Following the recent consultation covering the taxation of employee expenses (as announced in the Autumn 2017 Budget), draft Finance Bill 2018-19 contains proposals to amend some of the existing rules concerning travel and subsistence payments.

BSRs and OCRs

Currently, there are no income tax or NIC implications where an employer uses HMRC's approved benchmark scale rates (BSR) to pay or reimburse employees' qualifying expenses incurred when travelling for work. The BSRs are designed to cover modest meal allowances with which employers can reimburse their staff for food and drink costs. An employer may choose to pay less than the approved amounts, with no tax or NIC implications, but if a higher amount is paid, the excess will be subject to tax and NICs.

Although there will be no charge where BSRs are used, HMRC currently require employers to undertake certain verification procedures. For employers with many employees regularly undertaking business travel, the task of checking and maintaining expenses records is likely to be extremely burdensome. Proposals in Finance Bill 2018-19 aim to ease the burden by removing the requirement to operate a receipt checking regime for small set amounts under BSR from 6 April 2019.

Employers can also use HMRC's overseas scale rates (OCRs), which are designed to include an element for accommodation and subsistence, when employees undertake overseas business travel. The OCR amounts are not currently approved by statute and the informality the system has created uncertainty for some employers. It is therefore HMRC's intention to bring OCRs into legislation from April 2019. Similar to BSR, if enacted, there will be no requirement for employers to operate a system for checking employees' expenditure but they will need to ensure the employees are undertaking qualifying travel.

OpRAs - cars and vans

The Bill contains proposals which are expected to affect a small number of the one million or so individuals who are provided with a company car or van through Optional Remuneration Arrangements (OpRA) (formerly known as salary sacrifice arrangements).

Under OpRAs, the amount foregone is compared to the modified cash equivalent of the car or van benefit charge. The greater value is reportable for tax purposes. When the governing legislation (in ITEPA 2003) was originally introduced, the accompanying explanatory note was explicit that 'connected costs' were regarded as part of the car (or van) benefit charge. However, when the OpRA legislation was introduced Finance Act 2017, an oversight meant that no provision was made to ensure the calculation of the amount foregone for a taxable car or van should also include any connected costs. This meant the value of connected costs were not included in the calculation of the amount foregone, whereas they were deemed to be included within the modified cash equivalent rules - the comparison was not, therefore, on a like-for-like basis.

In addition, under the normal rules for calculating the car benefit charge, capital contributions are automatically subject to pro-rata if the car is made available for only part of a tax year. Similar provisions were not included in the Finance Act 2017 for calculating the relevant amount. This means that currently, the amount deductible for capital contributions where the car is available only for a part year is overstated.

Finance Bill 2018-19 is the first opportunity that the government has had to put right these anomalies. If enacted, the amendments will take effect from 6 April 2019.

Employer-provided charging points

Legislation is to be introduced to exempt from income tax and NICs, any liability arising from the provision of charging facilities (including electricity) to employees recharging all-electric or plug-in hybrid vehicles at or near the workplace, where facilities are made available generally to the employer's employees. It does not cover reimbursements for charging elsewhere paid for by the employee. This proposal will not apply to taxable cars and vans (chargeable under the car or van benefit charge respectively). These are taxable as benefits in kind, and the provision of charging facilities and electricity are treated as connected costs already subject to a separate exemption. Employers should note that, if enacted, this measure will apply retrospectively from 6 April 2018.

HMRC have published a document entitled Making Tax Digital Research - Attitudes, Behaviour and Engagement, which reports on research undertaken to help HMRC understand how individual customers and agents respond to the core principles of MTD. The key objectives of the research were to explore:

- individual customers' and agents' overall attitudes and expectations of the elements of MTD that may affect them;
- levers and barriers that may influence engagement with MTDi; and
- anticipated impacts and experiences across different individual customer groups of moving to MTD.

Is summary, the research confirmed that, overall, there is broad cross-audience positivity around the idea of MTD, and that digital tax is welcomed - even 'expected'.

The research also finds that:

- the benefits of MTD are more apparent to those with complex tax journeys and high senses of ownership over financial affairs.
- Customers' concerns centered on data security, customer error, increased workload, and a lack of need for those with simple tax.
- Third party data caused most concern out of four concepts - re: privacy, data security and motivations of HMRC.
- Framing is key: 'near real time' suggests data is updated immediately and raises high expectations around the speed of updating.
- Support needs were anticipated around tax knowledge and how to use Digital Tax Accounts (DTAs). Customers anticipated webchat and online demos would meet the needs of digitally capable customer.

This report was one of a number of research papers commissioned by HMRC in 2016-2017 to support the development and delivery of digital services for customers. The findings have been used to inform the department's work. HMRC reprioritised its portfolio of transformation projects in 2018 to ensure that it delivers key government priorities.

A summary of responses to HMRC's consultation on VAT and vouchers was published on 6 July 2018. The consultation sought views about proposed new rules for the VAT treatment of vouchers and gift cards. The consultation focussed on how an EU directive, providing for the VAT treatment of vouchers, should be transposed into UK law. Broadly, the EU Vouchers Directive (Council Directive (EU) 2016/1065) was agreed on 27 June 2017 and legislates for a common VAT treatment of vouchers across the EU. It applies to any vouchers issued on, or after, 1 January 2019.

The UK has had specific VAT legislation for vouchers for many years but it needs to be brought up to date. The new rules aim to ensure the correct amount of VAT is charged on what the customer pays, irrespective of whether payment is with a voucher or other means of payment.

Draft legislation included in Finance Bill 2018-19 aims to provide new, clear rules which separate vouchers with a single purpose (for example, a traditional book token) from the more complex gift vouchers and set out how and when VAT should be accounted for in each case.

The new legislation is not concerned with the scope of VAT and whether VAT is due, but with the question of when VAT is due and - in the case of multi-purpose vouchers - the consideration upon which any VAT is payable.

Over the coming months, HMRC will consult with various stakeholders about the business impact of the new rules and a Tax Information and Impact Note (TIIN) will subsequently be published on Budget Day. At that time, the expected date of implementation will also be announced.

An increasing number of individuals are finding work through online platforms (for example Deliveroo and Uber workers), usually on a self-employed basis, whereas in the past they might have been employees whose relatively simple tax affairs were dealt with under PAYE. The Office for Tax Simplification (OTS) has published a paper entitled Platforms, the Platform economy and Tax Simplification, which explores the possibility of re-creating for them, in the context of self-employment, an arrangement that looks and feels more similar to that of an employee from an administrative point of view. Such an arrangement might prevent large numbers of individuals having to submit a self-assessment tax return and a computation of their self-employment income.

In outline, the platform would sign up with HMRC as 'agent' for the platform worker, so that they can apply the equivalent of a tax code. Workers would be able to their taxable profits computed in real time. The platform would then withhold tax, either on an even basis or 'back-end' loaded for those with more fluctuating income, which it would then pay on account to HMRC.

The platform will then be able to 'correct' the withholding at the end of the year so the platform worker has nothing further to do. The OTS says this mechanism could initially apply only to large platforms but, over time, could be extended to smaller engagers.

In conjunction with private sector developments in making it easier for people to manage their tax affairs, HMRC might also consider opportunities to streamline its engagement with self-employed platform workers, for example by developing a phone application (for example, along the lines of that available in Australia) which operate alongside these new accounting products.

Work will continue on the proposals, with further announcements to be expected in due course.