The Tax Strategy Group (TSG) last week published its annual papers in advance of Budget 2024. In this year’s papers, the TSG identifies the key challenges for Ireland’s economy as capacity constraints, the aging population, digitalisation, de-carbonisation and de-globalisation. The TSG also highlights the country’s reliance on multinational companies and the resultant vulnerability to our corporation tax base. The TSG is chaired by the Department of Finance and comprises senior officials and advisers from several governmental departments and offices. The TSG is not a decision-making body, rather its purpose is to set out different options to be considered in the Budget. The full list of papers released by the TSG are as follows: Income Tax (TSG 23/01) includes a summary of tax yields, information on the distribution and burden of income tax and USC and policy considerations for reform. Other items discussed include Refundable Tax Credits, the Remittance Basis of Taxation and Pensions. Pay Related Social Insurance (TSG 23/02) examines issues including the Social Insurance Fund, certain “step-effect” anomalies relating to the exemptions from PRSI for lower paid workers, and the rate of PRSI for the self-employed. Corporation Tax (TSG 23/04) examines a range of topics such as corporation tax trends, implementation progress of BEPS, Pillar One and Pillar Two, EU tax developments, an update on Apple State Aid case and a discussion of various business support measures. Residential Property-Related Taxation Measures (TSG 23/06) discusses various income tax reliefs, including the Rent Tax Credit, and the treatment of rental income and examines residential zoned land tax (RZLT), local property tax (LPT) and vacant homes tax (VHT). Capital gains tax and capital acquisitions tax property reliefs are identified. A reduced rate of VAT for the supply and construction of housing is also considered. Climate Action and Tax (TSG 23/07) looks at how the tax system can be used to help meet Ireland's ambitious climate change goals of reducing emissions, increasing energy efficiency and developing less environmentally harmful policies. It puts forward options in respect of carbon, fuel related and motor taxes. Value Added Tax (TSG 23/08) reviews VAT rates and structures, considers options to assist SMEs and addresses climate change and the high costs of living. Capital & Savings Taxes (TSG 23/10) covers capital gains tax, capital acquisitions tax, DIRT and Stamp Duty and examines rates, yields and exemptions associated with these taxes. The paper sets out the current position on each and examines potential options for change in the context of Budget 2024.

With a view to ensuring that taxpayer data is kept in a safe, secure and accurate manner in accordance with Data Protection obligations, Revenue has updated the Agent’s Guide to the Collector-General’s Division. Revenue has advised that where an agent inadvertently uploads claims or returns for an incorrect taxpayer, or attaches information related to a third party, the integrity of the data held by Revenue is compromised. To help ensure that all details entered are correct for the taxpayer, additional text has been added to the agent screens on ROS. The updated manual includes a new section titled “Integrity of Data” explaining the system enhancements for agents.

This week we bring you news of new guidance and a form for anyone self-employed and working abroad. HMRC has also asked us to publish “Handy hints for taxpayers – June 2023”. Read HMRC’s update on new employees, and we remind you that from next month the research and development (“R&D”) Additional Information Requirements form must be submitted with all R&D tax relief claims, although this commences from the later date of 8 August 2023. The latest report from the Department for Trade on the National Minimum Wage is also available, and HMRC has published updated guidance on “How HMRC advice and information can help you”. New guidance and form for self-employed taxpayers working abroad New guidance and a g-form are available for any self-employed individuals who are working abroad and wish to apply for a certificate to confirm they pay UK national insurance. The form should be used to ask HMRC to confirm that you only need to pay UK social security contributions if you are a self-employed individual working temporarily in an EU country, or Gibraltar, Iceland, Liechtenstein, Norway, or Switzerland. HMRC’s update on new employees HMRC has sent an email about upcoming activity to support employers with new starters. The email sets out useful tips to help employers get their staff on the right starter declaration and tax codes.  R&D Additional Information Requirements form commences from 8 August 2023 From 8 August 2023, a week later than the original commencement date of 1 August 2023, companies must complete and submit the Additional Information Requirements (“AIR”) form to HMRC to support all claims for R&D tax relief or the R&D expenditure credit. The AIR form must be sent before submitting the company’s Corporation Tax Return which includes the R&D claim. Failure to do so means that HMRC will write to the company to confirm it has removed the claim for R&D tax relief from the Corporation Tax Return. According to HMRC, the delayed commencement date is designed to give companies more time to prepare. The Relief for Research and Development (Content of Claim Notifications, Additional Information Requirements and Miscellaneous Amendments) Regulations 2023 were published last week and codify the content of both the AIR form, and the Claim Notification form, which are both mandatory requirements for R&D tax relief claims to be considered valid. Chartered Accountants Ireland is represented on HMRC’s R&D sub-group forum and would welcome any feedback or questions on either the AIR form or the Claim Notification form. Department for Trade’s annual National Minimum Wage report The Department for Trade’s annual National Minimum Wage report was published last month and named over 200 employers for failing to pay their staff the National Minimum Wage. Guidance for employers on pay continues to be available on GOV.UK. Additional advice has also been published about breaches and the steps employers should take to make sure they pay their workers correctly. Updated guidance “How HMRC advice and information can help you” HMRC has published updated guidance “How HMRC advice and information can help you”. Some of the key changes made are as follows:- It should be clearer what types of information, or advice the statement applies to; Links are included to the HMRC Charter, and a link to the Admin Law Manual which covers “Legitimate Expectation” (“LE”) in more detail; and It is now clearer that HMRC can consider applying the correct tax position prospectively, something it always did as part of LE but did not say in the guidance.  The updated statement is based on stakeholder feedback from the Guidance Strategy Forum, with further improvements expected to both the guidance, and the Admin Law Manual.  HMRC are keen to hear feedback on the changes and is also considering more opportunities to signpost to the guidance.  

Revenue has updated the Tax and Duty Manual on the Research and Development (R&D) Corporation Tax Credit. Changes introduced by Finance Act 2022 are reflected throughout the manual, with examples provided where appropriate.  The manual also includes a new section on costs associated with cloud computing and obsolete material has been removed. The R&D corporation tax credit was amended in Finance Act 2022. Two new sections - sections 766C and 766D TCA 1997 – were introduced providing for accelerated payment of the second and final instalments for claims under sections 766(4D) and/or 766A(4C) TCA 1997 where the accounting period commenced pre-1 January 2022. The updated manual also provides guidance on making a claim using the new R&D Specified Return for 2022. As previously reported, a company is required to file an R&D Specified Return, which forms part of the Form CT1 2022, via MyEnquiries where the company is making a claim for an accelerated payment of the second and final instalment, as set out above.

Last Tuesday 18 July was “Legislation Day” (or “L-day”) when the Government published draft legislation for inclusion in Finance Bill 2024. Also published were explanatory notes, tax information and impact notes, responses to consultations, several new consultations, and other supporting documents. L-Day came just days after the Spring Finance Bill 2023 received Royal Assent to become the Finance (No. 2) Act 2023, and the second Finance Act of 2023. Following the Spring Finance Bill 2023 receiving Royal Assent, the Government published a statutory instrument implementing the new UK transfer pricing (“TP”) documentation requirements. The Transfer Pricing Records Regulations 2023 mean that for the first time the UK has mandatory TP documentation requirements. HMRC have also published new guidance on this in its International Manual. Chartered Accountants Ireland is disappointed to see draft legislation published last week on L-day for the potential merger of the UK’s SME and large company R&D schemes from April 2024 which we were opposed to in our response to this consultation earlier in 2023. However, we are pleased to see that the Government plans to simplify how the high-income child benefit charge is collected which was a recent recommendation in a consultation response in June. Last week’s L-day announcements contained few surprises and largely built on previous policy announcements at both Spring Budget 2023 and April’s Tax and Administration Maintenance Day. The Government also made some announcements in a small number of technical tax policy areas and published some new consultations and summaries of responses to previous consultations. Changes to the UK’s Pillar Two rules also featured which we will cover in detail next week. The Government also intends to change the income tax rules for anyone who inherits a pension which will make them liable for income tax at their marginal rate from 6 April 2024. This announcement was made briefly in the guidance on abolishing the pensions lifetime allowance which was published on L-day last week. Other headlines from last week’s L-day announcements included:- Research and development tax reliefs – draft legislation to introduce a new permanent rate of relief for the most R&D intensive loss-making SMEs from 1 April 2023 and on the proposed design of a potential merged scheme combining the SME and RDEC schemes. Further, the restrictions on overseas R&D expenditure, delayed from April 2023, will be introduced for expenditure incurred on or after 1 April 2024. With a few exceptions, expenditure on overseas R&D will no longer be qualifying; Reform of audio-visual creative tax reliefs – draft legislation to implement the previously announced modernisation and reform of the existing audio-visual tax reliefs into expenditure credits. The reforms include a higher rate of relief for animation and children’s TV, which will also be extended to animated films; Administrative changes to the high-income child benefit charge – the Government wants to simplify the process for those who become liable to this, particularly for those who currently need to register for Self-Assessment (“SA”) to pay the charge. Details will be provided in due course on how this will enable employed taxpayers to pay this through their tax code, without the need to register for SA; and Data HMRC collects from taxpayers – the draft Finance Bill clauses have been published for technical consultation before introducing the changes in the Autumn Finance Bill. Subsequent amendments to regulations will be required to enact the changes and set out the detailed requirements. The changes will take effect from no earlier than 2025/26 and broadly the changes mean that HMRC will be given extra powers to collect information about the amount of dividend payments earned by owner managed business directors while employers will have to report the number of hours worked by individual employees. HMRC will continue working closely with businesses and other affected parties to progress these changes, ensuring clear requirements, guidance, and adequate time for implementation. If you have any comments or questions about the draft legislation, please email: responsivenessdataconsultation@hmrc.gov.uk In addition, the following consultations have been published: Mass Balance approach to account for chemically recycled plastic for Plastic Packaging Tax; Tax incentives for occupational health; Taxation of Employee Ownership Trusts and Employee Benefit Trusts; and Review of the VAT Terminal Markets Order legislation.

Revenue has advised that a request to offset VAT repayments against warehoused debt is now available in ROS. The Tax and Duty Manual which provides guidance on offsetting VAT repayments has been updated accordingly. 

The second 2022/23 self-assessment payment on account for income tax and Class 4 NIC (National Insurance Contributions) is due for payment on or before midnight Monday 31 July 2023. Each payment on account is half of the previous year’s tax bill. Information on time to pay arrangements and how to apply is available on GOV.UK. Anyone who is self-employed is required to make two payments on account every tax year unless:- their last Self-Assessment tax bill was less than £1,000; or they’ve already paid more than 80 percent of all the tax owed, for example through their tax code. If a taxpayer knows their tax bill is going to be lower than last year, a request can be made to HMRC to reduce payments on account.

Revenue has published preliminary statistics on 2023 Local Property Tax (LPT) as of 14 July 2023. The rate of payment compliance is 94 percent and the total amount collected to date in 2023 is €394 million. Approximately €5 million has been collected in respect of newly liable properties. Further information is available here.

In this week’s EU exit corner, we bring you the latest guidance updates and publications relevant to EU exit. The latest Trader Support Service bulletin is also available. We also remind you that the deadline for applying for the new UK Internal Market Scheme to ensure applications are processed in time is next Monday, 31 July. Miscellaneous updated guidance etc. The latest documents and publications relevant to EU exit are as follows:- Reference Document for The Customs (Northern Ireland) (EU Exit) Regulations 2020; Report payments and view your allowance for non-customs state aid and Customs Duty waiver claims; Check if you can claim a waiver for goods brought into Northern Ireland; Request Customs Declaration Service data on imports and exports; 4-digit to 3-digit procedure to additional procedure code correlation matrix for imports; Simplified procedures exclusion list of procedure and additional procedure codes for CDS; Appendix 2: DE 1/11: Additional Procedure Codes of the Customs Declaration Service (CDS); Reading notes for Declaration Category Data Sets: CDS Declaration and Customs Clearance Request Instructions; Additions and deductions for Data Element 4/9 of the Customs Declaration Service; Appendix 1: DE 1/10: Requested and Previous Procedure Codes of the Customs Declaration Service (CDS); CDS Declaration Completion Instructions for Imports; Appendix 21: Import Declaration Category Data Sets; Imports and Exports of the Customs Declaration Service (CDS); Data Element 2/3: Documents and Other Reference Codes (Union) of the Customs Declaration Service; Authorised Consignee Temporary Storage (ACTS) location 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; Notices made under the Customs (Export) (EU Exit) Regulations 2019; Bringing commercial goods into Great Britain in your baggage; and Notices made under the Customs (Import Duty) (EU Exit) Regulations 2018.

Revenue has published preliminary statistics to 20 July 2023 for the Temporary Business Energy Support Scheme (TBESS). With 29,893 businesses registered for the scheme, claims paid out amount to €107.22 million. Businesses are reminded that TBESS claims for the periods September 2022 to July 2023 must be submitted by 30 September 2023. Further information is available on revenue.ie.

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. Basis period reform – moving to the tax year basis: book now This webinar provides an introduction to basis period reform and looks at:- The tax year basis applicable from 2024/25 The transitional year to basis period reform of 2023/24; and Overlap relief. Agent services account access groups: book now This webinar looks at access groups within the agent services account including:- about access groups; clients lists and transacting with clients; adding team members; managing access groups; examples; and error messages, filters, and client references. An overview of the new alcohol duty structure and rates: book now From 1‌‌‌ August‌‌‌ 2023, alcohol duty will be charged in relation to the strength of the product as opposed to the product type. This webinar will explain the new alcohol structure and rates, including the reduced rates for draught products An overview of the new alcohol duty structure and small producer relief: book now This webinar will provide a background into the new small producer relief, including eligibility criteria, and how to calculate this. Capital allowances and vehicles: book now This webinar is part of HMRC’s annual Self-Assessment programme covering the rules for cars, qualifying expenditure, pools and rates, and vehicle hire purchase. A recording is also available to register to view of the webinar UK freeports – examples of tax and customs benefit.

Do you use HMRC online services? Don’t be caught out by the planned downtime to some services. HMRC are warning about the non-availability of specific services on the HMRC website, a range of services are impacted. Check the relevant page for information on planned downtime.