Tax Matters Digest

In one form or another the OBBB dominates our coverage in this edition (again!):

• Our spotlight article looks at the G7 statement issued on 28 June which set out an intention to collaborate towards a ‘side-by-side’ system whereby US parented groups are excluded from some key elements of Pillar Two. Our article sets out the main points from the G7 statement and highlights areas which will need further clarification as the ‘side-by-side’ approach is developed;
• Our second article flags that HMRC have formally announced that the Business Risk Review Indicators will incorporate Pillar Two aspects. The article sets out HMRC’s latest approaches to tax compliance for groups and the importance of incorporating Pillar Two into existing tax control frameworks; and
• Much of the coverage to date on the OBBB has been focused on corporates but our third article covers tax implications for individuals and highlights key personal tax aspects of the bill, the impacts for US individuals doing business overseas, changes to the Gifts and Estates tax provisions and impacts for individuals located outside of the US doing business with the US. For those that want to know more on this subject we are holding a webinar focused on individuals on Tuesday 15 July at 2pm and you can register here: “Talking US Tax: What might the future hold for private clients”.

Turning from US tax reform, we include two articles on employment:

• The first of these highlights a new HMRC enforcement campaign focussed on directors’ loans that were held between April 2019 and April 2023 and then released or written-off, which might have been omitted from their tax return. The announcement focusses on the director’s personal tax position, but our article highlights other tax implications that can arise and what affected individuals and companies should be considering; and
• The second article explains a new initiative that has been launched by HMRC to reinforce National Minimum Wage compliance in London. National Minimum Wage is an area where the complexities of the calculations can inadvertently trip businesses up and trigger compliance failures and so the initiative, which will likely take place outside of HMRC’s formal enforcement activities, may present an opportunity for affected businesses to review their compliance. Our article summarises what businesses need to know and how to prepare.

Next, we provide links to two external articles penned by Tim Sarson, Head of Tax Policy at KPMG in the UK. The first is his City AM blog which explores the convergence of corporate tax rates around the world. The second is his regular international tax round-up for June’s Tax Journal which includes updates on the European Commission’s strategy to improve the competitiveness of the EU.

We round this edition off with Other News In Brief which this week includes confirmation that Legislation Day (L-Day), when we will see draft clauses for the next Finance Bill, will be on Monday 21 July. Measures may include areas subject to recent consultation or announcement although the precise details are as yet unclear. Other updates include minor amendments to Pillar Two regulations, an HMRC Webinar on the Pillar Two CbCR Transitional Safe Harbour which is on Thursday 10 July (so you may need to be quick to register!) and the publication of final regulations for the Crypto-Asset Reporting Framework (CARF) and Common Reporting Standard (CRS).

Finally, we include links to our regular Indirect Tax Weekly Talking Points and our round-up of news around our international network with our Week in Tax publication.