Forty-Fourth Report - The Digital Services Tax

Select Committee
Public Accounts Committee HC 732 5 April 2023
Report Status Government responded
Conclusions & Recommendations 20 items (4 recs)
Source View on Parliament website
Government Response (AI assessment · 19 of 20 classified)
Accepted 9
Acknowledged 7
Not Addressed 2
Rejected 1
Government response
Treasury minutes: Government response to the Committee of Public Accounts on the Forty fourth report from Session 2022-23 · published 27 Jun 2023
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Recommendations & Conclusions

9 results
2 Recommendation Accepted
HMRC implemented the Digital Services Tax with little cost, and the experience could provide valuable...
Recommendation
HMRC implemented the Digital Services Tax with little cost, and the experience could provide valuable lessons for other new taxes. HMRC implemented the tax on schedule for only £6.3 million, less than budgeted, though there will be ongoing compliance costs. … Read more
Government Response Summary
The government agrees and says HMRC carries out an evaluation on the implementation of all measures that require new or updated systems and processes, and that they have since implemented other taxes learning lessons from the design and implementation of DST.
HM Treasury
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4 Recommendation Accepted
HM Treasury and HMRC have a vital role in ensuring that the multilateral assurance framework...
Recommendation
HM Treasury and HMRC have a vital role in ensuring that the multilateral assurance framework for Pillar One of the OECD reforms will meet Parliament’s desire for accountability and transparency. The 140 jurisdictions involved in the development and implementation of … Read more
Government Response Summary
The government agrees and will write to the committee with the UK's objectives for the multilateral administrative framework, including audit arrangements and states that the forecasted revenues for Amount A will be published in the usual way after OBR scrutiny, at a future fiscal event.
HM Treasury
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11 Conclusion Accepted
It is unclear how the receipts from Pillar One will compare to the Digital Services...
Conclusion
It is unclear how the receipts from Pillar One will compare to the Digital Services Tax as HMRC has not yet modelled the likely receipts from businesses liable to pay Pillar One, prior to agreement being reached on how profits … Read more
Government Response Summary
The government agrees with the conclusion and commits to publishing forecasted Pillar One revenues at a future fiscal event after OBR scrutiny, while noting that Pillar Two revenue estimates were already published at Budget 2023.
HM Treasury
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13 Conclusion Accepted
Legislative decisions, implementation decisions and the operation of compliance regimes for Pillars One and Two...
Conclusion
Legislative decisions, implementation decisions and the operation of compliance regimes for Pillars One and Two will be carried out in line with agreed conventions. As previously stated, the OECD’s Pillar One is due to supersede the Digital Services Tax in … Read more
Government Response Summary
The government agrees, committing to implement Pillar One and repeal DST, and details enhanced plans for DST compliance, including identifying non-cooperating groups and increasing awareness, to be completed in 2023 in case Pillar One is delayed.
HM Treasury
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14 Conclusion Accepted
The Chartered Institute of Taxation describes the Digital Services Tax as a ‘blunt instrument’.43 There...
Conclusion
The Chartered Institute of Taxation describes the Digital Services Tax as a ‘blunt instrument’.43 There are aspects of the tax’s design that are tolerable in the short-term but would need to be addressed if its life was to be extended … Read more
Government Response Summary
The government agrees that HMRC has already completed an evaluation of DST implementation, applying lessons learned to other tax policy changes, and reiterates that DST is an interim solution whose impact is under constant review.
HM Treasury
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17 Conclusion Accepted
HMRC and HM Treasury said that they have not seen any evidence of tax avoidance...
Conclusion
HMRC and HM Treasury said that they have not seen any evidence of tax avoidance so far, for example by changing business models, as businesses have not regarded it as worth their while. But they assured us that they are … Read more
Government Response Summary
The government agrees and is committed to implementing Pillar One while monitoring Digital Services Tax. HMRC is enhancing its plans to identify groups within DST scope, increase business awareness, and address risks from non-UK presence, with these plans due for completion by the end of 2023.
HM Treasury
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18 Conclusion Accepted
As stated above, HMRC has not yet faced the situation where an overseas-based business refuses...
Conclusion
As stated above, HMRC has not yet faced the situation where an overseas-based business refuses to pay the correct amount of tax as assessed by HMRC. HMRC told us that it has bilateral and multilateral agreements with other countries that … Read more
Government Response Summary
The government agrees and reiterates its commitment to Pillar One implementation. HMRC's dedicated DST compliance team is enhancing plans to identify groups, increase awareness, and address non-cooperation risks, with these plans due for completion in 2023.
HM Treasury
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19 Conclusion Accepted
Pillar One will operate within a multilateral administrative framework, with the emphasis on international cooperation.
Conclusion
Pillar One will operate within a multilateral administrative framework, with the emphasis on international cooperation. This will be very different to how HMRC currently ensures compliance with its tax regime.58 Getting 140 tax jurisdictions to agree on a framework for … Read more
Government Response Summary
The government agrees with the observation and commits to providing the committee with the UK's objectives for the multilateral administrative framework, including audit arrangements, by June 2023.
HM Treasury
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20 Conclusion Accepted
There is a delicate line to tread between accountability, transparency and the maintenance of taxpayer...
Conclusion
There is a delicate line to tread between accountability, transparency and the maintenance of taxpayer confidentiality. The Digital Services Tax illustrates how difficult it is to talk about these issues in a way that protects confidentiality when you are dealing … Read more
Government Response Summary
The government agrees, committing to normal Parliamentary scrutiny for Pillar One and Two, and to publish forecasted revenues for Pillar One (Amount A) at a future fiscal event, addressing the importance of transparency.
HM Treasury
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