This week we bring you the news that the 2023 annual report of the Administrative Burdens Advisory Board “Better tax for better business” highlights its concerns in relation to Making Tax Digital for income tax. The notes from the most recent meeting of the Wealthy External Forum meeting which was held in October 2023 are available; Chartered Accountants Ireland is represented on this forum by a member firm. The OECD Inclusive Framework has released the third set of Pillar 2 administrative guidance and HMRC has confirmed that donations to charities of crypto assets do not qualify for gift aid tax relief.
Administrative Burdens Advisory Board “Better tax for better business” report
The 2023 annual report of the Administrative Burdens Advisory Board “Better tax for better business” was published last month. Amongst other items, the report highlights Making Tax Digital for income tax (“MTD for ITSA”) as a priority area and in particular, that testing via the trial “will be mission critical for MTD ITSA, which is a far more complex proposition than MTD for VAT.” Overall, the Board concludes that time is short, and many challenges remain.
The Board is also concerned about the emerging climate and messaging used by HMRC this year which discourages taxpayers from calling HMRC helplines. Although it has some sympathy with HMRC in trying to encourage taxpayers to do some basic research and checking themselves, rather than always calling HMRC helplines, restrictions on helplines need to be carefully considered and designed when there is so much that taxpayers (and HMRC) can still find difficult and make mistakes with during tax administration activities. HMRC need to work towards a system where helpline support is there for genuine difficulties - which in turn means improving guidance. The Board is also keen to continue exploring where there is further scope to simplify and modernise the tax system.
OECD Pillar 2 administrative guidance
The updated guidance released last month includes the below items.
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Purchase price accounting adjustments in financial accounts;
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Various calculation and application issues; and
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A rule that requires adjustments to the tested jurisdiction’s profit before tax and income tax expense with respect to certain hybrid arbitrage arrangements.
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Calculation of the €750 million revenue threshold;
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Mismatch between Fiscal Years of UPE and another Constituent Entity;
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Mismatch between Fiscal Year and Tax Year of a Constituent Entity;
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Further guidance on the allocation of Blended CFC Taxes;
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Transitional Filing Deadlines for MNE Groups with Short Reporting Fiscal Years; and
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A simplified Calculation Safe Harbour for Non-Material Constituent Entities.
According to an email from HMRC, it is the UK’s intention to ensure that this latest guidance is reflected in the UK Pillar 2 legislation. HMRC has also asked us to draw your attention to the release of additional draft HMRC guidance on which views are welcome by email.
Donations to charities of crypto assets
HMRC has recently updated its guidance on gift aid which confirms that donations of crypto assets do not qualify for gift aid relief. This is on the long-held view of HMRC that such assets are not currency or money. Should the crypto assets be converted into ‘money’ and then donated to the charity, then this may qualify for gift aid tax relief if the relevant conditions are met.