shout much louder than those who pay less!
Measures featured in this
Personal Tax Commentary
Page
Personal tax rates and allowances
Finance Bill 2012
Finance Bill 2013
39
Cap on unlimited tax relief
Finance Bill 2013
40
New 7% SDLT rate for residential property purchases over £2 million
Finance Bill 2012
40
15% rate of SDLT for property held in SPVs plus an annual charge
Finance Bill 2012
41
SDLT anti-avoidance
Finance Bill 2012
41
Capital gains tax and non-residents
Finance Bill 2013
42
Reform of the taxation of non-UK domiciled individuals
Finance Bill 2012
Finance Bill 2013
42
A new basis for calculating tax for small businesses and simplification measures Finance Bill 2013
43
Restriction on permitted premiums to certain savings plans
Other Budget Measures that relate to Personal Tax issues
Finance Bill 2012
Finance Bill 2013
44
45
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38
Personal tax
rates and
allowances
Finance Bill 2012
Finance Bill 2013
The additional rate of income tax will be reduced from 50% to
45% from April 2013 (the equivalent rate for dividends will be 37.5%).
The basic and higher income tax rates for 2013/14 will remain at their
2012/13 levels of 20% and 40% respectively.
The Government expects that the cost of the rate reduction will be very
small or nil which reflects the HMRC report and its conclusions that the
effect of the 50% rate in 2010/11 on total tax revenues was probably
negative. The HMRC report observed that large amounts of income
were moved before the introduction of the 50% rate and they have
assumed a similar pattern in reverse for a reduction in the rate.
The basic rate limit will be reduced from £34,370 in 2012/13 to
£32,245 in 2013/14 to limit the benefit to higher rate taxpayers of the
personal allowance increase to below that of a basic rate taxpayer.
The tax free personal allowance for individuals under 65 years old will
increase by £630 to £8,105 in 2012/13. There will be a further increase
in the personal allowance of £1,100 in April 2013 to £9,205 as part of
the Government’s commitment to increase the personal allowance to
£10,000.
Existing age related personal allowances for individuals above 65
years old will be frozen from 6 April 2013 at their 2012/13 levels until
they align with the general personal allowance. From 6 April 2013, age
related allowances will no longer be available except for those born on
or before 5 April 1948.
The capital gains tax exempt amount for 2012/13 is frozen at the
2011/12 level of £10,600.
The IHT nil rate band is frozen at the current level of £325,000
until 5 April 2015 after which point it will change in line with the
Consumer Price Index.
Class 1 primary National Insurance Contributions (NICs) payable by
employees will remain at 12% on income between £7,592 and £42,475
line with the higher rate threshold. A rate of 2% applies on income
above £42,474.
Class 2 NICs increase to £2.65 per week and Class 4 NICs are
payable at a rate of 9% on earnings between £7,605 and £42,475 in
line with the higher rate threshold. A rate of 2% applies on income
above £42,474.
Contacts:
Daniel Crowther
+44(0)20 7694 5971
[email protected]
Katy Shaw
+44(0)20 7311 3750
[email protected]
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39
Cap on unlimited
tax relief
Finance Bill 2013
Some reliefs from income tax such as Gift Aid are at present unlimited
in the amount that can be claimed. However, from 6 April 2013 a cap
on such income tax reliefs is proposed.
The cap will apply a restriction of such reliefs to the higher of
£50,000 in reliefs or 25% of income.
Tax reliefs to be capped will include but are not restricted to: qualifying
loan interest relief, gift aid and charitable donations of land and shares
and loss relief against income. There are already restrictions on loss
relief for investment in partnerships, in certain circumstances, so this
cap should not apply to those affected by existing restrictions. Reliefs
not capped would include EIS, VCT and pension relief.
There is very limited information available on this measure and until
the draft legislation is published (which is expected to be later this
year) it will be difficult to comment on the full impact. The target
taxpayer group is also unclear.
Charities will be concerned that this measure and the proposed
reduction in the additional tax rate to 45% from 6 April 2013 might
result in an unwelcome reduction in charitable donations.
Contacts:
New 7% SDLT
rate for
residential
property
purchases over
£2 million
Finance Bill 2012
Daniel Crowther
+44(0)20 7694 5971
[email protected]
Eugenia Campbell
+44(0)207 311 3651
[email protected]
In line with recent heavy speculation, the top stamp duty land tax
(SDLT) rate for purchases of residential property over £2 million
by individuals will increase from 5% to 7% from 22 March 2012.
Although referred to in much of the media as a ‘mansion’ tax, the
increase is not limited to high value homes. It can also apply to single
or linked purchases of up to five residential properties by individuals
where the aggregate price paid exceeds £2 million.
Acquisitions of commercial property together with acquisitions by
individuals of six or more residential properties remain unaffected by
these changes, with a top SDLT rate of 4%.
Contacts:
Fiona Cole
+44 (0)121 232 3073
[email protected]
Simon Yeo
+44 (0)20 73116581
[email protected]
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40
15% rate of
SDLT for
property held in
SPVs plus an
annual charge
Finance Bill 2012
A punitive rate of 15% stamp duty land tax (SDLT) has been
introduced with immediate effect from Budget Day for transfers of
residential property worth individually more than £2 million into
companies, unit trusts (or other collective investment schemes)
and partnerships with a corporate member (SPVs). It does not
matter if the SPV is a UK or offshore entity.
There is a significant exclusion for partnerships or companies that
have carried on a property development business for at least two
years and have acquired the property for the sole purpose of
development and resale (i.e. not for letting out).
For the purposes of the 15% charge, six or more units of residential
property are not treated as commercial property so transfers of large
portfolios of high value residential property will be hit by the 15%
charge.
In addition to the above, it has been announced that from April 2013
an annual charge will be imposed based on the value of each
property held in an SPV that is not a developer. The rates start at
£15,000 per annum rising to £140,000 per annum for each property
with a value greater than £20 million. Whether or not this tax will be
collected as SDLT and the details of how this will work are not yet
known.
This measure is George Osborne’s promised ‘ton of bricks’ on homes
held through SPVs. What is surprising is that he had previously said it
would be confined to property which is the owner’s home and this
measure goes far beyond that; he is also attacking genuine property
investment vehicles. High end residential property funds face the 15%
on acquisition of property portfolios, the annual charge on top of that,
plus, potentially capital gains tax for resident and non-resident
investors alike.
Contacts:
SDLT antiavoidance
Finance Bill 2012
Simon Yeo
+44 (0)20 73116581
[email protected]
Fiona Cole
+44 (0)121 232 3073
[email protected]
The stamp duty land tax (SDLT) legislation has been amended to
block certain schemes that sought to avoid SDLT by using the subsale rules in combination with the grant or assignment of an option.
The amendment makes it clear that where a purchaser acquires
property and simultaneously grants or assigns an option, the grant or
assignment of the option does not trigger the sub-sale rules.
Consequently ‘sub-sale relief’ is not available on the initial
purchase.
The amendment has effect for transactions with an effective date on or
after 21 March 2012.
It is unsurprising that further action has been taken to block SDLT
schemes. The measures are technical and specifically targeted and
therefore should not impact on the general application of the SDLT
rules or make them more complex.
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41
Contacts:
Capital gains tax
and non­
residents
Finance Bill 2013
Neil Whitworth
+44 (0)161 246 4276
[email protected]
Gordon Keenay
+44 (0)20 7311 1775
[email protected]
As part of a group of measures introduced to tackle tax avoidance
through ‘enveloping residential properties’, the Government intend to
extend the Capital Gains Tax (CGT) regime. Gains made on
disposals of UK residential property (including shares or
interests in such property) by non-UK resident non natural
persons will be subject to CGT. HMRC intend to consult on the
detail of the measure, in conjunction with the proposed Stamp Duty
Land Tax (SDLT) annual charge for residential properties worth more
than £2 million. It is, therefore, expected to come into force from
April 2013.
For the purposes of this charge ‘non-natural persons’ will include
companies, collective investment schemes (including unit trusts) and
partnerships in which a non-natural person is a partner. Individuals
and most trusts appear not be caught, and there will be exclusions
from the charge for property developers and corporate trustees in
certain circumstances. Whether this exemption will extend to
employee benefit trusts (EBTs) is not yet certain and is likely to be
considered during the consultation, though typically they would have a
corporate trustee.
One of the features of the existing capital gains regime is that tax is
generally chargeable only on gains made by UK resident individuals or
companies. The Government’s intention to tax certain non-residents
on capital gains made on UK residential property is therefore a
significant change. However, it would bring UK tax legislation more
into line with the tax treatment of immovable property in many other
countries and in the UK tax treaties.
Contacts:
Reform of the
taxation of nonUK domiciled
individuals
Finance Bill 2012
Greg Limb
+44 (0)20 76945401
[email protected]
Daniel Crowther
+44 (0)20 76945971
[email protected]
The following changes to the taxation of UK resident non-UK domiciled
individuals (non-doms) who claim the remittance basis have been
confirmed in the Budget and will be included in the Finance Bill 2012:
■
Allowing non-doms to remit foreign income or capital gains to
the UK for the purpose of commercial investment in qualifying
UK companies without immediate tax charges;
■
Increasing the existing £30,000 annual Remittance Basis
Charge to £50,000 for non-doms who have been UK resident
for 12 or more of the 14 tax years preceding the year of claim.
(The £30,000 charge will be retained for those who have been
resident for at least seven of the preceding nine years); and
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42
Finance Bill 2013
■
Simplifying the existing remittance basis rules in respect of
nominated income and the taxation of assets remitted to the UK to
be sold.
These new rules will take effect from 6 April 2012.
We are expecting to see revised legislation on 29 March 2012 in
Finance Bill 2012 which will provide further clarification about how the
exemption from tax when investing foreign income/gains in qualifying
UK companies will work. No further details were made available in the
Budget.
The Government also announced that it would consult on legislation to
take effect from 6 April 2013 to increase the IHT exempt amount that a
UK domiciled individual can transfer to their non-UK domiciled spouse
or civil partner. Currently the amount is £55,000 and has not been
increased since 1983. It is also proposed to allow such a non-UK
domiciled spouse to elect to be treated as deemed domiciled in the UK
for IHT and so have an unlimited spouse exemption.
The new commercial investment exemption is a positive measure that
should encourage UK investment and it is hoped that investments in
partnerships will be included in due course.
Contacts:
A new basis for
calculating tax
for small
businesses and
simplification
measures
Finance Bill 2013
Rob Luty
+44 (0) 161 246 4683
[email protected]
Daniel Crowther
+44 (0) 207 694 5971
[email protected]
The Government plan to introduce a simpler system for calculating
tax for small unincorporated businesses and to introduce simpler
arrangements for certain business expenses. In line with the Office
for Tax Simplification’s recommendations, the Government proposes
that such businesses should have the option to calculate their taxable
profits on a cash receipts and payments basis, as opposed to following
the same accounting rules that large companies use.
A consultation will take place before introducing any changes in
April 2013 which will include details of the scheme including extending
eligibility to business with turnover up to the VAT registration threshold
of £77,000.
The Government will also consult on standardising business
expenses, by allowing a fixed amount to be claimed rather than
recording actual amounts which can require detailed record keeping.
For example, standard mileage rates for business use of a car and
standard amounts for significant business use of home could be
introduced.
The Government will also consult over summer 2012 on introducing a
disincorporation relief. This will benefit smaller businesses which
incorporated previously but may now no longer want to be
incorporated and/or benefit from the simpler cash basis of taxation
which is proposed.
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43
We welcome these proposals to simplify the tax system for small
businesses which should make it easier and quicker for business
owners to calculate their tax and provide them with more certainty over
the correct calculation of their tax liabilities.
Contacts:
Restriction on
permitted
premiums to
certain savings
plans
Finance Bill 2012
Finance Bill 2013
Daniel Crowther
+44 (0) 207 694 5971
[email protected]
Katy Shaw
+44(0)20 7311 3750
[email protected]
For qualifying policies taken out on or after 6 April 2013,
premiums will be restricted to £3,600 per year across all policies
that are beneficially owned by an individual. Complex transitional
provisions are to be introduced which will apply to certain policies
started before 6 April 2013, by effectively applying the £3,600 annual
premium cap from 6 April 2013.
This will limit the tax advantages (i.e. no liability to high or additional
rate tax) which investors can currently obtain by investment in
qualifying policies.
Whilst this change may well be a surprise to the industry, it fits within
the Government’s objective of limiting tax advantages for wealthy
individuals, and closes down the use of qualifying policies by such
individuals to obtain tax favoured returns.
Initial reaction may well be that the limit is very low, particularly given
the perceived abuse this anti-avoidance measure is targeted at.
However, the level of the limit will effectively block such individuals
from investing significant sums in so called Maximum Investment
Plans (MIPs).
Contacts:
Carol Newham
+44 (0)117 905 4627
[email protected]
Daniel Crowther
+44 (0) 207 694 5971
[email protected]
© 2012 KPMG LLP, a UK limited liability partnership, is a subsidiary of KPMG Europe LLP and a member firm of the KPMG network of independent member firms affiliated with
KPMG International Cooperative, a Swiss entity. All rights reserved.
44
Other Budget Measures that relate to Personal
Tax issues
The following other measures were also announced or confirmed in the Budget.
Where a measure has been previously announced, we have only included it here
where a change has been made. A list of previously announced measures which will
be included in Finance Bill 2012 unchanged can be found in section 1.69 of the
HMRC document Overview of Tax Legislation and Rates (OOTLAR).
Further information on each of the measures listed here can be found in the OOTLAR –we have included the relevant
section and Annex numbers for ease of reference.
OOTLAR ref
Income Tax
■
Seed Enterprise Investment Scheme
1.7
■
Enterprise Investment Scheme and Venture Capital Trusts – simplification and
better focus
1.8
■
Enterprise Investment Scheme and Venture Capital Trusts – increases to rates
1.9
■
Resettlement payments paid to MPs
1.15
■
Exemption from UK taxation for non-resident athletes performing at the 2014
Glasgow Commonwealth Games
2.10
■
Expenses of members of devolved administrations
2.11
■
Income tax rules on interest
2.19
■
Transfer of assets abroad and gains on assets held by foreign companies
2.17
■
Post-cessation trade relief and post-cessation property relief
1.56
■
Property business loss relief
1.57
■
Income tax – corporate settlor-interested trusts
1.61
■
Life insurance – income tax avoidance
1.64
Capital Gains Tax
■
Heritage management funds
2.20
Inheritance Tax
■
Inheritance tax – periodic charges on trusts
2.21
■
Inheritance tax – offshore trusts
1.60
Benefits
■
Child Benefit income tax charge
1.12
■
Personal Independence Payment – tax reliefs
2.23
© 2012 KPMG LLP, a UK limited liability partnership, is a subsidiary of KPMG Europe LLP and a member firm of the KPMG network of independent member firms affiliated with
KPMG International Cooperative, a Swiss entity. All rights reserved.
45
Pensions
■
Bridging pensions
2.15
Other
■
Community Investment Tax Relief
2.22
© 2012 KPMG LLP, a UK limited liability partnership, is a subsidiary of KPMG Europe LLP and a member firm of the KPMG network of independent member firms affiliated with
KPMG International Cooperative, a Swiss entity. All rights reserved.
46
www.kpmg.com
© 2012 KPMG LLP, a UK limited liability partnership, is a subsidiary of KPMG Europe LLP
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