State aid modernisation
Published 16 March 2016
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This publication is available at https://www.gov.uk/government/publications/state-aid-modernisation/state-aid-modernisation
Who is likely to be affected
Customers receiving certain state aids.
General description of the measure
This measure provides HM Revenue and Customs (HMRC) with additional powers to collect information on certain state aids and share this information with the European Commission through a legal gateway.
Policy objective
This measure will allow HMRC to collect additional data to help the UK contribute towards the monitoring of and compliance with state aids. This supports the government’s objective to promote enterprise and entrepreneurship. The policy will also allow HMRC to transmit the data through a legal gateway for publication in accordance with the guidelines.
Background to the measure
State aid is any advantage granted by public authorities through state resources on a selective basis to any organisations that could potentially distort competition and trade in the European Union (EU). It includes certain tax reliefs. The UK and EU support strong state aid rules to ensure aid is well targeted to address market failures and avoid negative effects on competition.
In 2012 the European Commission set out a programme to modernise state aids, including reporting. One of the key ambitions is to streamline processes and reduce the number of aids that require detailed examination by the European Commission before they can be implemented.
To offset less examination before implementation this reform introduces more transparency after implementation to ensure state aids are monitored and to identify the beneficiaries of aid above 500,000 euro, and certain financial intermediaries, through the European Commission’s database.
Detailed proposal
Operative date
The measure will have effect from 1 July 2016.
Current law
HMRC’s powers to request information are generally restricted for the purpose of checking a tax position, for example checking the amount of the claim is correct or checking a tax position in a tax return.
The reliefs affected are:
- Enterprise Investment Scheme (Part 5 Income Tax Act 2007)
- Venture Capital Trusts (Part 6 Income Tax Act 2007)
- Film Tax Relief (Part 15 Corporation Tax Act (CTA) 2009)
- Orchestras Relief (Part 15D CTA 2009 - to be enacted)
- High End TV Relief (Part 15A CTA 2009)
- Animation Relief (Part 15A CTA 2009)
- Children’s Television (Part 15A CTA 2009)
- Theatre Relief (Part 15C CTA 2009)
- R&D credit for SMEs
- Vaccine Research Relief
- Climate Change Agreements (reduced rate of Climate Change Levy)
- Capital Allowances - Business Premises Renovation Allowance
- Enhanced Capital Allowances - zero emission goods vehicles
- Enhanced Capital Allowances in Enterprise Zones
Proposed revisions
Legislation will be introduced in Finance Bill 2016 to provide HMRC with additional powers to:
- require information to be provided by the beneficiary as a condition of entitlement for tax relief
- require information to be provided for the purpose of checking that state aid requirements have been fulfilled
- disclose information through a legal gateway for the purpose of publication
Summary of impacts
Exchequer impact (£m)
| 2016 to 2017 | 2017 to 2018 | 2018 to 2019 | 2019 to 2020 | 2020 to 2021 |
|---|---|---|---|---|
| nil | nil | nil | nil | nil |
This measure is not expected to have an Exchequer impact.
Economic impact
This measure is not expected to have any significant macroeconomic impacts.
Impact on individuals, households and families
State aid is a support mechanism for businesses/organisations so this measure has no impact on individuals, households or families, nor does it impact on family formation, stability or breakdown.
Equalities impacts
It is not anticipated that this measure will impact on any of the groups with protected characteristics.
Impact on business including civil society organisations
This measure will affect businesses in receipt of state aids. The amount of additional data businesses would be required to provide to HMRC will vary depending on what data businesses already provide. Businesses may incur a negligible one-off cost to familiarise themselves with the requirements and update their systems to capture the information. Although on-going additional burden is expected to be negligible, some businesses may incur a greater cost in the first year of providing the information as a result of gathering and preparing this for the first time. HMRC will continue to monitor the number of businesses affected and additional burden incurred in order to provide additional information as a result of this legislation.
Operational impact (£m) (HMRC or other)
HMRC is reviewing the implications of the new state aid requirements across all of the taxes affected. The implications are likely to vary but some changes to its internal systems for monitoring certain reliefs are likely to be required.
Other impacts
Other impacts have been considered and none have been identified.
Monitoring and evaluation
This measure will be kept under review through communication with affected taxpayer groups and through monitoring the information they provide.
Further advice
If you have any questions about this change, please contact:
Rachael Dudley on Telephone: 03000 539134 or email:
rachael.dudley@hmrc.gsi.gov.uk.
John Williams on Telephone: 03000 530434 or email: