Although not featured in the Chancellor’s speech, buried in the Autumn Statement 2023 publications is the outcome of HMRC’s recent small business review. This comprises what is referred to as a “package of changes to simplify the design of Making Tax Digital”. A separate corporate report with more detail was also published which provides details of further work and next steps. The package of changes announced includes maintaining the current MTD turnover threshold at £30,000 and design changes which aim “to simplify and improve the system”. These changes will take effect from April 2026 when MTD for income is initially scheduled to commence for self-employed business and landlords with turnover of more than £50,000. Earlier this year, Chartered Accountants Ireland met with HMRC to discuss the review and highlighted several concerns, including the need for HMRC to increase the exemption threshold. We are pleased to see that HMRC has decided, at present, to maintain the turnover limit at which MTD will be mandated to £30,000, effectively increasing this from the original exemption limit of £10,000. Taxpayers with turnover from £30,000 to £50,000 are still mandated to join MTD from April 2027. However, the government will keep under review the turnover less than £30,000 population. These changes specifically:- simplify the requirements for all taxpayers providing quarterly updates, and for taxpayers with more complex affairs, such as landlords with jointly owned property; remove the requirement to provide an End of Period Statement; exempt some taxpayers, including those without a National Insurance number, from MTD; and enable taxpayers using MTD to be represented by more than one tax agent.      

In Irish news, the Institute wants to hear members views on the proposal for real-time digital reporting of VAT, while Revenue  has provided contact details for platform operators with DAC7 registration queries and it is to hold a further webinar on the Enhanced Reporting Requirements for employers. In UK news, this week’s miscellaneous updates brings news about the publication of new Guidelines for Compliance for R&D tax relief claims. In International news, the European Commission has published the Autumn 2023 Economic Forecast which shows that the European economy has lost momentum. Ireland Revenue’s public consultation on real-time digital reporting for VAT – we want to hear from you. Revenue has provided useful contact information for DAC7 registration and filing queries for platform operators that are obliged to register with Revenue by 30 November 2023. Revenue is holding an online webinar on Thursday 30 November on the Enhanced Reporting Requirements (ERR) for employers which is scheduled to commence from 1 January 2024. UK Read about the new Guidelines for Compliance in respect of R&D tax relief claims. International The European Commission has published the Autumn 2023 Economic Forecast which shows that the European economy has lost momentum. 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 here.

The European Commission has published the Autumn 2023 Economic Forecast which indicates that the European economy has lost momentum this year against the background of a high cost of living, weak external demand and monetary tightening. Although economic activity is expected to gradually recover, the Autumn Forecast revises EU GDP growth down compared to its summer projections.

The OECD is to publish Corporate Tax Statistics 2023 tomorrow Tuesday 21 November, alongside a new working paper on effective tax rates of multinational enterprises. The publication provides comprehensive insights into corporate tax systems and the tax and economic activities of thousands of multinational enterprises operating around the world.

The OECD is to publish new evidence on global low-taxed profit of multinational enterprises (MNEs) as part of its series of OECD Taxation Working Papers. Using a new dataset on the global activities of large MNEs, the paper provides new estimates of the distribution of effective tax rates of large MNEs across and within jurisdictions.  The results show that low tax profit is common, and that substantial low-taxed profits exists outside low tax jurisdictions.

Kuwait has joined the OECD/G20 Inclusive Framework on BEPS, an international collaboration with over 140 member countries and jurisdictions. Kuwait will participate in the implementation of the Two-Pillar Solution to tackle tax avoidance, improve the coherence of international tax rules and ensure a more transparent tax environment.

Revenue has updated the Tax and Duty Manual regarding Securitisation Regulation: Notification of Investment following publication of the updated EU list of non-cooperative jurisdictions for tax purposes on 23 October 2023. The updated manual reflects the revised list, with relevant examples, and links to official journals of the EU also updated.

Revenue has published an updated Tax and Duty Manual to provide information for PAYE taxpayers on how to review their tax using MyGovID or MyAccount. The screenshots and guidance on the Employment Detail Summary have also been updated.

Later this week, Chancellor Jeremy Hunt will deliver his second Autumn Statement on Wednesday 22 November. On the day, the Institute will be reporting on key tax announcements with detailed analysis to follow in next Monday’s Chartered Accountants Tax News. It has also been confirmed that the 2024/25 Scottish Budget will take place on 19 December 2023 and the Welsh Government has announced that it is planning to publish the outline and detailed draft budgets on 19 December 2023, with the final Budget scheduled for 27 February 2024. In last week’s cabinet reshuffle, Nigel Huddleston MP was appointed as Financial Secretary to the Treasury.  The recent King’s speech provided little insight into what the government’s future tax policy may look like, though perhaps this is not unexpected as a UK general election looms in 2024. However, one thing we do expect to hear about on Wednesday is the outcome of HMRC’s review into Making Tax Digital for income tax for the smallest businesses. Earlier this year, Chartered Accountants Ireland met with HMRC to discuss the review and highlighted several concerns, including the need for HMRC to increase the exemption threshold. 

As previously reported, Revenue has published general guidance for platform operators on how to register with Revenue for the reporting obligations in Ireland for the purpose of DAC7.  Registration must be completed by 30 November 2023. In addition, Revenue has included the relevant contact details relating to registration queries on its Automatic Exchange of Information (AEOI) webpage.  Filing queries may also be placed here and they will be directed accordingly.

This week we bring you news about new Guidelines for Compliance in relation to R&D tax relief claims and read HMRC’s email about new letters being sent in relation to R&D tax relief claims. HMRC has also published updated guidance on refunds of Section 455 tax on loans made by close companies to participators/associates, and, as previously advised, 23 November 2023 is the date by which action must be taken in respect of certificates of tax deposit. The latest Employer Bulletin is available which includes a timely reminder on reporting PAYE information in real time when payments are made early at Christmas and the November 2023 Agent Update has been published. HMRC performance statistics are now available for the quarter end September 2023 and HMRC has also recently launched a new marriage allowance tool.  R&D Guidelines for Compliance  On 31 October, HMRC published several Guidelines for Compliance (“GfC”) to help potential claimants check if work qualifies as R&D for tax relief purposes. References to claims for tax relief in the GfC mean either:- claims to additional deductions for R&D expenditure under the SME regime; or  claims to the R&D expenditure credit under the “large” company regime.  According to HMRC, the examples included therein aim to help companies understand general principles that apply to all R&D claims and have also been designed to help avoid common errors made when identifying and submitting R&D relief claims.    The GfC’s objectives are therefore to assist claimants to:-  find out if work may qualify as research and development for tax purposes;  understand HMRC’s expectations of those making claims;   better understand HMRC’s view of who is considered a competent professional;  be able to judge if a project is seeking an advancement in science or technology;  understand the meaning of ‘scientific or technological advance’ for tax purposes;   decide where the project begins and ends for the purposes of an R&D claim; and  understand the level of evidence relating to a qualifying project that HMRC may want to see.  According to HMRC, the publishing of these GfCs is an indication of HMRC’s commitment to improve and publish guidance that helps and supports claimants. In the coming months, HMRC is aiming to introduce further new guidance for potential R&D tax relief claimants.  HMRC also recently updated their directions under Regulations 3 and 10 of Income and Corporation Taxes (Electronic Communications) Regulations 2003 (SI 2003/282) in respect of the Additional Information Form (“AIF”) which must be submitted for all R&D tax relief claims from 8 August 2023. In limited circumstances, the updated regulations allow HMRC to accept the AIF to be submitted by email.   R&D letters  HMRC has sent the below email to Chartered Accountants Ireland which sets out details of new letters being sent out in relation to R&D tax relief claims which HMRC believes to be incorrect. Read the email below.  Email to Chartered Accountants Ireland  “In ‘HMRC’s approach to Research and Development tax reliefs’, we set out the scale of non-compliance in the regime, and the related need to use the full range of investigative and compliance techniques to address this.   One element in this is the use of paragraph 16 of schedule 18 to Finance Act 1998 where it’s appropriate for us to do so.   Paragraph 16 sets out:   “16(1) An officer of Revenue and Customs may amend a company tax return so as to correct–   (a) obvious errors or omissions in the return (whether errors of principle, arithmetical mistakes or otherwise), and   (b) anything else in the return that the officer has reason to believe is incorrect in the light of information available to the officer.”  We are correcting returns to remove Research and Development (R&D) tax relief claims where there is reason to believe they are incorrect, based on the information available to us. In these circumstances HMRC issues letters to help customers understand the reasons why we believe an R&D tax relief claim is not valid. This is aimed at claims where we’ve received information about the claim, but we believe it to clearly not be a valid claim (where there is any uncertainty an enquiry will remain the best option).   We wanted to highlight this approach to you in case you have had questions from your members.  New Letters  Additionally, we would also like to inform you of two letters the R&D Anti Abuse Unit (AAU) will be issuing imminently in response to claims being received that have a high risk of being invalid based on the information available to us:  The first letter will be issued where we suspect no advance in science or technology has been sought by the business, but where they may be advancing their own state of knowledge only.  The second letter will be issued in similar circumstances to the above but where the company is in a specific business sector where we wouldn’t normally expect R&D for tax purposes to have taken place, for example, hairdressers, beauticians, and personal trainers. Whether a company is in a specific business or trade sector is not the only consideration. This information is used in conjunction with other methods of identifying the correct customer base, so that we can reach as many companies as possible who may be approached by less than scrupulous R&D sales agents.   Both letters will request that the claimant reviews HMRC’s R&D tax relief guidance to see whether the activities they have claimed does qualify for relief. After reviewing the guidance, if the claimant finds that their activities does not qualify, they will be asked to amend their return with the R&D claim removed. If the claimant still believes they qualify, the letter will ask for them to provide further information to evidence the claim.”  Why are we issuing these letters  Reinforcing HMRC’s commitment to tackle error and fraud in the R&D tax reliefs system, the Anti Abuse Unit was set up in July 2022. The team’s aims include increasing compliance activity to quickly and effectively identify deliberately incorrect claims. The AAU also aims to increase HMRC’s efforts to educate, encourage and facilitate genuine businesses to get it right first time, reducing error as well as tackling abuse.  These letters are intended to both educate and reduce error, by informing businesses of the correct meaning of R&D for tax purposes, and tackle abuse of the system by ensuring clearly unqualifying claims are scrutinised."  Agent Update 114  Agent Update: issue 114 is available now. Get the latest guidance and information including:- electric charging of company cars and vans at residential properties;  property business arrangements involving hybrid partnerships – Spotlight 63;  second-hand motor vehicle VAT margin scheme deadline extension;  electronic sales suppression a year on: HMRC continues clamping down on major till fraud;  tips for when you must use post; and  the Income Record Viewer’s coding data extension from current year-only to include the previous 4 tax years.  Marriage allowance tool   We recently notified readers that at a recent meeting HMRC advised that although the marriage allowance online form is not currently mandatory, using the form may mean that claims are processed quicker. HMRC has now launched a new tool to help taxpayers calculate their potential tax saving if they claim the marriage allowance. Both parties to the relationship will need their national insurance numbers to use the tool which only works in simple cases.   If a taxpayer is in receipt of other income such as interest, benefits in kind or dividends, they will not be able to use the tool and should instead call the Income Tax helpline. 

As previously reported, Revenue has launched a public consultation on Value-Added Tax (VAT) modernisation. Revenue’s objective is to introduce real-time digital transaction-level reporting for business-to-business (B2B) and business-to-government (B2G) trade, supported by mandatory electronic invoicing (e-invoicing) for such transactions. The proposed changes would be significant for all businesses, requiring changes not only to their VAT processes but to their wider finance and systems infrastructure.  The consultation opened on 13 October 2023 and closes on 12 January 2024. The Institute, under the auspices of the CCAB-I, is responding to this consultation. Members wishing to provide input can email us.  This consultation phase concentrates on B2B and B2G reporting. It does not consider Business to Customer (B2C) transactions, nor does it look at other matters, such as the approach to VAT payment/repayments and accounting for VAT. These will be among the topics covered in future consultations. Revenue is interested in the views of all businesses and their agents, software providers, accountants, bookkeepers, representative bodies, and other stakeholders regarding the development of a new real-time digital VAT reporting system. The consultation provides a list of questions for consideration. The questions are not exhaustive, and views are welcome on some or all of the questions and any other relevant matters. The questions asked are summarised below: What are your views on the proposal to introduce real-time reporting for B2B and B2G transactions?   What matters should be considered in planning for a transition to a new VAT Reporting system?   If your business is currently subject to a VAT reporting programme in another EU or non-EU country, can you please share best practice, recommendations or lessons learnt?   Have you any observations, concerns or recommendations on a move to mandatory electronic invoicing for B2B & B2G domestic VAT transactions?   Revenue is particularly interested in hearing views from businesses that are already engaged in e-invoicing Public Bodies within Ireland or engaged in B2B e-invoicing throughout Europe and beyond. How did you prepare and what challenges prevailed in your preparations for e-invoicing?   What suggestions would you offer in Ireland’s arrangements for a mandatory B2B and B2G e-invoicing programme?   Revenue is cognisant that small businesses may have different perspectives and requirements to large businesses, so what information prompts would you find useful for businesses in completing the VAT return?