A range of VAT measures featured from VAT relief to energy saving materials, to the treatment of private hire vehicles.  Reforms to Energy-Saving Materials   Following a call for evidence, the Government intends to expand the VAT relief available on the installation of energy-saving materials by extending the relief to additional technologies, such as water-source heat pumps, and bringing buildings used solely for a relevant charitable purpose within scope.   As a result of the Windsor Framework, these reforms will be implemented UK-wide in February 2024. Full details on these reforms will be published shortly.  Private hire vehicles   The Government will consult in early 2024 on the impacts of the July 2023 High Court ruling in Uber Britannia Ltd v Sefton MBC.   This case considered the regulation of Uber's business model outside of London, and specifically whether the private hire vehicle operator is acting as a principal when entering into a contractual obligation with the passenger to provide the journey. This potentially has VAT consequences in terms of whether the private hire vehicle operator is acting as a principal or an agent for the purposes of charging VAT.  VAT retail export scheme   The Government continues to review the rules of this scheme and thanks industry for submissions on the scheme and the associated airside scheme (tax-free shopping). The Government will continue to accept representations and will consider any new information carefully alongside broader data.   Sanitary products   The scope of the current VAT zero rate relief on women’s sanitary products is being extended to include reusable sanitary underwear from 1 January 2024. 

The main Autumn Statement 2023 publication contained details throughout of a range of measures and changes which did not specifically feature in the Chancellor’s main speech. We summarise these below. The Government will tackle the long-standing problem of “small pot” pensions and intends to launch a call for evidence on a lifetime provider model which would allow individuals to have contributions paid into their existing pension scheme when they change employer, providing greater agency and control over their pension. This call for evidence will also examine a potential expanded role for collective defined contribution schemes in future. The Government will also introduce the multiple default consolidator model to enable a small number of authorised schemes to act as a consolidator for eligible pension pots under £1,000;  As confirmed by HM Treasury in October, the Government will legislate to extend the Enterprise Investment Scheme and Venture Capital Trusts to 2035 hence they will not end as originally intended on 5 April 2025;  The Government is currently reviewing responses to the consultation on taxation of environmental land management and ecosystem service markets and will respond in due course;  The Growth Market Exemption, which provides relief from Stamp Duty and Stamp Duty Reserve Tax, is being extended to include smaller, innovative growth markets. This extension will also increase the threshold for the market capitalisation condition that is used within the exemption from £170 million to £450 million. These changes are included in the Autumn Finance Bill 2023 for implementation from 1 January 2024;   The offshore receipts in respect of intangible property (“ORIP”) rules are being abolished in respect of income arising from 31 December 2024. This repeal will be legislated for in a future Finance Bill, and will take place alongside the introduction of the Pillar Two Undertaxed Profits Rule, which aims to more comprehensively discourage the multinational tax-planning arrangements that ORIP sought to counter;   Exempting legislation is included in the Autumn Finance Bill 2023 to exempt from corporation tax compensation payments made under the Historical Shortfall Scheme, Group Litigation Order schemes, Suspension Remuneration Review or Post Office Process Review Scheme. This draft legislation aligns the taxation of onward payments of compensation to that of individual recipients;  Further to the publication of draft legislation on 18 July 2023, the Government is making amendments to the rules for Real Estate Investment Trusts which aim to enhance the competitiveness of the regime. The changes will take effect from the date of Royal Assent of the Autumn Finance Bill 2023, and will apply to accounting periods ending on or after 1 April 2023, or, where relevant, will be deemed to have always had effect;  The annual chargeable amounts under the Annual Tax on Enveloped Dwellings regime will be increased in 2024/25 in accordance with September 2023’s CPI figure of 6.7 percent. The Government will implement this change in the usual way through a Treasury Order;  There will be no changes to the van benefit charge and the car and van fuel benefit charges in 2024/25 hence these will remain at their 2023/24 levels;   Vehicle excise duty (“VED”) rates for cars, vans and motorcycles will increase from 1 April 2024 in line with inflation. To support the haulage sector, the VED rates for HGVs and the HGV levy will both remain unchanged from their 2023/24 rates in 2024/25;  Alcohol duties were frozen until 1 August 2024 with the annual increase decision also delayed to the Spring Budget 2024 in order to give businesses time to adapt to the new duty system introduced on 1 August 2023;  Duty rates on all tobacco products increased by RPI plus 2 percent from 6pm on 22 November 2023 and are included in the Autumn Finance Bill 2023. To reduce the gap with cigarette duty, the rate on hand-rolling tobacco increased by RPI plus 12 percent;   The Gross Gaming Yield bandings for gaming duty are frozen from 1 April 2024 until 31 March 2025;   The Government will consult shortly on proposals to bring remote gambling (meaning gambling offered over the internet, telephone, TV, and radio) into a single tax, rather than taxing it through a three-tax structure;   The Government will legislate so that, where the substantive decision to proceed with a project to create a new electricity generation station or expand an existing generating station is made on or after 22 November 2023, receipts from that new generating station or additional capacity will not be subject to the Electricity Generator Levy;  The Government is legislating in the Autumn Finance Bill 2023 to increase the Plastic Packaging Tax rate in line with CPI, from 1 April 2024, to £217.85 per tonne. To ensure the Plastic Packaging Tax continues to incentivise the use of recycled plastic in packaging, an evaluation plan will also be published by the end of the year in order to gather further evidence to inform the future trajectory of the rate and recycled plastic content threshold;   The Government will increase the Aggregates Levy rate in line with RPI, from 1 April 2025 to £2.08 per tonne; and  A technical change is being made to section 660 of the Income Tax (Earnings and Pensions) Act 2003 in the Autumn Finance Bill 2023, to ensure that the legislative reference to the Scottish Government’s Carer Allowance Supplement is correct. 

This week we bring you news about the need to include an agent reference number on P87 forms (employment expenses claims) and marriage allowance claim forms from 26 February 2024 and the VAT DIY housebuilder’s scheme is going digital from tomorrow, Tuesday 5 December. The UK and other jurisdictions recently announced their intention to implement the OECD’s Crypto-Asset Reporting Framework. HMRC is seeking feedback on its Annual Report publication and the latest advisory fuel rates which apply from 1 December are also available. And finally, the latest news and information bulletin from HMRC is available.  Change to P87 and marriage allowance forms from February 2024   Agent Update 114 recently confirmed that from 26‌‌‌ ‌‌February 2024, paid tax agents submitting form P87 (claims for relief from employment expenses) and marriage allowance claims on behalf of clients will be required to provide the agent reference number when submitting the forms if the agent wishes to receive the related repayment.   If the agent reference number is not provided, the related repayment will be paid to the taxpayer and not the agent, even if the repayment has previously been nominated to be paid to them. This change is part of HMRC’s continuing drive to protect taxpayers from the behaviours of certain repayment agents.  VAT DIY housebuilder’s scheme to go digital  As announced in the 2023 Spring Budget, the Government is legislating to digitise the VAT DIY housebuilders’ scheme from tomorrow, Tuesday 5 December. However, we understand that paper based claims will also remain possible if the digital process cannot be used. The time limit for making claims is also to be extended from three to six months after completion of the build.   By way of reminder, this scheme allows DIY housebuilders to reclaim VAT incurred and paid by them on building materials for any part of a house build which they undertake themselves and is also available to individuals converting a non-residential building into their own home.   The legislation to make these changes was laid recently. The associated Statutory Instrument  and tax information and impact note are as follows:-   The Value Added Tax (Refunds to “Do-It-Yourself” Builders) (Amendment of Method and Time for Making Claims) Regulations 2023; and  VAT: Digitisation of claims and extending time limit for DIY Housebuilders Scheme.   HMRC will be publishing new guidance when the changes go live tomorrow.  HMRC Annual Report  HMRC publishes its Annual Report and Accounts each year in July and want to make sure it's as helpful as possible to those who read it.  They would like feedback on how you use the Annual Report. Does it contain the information you need? Is it well presented and easy to read and find what you're looking for? How could it be improved? By taking a few minutes to complete this short form and give HMRC some feedback on their Annual Report and Accounts, you can help HMRC to make its performance reporting more accessible and effective. 

In this week’s EU exit corner, we bring you the latest guidance updates and publications relevant to EU exit. The most recent Trader Support Service and Cabinet Office Borders bulletins are also available. HMRC has also issued an email about the first phase of its Border Targeted Operating Model which takes effect in just under ten weeks, and will impact on movements of goods from Ireland to Great Britain. The email contains important details of actions which need to be taken and how to prepare for these changes. Miscellaneous guidance, publications etc.   The following updated guidance, and publications relevant to EU exit are available:-  Customs, VAT and excise UK transition legislation from 1 January 2021;  Reference documents for The Customs (Reliefs from a Liability to Import Duty and Miscellaneous Amendments) (EU Exit) Regulations 2020;  Reference Document for The Customs (Origin of Chargeable Goods) (EU Exit) Regulations 2020;  Reference document for authorised use: eligible goods and authorised uses;  Trade Specialised Committee on Goods;  Joint statement from the Specialised Committee on Financial Provisions, 26 October 2023; and  EM on Windsor Framework customs arrangements. 

HMRC’s latest schedule of live and recorded webinars for tax agents is available for booking. Spaces are limited, so take a look now and save your place. HMRC is also holding webinars which aim to explain its compliance professional standards. A webinar is also being held tomorrow (Tuesday 5 December) on the National Minimum Wage in the care sector.  Compliance and professional standards  HMRC is holding webinars which aim to explain its compliance professional standards. The webinars are scheduled for the following dates and times and will be recorded and available to view thereafter:-  8 December 2023 - 13:45; and  15 December 2023 - 15:45.  National minimum wage   HMRC’s National Minimum Wage team are holding a live webinar to talk through common issues found in the care sector, and how employers can protect their workers’ rights. There will also be a panel of experts on hand to answer questions on the topic - register here. 

Do you use HMRC online services? Don’t be caught out by the planned downtime to some services. HMRC are warning about the non-availability of specific services on the HMRC website, a range of services are impacted. Check the relevant page for information on planned downtime.  

Check out the latest items on the Agent Forum. Remember, in order to view each item, you must be signed up and logged in.  All agents, who are a member of a professional body, are invited to join HMRC’s Agent Forum. This dedicated Agent Forum is hosted in a private area within the HMRC’s Online Taxpayer Forum. You can interact with other agents and HMRC experts to discuss topical issues and processes. 

In a new report, the European Commission analyses the solidarity contribution applied on the unexpected surplus profits for the fossil fuel industry which arose during the 2022 energy crisis. The report sheds light on market developments in the fossil fuels sector covered by this emergency intervention since the measure was adopted in autumn 2022.

The  OECD is running a public consultation to develop an alternative definition of permanent establishment for activities in connection with the exploration and exploitation of extractible natural resources. The changes put forward in this discussion draft are expected to be included in the next update to the OECD Model and its Commentary. The consultation closes on 4 January 2024.

Welcome to this edition of Technical Roundup. In recent developments, IAASA has issued a letter to the CEOs of Recognised Accounting Bodies (RABs) setting out their expectations for the initial approval of existing statutory auditors to be Sustainability Assurance Service Providers (SASPs). In other news, the European Council has adopted a regulation creating the European Single Access Point (ESAP) which will give companies more visibility towards investors, and open up more financing opportunities.  Read more on these and other developments that may be of interest to members below. Financial Reporting The International Accounting Standards Board (IASB) has launched a consultation on improved accounting requirements for financial instruments with characteristics of debt and equity. In the exposure draft, the IASB proposes; to clarify the underlying classification principles of IAS 32 to help companies distinguish between debt and equity; to require companies to disclose information to further explain the complexities of instruments that have both debt and equity features; and to issue new presentation requirements for amounts—including profit and total comprehensive income—attributable to ordinary shareholders separate to the amounts attributable to other holders of equity instruments. The IASB has also released a webcast which gives an overview of the forthcoming standard for Subsidiaries without Public Accountability. The IASB has issued its November 2023 update which highlights preliminary decisions made by the board during their meetings on 13th to 15th November. In their November podcast, members of the IASB Board provided some insights from the recent meetings, including discussions on the progress and direction of the following projects; Business Combinations under Common Control; Post-implementation Review of IFRS 9—Impairment; and Provisions The IFRS Foundation has published a video which explains how IFRIC, the IFRS Interpretations Committee helps maintain and support consistent application of IFRS Accounting Standards; what happens when the Committee receives an application question; and how it works with the International Accounting Standards Board. EFRAG, the European Financial Reporting Advisory Group has issued its updated Endorsement Status Report which now reflects the European Commission’s endorsement of the amendments to IFRS 16 (Lease Liability in a Sale and Leaseback). The UK Endorsement Board has published its 2022/23 Annual Report. The UK Endorsement Board has also adopted Supplier Finance Arrangements: Amendments to IAS 7 Statement of Cash Flows and IFRS 7 Financial Instruments: Disclosures, issued by the International Accounting Standards Board in May 2023. The International Accounting Standards Board’s (IASB) Research Forum hosted 85 participants at the IESEG Management School in Paris 2–4 November. Key highlights and findings from this event are now available to view online. In a recently uploaded video, IASB Member Ann Tarca explains proposals in the IFRS Accounting Taxonomy—Proposed Update 2 Common Practice for Financial Instruments, General Improvements and Technology Update currently out for consultation. The International Forum of Accounting Standard Setters met on 26th to 27th September to discuss matters of relevance to National Standard Setters across the globe. A report which discusses the key messages has been published. Olivier Boutellis-Taft, CEO of Accountancy Europe has announced that he will step down from his role at the end of 2024. Assurance and Auditing FRC The Financial Reporting Council has published its thematic review of audit sampling. The aim of the review is to identify common practice, concerns and good practice across 7 (Tier 1) firms. The publication shares findings to educate the wider market as audit sampling has been an area of repeated Audit Quality Review (AQR) findings for smaller firms. It will also be useful for Audit Committees in understanding the approach taken by audit teams.  Key observations include: Audit sampling is still prevalent. Most firms base their methodology on similar statistical models but with their own methodologies. This leads to substantial variation. Professional judgement is key. Sufficient training is vital. You can read the full report here. IAASA In the years 2020 to 2022 IAASA’s Audit Quality Unit completed 90 audit file inspections across firms. In November IAASA published a report outlining its key messages and recommendations for auditors relating to the area of audit evidence and procedures performed on the financial statement disclosures. The report highlights the key findings from the inspections, in particular: the number of PIE audit file inspections resulting in findings and recommendations in this area; the number of findings and recommendations relating to this area; and the common auditing standard requirements relating to the respective findings and recommendations raised in this area. IAASA’s YouTube channel includes a video that outlines the key messages and recommendations of the thematic review. Sustainability Climate Finance Week Ireland’s 6th annual Climate Finance Week took place from Monday 20th to Friday 24th November. This year’s theme was ‘Exploring a Sustainable and Just Economic Transition’ and the agenda featured the AIB Sustainability Conference; Biodiversity Finance Day; Innovation in Sustainable Funds and Asset Management and Skills & Expertise Day – Empowering Finance Climate Practitioners. IAASA has issued a letter to the CEOs of Recognised Accounting Bodies (RABs) setting out their expectations for the initial approval of existing statutory auditors to be Sustainability Assurance Service Providers ( SASPs). Accountancy Europe and EFRAG are jointly hosting a webinar on Supporting High Quality ESRS Implementation on Tuesday, 12 December. Accountancy Europe, in collaboration with Ecopreneur.eu and supported by the European Association of Co-Operative Banks has published “5 Reasons why Sustainability Matters for SMEs” which sets out some reasons why SMEs should not wait to start transitioning to more sustainable business models. The International Sustainability Standards Board has issued its November 2023 update and Podcast. The Financial Conduct Authority has confirmed that will introduce a package of measures designed to protect consumers by helping them to make more informed decisions when investing and to enhance the credibility of the sustainable investment market. Other News IAASA has launched a Stakeholder Perceptions Survey to gather insights into how its stakeholders perceive IAASA, it focuses on IAASA achievement of its mission of upholding quality corporate reporting and an accountable profession. The Charity Commission for Northern Ireland is writing to around 7,000 charities in preparation for the roll out of the new traffic light display on the register of charities. The new display, expected to go live later this year, will indicate if a charity has submitted their accounts and reports to the Commission on time or late, and by how many days they are overdue if not submitted at all. The European Council have adopted a regulation creating the European Single Access Point (ESAP) - a platform that will make information easier for investors to consult.  The European Single Access Point will give companies more visibility towards investors and open up more financing opportunities, especially for small companies in small capital markets. The Minister for Enterprise, Trade and Employment recently published the First Update Report on the White Paper on Enterprise Implementation Plan 2023-2024, which was published in May of this year. This report details the work undertaken to progress the 40 initiatives identified in the Implementation Plan and also provides an update on the 15 key target metrics identified in the White Paper. Please click here for the press release and here for the report. The Department of Enterprise, Trade and Employment is holding a free business event in Dublin which will focus on the opportunities and challenges presented by the green economy and digital transformation. The event is on Thursday 7 December. The Director of Financial Regulation, Policy and Risk at the Central Bank of Ireland spoke recently at a conference about the EU’s new Digital Operational Resilience Act or DORA. He delved into some of the detail including the challenges faced when trying to design and implement a framework to address digital operational resilience in the financial sector. He also referred to the work being done by the European Supervisory Authorities (the ESAs) on the implementation of the new framework. Please click here for full details. Private sector organisations with 50 employees or more will shortly be in scope of obligations under protected disclosures legislation to have internal reporting channels and procedures for the making of protected disclosures. Also, this week the Minister for Public Expenditure, NDP Delivery and Reform has issued new statutory guidance on the Protected Disclosures Act 2014. Read more in the Institute’s recent news item. Accountancy Europe discussed the attractiveness of the accounting profession, including how younger generations can be attracted into the profession in their recent article. A reminder again this week of the CRO deadlines for Christmas filing. The CRO writes that processing before the Christmas break of submissions received after the dates below cannot be guaranteed:      FE PHRAINN ONLINE SCHEME 12 DECEMBER 2023 A1 ORDINARY ONLINE SCHEME 7 DECEMBER 2023 CHANGE OF NAME 8 DECEMBER2023 REREGISTRATIONS 8 DECEMBER 2023 COMPANY NAME RESERVATIONS 15 DECEMBER 2023   For further technical information and updates please visit the Technical Hub on the Institute website.

This report provides information on how the various UK bodies have met their regulatory obligations, including those relating to education. Click here to read the report.

More private sector organisations in scope ofobligations Readers may recall that the provisions of the Protected Disclosures (Amendment) Act 2022 came into force in January 2023.One of the effects of the Act was to expand beyond public bodies, the legal obligation on organisations to have internal reporting channels and procedures for the making of protected disclosures. Private sector organisations which have between 50 and 249 employees will be in scope for these new obligations from 17 December 2023. You can read about these obligations and much more on the Institute's webpages on protected disclosures. New statutory guidance On 20 November 2023 the Minister for Public Expenditure, NDP Delivery and Reform issued statutory guidance for public bodies on the Protected Disclosures Act 2014. Click here for the press release when the guidance was issued. It supersedes the Interim guidance issued in 2022.The Minister also issued two templates. One is for internal and one is for external protected disclosures policies. They are for use by public bodies and prescribed persons. The templates are available at the end of the webpage of the Department of Public Expenditure, NDP Delivery and Reform “Protected Disclosures Act: Information for Citizens and Public Bodies” which has been updated as of 20 November 2023. The Minister in his press release on the guidance said that while it is targeted at the public sector, much of the content is also applicable to the private sector and he expressed the hope that private sector organisations would also find the guidance useful. This information is provided as resources and information only and nothing in these pages purports to provide professional advice or definitive legal interpretation(s) or opinion(s) on the applicable legislation or legal or other matters referred to in the pages. If the reader is in doubt on any matter in this complex area further legal or other advice must be obtained. While every reasonable care has been taken by the Institute in the preparation of these pages, we do not guarantee the accuracy or veracity of any resource, guidance, information or opinion, or the appropriateness, suitability or applicability of any practice or procedure contained therein. The Institute is not responsible for any errors or omissions or for the results obtained from the use of the resources or information contained in these pages.

Against the backdrop of the Government meeting its own target to reduce inflation below 5 percent in the final three months of 2023, and a more optimistic economic outlook from the Office for Budget Responsibility, last Wednesday Chancellor Jeremy Hunt delivered his second Autumn Statement. With one eye squarely on the General Election expected to take place in 2024, the main focus was on announcing some tax cuts via reductions in national insurance contributions and confirmation that full expensing for companies, which provides 100 relief for new investments in plant and machinery, is being made permanent. Mr Hunt also further reformed the UK’s R&D tax relief regimes which will be merged into one scheme from 1 April 2024. It was also confirmed that, for now, the turnover exemption limit for Making Tax Digital for income tax will not be reduced below £30,000. The need to increase the exemption limit from its original level of £10,000 has been a long-standing recommendation of Chartered Accountants Ireland since 2016.  But will taxpayers be fooled by the tax cuts announced last week? Fiscal drag created in recent years by the freezing of numerous tax allowances and thresholds means that for many taxpayers, the cash benefit of any NICs reduction is likely to have already been outweighed by the additional tax that they are already paying because of frozen allowances/thresholds. However, a cut to income tax in the Spring 2024 Budget has not been ruled out.   After the closure of the Office of Tax Simplification, the Government also provided details of its four main objectives in this area (see page 77 of the main Autumn Statement publication) and will set out progress on these metrics before the end of 2023/24. Several specific announcements were also made which aim to make it easier for small businesses to set up and grow – more detail of these is contained in the business taxes story.  Read the Institute’s Press Release reacting to the Autumn Statement. The analysis herein is based on the publications of HMRC and HM Treasury and various emails and bulletins received by the Institute last week.   Next Monday’s Chartered Accountants Tax News will feature our final stories on the 2023 Autumn Statement and will cover an update on Pillar Two, proposals to tackle the tax gap and a range of other miscellaneous measures, including a number of VAT changes. 

Reductions in employee and self-employed national insurance contributions ("NICs") and the abolition of Class 2 NIC were the key announcements. And from 2024/25, the Government will no longer require individuals earning more than £150,000 whose only source of income is income taxed through PAYE to file a Self-Assessment return.   Employee NICs  Class 1 employee NICs are to be reduced by 2 percent from 12 percent to 10 percent from 6 January 2024. In a meeting with HMRC last week, Chartered Accountants Ireland flagged the short time period that software providers and payroll teams have to implement this 2 percent reduction which has come at an already very busy point in the tax year.  Self-employed NICs  From 6 April 2024, the main rate of Class 4 NIC, which is applied to trading profits between £12,570 and £50,270, is being reduced by 1 percent from 9 percent to 8 percent. And Class 2 NIC is being abolished from 6 April 2024.   From the same date, self-employed taxpayers with profits above £12,570 who will no longer be required to pay Class 2 NICs, will continue to receive access to contributory benefits, including the State Pension. Those with profits between £6,725 and £12,570 will continue to get access to contributory benefits, again including the State Pension, through a National Insurance credit without paying NICs as they do currently. Those with profits under £6,725 and others who pay Class 2 NICs voluntarily to get access to contributory benefits will continue to be able to do so.    According to the main Autumn Statement publication, the cuts to Class 4 and Class 2 NIC taken together amount to a tax saving of £350 a year for the average self-employed person on £28,200 with some two million self-employed individuals expected to benefit.   The Government will also set out next steps on Class 2 reform next year. As part of this, the intention will be to protect the interests of the lower paid self-employed who currently pay Class 2 NICs voluntarily to build entitlement to certain contributory benefits.  2024/25 allowances  The blind person’s and married couple’s allowances are being increased in 2024/25 to £3,070 and between £4,280 and £11,080, respectively. All other allowances remain frozen as announced at the Autumn Statement in 2022.  NICs rates and thresholds   The Government is freezing the lower earnings limit (“LEL”) and the small profits threshold (“SPT”) at 2023/24 levels in 2024/25. For those paying voluntarily, the Government is also freezing Class 2 and Class 3 NICs rates at their 2023/24 levels in 2024/25.   The LEL will remain at £6,396 per annum (£123 per week) and the SPT will remain at £6,725 per annum in 2024/25. The main Class 2 rate will remain at £3.45 per week, and the Class 3 rate will remain at £17.45 per week in 2024/25. This does not affect existing arrangements for payments of voluntary Class 2 or Class 3 NICs connected with previous tax years.   Employer NICs relief for employment of veterans  The Government is extending the NICs relief for employers of eligible veterans for one year into 2024/25. The relief means businesses pay no employer NICs on annual earnings up to £50,270 for the first year of a qualifying veteran’s employment in a civilian role.  

The merger of the SME and large company research and development (“R&D”) tax relief schemes, and the making permanent of full expensing for businesses were the main changes to business taxes. Merger of R&D tax relief schemes  Continuing with the theme of reform to the UK’s R&D tax relief regimes which began in the 2022 Autumn Statement, the SME and large company regimes are to be merged, as planned, from 1 April 2024. However, the Chancellor did not specify the rate(s) of relief which will be available under the merged scheme, which is likely to be announced in the 2024 Spring Budget.  The merged scheme will offer a taxable R&D expenditure credit, based on a percentage of R&D expenditure, that will be able to be offset against a company’s tax liability or, subject to some adjustments, be paid in cash to the business via a payable tax credit.   In our submission to the House of Lords Finance Bill Sub-Committee inquiry into draft Finance Bill 2023/24, Chartered Accountants Ireland recommended that the commencement date for the introduction of a single unified scheme be deferred beyond 2024 to allow for a longer period of consultation to be undertaken on the potential options available.  It was also announced by the Chancellor last week that under the merged R&D scheme, payments of the merged scheme payable tax credit to loss making companies will be reduced via a notional tax. The aim of this is to ensure that the overall tax benefit is similar to that available to profit making companies.   This will be done by calculating the net amount at Step 2 using the rate applicable to the taxpayer (either the small profits rate (“SPR”), currently 19 percent, or the main rate (25 percent)), by applying the SPR to loss making companies. Companies will also be able to off-set the amount withheld against tax in future years.   According to the publications, this change in the rules for the merged scheme is designed to ensure that loss making companies receive more cash benefit upfront, compared to the position set out in the July policy paper.  R&D intensive scheme  The intensity threshold in the R&D intensives scheme is to be reduced from 40 percent to 30 percent for accounting periods that commence on or after 1 April 2024. A one-year grace period will also be introduced which will allow companies who dip under the 30 percent threshold to continue to receive relief as an R&D intensive company for a further year.  More details of the changes to R&D tax relief are available in a HM Treasury policy paper with confirmation that all changes come into effect in respect of accounting periods beginning on or after 1 April 2024.  R&D tax reliefs - removing nominations and voiding assignments   From 1 April 2024, R&D claimants will no longer be able to nominate a third-party payee for R&D tax credit payments, subject to limited exceptions. In addition, from 22 November 2023. no new assignments of R&D tax credits are possible. This means that in most circumstances payments of R&D tax credit claims will be paid directly to the company in order to ensure that they “have full oversight of the claim and receive payment more quickly”. This will be legislated for in the Autumn Finance Bill 2023.   Closure of the R&D review   At Spring Budget 2021, the Government launched a review of R&D tax reliefs. The Government is now concluding that review with the announcement of the merged scheme.   The Autumn Statement publications do refer to the potential that further action may be needed to tackle high levels of non-compliance in R&D tax reliefs, hence it is expected that HMRC will be publishing a compliance action plan in due course.   The Government will also continue working with industry to develop the enhanced support for R&D intensive SMEs and will also consider if further simplifications can be implemented.  Full expensing for companies  Full expensing was announced in the 2023 Spring Budget and replaced the 130 percent super deduction which came to an end on 31 March 2023. The relief is only available to companies incurring expenditure on new plant and machinery (with some exclusions) and was originally scheduled to last for a three-year period until 31 March 2026. The Chancellor announced last week that full expensing is being made permanent.  Although this was badged as the biggest tax cut in modern British history, in reality it is only of real benefit to larger companies who have the capacity to invest in more than their annual investment allowance limit, which already provides 100 percent relief for such assets, up to a maximum of £1 million. The Office for Budget Responsibility expects this to increase business investment by £3 billion per year.   At present, assets for leasing remain excluded from full expensing. However, the Government is to continue to consider whether there is a case to extend full expensing to leasing hence a technical consultation will be published in due course to seek input on draft legislation which will also consider whether error and abuse risks can be appropriately mitigated.  A technical consultation is also expected to be launched on wider changes to simplify the UK’s capital allowances legislation.  Tax relief for training costs  HMRC is also to rewrite guidance around the tax deductibility of training costs for sole traders and the self-employed. This aims to ensure that taxpayers can be confident that updating existing skills or maintaining pace with technological advances or changes in industry practices, are allowable costs for tax purposes.  Creative sector tax reliefs  The Government expects further growth and a rise in employment as creative industries embrace new technologies. To maximise the benefits of this, the Government will further boost the international competitiveness of tax incentives for the UK’s world-leading visual effects sector by increasing the generosity of the audio-visual expenditure credit for visual effects expenditure. Work will begin with industry on how best to design this with the intention of implementing changes to the tax relief from April 2025.  As part of this, the Government has published a call for evidence on recent trends in the visual effects industry. This aims to inform the design of additional tax relief for expenditure on visual effects, which the Government intends to deliver via the audio-visual expenditure credit. The Government intends to consult on the detailed policy design of further support and intends to implement changes to this expenditure credit from April 2025.   As previously announced, animated feature film will be eligible for a 5 percent uplift in relief under the audio-visual expenditure credit.   The Government has also amended the proposed definition of a documentary. The new definition is designed to align with the guidance used by the British Film Institute and will apply to the audio-visual expenditure credit, which will be legislated for in the Autumn Finance Bill 2023.   The proposal to cap the relief that companies can receive on connected party transactions is also being amended. Companies will now be required to disclose connected party transactions and charge connected parties at an arm’s length price. This will also be legislated in the Autumn Finance Bill 2023.   Simplification for smaller businesses  As announced in Spring 2023, the Government is undertaking a systematic review of guidance and key forms for small business and has already begun to implement some improvements including enhanced guidance when checking if you need to submit a self-assessment tax return, new interactive guidance to help businesses register for self-assessment, and improved guidance designed to make it easier to report VAT errors.   Expanding the cash basis  Following a consultation at Spring Budget 2023, the Government is expanding the cash basis for unincorporated businesses. These changes will take effect from 6 April 2024, for 2024/25 and will be included in the Autumn Finance Bill 2023. More details are set out in a policy paper which confirms that the cash basis will be the default method of calculating the tax adjusted trading result, meaning an election will no longer be required. Hence all unincorporated businesses will use the cash basis unless they make an election to use the accruals basis instead.  Currently, businesses are only able to join the cash basis if their turnover is less than £150,000, and they are forced to leave in certain circumstances, including where turnover exceeds £300,000. The turnover restriction will be removed entirely from 6 April 2024.  Chartered Accountants Ireland responded earlier this year to this consultation and supported the expansion of the cash basis but recommended that business should have a choice and be able to choose which basis best suits them hence it is pleasing to see that the Government have taken this on board and will allow businesses to opt out of the default cash basis.   Oil and gas fiscal regime   Alongside confirming that the Energy Profits Levy (“EPL”) will end no later than 31 March 2028, the Government published the conclusion to the review of the oil and gas fiscal regime in a collection of documents which sets out an oil and gas fiscal regime package covering the short, medium, and longer term.  This includes setting out principles for the tax treatment of future oil and gas price shocks after the end of EPL and targeted support for the energy transition through allowing relief for payments made by oil and gas companies into decommissioning funds in relation to oil and gas assets that are repurposed for certain uses. Legislation will also remove the receipts from the sale of these assets from the EPL.   

Although not featured in the Chancellor’s speech, buried in the Autumn Statement 2023 publications is the outcome of HMRC’s recent small business review. This comprises what is referred to as a “package of changes to simplify the design of Making Tax Digital” (“MTD”). A separate corporate report with more detail was also published which provides details of further work and next steps. More information is also available in an email from HMRC. The package of changes announced includes maintaining the current MTD turnover threshold at £30,000 and design changes which aim “to simplify and improve the system”. These changes will take effect from April 2026 when MTD for income is initially scheduled to commence for self-employed business and landlords with turnover of more than £50,000. Earlier this year, Chartered Accountants Ireland met with HMRC to discuss the review and highlighted several concerns, including the need for HMRC to increase the exemption threshold. We are pleased to see that HMRC has decided, at present, to maintain the turnover limit at which MTD will be mandated to £30,000, effectively increasing this from the original exemption limit of £10,000. Taxpayers with turnover from £30,000 to £50,000 are still mandated to join MTD from April 2027. However, the Government will keep under review the turnover less than £30,000 population.  The MTD changes announced last week specifically:- aim to simplify the requirements for all taxpayers providing quarterly updates, and for taxpayers with more complex affairs, such as landlords with jointly owned property; remove the requirement to provide an End of Period Statement;  exempt some taxpayers, including those without a National Insurance number, from MTD; and  enable taxpayers using MTD to be represented by more than one tax agent. 

This Wednesday, the Global Forum will be meeting to discuss developments in the fight against offshore tax evasion. The annual plenary meeting is taking place in Lisbon, Portugal and will be live on OECD WebTV from 9.00am Irish time.

New data from the OECD suggests that 37.1 percent of global net profits are taxed at effective tax rates (ETRs) below 15 percent. Their research shows that 56.8 percent of all global profits taxed below 15 percent arise in high-tax jurisdictions. It is suspected that this is achieved through tax incentives and targeted concessions.

Azerbaijan has become the latest country to join the BEPS Convention. The BEPS Convention is the key instrument for updating double tax agreements and reducing tax avoidance by multinational enterprises. The Convention also enhances dispute resolution between countries.

Retailers face escalating cyber security challenges during peak events such as Cyber Monday. Will O’Brien outlines four steps to protect customer data this holiday season In the retail sector, cyber security often lags behind other sectors regardless of the retailer’s size or value. In the short-term, this can lead to some initial minor inconveniences, but if left unattended, it can manifest into serious issues that impact the organisation’s brand, reputation and customer loyalty. The security challenge During the peak Christmas consumer events of Black Friday and Cyber Monday, the retail sector sees a sharp uptake in business. As a result, its value to malicious actors also increases. To leverage this busy period, cybercriminals use unsophisticated phishing campaigns to gain access and steal data. when a retailer’s ‘accounts and billing’ function is in full swing during the holiday season, for example, they are more likely to fall victim to a phishing attack. While some retailers have reasonable controls in place to protect against these attacks, many rely heavily on insecure third parties to fulfil critical business functions. According to PwC’s 2023 Digital Trust Insights Survey, supply chain risks have become a big focus for regulators and organisations, with senior executives in Ireland identifying increased regulatory scrutiny as one of the top five impacts on their business since 2022. Without conducting the correct level of cybersecurity due diligence on third parties, retailers can open themselves up to cyber-attacks by providing third parties with access to their data. If these third parties fall victim to cyber-attacks, the organisation’s data – through payroll, accounts and shipping, for example – may be at risk. Despite the third party being at fault, the data controller (the organisation) is subject to fines and reputational impact. Defending consumer data Organisations can protect their digital assets by understanding the retail-specific cyber threats and associated remediation activities. 1. Education and awareness  Your people are your first line of defence against phishing campaigns. All staff should be educated on security procedures and aware of attack methods. A robust cybersecurity education and awareness programme is the best way to achieve this. You should tailor this programme for your organisation by identifying the critical threats and customising the content to address these threats. 2. Third-party risk management Third-party risk management (TPRM) is the process of analysing and minimising the cybersecurity risks associated with outsourcing to third-party vendors or service providers. It involves effective selection, due diligence, contracting, ongoing monitoring and the correct termination processes. 3. Malware and ransomware prevention Anti-malware and ransomware detection technologies can help to reduce the risk of a severe cyber attack likely to cause operational, reputational and financial damage to your organisation. Detection and response tools can be used to identify malware and limit the blast radius of the attack, for example. 4. Incident management and response With organisations facing more regulations than ever, the capacity to respond to a data breach quickly and effectively has never been so important. Senior executives should test their incident response capabilities and muscle memory with simulated strategic and tactical tabletop exercises. Incident response plans should be enhanced based on the learnings from these exercises. This documentation can include communication statements, runbooks for technical responses to ransomware, and breach notification processes for notifying the Data Protection Commission of a personal data breach. Implementing these controls can help to mitigate the financial and reputational impact of a security breach. Prioritisation You cannot eliminate cyber risk, but prioritising retail-specific cyber threats can help to mitigate the potential risks and damage. An effective cybersecurity programme will ensure that you can prepare, withstand, recover and learn from malicious attacks and security events online. Will O’Brien is Director of Cyber Practice at PwC