Markel Tax’s live thought-leadership returns to London

Markel’s distinctive red branding, added to the modern interior, created an ‘edgy’ feel for the event, reflecting current concerns around uncertainty in the UK’s taxation regime.

Stuart Brodie, director of Markel Tax, kicked off proceedings by saying how delighted he was to have everyone back together in a room to discuss some of the key tax issues of the day. He made light of the fact that, due to recent government events, it had been difficult to plan for the day but also acknowledged that the U-turns have created a challenged situation for everyone - hitting home the pertinence of events like The Angle.

Stuart introduced associate director, David Harmer, to discuss IR35, one of the areas most affected by the government’s recent change of course.

David Harmer – Associate Director at Markel Tax

With Chapter 10 reinstated, David’s view was that the pressure for end clients to respond and make decisions about contractor status would now increase. ‘End clients’ currently include all public bodies and larger companies, but the changing political and economic landscape could eventually mean that smaller companies will also come under this banner, according to David.   

David covered the current IR35 legislative environment, including the obligations of all parties in the chain and the three determinants of status: substitution, control and mutuality. The CEST peculiarities were also discussed: how HMRC’s own assessment tool does not provide an accurate assessment of status and how several organisations have faced large tax bills after relying on it, including government departments to the tune of £120m! David closed by touching on some of the changes we might see in 2023, including an increase in chapter 10 policing as well as greater scrutiny of MSCs, self-employed status and umbrella companies.

Next up was John Lewis to cover the often-thorny issue of tax investigations.

John Lewis – Senior Tax Consultant at Markel Tax

John was an HMRC inspector before joining Markel Tax 18 months ago. His view that there are fewer enquiries than pre-March 2020, was reinforced by a show of hands in the room confirming that only three of the audience had a client currently going through an investigation. However, HMRC’s tactics have shifted by the more psychological use of ‘nudge’ letters. Nudge letters can target a wider population, represent minimal cost and put the onus on recipients and their accountants to respond.

The subject of ‘careless penalties’ was also addressed with confirmation that HMRC are more reluctant than ever to suspend this type of fine in a material shift that would affect the clients of many of those in the room.

With John having the advantage of seeing alternative dispute resolution (ADR) from both sides of the desk, he has noted a shift in HMRC’s position where the previous ability to resolve matters within a more open forum before going to the tribunal stage has been watered down. Administratively, 1 June 2022, saw several changes – including the ability to now take session notes out of the room – although HMRC are seemingly not yet ready to release full details of the changes within their guidance and factsheets. 

After a brief break for refreshments, Adam Ellerington took the stage to talk R&D legislation.

Adam Ellerington - Senior R&D Tax Manager at Markel Tax

Adam confirmed that new legislation from 1 April 2023 is still in draft form. However, a number of changes are anticipated – one positive, two less so.

The definition of ‘software’ will now include data and cloud computing costs. However, the revenue will be refocusing relief towards the UK, thereby largely excluding costs associated with using overseas contractors. Thirdly, there are significant administrative changes with applicants now required to submit supporting documentation that has been signed off by a senior officer in the company.  

More generally, HMRC are becoming more stringent towards the issue of R&D claims having seen this incredibly useful form of relief somewhat abused over the last few years by the use of aggressive marketing tactics and spurious claims.

Sam Hart – Associate Partner at Claritas Tax

Last to present was Sam Hart of Claritas Tax who expertly covered the subject of trusts and how they can be used to manage tax liability in great detail for the audience.

The session closed with Stuart Brodie facilitating a panel session with each presenter being asked a series of challenging questions.

An opportunity to network followed what everyone agreed were hugely successful and informative sessions with some of the industry’s most experienced practitioners providing their views on many of the hot tax topics of today.

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