Latest Tax news

In Irish news, tax receipts remain strong in 2022 and Revenue publishes guidance on the new ROS Return Preparation Facility. In UK news, the Institute does not recommend further tax devolution for Northern Ireland at this time and HMRC transfers remaining businesses to Making Tax Digital for VAT. On the International front, OECD data reveals tax revenues rebounded as economies recovered from the COVID-19 pandemic. Ireland November Exchequer figures confirm that tax receipts remain strong in 2022. Revenue has published detailed guidance on accessing and using the new ROS – Return Preparation Facility (RPF), enabling taxpayers and tax agents to complete forms without the need to log into ROS, save the forms on their local computer and upload the files to ROS at a later time. UK     3. The Institute does not recommend further tax devolution for Northern Ireland at this time.     4. HMRC transfers remaining businesses to Making Tax Digital for VAT. International     5. OECD data reveals tax revenues rebounded as economies recovered from the COVID-19 pandemic. 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.    

In the OECD’s recent publication, Revenue Statistics 2022, data is presented in relation to tax revenue for the second year of the COVID-19 pandemic which illustrates that the OECD average tax-to-GDP ratio rose by 0.6 percentage points in 2021 to 34.1 percent, the second-strongest year-on-year increase since 1990. In another report recently published by the OECD, Consumption Trends 2022, the growth in e-commerce is highlighted with most OECD countries implementing reforms to ensure that VAT is collected effectively on online sales, in line with OECD standards, ensuring a level playing field between bricks-and-mortar businesses and online merchants.

The OECD is hosting a webinar in the form of a Q&A session on Amount B where OECD experts discuss some of the main features of the draft rules. Amount B provides for a simplified and streamlined approach to the application of the arm's length principle to in-country baseline marketing and distribution activities, with a particular focus on the needs of low-capacity countries. This event will take place on Thursday, 8 December and will be recorded and will be made available on the OECD YouTube channel within 24 hours.

In its response to the local Department of Finance “Consultation on devolution of more fiscal powers”, the Institute does not recommend that the Northern Ireland (“NI”) Executive, if re-established, consider any other taxes for devolution at the present time. The ongoing political instability in NI is a strong argument against further devolution of taxes. Once re-established, the NI Executive should instead pursue the completion of corporation tax devolution. In doing so, it should begin by following the pre-requisite steps set out in the Independent Fiscal Commission’s interim report. A public consultation should be launched to explore potential mechanisms to mitigate the impact of the cost of NI corporation tax via the block grant reduction. Any new NI Executive should also work with the Office of National Statistics, HM Revenue and Customs and the Northern Ireland Statistics and Research Agency to improve data on tax receipts in NI. The Institute also took the opportunity to urge all political parties to consider the impact that lack of government in the region is having on public services, businesses and, ultimately, on citizens. It is hope that, through good faith discussions, a mutually agreed solution on the Protocol can be reached as soon as possible which protects peace and jobs, provides prosperity for all and enables the Executive to be re-established.

In this week’s EU exit corner, we bring you the latest guidance updates and publications relevant to EU exit. We also update you on recent developments in relation to the Protocol on Ireland / Northern Ireland. HMRC has now published in one place a new collection bringing together guidance on customs valuation rules for imported goods and the latest FAQs on the Customs Declarations Service (“CDS”) are available. Update on the Protocol The Northern Ireland Protocol Bill remains at Report Stage. At the end of November, the House of Lords Sub-Committee on the Protocol on Ireland/Northern Ireland wrote to the Foreign Secretary on the Northern Ireland Protocol Bill and also published a news story on this.   The letter summarises the findings of the Committee’s inquiry into the Bill and takes account of 11 evidence sessions held in Westminster, a visit to Newry and Belfast, and nearly 40 written submissions from a range of Northern Ireland stakeholders and experts, including Chartered Accountants Ireland. In order to inform the House’s continued scrutiny of the Bill, the Committee has requested a response to the questions outlined in the letter by 13 December 2022. The Welsh Senedd recently voted on the Bill and did not give consent (35 votes for, 15 against) to the UK Parliament considering the provisions of the Bill which fall within the legislative competence of the Senedd. Updated guidance on customs valuation HMRC has published a collection of guidance on working out the customs value of imported goods. The purpose of the collection is to bring together in one place all the relevant information on customs valuation. The collection includes guidance on:- ·valuation methods; ·valuing different types of goods; delivery costs; how to calculate the import VAT payable; rates of exchange; and different types of charges and fees. Miscellaneous updated guidance etc. The latest guidance updates, and publications relevant to EU exit are as follows:- Customs declaration completion requirements for Great Britain; Customs Declaration Completion Requirements for The Northern Ireland Protocol; Data Element 2/3 Documents and Other Reference Codes (National) of the Customs Declaration Service (CDS); Data Element 2/3: Documents and Other Reference Codes (Union) of the Customs Declaration Service; Apply to use simplified declarations for imports; Apply to import goods temporarily to the UK; Customs Declaration Completion Requirements for The Northern Ireland Protocol; and Customs declaration completion requirements for Great Britain.

HMRC has now closed its online VAT return to businesses who should now be signed up to Making Tax Digital (“MTD”) for VAT. This means that businesses no longer have to sign up to MTD for VAT. Businesses that file annual VAT returns are still able to use their VAT online account and will automatically be signed up after 15‌‌‌ ‌‌May 2023. If a business has not started using MTD for VAT function compatible software, HMRC has set out the necessary steps which must be followed in an email.

HMRC’s new interactive P2 notice of coding tool went live on GOV.UK recently. This new guidance has been produced specifically to support taxpayers and improve their understanding of tax codes. HMRC has also contacted us to advise that it is making changes to form P87(Income Tax relief for employment expenses) which will take effect from 21 December 2022. P2 notice of coding guidance The new P2 guidance allows taxpayers to select guidance linked to their needs and intuitively responds to the information they provide, with an explanation of their tax position. If any further action is required, it will give clear instruction on what needs to be done.  The guidance aims to improve taxpayer’s confidence in handling their own tax affairs and their ability to self-serve. Changes to P87 From 21 December 2022, new additional information requirements for P87 forms include:- all the details in section 1, except for the title and contact phone number which are optional; employer PAYE reference number in section 2 – this is available from the Personal Tax Account, the HMRC app, P45 or P60; type of industry in section 2 if claiming flat rate expenses. Any forms received on or after 21‌‌‌ ‌‌December 2022 that do not include the required information will be rejected.  According to HMRC, these changes are being introduced to improve taxpayer experience as it takes HMRC longer to process forms without the required information, resulting in delayed payments. HMRC wants to pay taxpayers the money they are due as quickly as possible and ensure time is used efficiently.

The latest tidbits cover HMRC’s response to the 2021/22 adjudicator’s report and the latest advisory fuel rates.

Revenue has issued a new version of the Form IREF. Irish Real Estate Funds (IREFs) with accounting periods ending between 1 January 2022 and 30 June 2022 are required to file the updated Form IREF on or before 30 January 2023, as provided by section 739R(2) TCA 1997.

Revenue has updated the Tax and Duty Manual that provides guidance on capital gains tax relief on disposals of certain land or buildings under section 604A TCA 1997. The updated guidance includes confirmation that the relief may apply in respect of disposals of land or buildings located in the UK. This reflects an amendment made to section 604A TCA 1997 by the Withdrawal of the United Kingdom from the European Union (Consequential Provisions) Act 2020. In addition, Revenue has clarified that the meaning of “consideration” for the purpose of the relief is “the amount or value of the actual consideration in money or money’s worth given by the person or on the person’s behalf wholly and exclusively for the acquisition of the asset, together with the incidental costs to the person of the acquisition”.

Revenue has published a new Tax and Duty Manual that provides detailed guidance on accessing and using the new ROS – Return Preparation Facility (RPF). The RPF enables taxpayers and tax agents to complete forms without the need to log into ROS, save the forms on their local computer and upload the files to ROS at a later time. As previously advised, the RPF has been available since the end of November 2022. Forms prepared and saved using the RPF, which is accessed through a link on the ROS Login screen, must be uploaded using ROS Online to ‘Sign and Submit’ the return. The following forms are currently available on the RPF: eStamping Form 11 2022 Form 11 2020 Form 1 (Firms) 2022 Form 1 (Trusts and Estates) 2022

With November being the most important month of the year for tax receipts, the Minister for Finance noted that the recent November Exchequer figures indicate that “[t]he ongoing strength in income tax, in particular, is a positive signal of the continued momentum in the labour market”. The Exchequer surplus stood at €6.2 billion, on a 12-month rolling basis. However, it is concerning that if the recent windfall corporation tax receipts are excluded, there is an underlying deficit of approximately €5 billion on a 12-month rolling basis. November is a VAT-due month, it is the deadline for self-employed income tax payments, and the month in which the largest payments are made for corporation tax. Total tax receipts for the month of November amounted to €13.6 billion. Corporation tax receipts in November amounted to €5 billion, which is 25 percent higher than November last year. However, some of these receipts are expected to be once-off in nature and will not reoccur next year. Income tax receipts of €4.4 billion in November are 16 percent ahead of November 2021 and reflect continued increases in earnings as well as also the strength of self-employed income. VAT receipts for the month of November are up 19 percent on the same period last year, with almost €3.1 billion being collected, reflecting the recovery in consumer spending. Commenting on the figures, the Minister stated: “Our economy has recovered remarkably well from the shock caused by the impact of Covid-19. This is due to the careful management of our public finances during what was a testing period for the country. I fully appreciate that for so many the rising cost of living, and in particular, the cost of energy is a real challenge. The Government has and will continue to help citizens and businesses deal with these rising costs but we must ensure that the support we provide is sustainable and does not put our public finances on an unsustainable path. By delivering a budget surplus and putting aside these potentially transient corporation tax receipts it will ensure that we are in a position of strength to deal with unforeseen challenges that may yet be around the corner as well as the more longer-term challenges that we need to make progress on too.” See the Fiscal Monitor November 2022 for further details.