Latest Tax news

In response to recent public health restrictions on the hospitality sector to reduce the spread of COVID-19, Minister for Finance, Paschal Donohoe T.D. announced a targeted support for the sector last Friday. The scheme will be modelled on the Covid Restrictions Support Scheme, providing targeted and timely support to those affected. The Minister expects the scheme to be open for applications this week, with payments commencing shortly after. However, the Employment Wage Subsidy Scheme (EWSS) will remain in place at current rates of payment and qualification criteria. The Pandemic Unemployment Payment (PUP) is expected to reopen tomorrow. A weekly payment will be made to qualifying businesses in the sector whose trade is significantly impacted due to the restrictions set out in Health Regulations. Businesses who expect their turnover to be below half of what it was in 2019 will qualify for this additional support. The payment will amount to 12 percent of turnover for the same week in 2019 up to a maximum weekly payment of €5,000. Speaking about the scheme last Friday, Minister Donohoe detailed: “My officials are working with the Revenue Commissioners to develop this scheme and it is expected to be open for applications by next week with payments commencing shortly afterwards.” The Minister also confirmed that COVID-19 supports are being kept under review and “there will be no cliff-edge to supports for citizens and businesses”. A press release issued by the Department of the Taoiseach also details that the Employment Wage Subsidy Scheme (EWSS) will remain in place at current rates of payment and qualification criteria. It is also confirmed that there will be a further extension to the commercial rates waiver for the first quarter of 2022, and additional funding of €25 million will also be made available to support the live entertainment sector. In addition to the announcement of targeted supports for the hospitality sector, the reopening of the PUP was announced last Friday. The PUP is expected to reopen for a limited period to support people who may lose employment as a result of the change in restrictions. Minister for Social Protection, Heather Humphreys, T.D. confirmed: “My Department is finalising arrangements and full details will be announced, and the scheme will be ready for new applicants, by Tuesday.” In the press release issued by the Department of the Taoiseach, it was detailed there will be a number of refinements to the PUP design to target it more effectively. Further details will be made available by the Department of Social Protection.

Chartered Accountants Ireland, under the auspices of the CCAB-I, made representations to Revenue on the difficulties facing companies, due to COVID-19 disruption, in meeting the 23 December iXBRL deadline. Revenue confirmed that companies and their accountants can seek to make arrangements to ensure that a late filing surcharge and restriction on loss and group relief is not imposed where a company is genuinely unable to file iXBRL financial statements due to extenuating circumstances. A Revenue representative confirmed: Further to Item 6 on iXBRL Filings from TALC Collections on 25 November, we have issued an internal update to Revenue colleagues to say that some companies may be unable to submit their iXBRL financial statements for the year ended 31 December 2020 before the 23 December 2021 deadline due to difficulties completing audits and signing off on financial statements during the ongoing Covid-19 pandemic. As such, we’ve advised that they may see an increase in requests for waivers of Corporation Tax surcharges where the iXBRL submission is filed late and/or requests for tax clearance in the absence of the iXBRL submission. We then reminded colleagues that they may waive the Corporation Tax surcharge or issue tax clearance on a case-by-case basis when a company is genuinely unable to file the iXBRL financial statements due to extenuating circumstances, for example where key personnel are absent due to Covid. Affected companies should contact their operational branch via MyEnquiries where they wish to request a waiver of the Corporation Tax surcharge and/or request tax clearance. It was also confirmed that Revenue staff will consider withdrawing loss relief/group relief restrictions, which apply on the late filing of iXBRL financial statements, on a case-by-case basis. Requests to have surcharges waived and restrictions on loss relief/group relief withdrawn on a case-by-case basis should be submitted through MyEnquiries; select the “Corporation Tax” and “iXBRL” dropdown categories. Revenue confirmed that these queries will be prioritised. In line with Part 3.1.4 of the iXBRL Tax and Duty Manual, it was confirmed that filers can submit draft iXBRL financial statements, without permission from Revenue, where the only issue pending is director(s) sign off of the financial statements. The TDM confirms that in these circumstances, there is no need to resubmit the iXBRL financial statements, when they are signed-off later [unless the draft statements are different to the final ones submitted]. Where there are other issues giving rise to the draft financial statements, filers are required to contact the Revenue through MyEnquiries; select the “Corporation Tax” and “iXBRL” dropdown categories. Filers must outline the reason(s) for the draft financial statements and request permission to submit draft financial statements in that situation. If this is agreed, then the final signed-off set of financial statements must also be submitted in iXBRL format.

Revenue amended the Tax and Duty Manual Filing and paying Stamp Duty on Instruments - Chapter 3: Tax Reference Numbers. Included in the list of amendments is the new requirement for Irish incorporated, non-resident companies and foreign bodies corporate and unincorporated, to provide the tax reference numbers of associated companies registered in Ireland with a request for a tax reference number for the purposes of filing a stamp duty return. Read more for the details on further amendments. The amendments to the manual are as follows: Section 1.1 has been updated with a clarification for deceased non-resident persons. Section 1.4 has been updated with the new requirement to include associated companies' tax reference numbers, in addition to existing requirements. Section 1.5 has been updated to cover both bodies corporate and incorporate, in addition to the new requirement to include associated companies' tax reference numbers. Section 2 Tax types has been removed. Section 5 has been updated to provide clarification on the need to file stamp duty returns for Deeds of Assent. Section 7 has been added on the requirement for Embassies to register for tax with Revenue on Form TR2 (FT). Section 9 has been updated on the requirement for a written application for an exemption from electronic filing of stamp duty returns, in favour of a paper form. See Revenue eBrief No. 220/21 for further details. 

Revenue published a new Tax and Duty Manual Part 01-01 - Meaning of a “residential property”.  Where a property is a “residential property” on 1 November in a given year, the property is liable for local property tax (LPT) for the following year.  In determining whether a property is a “residential property”, Revenue makes reference to the below matters: whether a property is a “building”, as defined in section 2 of the Local Property Tax Act 2012; the exclusion of certain types of structure; what constitutes a “dwelling”; the use of a property as a dwelling or its suitability for such use; the inclusion of associated buildings and land; and the extent of the associated land to be included. The manual also addresses some ancillary matters such as valuation issues and Revenue determinations and appeals. See Revenue eBrief No. 221/21 for further details. 

Revenue updated the Tax and Duty Manual Part 07-02 - Surcharge (income tax, corporation tax, capital gains tax) – which sets out the surcharge that can be imposed for non-compliance with the filing of local property tax (LPT) returns and the payment of LPT liabilities. The updates relate to the cap on an LPT-generated surcharge and the confirmation that a late 2022 LPT return would not generate a surcharge on the filing of a 2020 Form 11. The manual has been updated to take account of: the reduction in the size of the cap on the surcharge from 100 percent to 50 percent of the LPT liability where a person becomes fully LPT-compliant; and the eBrief issued on 12 November 2021 stating that the late filing of an LPT return after the 10 November 2021 filing date (extended from 7 November) would not generate a surcharge for the income tax Form 11 return for the year 2020. See Revenue eBrief No. 219/21 for further details. 

Revenue’s preliminary local property tax (LPT) statistics as at 2 December indicate that return compliance for 2022 is now at 80 percent, while payment compliance stands at 90 percent. The due date for payment of 2022 LPT for property owners without a payment option in place is 12 January 2022. Revenue’s preliminary analysis indicates that average LPT valuations returned by property owners are comparable to average sales prices from the Central Statistics Office (CSO). The average valuation band selected by property owners required to value their properties on 1 November 2021, for their 2022 LPT obligations is €200,001 - €265,500, while the average sales price in September 2021 per the CSO was €295,000. Revenue details that “the minor difference between LPT valuations and the most recent sales prices are to be expected give the nature of the two data sources being compared and the characteristics of Ireland’s property market”. Revenue notes in its key findings within the statistical report that it has “confidence that property owners filing their LPT returns have overall made reasonable and honest efforts to determine the appropriate valuation band for their property.” Page 7 of the statistical report provides the average valuation band selected and the average sales price in each Local Authority area. Dublin City, Dún Laoghaire-Rathdown, Offaly, South Dublin and Wicklow have average sales price higher than the upper end of the average LPT valuation band limit. 

It was another busy week last week for tax practitioners as the Government’s Tax Administration and Maintenance (“TAM”) Day took place on Tuesday 30 November. As part of TAM Day, the Government published a Tax Administration and Maintenance command paper and confirmed that a roadmap for future consultation on its Tax Administration Framework review will be published in 2022. We’ve highlighted the key announcements below together with links to key documents published. Raising Standards in the Tax Advice Market The summary of responses to the consultation on raising standards in the tax advice market has been published, along with an update on this work and the next steps. This consultation sought views on whether to introduce mandatory professional indemnity insurance (“PII”) for tax advisers, and the definition of tax advice. After carefully considering the consultation responses, the Government has decided not to introduce the PII requirement at this time, following feedback that on its own, it would not be an effective mechanism to raise standards across the market or have a meaningful impact on consumer protection. Instead, there will be a consultation in 2022 on options to improve the wider regulatory framework around standards in tax advice. This is in line with the recommendations in Chartered Accountants Ireland’s response to this consultation which was conditionally supportive of mandatory PII subject to the need for additional measures in the area of raising standards including to enhance consumer protection. Timely payment A response to this Call for Evidence which examined mandating real time payments of income tax and corporation tax was also published. In line with the Institute’s recommendation not to mandate timely payment, the consultation response confirms that no changes will be made to the timing of tax payments in this Parliament. It also sets out the next steps, namely:  Exploring the best approach to achieving more accurate in-year tax calculations via a voluntary in-year calculation proof-of-concept pilot; Forming a working group with external stakeholders to explore how best to support taxpayers and help understand the implications and impacts of timely payment for different types of business and sectors, in particular low income or vulnerable taxpayers; and Continuing to make improvements to HMRC’s Budget Payment Plan, a voluntary tool for ITSA taxpayers who are up to date with their self-assessment payments and wish to make regular weekly or monthly payments towards their next tax bill (another of the Institute’s recommendations). Making Tax Digital for corporation tax The Government’s response to this consultation confirms that MTD for CT will not be introduced any earlier than April 2026. No income based exemptions will be introduced. The key message is that the government will continue to work with stakeholders on the design of MTD for CT. Review of the Office of Tax Simplification (“OTS”) As required by Finance Act 2016, HM Treasury conducted a review of the effectiveness of the OTS in its role as independent adviser to the Chancellor on simplifying the tax system. The first five-year OTS review has been now published. The review concluded that the need for the OTS’s statutory function to advise the Chancellor on simplification of the tax system remains undiminished and also sets out a number of recommendations to maximise the impact of the OTS as it continues to mature as an organisation over the next five-year period and beyond, including that the OTS: Expose their reasoning behind their recommendations, particularly where there are trade-offs between simplification and other policy objectives that government must consider; More clearly prioritise those recommendations which the OTS considers of most value to taxpayers; Maintain and expand the breadth and balance of knowledge, experience and expertise within the Secretariat, while also seeking professional expertise in how it consults externally; Consider the volume and type of output it produces, and focuses more on activities that build its preliminary evidence base and embed its work; and, Clarifies its aims and objectives in light of its articulation of how it interprets ‘tax simplification’, using this to inform which areas it will prioritise over the next five year period to maximise its impact. Reforming Research and Development (“R&D”) tax reliefs At Autumn Budget 2021, the Government announced that R&D tax reliefs would be reformed to support modern research methods by expanding qualifying expenditure to include data and cloud costs (as recommended by this Institute); to capture more effectively the benefits of R&D funded by the reliefs, through refocusing support towards innovation in the UK; and to target abuse and improve compliance. The government has now published a report providing further detail and the next steps for the review, alongside a summary of responses to the consultation from earlier this year. New evaluation framework Although not announced on TAM Day, HMRC recently published a new evaluation framework which sets out the Department’s approach for achieving HMRC’s evaluation vision of good quality monitoring and evaluations of policies, programmes and projects in line with government good practice. The framework is intended to “deliver proportionate and systematic evaluations, transparency in our evaluation decision-making and build a stronger evidence base.” TAM Day publications Key consultation responses, new consultation and publications related to TAM Day are as follows:- Chancellor responds to OTS reports on Inheritance Tax and Capital Gains Tax; Check the status of tax policy consultations; Tax policy consultations; R&D Tax Reliefs Report; R&D Tax Reliefs: consultation; Landfill Tax Review: call for evidence; 2021 Review of the Office of Tax Simplification: Final Report; Small Brewers Relief: technical consultation; Call for Evidence: umbrella company market; Tax administration and maintenance: Autumn 2021; Governments sets out steps to modernise and simplify UK tax system; Tax Administration and Maintenance: Autumn 2021; 2021 Review of the Office of Tax Simplification; Review of tax administration for large businesses; Chancellor responds to the Office of Tax Simplification; Use of marketed tax avoidance schemes in the UK; Review of tax administration for large businesses; Call for evidence: Income Tax Self Assessment registration for the self-employed and landlords; Call for evidence - Individual Savings Accounts: compliance and penalties; Call for evidence: modernising tax debt collection from non-paying businesses; Draft regulations: Mandatory Disclosure Rules; Corporation Tax: response to accounting changes for insurance contracts; Stamp Duty Land Tax: mixed-property purchases and Multiple Dwellings Relief; Insurance Premium Tax: administration and unfair outcomes; Proposals on the treatment of aggregate removed during construction works; Hidden economy conditionality - Northern Ireland and Scotland; Transfer pricing documentation; Making Tax Digital for Corporation Tax; Call for evidence: the tax administration framework: supporting a 21st century tax system; Call for evidence: timely payment; Reform of the taxation of securitisation companies; Call for Evidence: Simplifying the VAT Land Exemption; and Raising standards in the tax advice market.

In response to our letter in October, Chartered Accountants Ireland will be meeting with the Financial Secretary to the Treasury in the next few weeks to discuss the concerns we expressed in respect of basis period reform, Making Tax Digital and tax complexity. We’d like to hear your views on these important areas. Email leontia.doran@charteredaccountants.ie by the end of this week with your views.

HMRC has sent Chartered Accountants Ireland the below message about their corporation tax and VAT phonelines which will be closed for the first three Fridays of December 2021. The Institute will be discussing this with HMRC as no warning was given that this was planned which comes at a busy time for corporation tax in particular for 31 December 2020 year ends. “What is happening? In December, we will run a trial of reducing the hours on some of our telephony services so that we can dedicate the time to work post that has built up over the past year. To test the approach, we will close our VAT and CT phone lines (with the exception of the bereavement line) on 3,10 and 17 December.   Why have you done this? As you know, over the course of the pandemic, we made choices about the work we prioritised in order to protect our essential services and the livelihoods of our customer groups who need it the most. We prioritised the COVID support schemes, the UK’s smooth transition from the European Union and the essential services that keep the tax system running.   We are in a year of recovery and are making solid progress. In the first half of the year, we focused on stabilising our phone services and our tax credits/child benefit services – while we maintained our customs services well within targets and supported the smooth running of the COVID support schemes until they closed in October.   Recently, we’ve been able to move more resources back into our core tax activities now that the Covid schemes have ended, and we’re adding further capacity through temporary recruits (contingent labour).  We are now working through the stocks of post that built up over the past year. We are doing this while keeping our helpline service levels and processing stable, and making sure we are prepared for key events in the coming weeks like the Self-Assessment peak and the introduction of full EU full customs controls in January.  By April, we expect to be delivering normal (pre-pandemic) performance across our core service lines – in terms of the work we have on hand, our turnaround times and the running of our real-time channels.  What happens next? As with any trial, we’ll keep a close eye on our progress, responding to any issues as we go. Towards the end of December, we’ll take a view on what to do next and update you in the first week of January. We will also be: Sending a bulk email to agents Publishing the message on the Agent Online Forum Revising the outbound phone messaging to reflect the change from 3pm this afternoon Including an update in the Stakeholder Digest next week.” 

Revenue’s preliminary statistics on the COVID-19 support schemes as at 2 December include information on the Employment Wage Subsidy Scheme (EWSS), the Business Resumption Support Scheme (BRSS) and the Covid Restrictions Support Scheme (CRSS). With a reduced subsidy rate applying since 1 December, the amount of EWSS payments were €12.8 million. EWSS There are 26,600 employers currently registered with Revenue for EWSS. This has fallen from 27,900 employers the week previous. As notified in Tax News on 22 November, Revenue is undertaking an exercise to deregister employers who are not actively claiming the EWSS. New subsidy rates took effect last Wednesday, 1 December. Employers will experience the below reduction compared to the subsidy paid to the end of November 2021. Employee gross weekly wage Weekly subsidy paid to 30 November 2021 Weekly subsidy payable December 2021 – February 2022 Difference Less than €151.50 Nil Nil €0 From €151.50 to €202.99 €203 €151.50 €51.50 From €203 to €299.99 €250 €203 €47 From €300 to €399.99 €300 €203 €97 From €400 to €1,462 €350 €203 €147 More than €1,462 Nil Nil €0   Further details on the subsidy payable from 1 March 2022 to the end of the scheme (30 April 2022) is available in Revenue’s main guidelines on the operation of the EWSS. BRSS The latest date by which a claim for the BRSS could be made was 30 November 2021. As at 2 December, 2,150 businesses with 2,300 trades availed of BRSS and claims of €6.8 million were made under the scheme. CRSS There are currently 40 businesses with 150 premises registered for CRSS. 17,400 premises have claimed for ‘Restart Week’ payments totalling €73 million since 10 May 2021 and are now trading without the support of CRSS. Total claims amount to €704 million. See the latest COVID-19 support schemes statistics for more. 

The annual EU VAT Gap Report published last week shows that Member States lost an estimated €134 billion in Value-Added Tax (VAT) in 2019. The VAT Gap measures overall difference between the expected VAT revenue and the amount actually collected in EU Member States. The €134 billion VAT Gap is lost to fraud and evasion, VAT avoidance and optimisation practices, bankruptcies and financial insolvencies, as well as miscalculations and administrative errors. The overall EU VAT Gap decreased by almost €6.6 billion 2019, an improvement on the previous year’s decrease of €4.6 billion. Ireland’s VAT Gap results are outlined on page 36 of the report. The VAT Gap in Ireland went up by approximately 0.3 percent year on year to €1,721 million in 2019. For more information you can read the report here.

HMRC has recently begun writing to VAT registered businesses with turnover below the VAT registration threshold (£85,000) in advance of the requirement to comply with MTD for VAT from April 2022. The first tranche of letters began to be sent last month and continues into this month and is being sent to VAT stagger 1 and 2 quarterly filers in addition to those filing monthly or annual VAT returns. We understand that letters will also be sent to stagger 3 quarterly filers from February 2022. Some businesses may be exempt from MTD for VAT under the digital exclusion exemption. As a result, HMRC is accepting applications from those who require an exemption from April 2022.