News

As part of it’s the Making Tax Digital for income tax (“MTD ITSA”) project and specifically the informal review for smaller businesses, HMRC is scheduling meetings with key stakeholders, including this Institute, to discuss MTD ITSA in the context of businesses with turnover less than £30,000. Contact us before Monday 27 March to tell us your views. HMRC would also like to hear from agents on the MTD ITSA trial (see questions below).   Based on HMRC’s roadmap, HMRC’s current planned approach to beta testing (a type of user acceptance testing where the product team gives a nearly finished product to a group of target users to evaluate product performance in the real world) is as follows:   Private beta service: (a ringfenced serviced used by a defined set of taxpayers/users) will operate in 2023/24 and 2024/25;   Public beta service (a scaled-up service using a larger taxpayer/user base) will operate from April 2025. This date is driven by when the majority of core functionality is expected to be available in the MTD ITSA service. According to HMRC, some low volume functionality will continue to be developed and built in 2025/26 ahead of mandation from April 2026.    HMRC expects that businesses with non-5 April/31 March accounting periods will be able to join the private beta testing service from April 2024.  In the context of the MTD ITSA trial, HMRC would like feedback on the following areas:-  What are the most important things from an agent perspective that you would like to see in the test strategy for MTD for ITSA from 2023 to 2026?; and  What are the biggest taxpayer testing risks you see from an agent perspective? 

The Office of Tax Simplification (“OTS”) has now closed and ceased its work after Finance Act 2023 received Royal Assent last month. In the months of November and December it published its review of residential property income in a report and the report on hybrid and distance working. Report on hybrid and distance working This report examines the complexities driven by hybrid working, including for periods where employees choose to work overseas. As part of its work leading up to issuing this report the OTS talked to a wide range of businesses and others to consider the challenges and complexities that have arisen for employers and employees following the changes in working practices in the wake of the pandemic. ONS surveys suggest that about 40 percent of the workforce is able to work from home and the evidence is that many are splitting their working time between home and office-based working. The report’s key findings are as follows:- Businesses see hybrid working as here to stay and are planning accordingly – although many suggested that the approach to different ways of working will continue to develop; Offering employees the ability to work some of the time at home in the UK is almost universal amongst those the OTS heard from; Employers call for a review of the expense and benefits systems, where many concepts are tied to more traditional ways of working. Adding additional tax reliefs would have a significant exchequer cost – but new ways of working present the opportunity to reconsider the approach to employee tax reliefs; As well as the government considering policy change, respondents asked for HMRC to improve guidance to help both employers and employees; at present there is limited guidance on hybrid working; Working abroad for short periods is not taken up by many employees, but still seen by many employers as a crucial business policy to attract and retain staff. Businesses are also permitting a small number of individuals to live and work overseas on a long term basis whilst the benefit of their services is mainly received in a different country; The social security and payroll implications of cross-border working are already complex, and these and the UK’s position on issues such as taxable presence for the business (permanent establishment) were seen by businesses as unclear where the staff are the ones choosing to work overseas for short periods; On both cross-border payroll and social security issues, businesses want to see improved HMRC processes, turnaround times, more PAYE relaxations and better guidance; and Multinational businesses want to see the UK taking a lead on how permanent establishment and transfer pricing interact with staff who choose to work overseas on for personal reasons and longer term, and where possible, businesses would like the UK to set out unilateral guidelines that can be clearly understood. Residential property income report This report examines the income tax rules for residential property income, exploring the common complexities, issues, and concerns facing taxpayers. Key findings from the report are as follows:- Although the furnished holiday lettings regime can provide some tax benefits, it is not widely used and adds a complex layer to the tax rules which apply to property income. The government should consider whether there is continuing benefit to the UK in having a separate tax regime for furnished holiday lettings; The report recognises that removing the furnished holiday lettings regime could put pressure on the boundary between whether a taxpayer has a property business or a trade, and recommends the government consider whether it would be appropriate to introduce a statutory ‘bright line’ test to define when a property business should be handled under the trading rules; Should the government wish to retain the furnished holiday lettings regime, the report recommends that the government consider removing the benefits for properties in the EEA and removing the benefits where there is private use (other than a minimal level); The report reflects the weight of feedback on the long-standing tax complexity for landlords of whether costs are allowable straight away as repairs and replacements or should be disallowed for income tax as capital improvements, and recommends the government consider a broader immediate income tax relief for the majority of property costs; Nearly half of landlords will be filing for Making Tax Digital for Income Tax in respect of jointly-owned property. It is common practice for only one of the owners to keep records, and the report recommends that HMRC should establish a system to allow this practice to continue for Making Tax Digital. The report also notes the importance of HMRC accepting multiple agents to help with the new tax filings and recommends that HMRC should not go ahead with Making Tax Digital until these issues have been resolved. The report also covers the general regime for property and the confusion and challenge raised by large numbers of respondents about matters such as the allocation of income between joint owners, and in relation to rules which cause significant distortions or complexity such as the circumstances for diversified agricultural businesses. It also looks in detail at how Making Tax Digital (“MTD”) for income tax will affect landlords, and questions whether the initial and medium term threshold for entry into the new system should be increased above £10,000. Readers should note that the report was published before the Government’s December announcement on MTD. Non-resident landlords are examined and the report encourages HMRC to make it easier for them to register for and report their income online for UK tax purposes. It also recommends that the government should consider removing the obligation on individual residential tenants in some situations to withhold tax from their rental payments to non-resident landlords.

The latest HMRC news and information bulletin from 8 December is now available. Key items which may be of interest include the publication of the latest Administrative Burden Advisory Board (“ABAB”) Annual Report last month and how to check if a business is subject to the plastic packaging tax. The ABAB report recommends that Making Tax Digital for income tax should be delayed by at least a year to properly address and resolve areas of concern. HMRC has also contacted us about a number of changes to the HMRC app, including a new function that allows taxpayers to copy and paste their Self-Assessment Unique Taxpayer Reference (“UTR”). Taxpayers can easily share their UTR with their tax agent, and by using the copy and paste function they can be sure it’s the correct UTR. HMRC has published a YouTube video showing just how easy it is to find your UTR on the app. Additional features added to the app also allow taxpayers to pay their Self-Assessment tax bill using the app. The improved app functionality will be promoted ahead of the Self-Assessment tax return deadline on 31 January 2023.  

Last week we reminded readers of HMRC’s plans to progress Making Tax Digital (“MTD”) for VAT by closing the online VAT portal for filing returns from 1 November 2022. HMRC has since contacted us to advise of a limited relaxation for businesses with turnover under £85,000. If such businesses have not signed up to MTD for VAT in time to file their next return by 7‌‌‌‌‌ ‌‌‌November 2022, they will still be able to use their existing VAT online account for that return only. Businesses that file annual VAT returns will still be able to use their VAT online account until 15‌‌‌‌‌‌ ‌‌May 2023.  Chartered Accountants Ireland, in discussions with HMRC about closure of the portal, expressed concern that businesses not signed up to MTD for VAT in time, would be unable to file their VAT return and pay any VAT due. This relaxation by HMRC for certain businesses is a helpful time limited compromise. Such businesses must sign up to MTD for VAT in order to file any returns due after‌‌‌ ‌‌1‌‌‌ ‌‌December 2022 if they file monthly or quarterly VAT returns, or they could face a penalty. Businesses with turnover over £85,000, who have been mandated to use MTD for VAT since 2019, and who are still not signed up will not be able to use the online VAT portal from 1 November 2022 and cannot avail of this relaxation. If a business is already exempt from filing VAT returns online or if they or their business are subject to an insolvency procedure, they are automatically exempt from MTD. Check if they can apply for an exemption sets out guidance on the exemption process. HMRC will consider each application on a case-by-case basis Last week, HMRC began to send emails to agents to let them know about the relaxation for returns due by certain businesses by 7 November 2022. HMRC will also be contacting these businesses directly by email on Wednesday 19 October. 

HMRC’s latest schedule of webinars is now available for booking. Spaces are limited, so take a look now and save your place. HMRC 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 email HMRC prior to the webinar, including the title of the webinar in the ‘Subject’ line of your email. HMRC will answer as many questions as possible on the day. Making Tax Digital for VAT: register here This webinar will provide some of the basics of Making Tax Digital for VAT. This includes what has changed, using software and keeping digital records, plus an introduction to penalty reform. From April 2022, these requirements apply to all VAT-registered businesses, including those with turnover below the £85,000 VAT registration threshold. How to register for VAT using the VAT1 form: register here This webinar will explain how to register for VAT using the VAT1 form and will also focus on the most common errors made when completing this form with tips provided on how to avoid mistakes. Using VAT484 form to report changes: register here This webinar will explain how to complete form VAT484 to report any changes to your client‘s VAT registered business. This includes changing business contact details, VAT return dates, business partners and cancelling VAT registration. Capital allowances and vehicles: register here This webinar will cover the rules for cars, qualifying expenditure, pools and rates and vehicle hire purchase. Trade losses: register here This webinar will explain how trade losses can be relieved and will provide examples of the different loss relief provisions, time limits applicable to each claim and further points to consider. Income from property for individual landlords – part 1: register here This webinar will look at restricting finance cost relief and the cash basis eligibility and computational rules for property income. Income from property for individual landlords – part 2: register here This webinar will examine some of the main expenses and deductions including the treatment of capital expenditure, repairs and the property allowance for property income.

This update brings news of Making Tax Digital (“MTD”) for VAT and specifically HMRC communications ahead of the closure of the online VAT portal from 1 November. An update on the MTD for income tax trial is also provided. MTD for VAT As planned, the online VAT portal for submitting VAT returns is due to close from 1 November 2022 to ensure those required to sign up to MTD for VAT do so. Earlier this month, HMRC issued letters to those still not signed up. This is to be followed up later this month with direct emails to taxpayers. An email will also be sent to appointed agents from the beginning of November setting out information on what happens next and how to support clients from 1 November. Last week HMRC issued a Press Release highlighting the closure of the online VAT portal from 1 November and the requirement to sign up to MTD for VAT. MTD for income tax MTD for income tax is due to commence from 1 April 2024. At present, the pilot remains at Stage 1 (handholding and entry route via software developers only) while some technical issues are reviewed. There are currently 97 participants in the pilot with participation limited to those with an accounting period ending 5 April. Chartered Accountants Ireland and the other Professional Bodies have expressed their concerns to HMRC about MTD for income tax and will continue to do so.

HMRC’s latest schedule of webinars is now available for booking. Spaces are limited, so take a look now and save your place. HMRC 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 email HMRC prior to the webinar, including the title of the webinar in the ‘Subject’ line of your email. HMRC will answer as many questions as possible on the day. Making Tax Digital for VAT: register here This webinar will provide some of the basics of Making Tax Digital for VAT. This includes what has changed, using software and keeping digital records, plus an introduction to penalty reform. From April 2022, these requirements apply to all VAT-registered businesses, including those with turnover below the £85,000 VAT registration threshold. How to register for VAT using the VAT1 form: register here This webinar will explain how to register for VAT using the VAT1 form and will also focus on the most common errors made when completing this form with tips provided on how to avoid mistakes.

The Institute continues to engage with HMRC on Making Tax Digital (“MTD”) and the Government’s Tax Administration Strategy. Over the summer, the Institute was represented at various forum meetings at which the many barriers to the successful introduction to MTD for income tax from April 2024 were discussed and highlighted including the lack of available software and the limited numbers of taxpayers participating in the trial. During a meeting at the end of August ahead of the announcement of the new Prime Minister and her ministerial team, the Institute and other Professional Bodies reiterated the need for HMRC to take stock now of the very challenging timetable for MTD for income tax and revise this, where required, to enable HMRC to  re-consult with stakeholders. Business, taxpayers and HMRC alike would benefit from this additional time and collaboration. HMRC should also focus on delivering current objectives well rather than over-stretching capacity. Even more pressing, MTD for VAT and the closure of the online VAT portal from 1 November 2022 was also highlighted as a major concern given this could impact on the Exchequer if businesses are not signed up to MTD for VAT on time and are unable to pay the VAT due online. The Professional Bodies are clear that further digitalisation of the UK tax system is only possible if it is delivered and implemented in such a way that it allows businesses and taxpayers sufficient time to prepare and participate in trials. The UK Government also needs to deliver certainty and stability for businesses during the current cost of living and energy crisis. The Professional Bodies stressed that any in-year tax changes being considered by the Government should take this into account.

HMRC’s latest schedule of webinars is now available for booking. Spaces are limited, so take a look now and save your place. HMRC 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.  Making Tax Digital for VAT: register here This webinar will provide some of the basics of Making Tax Digital for VAT. This includes what has changed, using software and keeping digital records, plus an introduction to penalty reform. From April 2022, these requirements apply to all VAT-registered businesses, including those with turnover below the £85,000 VAT registration threshold. If you have any questions, please send them to email HMRC prior to the webinar, including the title of the webinar in the ‘Subject’ line of your email. HMRC will answer as many questions as possible on the day.

From 1 November 2022, HMRC has announced that its online VAT return portal will close to the majority of VAT registered businesses who should be using Making Tax Digital (“MTD”) for VAT. HMRC has also now published more detailed guidance on MTD for income tax as recommended by Chartered Accountants Ireland in its response to the recent consultation on the MTD for income tax tertiary legislation. Closure of online VAT return portal From 1 November 2022, businesses and agents will only be able to file VAT returns using MTD for VAT compatible software. Businesses will no longer be able to use their existing VAT online account to file their quarterly or monthly VAT returns. However, the online VAT return will remain available to those with a digital exclusion exemption and businesses that file annual returns will still be able to use their VAT online account until 15 May 2023. VAT registered businesses must sign up to MTD for VAT and use MTD for VAT compatible software to keep their VAT records and file their VAT returns. From 24 August 2022, HMRC began contacting businesses that still need to sign up. If a business hasn’t signed up to MTD and started using compatible software already, they must follow these steps:- Step 1 - choose MTD-compatible software that’s right for your business – you can find a list of software  on GOV.‌‌‌UK. Chartered Accountants Ireland recommends you discuss this with a Chartered Accountant. Step 2 - check the permissions in your software – once you’ve allowed it to work with MTD, you can file VAT returns. Step 3 - keep digital records for current and future VAT returns. Step 4 - sign up for MTD and file future VAT returns using MTD-compatible software. MTD for income tax detailed guidance HMRC has now published more detailed MTD for income tax guidance in the following publications:- Check if you can sign up for MTD for Income Tax; Check when to sign up for MTD for Income Tax; Using MTD for income tax; and Sign up as an individual for Making Tax Digital for Income Tax.

That’s according to the Northern Ireland Tax Committee in its response to the consultation “Tertiary legislation for Making Tax Digital for Income Tax”. The Committee also highlighted the lack of available software and the importance of ensuring that detailed guidance is not only developed as soon as possible but that it must explicitly set out the digital record keeping requitements for businesses under Making Tax Digital (“MTD”) for income tax. The Committee also made the following recommendations:- HMRC should work at pace and aim to publish the final MTD for Income Tax notices and more detailed guidance as a matter of urgency; The reporting simplification for smaller businesses should be automatically available to those business with turnover less than £85,000 and this simplification should be de-linked from the VAT registration threshold; HMRC should establish a dedicated MTD for Income Tax exemptions unit to deal with exemption applications; and HMRC should also explore what further categories of exemptions should be made available. In other consultation news, HMRC has also recently published two further consultation outcomes:- Call for evidence: An Independent Customs Regime; and Employment status. The Institute responded to both of these consultation; you can read our submissions here and here. The employment status consultation was conducted in 2018 and its outcome is only now being published. According to the accompanying email from the Department for Business, Energy and Industrial Strategy, the Government has also announced new employment status guidance designed to provide additional clarity for businesses, individuals and other groups such as those in the gig economy, so that they have a better understanding of which employment status for employment rights (including pay, leave and working conditions) an individual falls into. The guidance also makes reference to an update to the ‘Calculating the Minimum Wage’ guidance which has been refreshed to provide more information about what counts as working time for National Minimum Wage purposes in the gig economy. The guidance is being published alongside the Government response to this consultation on employment status, where many respondents called for additional clarity around the employment status boundaries and examples of how to apply the rules to different scenarios. A new consultation on the UK Single Trade Window (“STW”) has also been recently opened. This consultation sets out the UK government’s proposed approach to four key areas where legislation will be needed to enable the full functionality of the STW:- The collection, use and sharing of data within government; Enabling government visibility, and use of, supply chain data;  Facilitating trade through targeted international data sharing with other countries and territories; and Transitioning to the STW as the sole point of entry for border data required for transactional processes. The Government is interested in any views or feedback to ensure the STW improves UK businesses’ ability to import and export by reducing costs and burdens, and ultimately drives economic growth. Should you wish to discuss the proposals, please contact btbo-event-enquiries@cabinetoffice.gov.uk.

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. Making Tax Digital for VAT: register here This webinar will provide some of the basics of Making Tax Digital for VAT. This includes what has changed, using software and keeping digital records, plus an introduction to penalty reform. From April 2022, these requirements apply to all VAT-registered businesses, to include those that have a turnover below the VAT threshold.

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. HMRC’s latest update on the agent forum is also available in addition to the May 2022 Digital Services update which features the latest on Making Tax Digital and cyber security.

HMRC has recently published research on readiness for MTD for income tax self-assessment (“MTD for ITSA”) and VAT and a new compliance check factsheet has also been published setting out the potential penalties which will be charged if a business does not meet the necessary conditions of MTD for VAT. VAT Notice 700/22: Making Tax Digital for VAT has also been updated and the MTD for ITSA pilot is expected to open up from next month. HMRC is also sending reminder emails this week on MTD for VAT. Research on MTD readiness HMRC commissioned Ipsos Mori to conduct research on readiness for MTD for ITSA mandation, which is scheduled to commence in April 2024. The research consisted of a quantitative telephone survey of 2,200 businesses supported by 30 in-depth qualitative interviews. The research was used to provide a segmentation of the ITSA population to inform HMRC’s strategies for communication and support tailored to the needs of different groups. Six distinct groups have been formed by HMRC based on perception of readiness for MTD. This was based on their current practices, business structure, comfort using technology and life stage of the business. These are being discussed via various HMRC MTD sub-group forums which Chartered Accountants Ireland is participating in. According to HMRC, the key findings are as follows:- Readiness is affected by a number of key characteristics including age, business complexity, digital capability and record keeping practices; 67 percent of the research population are deemed “capable” by HMRC of meeting their MTD requirements based on these characteristics; Similar numbers of businesses (38 percent) reported that they will find their MTD obligations easy compared to those who said they will find it difficult (35 percent); and The research suggests areas in which the least prepared businesses may require further support, largely in the need for information on choosing suitable software, facilitating trial runs of MTD and allowing a grace period for first submissions. Research has also been published on readiness for MTD for VAT which took effect for businesses with turnover below £85,000 from 1 April 2022. This research was conducted by Yonder between June 2021 and January 2022. According to the survey results, there appeared to be a general lack of awareness of the specific requirements of MTD VAT. HMRC tells us that by the middle of May 2022, approximately 40 percent of those mandated to use MTD for VAT from April 2022 had signed up to do so. Businesses are not able to register until their final non-MTD VAT return has been filed hence it is expected that further tranches of businesses will sign up to MTD VAT in the coming months (depending on their VAT return stagger return period). MTD for VAT penalties The new compliance check factsheet on MTD for VAT penalties sets out long awaited information and guidance on the penalties that apply for failure to comply with MTD for VAT. Note that the new factsheet only deals with MTD for VAT penalties and does not deal either with the default surcharges rules or the new VAT points based late submission and payment penalty system that begin to take effect from 1 January 2023. These rules were originally scheduled to commence from 1 April 2022 but were delayed nine months as recommended by Chartered Accountants Ireland. A filing penalty of up to £400 for every return filed can be applied to a business that does not sign up to MTD for VAT and continues to file its VAT return in a way that does not use MTD compliant functional compatible software. At a recent meeting with HMRC, HMRC stated that these penalties will begin to be charged later this year once all VAT records have been transferred by HMRC to its new database. A penalty of between £5 and £15 can be charged for every day of failure to comply with the MTD for VAT digital record keeping requirements (including the digital links requirement). Chartered Accountants Ireland continues to express the need for a soft landing for the smallest businesses in respect of MTD for VAT and remains concerned about a number of aspects of MTD for ITSA, including the low £10,000 turnover exemption, and the lack of both available MTD for ITSA compatible software and the trial roadmap which was due to be published in Spring 2022. MTD for VAT bulk emails Later this week, HMRC is expected to begin sending reminder emails on MTD for VAT to businesses with turnover below £85,000. It is expected that further emails will also be sent to the same population in July and August. MTD for ITSA pilot HMRC has issued a message to agents updating them on the MTD for ITSA pilot in the latest Agent Update. HMRC plans to extend the MTD for ITSA pilot by opening it up to more of the self-employed and landlords from 1 July 2022. HMRC are keen to say that anyone taking part will be able to test MTD ITSA before April 2024, including their own internal processes for managing MTD for ITSA. The message asks agents to think about which of their clients may be eligible to join the pilot for 2022/23. HMRC wants agents to consider how the pilot provides an opportunity to test MTD for ITSA with their clients early in addition to playing a key role in testing the new system before mandation in 2024.  Taxpayers with the following income types will be able to join the MTD ITSA pilot scheme from July 2022:- self-employment (including multiple self-employments); UK property; Gift Aid; Pay As You Earn income, including employment income and occupational pensions (excluding those with a coded-out liability);  UK interest; and   UK dividends.   Taxpayers will need to have an accounting period that aligns to the tax year (6 April to 5 April) to join the 2022/23 pilot and have MTD-compatible software. However, it remains concerning that only three software packages are available and no full roadmap for this pilot has been published as yet which HMRC had promised for Spring 2022. HMRC has stated that from 6 July it will be testing the first quarterly submission for 2022/23 for taxpayers already in the pilot, after which it aims to open up the pilot more widely to those with income types listed above. More information will be available in subsequent Agent Updates after HMRC has carried out initial stage 1 testing of core income types for the first quarterly submission. Chartered Accountants Ireland continues to discuss MTD with HMRC and will keep members updated.

Agent Update: issue 97 is now available and contains the latest guidance and information for tax agents and advisers. This edition of the Agent Update includes:- the increase in some National Insurance Contributions thresholds from 6 July 2022; residency and the remittance basis charge; changes to VAT penalties; P11D and P11D(b) filing and payment deadlines next month; and Making Tax Digital (MTD) for Income Tax Self-Assessment – do you have clients who may want to join the pilot?  

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. Introduction to Plastic Packaging Tax: register here Find out about the new Plastic Packaging Tax and what to do if you produce or import plastic packaging. Plastic Packaging Tax – admin and technical aspects: register here This webinar contains more detail about the administrative and technical aspects of the new Plastic Packaging Tax. Making Tax Digital for VAT: register here This webinar will provide some of the basics of Making Tax Digital for VAT. This includes what has changed, using software and keeping digital records, plus an introduction to penalty reform. From April 2022, these requirements apply to all VAT-registered businesses, to include those that have a turnover below the VAT threshold.

HMRC’s latest schedule of webinars is now available for booking. Spaces are limited, so take a look now and save your place. 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. Declaring your grants on your Company Tax Return (CT600): register here This webinar provides an overview of how to report COVID-19 support payments and grants on a company tax return, what happens if you’ve claimed too much and records you need to keep. Making Tax Digital for VAT: register here This webinar will provide some of the basics of Making Tax Digital for VAT. This will include what’s changing, using software and keeping digital records, plus an introduction to penalty reform. From April 2022, these requirements will apply to all VAT-registered businesses, to include those that have a turnover below the VAT threshold.

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. HMRC’s latest update on the agent forum is also available in addition to the March 2022 Digital Services update which features the latest on Making Tax Digital and cyber security.

The new tax year 2022/23 begins later this week on 6 April 2022 after the new financial year commenced last week on 1 April 2022. 5 April 2022 is  the deadline to claim certain allowances and reliefs such as claims for the marriage allowance which are still in time for the tax year 2017/18 but only up to 5 April 2022. Let’s take a look at the key tax changes which take effect as a result. Income Tax and National Insurance Contributions The headline changes which will apply from 6 April 2022 are the 1.25 percent increase in National Insurance Contributions (“NICs”) which was announced in September 2021. Class 1, (employee and employer), Class 1A and 1B and Class 4 (self-employed) NICs are all affected. From 6 April 2022, the rate of income tax on dividends will also increase by 1.25 percent from 7.5 percent to 8.75 percent for basic rate taxpayers. Higher rate taxpayers will pay 33.75 percent up from 32.5 percent and additional rate taxpayers will pay 39.35 percent, up from 38.1 percent. In the recent Spring Statement, the Chancellor announced that from 6 July 2022, the primary threshold for Class 1 national insurance contributions (“NICs”) by employees will increase from £9,880 in 2022/23 to £12,570 for the remainder of 2022/23. The lower profits limit for Class 4 NICs is set to increase to £11,908 from the same date. From 6 April 2022, self-employed individuals with profits between the small profits threshold (£6,725 for 2022/23) and the lower profits limit will not pay Class 2 NICs, however such individuals will be able to continue to build NICs credits for the purposes of contributory state benefits. Also from 6 April 2022, the Employment Allowance (which allows eligible employers to reduce their annual Employer’s Class 1 NICs liability) will increase by £1,000 to £5,000. There is no change to the personal allowance which remains at £12,570, nor to the other rates of income tax and their bands but the Chancellor did announce during the Spring Statement that he intends to reduce the 20 percent income tax rate to 19 percent in 2024, subject to certain fiscal conditions being met. Making Tax Digital (“MTD”) for VAT From their first VAT period starting on or after 1 April 2022, VAT registered businesses (including the self-employed and landlords) with turnover below the £85,000 VAT registration threshold are required to operate MTD for VAT. This means that the following two conditions must be met:- They must keep their records digitally (for VAT purposes only) They must file their VAT returns using MTD compatible software. However, some businesses may be exempt from MTD for VAT under the digital exclusion exemption. For those that are not exempt, HMRC is not providing a soft-landing for either element of the MTD for VAT requirements. Chartered Accountants Ireland has written to the Financial Secretary to the Treasury setting out the case for providing a soft landing in respect of this major change. Red diesel changes From 1 April 2022, rebated diesel (known as red diesel) and rebated biofuels are no longer allowed to be used as they were previously. This means that businesses in the construction industry can no longer use red diesel for most purposes. From 1 April 2022 you can only use rebated fuel for the following specific purposes: For vehicles and machinery used in agriculture, horticulture, fish farming and forestry (includes allowing vehicles used for agriculture to be used for cutting verges and hedges, snow clearance and gritting roads) To propel passenger, freight or maintenance vehicles designed to run on rail tracks For heating and electricity generation in non-commercial premises. This includes the heating of homes and buildings such as places of worship, hospitals and townhalls; off-grid power generation; and non-propulsion uses on permanently moored houseboats For maintaining community amateur sports clubs and golf courses As fuel for all marine craft refuelling and operating in the UK, except for propelling private pleasure craft in Northern Ireland For powering the machinery of travelling fairs and circuses. A HMRC webinar setting out the changes is available to view here:- https://www.youtube.com/watch?v=hwdiKDMgM6s Miscellaneous A number of new taxes also came into operation this month including the Plastic Packaging Tax and the Residential Property Developer Tax. The Plastic Packaging Tax came into force on 1 April 2022 and is charged at a rate of £200 per tonne. If a business has manufactured or imported 10 or more tonnes of finished plastic packaging components within the last 12 months, or will do so in the next 30 days, it must register with HMRC for this tax. This applies to plastic packaging manufactured in, or imported into the UK, that does not contain at least 30 percent recycled plastic. Plastic packaging is packaging that is predominantly plastic by weight. The Residential Property Developer Tax (“RPDT”), which also applies from 1 April 2022, is charged on profits of companies which arise from residential property development and which are recognised in accounting periods ending on or 1 April 2022, but only if profits from that activity exceed £25 million per year (this allowance can be allocated by groups between its companies). Profits in excess of the allowance are taxed at a rate of 4 percent, with the tax due required to be reported and paid as part of the company’s Corporation Tax return. The legislation for this was enacted in Finance Act 2022 with the initial guidance which was available now published in the new RPDT manual. This was developed by HMRC in conjunction with stakeholders and provides further clarifications on how RPDT will operate, including a number of examples. Other notable changes from 1 April 2022 include increases in the National Minimum Wage and Living wage hourly rates, the requirement imposed on certain large businesses to notify HMRC of an uncertain tax treatment and the extension to various corporation tax creative sector reliefs. From 6 April 2022, there is also a new requirement that companies must meet to be able to reclaim Construction Industry Scheme (“CIS”) deductions. This requires contractors who wish to reclaim CIS deductions via their Employer Payment Summary (“EPS”) to include details of their Corporation Tax Unique Taxpayer Reference number on the EPS. HMRC has also issued guidance on its new power to publish information about tax avoidance schemes. Following Royal Assent to Finance Act 2022, Section 86 provides HMRC with a power to publish information about tax avoidance schemes and about persons suspected to be promoters of those schemes. The guidance explains when details may be published, the type of information that may be published and where it may be published, together with the process for making representations about whether the information should be published. HMRC’s new powers and penalties to tackle the form of tax evasion known as electronic sales suppression (“ESS”) came into effect when Finance Act 2022 received Royal Assent on 24 February 2022. ESS is where a business manipulates electronic sales records to hide or reduce the value of individual transactions. This reduces the recorded turnover of the business and its tax liabilities, while providing an apparently credible and compliant audit trail. The new powers aim to ensure businesses pay the right amount of tax and also to level the playing field for compliant businesses by tackling the possession, making, supply and promotion of ESS tools (ESS software and hardware). The penalty is a fine of up to £50,000. There are also new ESS-specific information powers. These powers allow HMRC to obtain details of those involved in the supply chain of ESS tools and to understand more about the tools. Safeguards for taxpayers include giving businesses a 30-day grace period to remove the software to avoid a penalty and the right to appeal against any penalties.

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