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 Windsor Framework and the latest Trader Support Service bulletin is available. The Institute was also in attendance last week at the latest UK Domestic Advisory Group meeting. Windsor Framework update The House of Lords Protocol Sub-Committee on the Protocol is holding a follow-up evidence session on the implementation of the Windsor Framework. The UK Government has also now responded to the Committee’s report published in July. Various pieces of secondary legislation (set out below) have recently been published to implement the Windsor Framework and specifically the new trade operating model including the green and red lanes for agri-food and retail scheme which are due to commence later this week from 1 October. The House of Commons Library has published a briefing on the new rules for trading with the EU. The secondary legislation published is as follows:- Windsor Framework (Retail Movement Scheme: Public Health, Marketing and Organic Product Standards and Miscellaneous Provisions) Regulations 2023; Windsor Framework (Enforcement etc.) Regulations 2023. Windsor Framework (Retail Movement Scheme) Regulations 2023; Windsor Framework (Plant Health) Regulations 2023; Customs (Northern Ireland) (EU Exit) (Amendment) Regulations 2023 Windsor Framework (Financial Assistance) (Marking of Retail Goods) Regulations 2023; and Postal Packets (Miscellaneous Amendments) Regulations 2023. UK Domestic Advisory Group meeting Last week, the Institute was represented at the latest Domestic Advisory Group (“DAG”) meeting. The UK DAG is a consultative body designed to enable the government to hear from those most affected by the operation of the UK-EU Trade and Cooperation Agreement (“TCA”). The DAG has now established five sub-groups as follows, each of which reports back to the DAG on key issues with implementation of the TCA:- Trade and Customs; Regulatory Co-operation and Level Playing Field; Business and Labour Mobility; Energy and Climate Change; and Nations and Regions. Chartered Accountants Ireland participates in the Nations and Regions sub-group and would welcome your feedback on any issues specific to Northern Ireland. Readers are advised to note that the Windsor Framework is outside the remit of the UK DAG. In November, a further DAG meeting is scheduled to be held in advance of the annual UK-EU Joint DAG which the Institute will be attending. Miscellaneous updated guidance etc. The following updated guidance, and publications relevant to EU exit are available:- External temporary storage facilities codes for Data Element 5/23 of the Customs Declaration Service; Smart watch straps, watch bands and watch bracelets (Tariff notice 11); Transit newsletters — HMRC updates; Register with the UK ID issuer if your business is involved in the supply of tobacco products; Simplified rates for bringing personal goods into the UK; and Moving goods out of Great Britain using transit: step by step. Search the register of customs agents and fast parcel operators Transit newsletters — HMRC updates Delaying declarations for goods brought into Great Britain List of goods imported into Great Britain from Ireland that are controlled Moving qualifying goods from Northern Ireland to the rest of the UK; and Apply to use simplified declarations for imports.  

Readers are reminded that the Temporary Business Energy Support Scheme (TBESS) claims deadline is 30 September 2023. As previously reported, claims cannot be made after this date. 

Tax news readers will be aware from previous news that the new non-resident landlord withholding tax (NLWT) system enables tenants or collection agents to make Rental Notifications (RN) when making payments to a non-resident landlord. Validation rules in the system require collection agents to enter the Tax Reference Number (TRN) of the non-resident landlord they represent while both tenants and collection agents are required to submit the local property tax (LPT) identifier of the property, depending on who is filing the RN.  Revenue is aware of validation issues arising in relation to the input of incorrect tax reference numbers or local property tax identifiers. Where an error message is returned, and following confirmation of the TRN/LPT details provided by the landlord, the tenant or collection agent should contact Revenue through MyEnquiries. Revenue has advised that the tenant or collection agent should also email the NLWT team directly at info_NLWT@revenue.ie quoting the Enquiry ID number. As this is not a secure channel, client data should not be included in the email.  

Last week, Institute representatives attended an information meeting hosted by the Department of Finance in conjunction with officials from Revenue. An update on the revised EU “Green Deal” General Block Exemption Regulation (GBER), which was adopted on 1 July 2023 and comes into effect from 1 January 2024, and its impact was provided.  GBER is a European Commission regulation that allows Member States to put certain State aid schemes into place without prior notification to the EU Commission, provided certain conditions are met. The Employment Investment Incentive (EII), the Start-Up Relief for Entrepreneurs (SURE) and the Start-Up Capital Incentive (SCI must comply with GBER for all shares issued on or after 13 October 2015.   A copy of the slides from the meeting are available here. 

Revenue has updated its process to automatically offset relevant contracts tax (RCT) credits against tax liabilities as they fall due and tax returns are filed. Upon receipt of the RCT deducted by a principal contractor from a sub-contractor Revenue will automatically credit the subcontractor’s tax record. Automatic RCT offsets apply to employer’s PAYE, income tax, corporation tax, preliminary tax and VAT liabilities.   All automatic system offsets happen no later than seven days from the date the liability becomes due following submission of the relevant tax return. The taxpayer will receive a statement of account to their ROS inbox confirming an offset has been made.   Automatic offset of RCT credits does not apply to liabilities covered by the debt warehousing scheme or a phased payment agreement. Such an offset must be requested via MyEnquiries.

Last week, the Institute, under the auspices of the CCAB-I, wrote to the Taoiseach, Leo Varadkar T.D., and the Minister for Finance, Michael McGrath T.D., to express our members’ concern about the tax treatment of General Medical Services (GMS) income of General Practitioners (GPs) which will change from 1 January 2024. The CCAB-I and other bodies have been discussing this matter with Revenue over the past two years through the Tax Administration Liaison Committee (TALC) forum.  As previously reported, GPs in a medical practice, be they principals, partners or employees, will be required to self-assess for tax purposes on the GMS income earned in their name, with a credit for the attaching professional services withholding tax (PSWT).    Our members are concerned that taxing the GMS income of GPs in this manner does not make provision for the practice-wide scope of the GMS contract and will result in complex administrative procedures for medical practices where income is allocated between GPs and the practice depending on who treats certain categories of patient.   In addition, certain GPs employed by medical practices, that previously were simply subject to PAYE on their salary, will now also be subject to self-assessment on their GMS income. They will be required to file income tax returns and pay preliminary tax, while at the same time continuing as an employee of the practice. They may also be exposed to the 3 percent USC surcharge as self-employed individuals.   In light of such practical difficulties, CCAB-I requested that the tax treatment of income earned under contract by individuals acting on behalf of a practice be assessed on the principal or partners of the practice.  Revenue has confirmed that it will publish an updated Tax and Duty Manual in the coming weeks, in relation to the tax treatment of GMS income of GPs. CCAB-I will continue to liaise with Revenue and will inform members via Tax News.  

In Irish news, the Minister for Finance publishes a roadmap for the introduction of a participation exemption and Revenue issue invitations to webinars on the new Enhanced Reporting Requirements for employers. In UK news, read our update on Making Tax Digital for Income Tax Self-Assessment and this week’s miscellaneous updates includes a request from HMRC for feedback on the impact that the recent closure of the Self-Assessment helpline has had on the work of agents. In International news, the European Commission publishes BEFIT and transfer pricing proposals.  Ireland The Minister for Finance has published a roadmap for the introduction of a participation exemption and has also launched a public consultation on the design of the proposed systems. Revenue is issuing notices to agents’ and employers’ ROS inboxes, inviting them to register for webinars on the new Enhanced Reporting Requirements for employers. UK Read our update on what’s been happening with Making Tax Digital for self-assessment. This week’s miscellaneous updates includes a request from HMRC for feedback on the impact that the recent closure of the Self-Assessment helpline has had on the work of agents. International The European Commission has published two key proposals in the past week; Business in Europe: Framework for Income Taxation (BEFIT) and harmonised transfer pricing rules. 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.  

Last week the Institute attended HMRC’s Making Tax Digital (“MTD”) for Income Tax Self-Assessment (“ITSA”) quarterly forum meeting. The meeting provided an update on what’s been happening with the Small Business Review and also discussed the current MTD for ITSA trial. Small Business Review  HMRC advised that the outcome of this review into landlords and self-employed individuals with turnover less than £30,000 is expected to be announced sometime in the autumn but could not provide further details of when exactly this may be, except to say that any announcement would be to “Ministerial timelines”.   The review is designed to understand this taxpayer population better taking into account the burdens that MTD for ITSA would impose, and pain points, including the potential for easements and simplifications. HMRC also continues to consider the implications of MTD for ITSA on niche incomes such as foster carers. Revised regulations are expected to be published in early 2024 following a technical consultation on these in draft.  Earlier this year, Chartered Accountants Ireland, and several members from a range of practice sizes met with HMRC as part of the Small Business Review. During the meeting we stressed that the MTD for ITSA exemption threshold needs to be more realistic and should be set at the VAT registration threshold. We also expressed concern that agents will not be able to bulk sign up clients, that the trial will only be public from April 2025, and that there is a need for free bridging software to be available.   MTD for ITSA trial  Following the December 2022 announcement of the delay to the introduction of MTD for ITSA and its phasing in from 2026, HMRC then paused new sign-ups to the existing MTD ITSA pilot in order to review its testing approach but confirmed in last week’s meeting that the trial is now open again to new participants. Readers are reminded that strict conditions must be met to participate in the current trial which also is only open to those with a 5 April accounting period end. Non-5 April accounting period ends are expected to be able to join the trial in 2024/25.  A new testing strategy was shared with stakeholders, including this Institute, earlier this year which outlined the revised trial timetable as follows:-  Small private beta testing 2023/24;   Large private beta testing 2024/25; and   Public beta testing 2025/26.   The Institute remains concerned that public beta testing will not commence until 2025/26, which therefore means that one full cycle of testing will not be completed by many taxpayers before mandation for the turnover over £50,000 population from 6 April 2026. We are also concerned at the low number of those currently participating in the trial and that this will cause delays to further elements of the trial.  HMRC is now working with software developers to transition from the previous pilot into private beta testing. Taxpayers who were in the original pilot and wish to continue can be automatically moved into the private beta.   HMRC is also working with developers to identify any new taxpayers who could join the private beta, subject to the necessary conditions being met.   According to HMRC, private beta testing is being enhanced by new support arrangements. Previously, taxpayers were guided through each MTD ITSA submission in live video calls. Taxpayers and their Agents can now make submissions without video support but can access help from a new dedicated support team by email (scmimplementationteam@hmrc.gov.uk) or phone (0300 322 9619 8am-6pm, Monday to Friday).   HMRC has also confirmed that private beta participants with an agent do not need a 64-8 authorisation form if a digital handshake is in place authorising their agent. This is limited to agents contacting the support team. 

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.  

Today is the deadline to tell us your views on HMRC’s consultation on the taxation of employee ownership trusts and employee benefit trusts. The consultation closes next Monday 25 September 2023 and examines potential proposals to reform the tax treatment of each of these types of trust. Let us know your views by close of business today, Monday 18 September 2023. The aim of this consultation is to ensure that the tax regimes for these trusts remain focused on the targeted objectives of rewarding employees and encouraging employee ownership, whilst preventing tax advantages being obtained through use of these trusts outside of these intended purposes.  

In this week’s EU exit corner, we bring you the latest guidance updates and publications relevant to EU exit and the latest Trader Support Service and Borders Weekly Stakeholder bulletins are also available. Miscellaneous updated guidance etc.   The following guidance, and publications relevant to EU exit are available:-  Known error workarounds for the Customs Declaration Service (CDS);  Classifying drones and aircraft parts for import and export;  Classifying electrical equipment for import and export;  Classifying tobacco for import and export;  Remote internal temporary storage facilities codes for Data Element 5/23 of the Customs Declaration Service;  Internal temporary storage facilities (ITSFs) codes for Data Element 5/23 of the Customs Declaration Service;  Maritime ports and wharves location codes for Data Element 5/23 of the Customs Declaration Service;  Data Element 2/3: Documents and Other Reference Codes (Union) of the Customs Declaration Service; and  Data Element 2/3: Document and Other Reference Codes: Licence Types – Imports and Exports of the Customs Declaration Service (CDS). 

HMRC’s latest schedule of live and recorded webinars is now available for booking. Spaces are limited, so take a look now and save your place.