Government to announce tomorrow largest tax consultation in decades

The government will tomorrow launch a number of tax consultations that is expected to result in a widescale reform of the tax system. The largest consultation on tax reform in recent memory.

Whilst the details of the consultations are not known, they are expected to include VAT, Capital Gain Tax and Income Tax and National Insurance reforms. They are also like to include proposals for new taxes including a new digital sales tax.

Laurence Parry, Partner, Kreston Reeves said: “One of the more far-reaching proposals we may see is an alignment of National Insurance and Income Tax into one tax. The two have been increasingly blurred and reform has been long expected.

“The global pandemic has seen online retailing boom and many high street favourites collapse. There is growing concern that online retailers are not paying their fair share of tax especially when compared to ‘bricks and mortar”.

“The government first announced a Digital Services Tax in its 2018 Budget and following a consultation in 2019 the Digital Services Tax was introduced with effect from April 2020. At present, however, this only targets the large digital platforms such as Facebook and Google by reference to the number of users and user created content in the UK. It is likely the government may now extend its remit to include global online retailers. Any tax is likely to see the cost of online sales increase and that will need to be balanced against the challenges businesses are facing in a post-Brexit environment. The question is will that tax fall on shoppers or on business?”

If you would like to discuss the topics explored in this article, please contact Laurence Parry.