This week we bring you a report from HMRC that Russia considers itself to have unilaterally suspended substantially all of its Double Tax Treaty (“DTT”) with the UK, and HMRC is seeking feedback on the impact that the Self-Assessment Helpline closure has had on the work of agents. A reminder has been issued that from 20 July 2023 assignments of income tax repayments are not accepted as valid nominations and minutes are available from the May 2023 Wealthy External Forum meeting which the Institute was represented at. We have also been asked to remind companies of the need to submit the additional information claim form when submitting claims for R&D tax relief. And finally, the House of Lords Finance Bill Sub-Committee has opened an inquiry into the draft Finance Bill 2023/24; the deadline for written evidence submissions is Friday 6 October 2023.
Suspension of UK/Russia DTT
Russia has suspended substantially all material provisions of many of its Double Taxation Agreements by Presidential decree dated 8 August 2023. This action affects 38 countries, including the 1994 UK-Russia Double Taxation Convention, and the UK was notified on 15 August 2023.
The suspension includes the treatment of dividends, interest, royalties, capital gains, business profits, employment income and pensions, together with protection against discrimination. The provision for elimination of double taxation has not been fully suspended. The suspension likely means that Russia will not honour any agreed limits on what it may tax at source, and that only limited relief from double taxation will be available in Russia.
According to the announcement on GOV.UK, the UK-Russia Convention does not permit this unilateral action hence the UK has asked Russia to reverse the suspension, considers the treaty to remain in force, and is continuing to comply with its terms. The government is considering next steps and will provide further information in due course.
Impact of SA helpline temporary closure on agents
HMRC is currently evaluating the impact of the recent closure of its Self-Assessment Helpline which reopened earlier this month following a closure period from 12 June to 4 September 2023. As part of this, HMRC is also seeking to better understand the impact of the closure on agents. If you have any feedback about the impact on agents that you think would be valuable to share, please email external.affairs@hmrc.gov.uk.
Deeds of assignment no longer treated as nominations
From the date of the Spring Budget on 15 March 2023, assignments of income tax repayments were rendered void. However, for a transitional period only, HMRC continued to accept nominations of income tax repayments as non-legally binding nominations.
This transitional period ended in July meaning from 20 July 2023 any assignment of an income tax repayment is no longer accepted as a nomination. As a result, HMRC will repay the taxpayer directly where there is no valid nomination.
Reminder: importance of submitting additional information form with R&D tax relief claims
HMRC has asked us to issue a reminder that from 8 August 2023, R&D tax relief claims by companies will only be considered as valid when accompanied by the additional information form (“AIF”). According to HMRC, nearly half of all R&D tax relief claims received between 8 August and 3 September 2023 did not include the AIF.
As a result, we are aware that HMRC is in the process of writing to companies and/or agents that have submitted claims for R&D tax relief without the AIF. The letter advises that the R&D claim is not valid and as a result has been removed from the company tax return but can be reinstated if the return is amended to include the R&D claim and the AIF, if this is within the time limit to do so.
The letter advises that boxes 656 and 657 of the company tax return should be ticked, where appropriate, to indicate that a R&D claim notification and AIF have both been submitted.
Readers are advised that a known error is preventing some claimants (those claiming under the “large” company R&D expenditure credit scheme) from making an entry in both boxes 655 and box 657.
HMRC advises that if an error appears, the company should not make entries in these boxes and should instead use the white space on the corporation tax return to say that an R&D claim is being made and the AIF has been completed and submitted.
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