HMRC has published partial draft guidance on the multinational top-up tax (“MTT”), and the domestic top-up tax (“DTT”) included in the Finance No. 2 Bill 2023. The MTT and DTT will take effect in the UK in respect of accounting periods beginning on or after 31 December 2023. Comments should be emailed to HMRC Pillar 2 consultation inbox. Include “HMRC guidance” in the subject line, and refer to the page number (MTTxxxxx) and page title if applicable, when submitting comments. HMRC also welcomes feedback on what stakeholders might find useful in future guidance. This guidance will form a new manual hence further draft guidance will be published in due course. We also understand that HMRC is sending letters to large businesses who it believes may be within the scope of the MTT and DTT.  The multinational top-up tax is a new tax on multinational enterprise groups with annual revenue of €750 million or more. A top-up tax will be charged on UK parent members when a subsidiary is located in a non-UK jurisdiction, and the group’s profits arising in that jurisdiction are taxed at a rate below the minimum effective tax rate of 15 percent. These measures constitute the UK’s adoption of a qualifying Income Inclusion Rule and a Qualifying Domestic MTT (part of the Pillar 2 or GloBE rules). The draft guidance is partial and consists of three chapters of the HMRC guidance manual on multinational top-up tax, which exists as a standalone manual. Page 24 of the guidance includes a cross-reference table between the OECD Model Rules and the UK legislation. The three chapters are:- Introduction, which includes an overview of the taxes and guidance on chargeability; Scope, which includes guidance on excluded entities, the revenue threshold test, and the transitional CbCR safe harbour; and Administration. Additionally, the Introduction chapter includes a map between the legislation and the OECD Model Rules (at MTT09990). The draft guidance is intended to reflect the legislation in the Finance No. 2 Bill 2023 and will be updated to reflect any amendments to the legislation. Therefore, you should not assume that the guidance is comprehensive, nor that it will provide a definitive answer in every case. HMRC will use their own reasoning, based on their training and experience, when applying the guidance to the facts of particular cases.

This month’s tidbits cover several newsletters and the latest advisory fuel rates. The following newsletters are available:- Pension schemes newsletter 150 — May 2023, Charities newsletter 1 — June 2023, Employment Related Securities Bulletin 52 (June 2023), and Public service pensions remedy newsletter — May 2023; The latest advisory fuel rates, which apply from 1 June 2023, are available; The following guidance has been updated:- Confirm a tax check for taxi, private hire or scrap metal licence applications, and Complete a tax check for a taxi, private hire or scrap metal licence A new Spotlight “Dividend diversion scheme used to fund education fees (Spotlight 62)” has been published; The guidance on how to claim a refund of Income Tax deducted from savings and investments has been updated; Several publications relevant to the new Economic Crime Levy have been updated:- Prepare for the Economic Crime Levy, Register for the Economic Crime Levy, and Check if you need to register for the Economic Crime Levy.

The database supporting  application of the Multilateral Convention to Implement Tax Treaty Related Measures to Prevent Base Erosion and Profit Shifting (MLI) has been updated and improved. The new release will allow interested parties to make projections on how the MLI modifies a particular tax treaty.

As reported in Tax News last week, the European Commission has proposed new procedures to make withholding tax more efficient and secure. The Commission has identified several problems with the existing regime, including an uneven digitalisation of tax procedures across Member States. In addition, regulation is fragmented with myriad forms applying in the various Member States. Recent estimates suggest investors are losing around €5 billion a year as a result. The new rules seek to standardise withholding tax procedures across the EU.

Recent data published on the new expanded One Stop Shop (OSS) and the new Import One Stop Shop (IOSS) indicate that Member States collected €20 billion in VAT in 2022 using the new systems. Just under 130,000 traders are now utilising the new systems.

In Irish news, the Institute represented members at TALC Collections and TALC Direct and Capital Taxes, and the Minister for Finance opens a public consultation on Ireland’s funds sector. In UK news, HMRC interest rates are increasing again, and we need your assistance with some consultation work. In International news, the European Commission has proposed new withholding tax procedures to ensure better efficiency.  Ireland The Institute represented members at TALC Collections and TALC Direct and Capital Taxes. The Minister for Finance opens a public consultation on Ireland’s funds sector. UK HMRC interest rates are increasing again. We need your assistance with some consultation work. International The European Commission has proposed new withholding tax procedures to ensure better efficiency. 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.

Revenue has updated its CREST Manual regarding the rules, procedures, practices, guidelines and interpretations for electronic share trading.  The updated manual sets out the provision in Chapter 2 of Part 6 SDCA 1999 for stamp duty to be charged on the transfer of an interest in dematerialised securities. The updated guidance also outlines the procedure that is to be followed when claiming relief from stamp duty under any of the provisions of Chapter 1 of Part 7 SDCA 1999.

Revenue has made a further update to its Tax and Duty Manual regarding the payment and receipt of interest and royalties without deduction of income tax. The updated manual exempts payments to the International Bank for Reconstruction and Development as it is one of the statutorily tax-exempt bodies.

Due to the increase in the Bank of England base rate last week, HMRC has since announced the associated increase in its interest rates. The new rates will take effect from Monday 3 July 2023 for quarterly instalment payments, and Tuesday 11 July 2023 for non-quarterly instalments payments. The two new increased rates of interest will be as follows:- late payment interest, set at base rate plus 2.5 percent, will increase to 7.5 percent from 7 percent; and repayment interest, set at base rate minus 1 percent, with a lower limit of 0.5 percent (known as the ‘minimum floor’), will increase to 4 percent from 3.5 percent.

Revenue has published a new Tax and Duty Manual to provide guidance to first-time employees on how to register their first job through either MyGovID or MyAccount.

The Institute is seeking feedback from members on two formal consultations, and we are also considering writing to the Government in relation to the Spring Budget announcement that from 2024 agricultural property relief for Inheritance Tax will be restricted, and will only be available on UK farmland and farm buildings. We are particularly concerned of the impact this will have in Northern Ireland given our geographic proximity to the Republic of Ireland. Get in touch by Monday 10 July with your comments and observations on this, and the two formal consultations below. The Tax Administration Framework Review: information and data – closes 20 July 2023 This seeks views on how HMRC's information and data-gathering powers could be updated to enable digitalisation of services, improve compliance and reduce administrative burdens. Section 6 of the consultation sets out the specific consultation questions. The Tax Administration Framework Review: Creating innovative change through new legislative pilots – closes 20 July 2023 This seeks views on a proposed legislative approach to piloting. HMRC is exploring how it can develop and improve testing prior to wider roll out of change. Section 6 of the consultation sets out the suggested discussion areas. Currently, testing of changes or collaboration with external stakeholders can be limited by legislative inflexibility. This explores the opportunities and challenges of a possible sandbox testing approach, and what safeguards might be necessary and proportionate.

Revenue has confirmed that it intends to make the R&D Specified Return available this week, updated for the amendments introduced in Finance Act 2022. The updated Form CT1 2023 is expected by 10 July 2023. The Specified Return must be completed and submitted via MyEnquiries when filing the Form CT1 2022 where a company is claiming an R&D Tax Credit under sections 766, 766A, 766C and/or 766D TCA 1997.