In this week’s miscellaneous updates, we bring you the news that the Chief Executive of HMRC has announced that he is retiring next year. The latest Administrative Burdens Advisory Board report has been published the headlines from which are that many agents/businesses do not believe that there will be any benefits from Making Tax Digital for income tax (MTD ITSA). Frustration with HMRC’s poor service levels also continues to grow. Regulations have been published on the information requirements for the new research and development (R&D) tax relief regimes and HMRC has published guidance/forms for certain overseas companies to register for corporation tax. The latest schedule of HMRC live and recorded webinars for tax agents is also available for booking. Spaces are limited, so take a look now and save your place. And finally, check HMRC’s online services availability page for details of planned downtime and the online services affected.
HMRC Chief Executive to retire
Sir Jim Harra, Chief Executive of HMRC, is to retire in April 2025. Mr Harra, who is originally from Northern Ireland, announced his retirement last week in a LinkedIn post saying ‘I am due to complete my tenure as first permanent secretary/chief executive in the spring, when I will be retiring from HMRC and the Civil Service.
‘The recruitment exercise to find my successor is now under way. If you have the right skills and experience, please consider applying – it’s a fascinating and rewarding role with national impact, for candidates of the right calibre.’
Mr Harra has been Chief Executive and first Permanent Secretary of HMRC since 2019.
2023/24 Administrative Burdens Advisory Board report
The Administrative Burdens Advisory Board (ABAB) recently conducted its annual survey in its role to survey the needs of small businesses in the context of the UK tax system. The ABAB was established in 2006 to provide valuable business insight and expertise to HMRC, acting as a ‘critical friend’ on issues relating to regulation and administration of tax for small businesses. The ABAB also challenges HMRC on performance, providing robust, independent scrutiny against key initiatives that affect small businesses.
This year a record number of over 10,000 responses were received to the survey, comprising 84 percent from businesses and 16 percent from agents. The outcome of the survey has been published in the Tell ABAB report for 2023 to 2024 the key findings are as follows:
- Just over 33 percent of respondents described themselves as being aware or very aware of MTD ITSA, suggesting that awareness appears to be low, though it should be noted that of the businesses who responded to the survey, this may include companies and partnerships who will not be directly impacted by MTD ITSA,
- 64.6 percent of respondents said that MTD ITSA would have no benefits with 63.1 percent saying that the digital record keeping requirement will increase costs, and
- The survey responses suggest an ongoing and growing sense of frustration when engaging with HMRC with 56.7 percent of respondents rating HMRC’s webchat and telephony services as poor, up from 39.8 percent in 2022/23. When asked about their experience of dealing with HMRC in the last 12 months, 42.2 percent of respondents said it was worse, compared with 33.6 percent in 2022/23.
The outcome of the survey has been shared with the Exchequer Secretary to the Treasury (XST) and it is expected that in December 2024, the ABAB will submit its annual report to the XST which will review HMRC’s progress and performance against the priorities set in the ABAB’s 2022/23 report.
Regulations published on merged R&D expenditure credit information requirements
For accounting periods commencing on or after 1 April 2024, the UK’s R&D tax relief regime was majorly reformed when the merged R&D expenditure credit (RDEC) and the enhanced R&D intensive support (ERIS) regimes were introduced. As a result, the information requirements for the merged RDEC and the ERIS regimes have changed hence The Research and Development Relief (Information Requirements etc.) Regulations 2024 have now been published to implement these changes.
Broadly, the information requirements under the legislation, which set out the content of the Additional Information Form, are consistent with the requirements prior to 1 April 2024. However, the regulations now provide a statutory footing for claimants to disclose expenditure claimed in relation to the qualifying element of contracted out R&D expenditure. In addition, if expenditure is incurred in relation to Externally Provided Workers and contracted out R&D, the regulations now include a requirement to disclose further information if the relevant activity was undertaken outside of the United Kingdom. This is by virtue of the general exclusion of overseas R&D activity which is subject to certain exceptions. Additional disclosure requirements also arise in relation to companies with a registered office in Northern Ireland. The new requirements took effect from 2 October 2024.
HMRC guidance/forms for overseas companies to register for corporation tax
Last month, the HMRC guidance page ‘Corporation Tax for non-UK incorporated companies’ was updated in respect of the corporation tax registration process for overseas companies that are not able to use the joint registration process via Companies House.
As set out in the guidance, although various categories of non-UK tax resident company can be within the scope of UK corporation tax, these do not always come within the rules that require such companies to register with Companies House. The updated guidance page therefore clarifies the process required for such companies and provides links to further new guidance and online forms.
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