Latest Tax news

In Irish news, the Department of Finance has published the Fiscal Monitor for August 2024, the PBO has published an overview of taxes on wealth in Ireland, and Revenue has published new guidance on the CAT reporting requirements for certain interest-free loans. In UK news, HMRC has announced a delay to the new data reporting requirements which were due to take effect for employers from April 2025 and this week’s miscellaneous updates features a new report from the National Audit Office on tax avoidance and evasion in the retail sector. Ireland The Department of Finance has published the Fiscal Monitor for August 2024 showing an Exchequer surplus. The Parliamentary Budget Office (PBO) has published an overview of taxes on wealth in Ireland. Revenue has published new guidance on the CAT reporting requirements for certain interest-free loans. UK Read about HMRC’s decision to delay the new data reporting requirements which were due to take effect for employers from April 2025. The National Audit Office has published a new report on tax avoidance and evasion in the retail sector. 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. You can also read this week’s EU exit corner.    

From April 2025, businesses and employers were due to start providing more detailed employees’ hours data through PAYE Real Time Information submissions as proposed in the draft legislation: improving the data HMRC collects from customers. HMRC has announced that this specific aspect will not now commence from April 2025 due to concerns about their being insufficient lead in time to upgrade software and the delay caused by the general election. Although a revised timeline has not yet been announced, HMRC has said that this requirement will now not apply until April 2026 at the earliest. The announcement came in the most recent HMRC News and Information Bulletin.  In response to the initial consultation examining these proposals, Chartered Accountants Ireland expressed its concern that the additional data to be collected was not warranted.  However, the April 2025 expected implementation date for the other new data to be collected is still expected to proceed as this is still viewed as being “achievable”. At present, the data in-scope are as follows:  Directors in owner-managed businesses will be required to provide the amount of dividend income received from their own companies separately to other dividend income, and the percentage share they hold in their own companies via their Self-Assessment return,  The self-employed will be required to provide information on start and end dates of self-employment via their Self-Assessment return.  HMRC did say however that “whether and when to proceed with implementing the regulations remains subject to decisions by the new government.”   A further update on these proposals and the timeline for implementing these changes will be provided in due course.  

Revenue has amended the Tax and Duty Manual which provides guidance on the prosecution and penalty programmes for VAT non-compliance. The guidance has been amended to remove references to Employer PAYE/PRSI/USC/LPT. The guidance now also includes the name and contact details of the Prosecutions Unit and information on how to make a penalty payment. 

Revenue has confirmed that the guidance in Failure to Co-Operate fully with a Revenue Compliance Intervention is no longer relevant as all of the information is now contained in the Code of Practice for Revenue Compliance Interventions. 

Revenue has updated the Tax and Duty Manual which provides guidance on the Dependent Relative Tax Credit. The updated manual clarifies that references to “maintaining at his or her own expense”, for the purposes of this tax credit, means financially maintaining the dependant relative by meeting their everyday living costs. Further information is available in eBrief No.234/24. 

Revenue has published a new Tax and Duty Manual regarding the new capital acquisition tax (CAT) reporting requirements relating to certain interest-free loans. Where a person is deemed to take a gift in respect of a loan, they may be required to report information in relation to the loan under section 46(4A) CATCA 2003.  The guidance contains examples of loan arrangements that fall within the definition of a 'specified loan' for the purposes of the legislation. Examples of circumstances where the reporting requirement arise and the due dates for filing the information in a Form IT38 return are also provided. 

The Central Statistics Office (CSO) has published the Quarterly National Accounts for the second quarter of 2024. Modified Domestic Demand fell by 0.5 percent relative to the previous quarter, but was up 1.5 percent on an annual basis. Continued volatility in the multinational sector was reflected by a decline in gross domestic product (GDP), down 1.0 percent in Q2 2024, and declining by 4.0 percent on an annual basis.   Commenting on the figures, Minister for Finance, Jack Chambers TD, said:  “While I recognise the fall in GDP in the second quarter of this year, GDP is not a useful measure in assessing the living standards of domestic residents, given the outsized role the multinational sector plays in our economy. The fall in GDP reflects the volatile nature of activity in the multinational sector.  In terms of the domestic economy, Modified Domestic Demand – my preferred metric of Ireland’s economic performance – declined on a quarterly basis, but recorded positive growth of 1.5 per cent on an annual basis.  I am pleased to see that consumer spending contributed positively to this growth, with consumption increasing by 1.3 per cent on an annual basis. The growth in consumer spending, alongside robust exchequer figures released yesterday and the strength of our labour market highlights the relatively healthy position of our domestic economy at present.  Looking ahead, inflation has now eased back significantly and is expected to remain on a stable trajectory over the short term. This will help boost real incomes which should further support growth in our domestic economy in the second half of the year.  My Department will publish updated macroeconomic and fiscal forecasts as part of the Budget early next month. Budget 2025 will ensure we continue to support families, workers and businesses while also investing in our public services and infrastructure to prepare us for the challenges that we face now and into the future” 

At the hosting of a naming and commissioning ceremonies for two new Naval Service vessels, Tánaiste and Minister for Defence, Micheál Martin TD, announced that the Sea-going Naval Personnel Tax Credit will be extended for a further five years. 

The Parliamentary Budget Office (PBO) has published a new report – An Overview of Taxes on Wealth in Ireland. The report provides an overview of taxes on wealth, including property and assets, in Ireland. It outlines existing taxes, their value to the Exchequer, and identifies relevant recommendations from the Commission on Taxation and Welfare.   As tax revenues in Ireland are highly concentrated on income and corporation tax receipts from a relatively small number of taxpayers, the report notes the need to consider broadening the tax base on a greater variety of sources. However, it cautions that as those who pay taxes on wealth are more likely to be high earners, this could lead to increased concentration of overall tax receipts from a relatively small proportion of taxpayers and must be considered within the context of the overall competitiveness of Ireland’s economy.   The report concludes that additional base-broadening measures should be considered by government to increase the number of taxpayers and further diversify revenue sources. 

The Department of Finance has published the August 2024 Fiscal Monitor which details an Exchequer surplus of €3.8 billion recorded to end-August 2024. While this was an increase of €4.1 billion on the same period last year, the comparison is skewed by the transfer of €4 billion to the National Surplus (Reserve Fund) in the first half of 2023. Tax revenues to end-August 2024 were €59.8 billion, an increase of €6.7 billion (12.6 percent) ahead of the same period last year.  Income tax, VAT, excise duties and, in particular, corporation tax, all recorded strong growth, with income tax receipts increasing on the prior period last year by €1.4 billion (6.9 percent) to €22.2 billion. On a year-to-date basis, VAT receipts are up €1.0 billion (7.5 percent) totalling €14.5 billion. Corporation tax receipts for the period totalled €16.3 billion, €3.6 billion (28.4 percent) on the same period last year.  Commenting on the figures, the Minister for Finance, Jack Chambers TD said:  “The tax figures published today are further evidence of the resilience of our economy.  The most notable feature of the August performance was the substantial increase in corporation tax receipts. While much of the increase in August relates to a technical timing factor, and offsets a decline earlier in the year, in the year-to-date this revenue stream is now well ahead of last year.  However, as I have cautioned previously, these receipts are clearly subject to exceptional volatility. Put simply, there is no guarantee that these revenue streams will remain at this level indefinitely, and it is crucial that we do not build permanent spending commitments on the back of these.  With the two new investment funds – the Future Ireland Fund and the Infrastructure, Climate and Nature Fund – we are setting aside a portion of windfall tax receipts to prepare for future fiscal challenges.  At the same time, Government will continue to calibrate a budgetary policy that balances the need to address the pressures of today and while, at the same time, maintaining our public finances on a sustainable trajectory over the medium-term.  Budget 2025, which Minister Donohoe and I will present to the Oireachtas on October 1st, will be framed on this basis.” 

In this week’s miscellaneous updates, HMRC has been writing to approved producers of alcoholic products in the UK to tell them about the new digital service due to be launched in March 2025 and how to get ready. The minutes from the most recent Joint VAT Consultative Committee and Guidance Strategy Forum meetings are available. We update you below on P87 (tax relief for employment expenses) processing and the National Audit Office (NAO) has published a report on tackling tax evasion in high street and online retail.  The fuel advisory rates applicable to company car users from 1 September 2024 have been published and the latest  schedule of HMRC live and recorded webinars for tax agents is also available for booking. Spaces are limited, so take a look now and save your place. And finally, check HMRC’s online services availability page for details of upcoming planned downtime and the online services affected.  P87 processing  HMRC is expected to provide a more detailed update on this issue later in September. However, we have been advised of the following in the meantime:  “HMRC has withheld the processing of some employment expense claims due to concerns about whether the relief claimed is due.   HMRC wants to make sure that customers get the tax repayments they are entitled to in as straightforward manner as possible. However, we also need to make sure that where we identify customers who are making errors, we take action to put things right for the customer and prevent similar mistakes from occurring in the future. This is why we are asking some customers to provide further evidence.  We will provide more information to customers impacted by this in due course.”   NAO report on tax evasion in high street and online retail  The NAO reported recently on tax evasion in high street and online retail in the context of HMRC estimating that tax evasion costs around £5 billion a year in lost revenue and is most prevalent among small businesses. The report examined whether HMRC, with other parts of government, is well-placed to tackle tax evasion in high street and online retail and also examined specific risk areas in more depth.   The report concluded that HMRC has had success in raising more tax from online retail by making online marketplaces liable for the VAT on sales by overseas retailers, which generated more than HMRC expected. However, significant weaknesses remain in government systems which tax evaders can easily exploit, most notably around company registrations and the ability of overseas businesses to falsely represent themselves as UK-established.  Tax evasion has been growing among small businesses, and HMRC has so far lacked an effective strategic response. Although there are good examples of localised campaigns targeting some retailers, HMRC missed earlier opportunities to tackle others, potentially allowing their market share to grow.  HMRC’s assessment of risks has also given too little emphasis to widely used methods of evasion such as sales suppression and “phoenixism”, despite identifying that they were large and potentially growing. This means HMRC may not prioritise the most effective compliance interventions. It has also not used some new powers to tackle tax evasion. While these remain untested, they will offer less deterrence.  Tackling tax evasion is not a straightforward task, and with finite resources HMRC must work with the rest of government and other stakeholders to find the most cost-effective way to reduce evasion.  HMRC’s overarching strategy to tackle non-compliance by preventing it from occurring is sensible, but it has not followed through on this principle sufficiently for tax evasion. Real opportunities exist for HMRC to work more systematically across government to reduce evasion.  The report also concluded that HMRC does not measure its overall performance in responding to tax evasion, although the examples highlighted in the report suggest high returns. The likelihood is that tighter controls and more compliance work could raise significant sums and would be cost-effective and improve value for money.   

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 bulletin is also available as is the latest Brexit and Beyond newsletter from the Northern Ireland Assembly EU Affairs Team.  Miscellaneous updates to guidance and publications  Check if a business holds Authorised Economic Operator status,  Data Element 2/3 Documents and Other Reference Codes (National) of the Customs Declaration Service (CDS),  Get an individual guarantee to cover customs debts,  Delivery terms for Data Element 4/1 of the Customs Declaration Service,  Data Element 2/3: Documents and Other Reference Codes (Union) of the Customs Declaration Service,  External temporary storage facilities codes for Data Element 5/23 of the Customs Declaration Service,  Due diligence when making customs declarations.