A protocol to the double taxation convention between the UK and Belgium has been signed in Paris.

The text will be presented to Parliament for approval, and it will enter into force once both countries have completed their legislative procedures. Its provisions will then take effect from the next calendar year.

The protocol updates the exchange of information article of the convention to bring it into line with current Organisation for Economic Co-operation and Development standards and practice.

It also introduces a provision dealing with mutual agreement, which will provide binding arbitration in the event of a protracted dispute between the two tax authorities.

In addition to several other technical revisions, the new document provides for a new dividends article that grants zero withholding tax to direct investors and pension funds, and a new interest article that removes withholding tax on all interest paid between enterprises.

A number of errors have been detected on the updated employer CD-ROM recently issued by HMRC.

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HMRC Trusts are having difficulties receiving some online-delivered returns.

If a return contains an entry in any of the following boxes:

• 13.19
• 14.15
• 5.20

it may be rejected by the self assessment gateway.

If this happens, a paper return should be submitted, says the Revenue.

For these cases the usual paper deadline of 31 October has been extended to 31 January.

If submitting the paper return in one of these cases after 31 October, then the taxman asks that the reason be noted on the front of the return or in an accompanying letter.

This will avoid a penalty being charged for the late submission of a paper return.

HMRC say they are ‘very sorry about the inconvenience’ that this may cause taxpayers.

After yesterday’s full argument by leading counsel for Davies and anor and for Gaines-Cooper, most spectators eagerly awaited to hear HMRC’s arguments, writes Ximena Montes Manzano.

To everyone’s surprise, the morning’s part-heard hearing started with the judges asking the Revenue’s representative, Ingrid Simler QC, whether she was still contesting the appeal against refusal for permission to apply for judicial review (JR), and whether she would need further time to put in evidence. 

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A question was recently asked in Parliament (Hansard, 22 Jun 2009, vol 494, no 96, col 670W) about the Revenue's plans to enable MPs to submit their tax returns online.

Financial secretary to the Treasury Stephen Timms replied that members of Parliament have to complete special, dedicated pages.

‘These forms are not available online since it would be disproportionately costly to develop the links to departmental computer systems,' said Mr Timms.

Previous arguments against MPs filing online have, however, related to a lack of security, not cost.

Nigel Powell, a spokesperson from Digita, part of Thomson Reuters, noted that ‘the original HMRC line was that certain people, including judges, senior officers in HM armed forces and secret services and MPs, could not submit their forms online because once their returns had been filed - i.e. inside the Government Gateway - they could be read by anyone inside HMRC.

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The long-running saga of Robert Gaines-Cooper has reached the Court of Appeal.

New readers may not want to start here – but to explain briefly, Mr Gaines-Cooper was previously found by the Special Commissioners to be both UK resident and domiciled. The appeal against the decision on domicile was rejected by the High Court, and leave to appeal to the Court of Appeal refused.

The issue of residence, however, is being pursued by judicial review, and it has been heard with the case of Davies & anor in the Court of Appeal.

The issue at stake in both is the same: did HMRC fail to apply the tests as set out in their IR20 booklet and in doing so frustrate the legitimate expectations of the taxpayers?

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The Government today published a consultation document on a code of practice on tax for banks.

It sets out the behaviours the Treasury expects from financial institutions in the management of their tax affairs and in their relationship with HMRC, including governance, tax planning and the relationship between banks and the Revenue.

Feedback is being sought on a range of issues, including introducing and complying with the code, how uncertainties arising in interpreting the code could be dealt with, and what support banks can expect from the taxman in return.

The Government and HMRC will be speaking directly with banks operating in the UK to develop a shared understanding of the principles and implications of the code.

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The VAT reverse charge for mobile phones and computer chips has been extended to April 2011. 

Further to Revenue & Customs Brief 28/09, HMRC confirm that the Government's application to renew the derogation was formerly agreed on 5 May 2009 by the European Council of Finance Ministers.

The agreement has retroactive effect from 1 May 2009, meaning that legal vires for the reverse charge is unbroken.

The reverse charge for mobile phones and computer chips was implemented with effect from 1 June 2007 to remove the opportunity for fraudsters to use goods to perpetrate missing trader intra-community fraud.

As an exception to the normal accounting rules for VAT, the UK has a derogation from EU law to apply this anti-fraud measure, which ran until 30 April 2009.

Plans for a new top tax band for high-earners should be abandoned, according to the Centre for Policy Studies (CPS).

In a new report, the Conservative think-tank claims that the recently announced 50p rate, intended to take effect from April 2010, will be ‘unfair, complex, uncertain, inefficient and damaging’.

The mooted income tax rate ‘meets none of [economics pioneer] Adam Smith's criteria for good taxation - fairness, simplicity, certainty and efficiency – and will undermine UK competitiveness at a crucial time’, claims the CPS’s 12-page document, What’s Wrong with 50p?

It claims that ‘as a consequence of the Finance Bill 2009, there will be 16 different personal tax rates’ and ‘the withdrawal of some personal allowances will lead to widely variable marginal rates, reaching 61.5% for those earning between £100,000 and £112,000’.

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The lack of government consultation on key areas of new tax legislation has been strongly criticised by peers in a new report.

In its annual report on the Finance Bill, the House of Lords’ select committee on economic affairs says it is ‘at a loss to know why’ tax experts and business organisations were not sought to opine on ‘two significant and contentious compliance measures’: the obligations of senior accounting officers of large companies, and the ‘naming and shaming’ of tax defaulters.

‘Neither of these provisions falls within the areas where it is generally accepted that consultation is impracticable,’ said the committee. 

The lack of consultation on the clauses – numbers 92 and 93 respectively – is regarded by the Lords as a ‘failing on the part of [the Treasury] and HMRC’.

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Holders of bank accounts in the Isle of Man will soon be obliged to disclose their offshore income, following the decision by the crown dependency to move to an automatic exchange of information within the EU.

The major new tax policy will take effect from 1 July 2011, when the withholding tax option, currently available by virtue of the transitional arrangements under the EU savings directive (EUSD) framework, will be abolished.

The announcement of the move – made by Isle of Man treasury minister Alan Bell at the Organisation for Economic Co-operation and Development (OECD) forum in Paris – was welcomed by HM Treasury.

‘This will enhance transparency and help ensure that tax is paid where it is due. We encourage all jurisdictions that apply the transitional withholding tax to move to exchange of information as soon as possible,’ said financial secretary Stephen Timms.

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HMRC have announced further details of the penalties that will be suffered by individuals who make use of the forthcoming New Disclosure Opportunity (NDO).

A 20% fine will be incurred by holders of offshore bank accounts if they reveal details of undeclared income, after having been previously contacted during the Offshore Disclosure Facility (ODF) – the so-called ‘tax amnesty’ – of late 2007.

The individuals concerned will be customers of the five banks – believed to be HSBC, Lloyds-TSB, NatWest, Barclays and one other – that were targeted during the ODF.

‘Those we have not yet caught up with from that group have a second chance,’ said an HMRC spokesperson.

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