Miscellaneous updates, 25 March 2024

This week we bring you the latest HMRC performance data to the end of January 2024 and draft legislation has been published for consultation in relation to changes being made to the information businesses will need to provide to HMRC via various returns. HMRC is also warning of bogus tax refund offers and we update you below on R&D tax relief including the intensive tax relief available for businesses in Northern Ireland. And finally, a consultation has been launched seeking views on proposals for the design and administration of the UK carbon border adjustment mechanism which would commence from 1 January 2027. 

Draft legislation on additional data 

HMRC has launched a technical consultation which is open until 9 May 2024 and relates to two draft Statutory Instruments. The consultation examines the draft legislation which will require businesses to provide additional information to HMRC as follows:-

• employers will be required to provide more detailed information on employees’ hours via PAYE Real Time Information; 

• directors will be required to provide the amount of dividend income received from their company separate to other dividend income in addition to their percentage shareholding in the company in their Self-Assessment (“SA”) return; and 

• self-employed individuals will be required to provide start and end dates of self-employment via their SA return.

These changes will take effect from April 2025. Finance Act 2024 introduced powers to enable the collection of this additional data and enabled HMRC to specify, through the two Statutory Instruments, the particular information required within those returns. Feedback on the draft regulation should be sent by email to HMRC at responsivenessdataconsultation@hmrc.gov.uk.

Bogus tax refunds 

HMRC has issued a Press Release which reports that it responded to almost 210,000 referrals of suspicious contact in the last year, up 14 percent on the previous year. More than 79,000 of these were offering bogus tax rebates. HMRC is therefore warning of a further spate in fraudsters contacting taxpayers after the 2022/23 SA deadline on 31 January 2024. 

Taxpayer can help fight phishing scams by reporting any suspicious communications to HMRC:-  

• forward emails to phishing@hmrc.gov.uk;  

• report tax scam phone calls to HMRC on GOV.UK; 

• forward suspicious texts claiming to be from HMRC to 60599. 

R&D tax relief update  

At Spring Budget 2021, the government launched a review of R&D tax reliefs to ensure the UK remains a competitive location for cutting edge research, the reliefs continue to be fit for purpose and taxpayer money is effectively targeted.  

As part of this review, the government announced additional support for R&D intensive SMEs, which will continue alongside the new merged scheme SME and “large” company reliefs announced at the Autumn Statement 2023. 

Regulations made earlier this month on 4 March specified that the merged scheme and the amendments to the additional relief for R&D intensive SMEs will commence for companies with accounting periods beginning on or after the 1 April 2024.  

As a result, the Financial Secretary to the Treasury laid before the House of Commons the Research and Development (Chapter 2 Relief) Regulations 2024 which introduce changes to the further support for R&D intensive SMEs due to particular market conditions in Northern Ireland.  

Under the new rules, eligible companies in Northern Ireland will be able to benefit from relief on subcontracting expenditure undertaken outside the United Kingdom. To protect against the fiscal risk of uncapped overseas expenditure, a cap on the amount of relief that can be claimed will also be introduced, at £250,000 over a rolling three-year period.  

The cap will only apply to the amount of intensive scheme relief that is above the amount that could have been claimed under the merged scheme. 

Guidance on the new rules is available. Further guidance on the merged scheme R&D expenditure credit and enhanced R&D intensive support is also available. As Finance Act 2024 has received Royal Assent and the relevant Appointed Day Regulations have been made, claims for enhanced R&D intensive support for expenditure incurred on or after 1 April 2023 can now be made. 

HMRC also published draft guidance on the new subcontracting and overseas rules for consultation on 9 February. HMRC is currently reviewing responses and will publish final versions of that guidance shorty. 

At Spring Budget, the government also announced that HMRC will establish an Expert Advisory Panel to support the administration of the R&D tax reliefs. This panel will support HMRC to develop and update guidance, improve communications, provide insights on the types of R&D occurring across certain sectors and feedback from industry.  

Given the broad array of projects and specialisms from the life sciences and tech sector, HMRC will seek representatives from these sectors and will directly reach out to relevant organisations. Further details and the terms of reference will be published in due course. This panel will supplement HMRC’s R&D Communications Forum, which will continue to provide the opportunity for broader discussion and feedback.