Chartered Accountants and Professional Business Advisers

Spring Statement

A number of new consultations were announced along with the Chancellor’s Spring Statement

Allowing Entrepreneurs’ Relief on gains arising before dilution

A new consultation seeks views on a change to entrepreneurs’ relief (‘ER’). It will apply when a shareholder loses eligibility for ER because the company’s fundraising results in their shareholding being reduced (‘diluted’) below 5%. It is suggested that the shareholder might retain ER on gains that relate to the time before the dilution. An election would treat the shares as disposed of and re-acquired at their market value, with the tax liability deferred until an actual disposal.

Enterprise Investment Scheme knowledge-intensive fund

Another consultation aims to build the government’s understanding of the capital gap that knowledge-intensive companies face. It explores possible options for an Enterprise Investment Scheme fund structure aimed specifically at investment in knowledge-intensive companies.

Extension of the existing security deposit legislation

This consultation sets out how HMRC proposes to extend the existing security deposits regime to include corporation tax and construction industry deductions This is described as a proportionate and targeted extension of existing powers, to strengthen HMRC’s ability to deal effectively with defaulters that pose a serious risk to the revenue. Legislation will be introduced to apply with effect from April 2019.

VAT registration threshold – a call for evidence

The UK’s high VAT threshold keeps most small businesses out of VAT altogether helping them to avoid the administrative burden of accounting for VAT. However, the government says there is growing anecdotal, academic and data-based evidence that the cliff-edge nature of the VAT threshold acts as a disincentive for small business owners who want to expand. Ideas are explored to mitigate this.

The role of online platforms in ensuring tax compliance by their users

Online platforms facilitate new economic interactions, increasing market efficiency, lowering prices and providing more choice for suppliers and consumers. The government wants to ensure that those involved are fully aware of their tax obligations.

An alternative method of VAT collection

The government remains of the view that a feasible split payment mechanism for VAT, would allow VAT to be extracted from online payments in real time, and help to reduce the VAT gap. The government is asking for views on potential options.

Cash and digital payments in the new economy

The government would like to know more about what further work can be done to remove barriers to digital payments. Although cash usage is declining, the government wants to explore how to ensure cash remains accessible and secure. The government also wants to know what more can be done to crack down on the minority who use cash to evade tax and launder money. It is keen to understand more about large cash transactions and why they are used. Some countries have taken steps to limit these, and it wants to know more about what impact that has had, including on tax compliance.

Taxation of self-funded work-related training

The government is consulting on the extension of tax relief for training by employees and the self-employed.

Specific advice should be obtained before taking action, or refraining from taking action, on any of the subjects covered above.  If you would like advice or further information, please speak to your usual Shipleys contact.

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