UK Autumn Budget: Reaction & Insight from the Legal Sector
Following Chancellor Phillip Hammond's Autumn Budget, we get the expert reaction and find out what impact we can expert on the legal sector.
Yesterday Phillip Hammond delivered his second and, in some analyst’s eyes, crucial Autumn Budget for the UK. With a range of Tax revisions, changes to the housing market and investment in technology and the NHS there has been some praise for the Chancellor’s proposals.
But what are the implications for the Legal Sector and those they serve? We got the reactions and insights from a host of legal experts across the UK in a special edition of Your Thoughts: Autumn Budget 2017.
Jon Hales, Partner, Womble Bond Dickinson:
There was little in the Budget to help employers, who will see wage bills rise from next April as a result of the increase in the national living wage to £7.83 per hour. The national minimum wage is due to increase as well. There was a hint that the apprenticeship levy may be more flexible in future; this is being kept under review by the Government so we will have to wait and see what they propose.
James Kitching, Corporate Solicitor, Coffin Mew:
This was very much the budget for tech, start-ups, and scale ups. However, the development of new technologies, such as autonomous cars and AI, is very much at the mercy of our legal and regulatory systems. Already there are issues with how fast these kinds of ideas can advance while there are questions about insurance and liability. While producing an environment for greater investment in future technologies is a start, the law needs to adapt to allow our nation to lead the way.
There is talk of making a friendlier regulatory environment but with the fast pace of change, this needs to happen sooner rather than later. Hopefully Philip Hammond and the government recognise this and the ideas in the budget are a start of greater things to come.
Simon Airey, Partner, Paul Hastings:
HMRC is poised for a huge clampdown on tax evasion both in relation to the UK and overseas, energised by September’s Criminal Finances Act. The first quarterly tax returns are due in December and this Budget gives them the tools that they need to strike – more resources on the ground, increased powers of investigation and a much longer time period within which to raise assessments.
These powers are very far-reaching but they are just the latest tools that form part of a comprehensive anti-avoidance and evasion strategy which has been rolled out over recent years. Companies would do well to check that their policies and procedures are up to date. This is not about the finer details of tax law. It’s about compliance and enforcement and, increasingly, criminal law and prosecution.
Richard Morley, Tax Dispute Resolution Partner, BDO:
Although it’s clear that Hammond’s assertion to help first time buyers onto the property ladder by abolishing stamp duty for properties purchased up to £300,000 will perhaps cause most heads to turn, the additional £4.8bn to be raised by 2022/23 through a ‘further set of measures’ should not be ignored. The proposal to consult on extending offshore time limits for ‘non-deliberate offshore tax non-compliance’ is key.
The current non-deliberate time limits are either 4 or 6 years with little or no penalty. The proposal is to extend these time limits to 12 years and if these new rules come in, we will have to see when they will apply from (no surprise if it coincides with September 2018).
Pivotally, any UK Resident taxpayer with offshore interests must take complying with the ‘Requirement to Correct’ very seriously to ensure correct compliance or where non-compliance is identified to make a disclosure before September 2018 before the higher ‘Failure to correct’ penalties come into force.
Jane Mackay, Head of Tax, Crowe Clark Whitehill:
The tax avoidance debate has centred around large multinationals and their corporate tax bills. High profile cases have eroded public trust in how we tax companies. By maintaining the UK’s low corporate tax rate, currently 19%, and reducing it to 17% from 2020, the Chancellor accepts that corporate tax is only of limited relevance in our UK economy. It accounted for around just 7% of UK tax revenues last year.
The Budget announces changes to extend the scope of UK withholding taxes to tax royalty payments in connection with UK sales, even if there is no UK taxable presence. There will be computational and reporting challenges, but this measure may pacify those who feel the UK is not getting enough tax from international digital corporates which generate substantial sales revenues from the UK.
We’d love to hear more of Your Thoughts on Phillip Hammond’s Autumn Budget and what effect it will have on the legal sector. Will it benefit Britain and will it make your work easier? Let us know by commenting below.