In Irish tax developments, the Government publishes the Summer Economic Statement 2022 and Revenue publish data on vacant property.  On the UK front, HMRC has published four Making Tax Digital for income tax notices for consultation and the annual UK legislation day will take place next Wednesday 20 July. In International news, the European Commission opens a call for evidence on tax evasion and aggressive tax planning. Ireland 1.   The Government published the Summer Economic Statement 2022 setting out its medium-term budgetary strategy and outlining the fiscal parameters within which discussions will take place ahead of Budget 2023, which will be delivered on Tuesday 27 September 2022, two weeks earlier than originally planned. 2.   Revenue published preliminary analysis of the data on vacant properties captured as part of the Local Property Tax (LPT) returns. UK 3.   HMRC has published four Making Tax Digital for income tax notices for consultation. 4.   The annual UK legislation day will take place next Wednesday 20 July. International 5.   The European Commission have opened a call for evidence seeking feedback on those enabling tax evasion and aggressive tax planning. Keep up to date with all the latest Irish, UK, and international tax developments through Chartered Accountants Ireland’s Tax Newsletter. Subscribe to the Tax News by updating your preferences in MyAccount.  

June’s Exchequer figures show that tax revenues in the first half of the year were €36.9 billion. That is €1.39 billion or 3.9 percent higher than profiled and €7.4 billion or 25 percent up on the same period last year. The 12-month rolling Exchequer surplus stands at €2.1 billion.  The breakdown of tax revenues is as follows:  Income tax receipts were €14.3 billion to end-June, €67 million or nearly 0.5 percent over profile and nearly 17 percent higher than the first six months of 2021; VAT receipts to end June were strong at €9 billion, €175 million, or 2 percent higher than profiled and over 26 percent higher than to end-June 2021; and Corporation tax receipts of €8.8 billion have been received, €1 billion, or 13 percent ahead of profile. Total gross voted expenditure to end-June amounted to €38.5 billion, €1.4 billion or 3.5 percent below the same period in 2021.  Commenting on the figures, the Minister for Finance, Paschal Donohoe TD, said: “There is mounting evidence that the economic momentum that we had seen in the Irish economy since the easing of public health restrictions is now slowing. The economic impact of further disruption to gas supplies in Europe would have a negative impact on businesses and households across the country. It is now imperative that we build more resilient public finances. The Government has acted with determination - and will continue to do so - to help support households over the past few years. However, the interventions to-date have come at a significant cost to the Exchequer.” Today’s exchequer figures show that tax receipts remained robust in the first half of this year. The continued strength in income tax, in particular, is a positive signal of the recovery in the labour market. However, the strength of volatile corporation tax receipts provide an artificially positive picture of the state of the public finances. It is also important to stress that today’s figures are, of course, backward looking. We expect economic activity and the public finances in the second half of this year to be negatively impacted by the war in Ukraine, the decline in real purchasing power and increased uncertainty in the international economy.

Last week, the Government published the Summer Economic Statement (SES) 2022. The document sets out the Government’s medium-term budgetary strategy and outlines the fiscal parameters within which discussions will take place ahead of Budget 2023. In last year’s SES, the Government adopted a medium-term budgetary strategy based on public expenditure growth of 5 per cent per annum over the medium-term. The Government is now adapting the strategy – on a once off basis - in this year’s Summer Economic Statement. To protect public services and incomes, core spending will now increase by 6.5 per cent next year. This is because of the less benign inflationary environment, and the impact of higher energy prices on the most vulnerable groups in our community. Budget 2023 will provide an overall package of €6.7 billion, representing additional public spending of €5.65 billion and taxation measures amounting to €1.05 billion (an increase of €2.2 billion against what was originally budgeted). The main purpose of this year’s budget will be to address the rising cost of living in the country. Commenting on the document, Minister for Public Expenditure and Reform Michael McGrath said: "Today’s publication of the Summer Economic Statement outlines the government’s budgetary strategy which will seek to protect public services, allow us to introduce further measures to address the cost of living pressures in the autumn, and at same time maintain fiscally sustainable expenditure into the medium term.”

Revenue has published preliminary analysis of the data on vacant properties captured as part of the Local Property Tax (LPT) returns. LPT returns for over 1.62 million properties filed with Revenue as at the end of June 2022 indicate that 57,206 (3.2 percent) of those properties were vacant at 1 November 2021 for reasons including ‘undergoing refurbishment’ and ‘holiday home’. Overall, 61 percent of vacant properties were reported as being vacant for less than 12 months. Such vacancy levels are considered to be consistent with those of a functioning housing market. Welcoming the publication, the Minister for Finance, Paschal Donohoe said: “This information provides the basis for ongoing work on the merits, impact and design of a tax on vacant residential properties. Further details on this measure will be made available as my officials work out the technicalities of administering a new tax". Further information is contained in the Local Property Tax (LPT) for 2022 Preliminary Vacancy Analysis.

The Institute has published its annual position paper and public policy blueprint, The Next Financial Year, representing the views and concerns of its 30,000+ members. It reflects the needs of businesses in the challenging post-Covid world of cost inflation, competition for talent, supply-chain disruption, and geopolitical uncertainty. With focus on the services sector, and particularly the development of capacity within SMEs ,the Institute offers suggestions to improve operation of the regulatory environment, not just to reduce the burden on business but also to promote compliance. In addition, it promotes a ‘whole of career’ approach to personal taxation, from pragmatic solutions to foster remote working to adequate provision for retirement. Read the full position paper here.

Revenue has updated its Tax and Duty Manual confirming that the Dependent Relative Tax Credit specified amount is €16,156 for the 2022.

Revenue has updated its Tax and Duty Manual to reflect changes to the expenses and allowances of elected members of local authorities on foot of new Regulations (S.I. No.313 of 2022) that came into effect from 1 July 2021 (unless otherwise stated).

Revenue’s Tax and Duty Manual has been updated to clarify that surviving spouses, children and dependants of veterans qualify for an exemption from tax in respect of War of Independence Pensions.

In this recent piece in the Irish Examiner, Director of Advocacy and Voice, Dr Brian Keegan discusses the budget costs of cutting VAT and income taxes. In his piece in the Business Post, Dr Keegan discusses how the Government can translate the recent economic capacity and success into consumer sentiment. Comments made by Dr Keegan on the Northern Ireland Protocol were also covered in a recent story in the Irish Examiner.

The Minister for Finance, Paschal Donohoe, and the Minister for Public Expenditure and Reform, Michael McGrath, announced that Budget 2023 will be presented on Tuesday 27 September 2022, two weeks earlier than originally planned. The Institute will update members on the Finance Bill 2022 timetable when further details become available.

The 9th Competent Authorities meeting was held on 30 June 2022 and 1 July 2022, bringing together 355 participants from 106 jurisdictions. Discussions covered the implementation of both the exchange of information on request (EOIR) and the automatic exchange of financial account information (AEOI) standards and provided for the opportunity to explore more advanced forms of international co-operation, such as simultaneous tax examination. The Global Forum Secretariat also updated participants on the tools developed for capacity-building purposes and available to Competent Authorities, with a specific focus on the Model Manual on Exchange of Information for Tax Purposes. Read more at www.oecd.org.

The US Treasury Department has commenced the process of terminating the Double Taxation Agreement between Hungary and the US. It is understood that the Biden administration took the decision as the benefits of the agreement are no longer reciprocal. A spokesperson for the US Government noted that Hungary’s decision to block the EU directive implementing a global minimum tax rate (Pillar Two) tipped the balance as agreement of this measure may have made the agreement less one-sided.

In May, the Institute, under the auspices of the CCAB-I, responded to the European Commission’s public consultation on VAT in the Digital Age. The Commission recently published its summary report from the 193 responses received. Some of the key findings from the consultation were: A majority of stakeholders noted the negative impacts stemming from the current situation with regards to Digital Reporting Requirements (DRRs). Over two-thirds of respondents perceived to a large extent that EU action is necessary in ensuring a more widespread adoption of digital reporting and e-invoicing requirements. A majority of stakeholders supported the introduction of an EU DRR for intra-EU transactions. Many businesses confirmed that, thanks to OSS, they no longer need to maintain previously held VAT registrations in other Member States, and that the OSS is particularly helpful for SMEs. Read the full report at cirabc.europa.eu.

The European Commission have opened a call for evidence seeking feedback on those enabling tax evasion and aggressive tax planning. The aim of the public consultation is to collect views from stakeholders on the role of enablers that contribute to tax evasion and aggressive tax planning, the magnitude of the problem, the need for EU action and the potential policy responses. The consultation will close on Wednesday, 12 October 2022.

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.

HMRC’s latest schedule of webinars is now available for booking. Spaces are limited, so take a look now and save your place. HMRC’s has also made available a YouTube video which contains an overview of how to report COVID-19 support payments and grants on Company tax returns, what happens if you’ve claimed too much and the records that must be kept.  If you have any questions, please send them to team.agentengagement@hmrc.gov.uk prior to the webinar, including the title of the webinar in the ‘Subject’ line of your email. HMRC will answer as many as possible on the day. National Minimum Wage: register here Paying the National Minimum Wage correctly and protecting workers rights are vital parts of being an employer. HMRC’s National Minimum Wage team, the Gangmasters and Labour Abuse Authority and the Employment Agency Standards Inspectorate are working together to support employers in avoiding mistakes and helping get things right first time. HMRC is holding a live webinar to talk about some of the more common issues concerning payment of the minimum wage and the protection of worker’s rights. Experts will also be on hand to answer your questions and offer further help and support.  

HM Treasury consulted on the implementation of Pillar Two earlier this year to which Chartered Accountants Ireland responded. The Financial Secretary to the Treasury recently issued a letter to the consultation respondents, including this Institute, which provides an interim update on the implementation of this legislation in the UK and confirms a delay to the implementation of this legislation to 2024. The letter confirms that, having listened to concerns on timing of implementation, the UK Pillar 2 legislation will first apply to accounting periods beginning on or after 31 December 2023. This will give businesses an appropriate lead-in time before implementation and allow the policy to benefit from progress on the international process. A full consultation response and further update will be provided later in the summer, possibly on legislation day next week.  

HMRC has published detailed of two new tax avoidance spotlights 57 and 58. Spotlights are designed to provide information about tax avoidance schemes that HMRC believes are being used to avoid paying tax due. The two new Spotlights are as follows:- Disguised remuneration: tax avoidance by selling future business revenues to a revenue service trust (Spotlight 57); and Disguised remuneration: tax avoidance using unfunded pension arrangements (Spotlight 58).

In this week’s EU exit corner, we bring you the latest guidance updates and publications relevant to EU exit. See also news about the closure of the CHIEF customs system to new importers who must use the Customs Declarations Service and the procedure to be followed by businesses that brought goods into GB from the EU between 1 January 2021 and 31 December 2021. We also update you on developments in relation to the Northern Ireland Protocol Bill. Northern Ireland Protocol Bill update As mentioned in last week’s EU exit corner, the Northern Ireland Protocol Bill is now at Committee Stage which is expected to take place later this week on Wednesday 13 July. At the time of writing there are no formal publications for this sitting yet. However on Friday 8 July, a paper setting out a number of amendments to the Bill proposed by some MPs, including some from Northern Ireland, was published. Details of the proposed amendments are contained in this publication. At present it remains unclear if the Conservative Party leadership race will impact the Bill. Members will be updated in Chartered Accountants Tax News. CHIEF system not available to new importers From 5 July 2022, the CHIEF system for customs declarations closed to new importers who are no longer able to register to use it and must now register and use the Customs Declarations Service (“CDS”). This is part of the transition from CHIEF to the CDS which closes for import declarations from 30 September 2022. Imports into GB between 1 January 2021 and 31 December 2021 Any business which imported goods into Great Britain between 1 January 2021 and 31 December 2021 is required to contact HMRC if they chose to delay making a declaration for those goods if they have not yet made a supplementary declaration. More information on what to do is set out in updated guidance. Miscellaneous updated guidance etc.   The latest guidance updates, and publications relevant to EU exit are as follows:-   Retained EU law dashboard; Separation Agreement Joint Committee decision 1/2022: social security coordination between UK, EEA and EFTA states; UK-EEA EFTA Separation Agreement Joint Committee annual report 2021; Local government and the EU; Guidance on handling of Decentralised and Mutual Recognition Procedures which are approved or pending; Search the register of customs agents and fast parcel operators; UK-EEA EFTA Separation Agreement: Joint Committee; Separation Agreement Joint Committee decision 1/2021: social security coordination between the UK, EU and EFTA states; and Marketing Authorisation Application submission dates for 150-days national and European Commission decision reliance procedures.  

The latest Adjudicator’s report has been published which reflects on HMRC’s performance during the period 1 April 2021-31 March 2022. The report shows a 19 percent fall in complaints about HMRC, although the adjudicator does say that the number of complaints in 2020/21 was “temporarily inflated by large numbers of complaints about the COVID-19 support schemes”. In 2021/22, the adjudicator upheld 32 percent of complaints investigated, which is a return to a similar level before the pandemic. In past years, the adjudicator has commented on inconsistency of approach and attitude to complaints and learning within HMRC and lack of clear accountability to creating a positive complaint environment at a senior level. According to this year’s report, over the past two to three years this issue has been addressed and HMRC have established an over-all corporate responsibility for complaints. This year’s report contains seven case studies. Case study six, which was upheld, may be of interest to our members operating in practice as this involved HMRC paying reasonable agent costs. This particular complaint was upheld.