This week’s miscellaneous updates – 20 January 2025

In this week’s miscellaneous updates, the OECD has published updated Pillar Two guidance and employment expenses relief claims can be made online again for all qualifying employment expenses. HMRC has also published detailed guidelines for compliance (GFC) and a Revenue and Customs Brief on the VAT treatment of remedial works. 

OECD publishes updated Pillar Two guidance 

Last week, the OECD published the following documents: 

• Administrative guidance on article 9.1 of the GloBE model Rules, which clarifies the treatment of deferred tax assets arising from tax benefits provided by a government. However, the Inclusive Framework has agreed that, for a two year grace period, jurisdictions will not apply 9.1 to neutralise the deferred tax expenses arising from arrangements that were entered into before 18 November 2024, unless the deferred tax expense exceeds 20 percent of the relevant excluded deferred tax asset amount originally recorded, 

• Administrative guidance on articles 8.1.4 and 8.1.5 which clarifies how groups will be required to complete GloBE Information Returns (GIR) when there is a difference between domestic legislation and the GloBE model rules, 

• A list of jurisdictions whose legislation for the Income Inclusion Rule and Domestic Minimum Top-up Tax (DMTT) have been granted transitional qualified (and DMTT Safe Harbour) status by the Inclusive Framework, and 

• An update to the GIR, a XML schema user guide for tax administrations, and a Multilateral Competency Authority Agreement on the exchange of GloBE information.  

All of the updated guidance is available on the OECD website at: Global Anti-Base Erosion Model Rules (Pillar Two).  

Online claims for relief from all employment expenses restored 

HMRC has recently fully restored the online option for an employee to make a claim online for tax relief for all types of employment expenses. This was restored for uniform, work clothing, and tool expenses from 31 October 2024. However, from 23 December 2024, an employee can make a claim and submit evidence for all qualifying employment expenses online using a new iForm. Note that agents cannot make claims online and can only do so by post. 

From Monday 14 October 2024, claims for relief for employment expenses had only been possible by post using form P87 and were required to be backed up by supporting evidence.  

More information and guidance is available in the following publications: 

• HMRC policy paper: Evidence required to claim PAYE (P87) employment expenses, and 

• HMRC guidance: Claim tax relief for your job expenses. 

VAT treatment of remedial works 

HMRC has published a GFC and a Revenue and Customs Brief on the VAT treatment of remedial works. The GFC includes illustrative examples to help stakeholders understand how these rules apply. See the following documents for more information: 

• Help with VAT treatment of remedial works — Guidelines for Compliance GfC11, and 

• Revenue and Customs Brief 3 (2024): VAT on cladding remediation work.