Rutherford Cross’ Amy Ferguson, who leads on Tax and Treasury, reviews the tax market so far in 2022, and looks ahead to the remainder of the year.
Following on from my previous article reviewing tax in 2021 and looking forward to 2022, it is now interesting to look at the world of tax at the half year point. We continue to be faced with new global level issues, and as we look back at the state the pandemic left the world in, we also look forward with trepidation. There have been a number of tax related updates in the first half of 2022, and it will be interesting to see how they pan out in the second half of the year.
In an attempt to partly tackle the rise in the cost of living and soaring energy prices, the UK government has announced a windfall tax on energy firms that should raise around £5bn in its first 12 months. Known as the Energy Profits Levy, it will increase the headline rate of corporation tax on oil and gas sector UK profits from 40 percent to 65 percent.
The government’s plan is to use this money for one-off payments to some of the most vulnerable households in the country. It will be interesting to see the impact of this tax over the coming year, with critics suggesting that the Government will struggle to raise the targeted amount due to the exploitation of loopholes in the legislation.
Technology and Transparency of the Tax Function
Technological advancements continue to be prominent in the world of tax this year. Recent research by Deloitte found that “70% of tax leaders predict that revenue authorities will have more direct access to their systems within three years”. There is a continuing focus on data and interpretation of ‘quality’ data. The world wants to know what tax is being paid and who is paying it, and technology will ensure that this information becomes even more visible to the public. This in turn will have an impact on general perception of companies and brands, and potentially the profits that they make.
Uncertain Tax Treatment (UTT)
In relation to the above discussed transparency pressure of tax functions, on April 1st, the new notification of Uncertain Tax Treatment (UTT) regime became live. This has been designed to help HMRC identify where businesses and HMRC are interpreting tax laws or their applications differently. Businesses affected by the UTT are those with UK turnover in excess of £200m.
Special focus will be needed in areas of uncertainty disclosed through the new regime as it is likely that there will be increased levels of HMRC investigation. The UTT is just one of a number of new approaches introduced by HMRC that put the onus of identifying tax issues onto businesses. According to PwC, it is likely that HMRC will take further steps along this road.
What does this Mean for Tax Professionals?
With lots up in the air and tax changes coming into play in the first half of the year, it is now paramount that businesses have the necessary knowledge and capabilities to steer their own tax ship. As tax plays an increasingly critical function to the success of the wider business, and further tax updates likely to be announced in the second half of 2022, businesses will continue to put focus on their recruitment strategies.
In terms of the market, we are still experiencing a shortage of talent and, at the same time, a large number of opportunities coming to market, especially at the mid management level and just below. This is true for both the profession and industry. With the market being as it is, just now is a great time to consider whether you are truly happy in your current role or organisation as the scope for development and career progression is high in the Scottish market.
To discuss your career aspirations in tax and treasury, contact [email protected]