The European Commission has proposed new rules to make withholding tax procedures in the EU more efficient and secure. The initiative will promote fairer taxation, fight tax fraud, and support cross-border investment. Recognising that current refund procedures are often lengthy and costly, the key proposals include a common EU digital tax residence certificate, two fast-track procedures complementing the existing standard refund procedure as well as a standardised reporting obligation.

In UK news, HMRC IT upgrades this weekend will impact the Agent Dedicated Line and service availability, we remind you of the upcoming expenses, benefits and share related filing deadlines, and the National Audit Office has published its report examining progress on Making Tax Digital. In Irish news, we provide an update on claiming the rent tax credit. In International news, the European Commission consults on the Carbon Border Adjustment Mechanism (CBAM). UK HMRC has notified us by email of planned IT upgrades that will impact the Agent Dedicated Line and service availability. Read our reminder on the upcoming expenses, benefits and share related filing deadlines. The National Audit Office has published its report examining progress on Making Tax Digital which HMRC has also responded to. Ireland Revenue’s preliminary statistics indicate that over 226,000 Rent Tax Credit claims have been made by PAYE taxpayers. International European Commission is consulting on rules governing Carbon Border Adjustment Mechanism. 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.          

HMRC have notified us by email of planned upgrades to some IT as a result of moving systems to cloud-hosting. These interruptions are expected to commence from today, midday Friday 23rd June, to 9am on Monday 26th June. As a result, a number of digital services and helplines will be either fully unavailable or have limited functionality. Agents are advised that the Agent Dedicated Line will be closed during this time period. The email from HMRC is below.  “IT upgrade over the weekend of 23 to 26 June We will be making planned upgrades to some of our IT, moving our internal systems that support tax for individuals to cloud-hosting from midday on Friday 23rd June until 9am on Monday 26th June to make them more resilient, reliable and secure.   This means that some of our digital services and helplines that depend on this infrastructure will be either fully unavailable or have limited functionality during migration.   Helplines  Some customer helplines will be unavailable on Friday afternoon, including National Insurance and PAYE helplines. For other helplines relating to tax for individuals, our advisers may only be able to provide general advice.  Digital services  The following digital services will be unavailable over the weekend while we carry out this work. Customers trying to access these services over this period will see a message to say the service is unavailable.  Check Your State Pension Child Benefit Claim a Tax refund Class 2 National Insurance Company Car Employee Expenses Help to Save Marriage Allowance Medical Benefits PAYE Check Your Income Tax Service Pensions Lifetime Allowance Repayments Tax Calculation Trusted Helpers   Details of services affected can also be found on our service availability pages on GOV.UK.  Agent Dedicated Line  The Agent Dedicated Line will be closed from midday on the afternoon of Friday 23rd June and reopen at 9.00am on Monday 26th June.  We apologise for any inconvenience this may cause.”   

In this week’s EU exit corner, we bring you the latest guidance updates and publications relevant to EU exit. The most recent Trader Support Service Bulletin is available, and HMRC has now appointed its technical delivery partner for the Single Trade Window. A consultation has been launched on introducing a voluntary standard for customs intermediaries, and HMRC is seeking more information on the role of the accountant and/or chief financial officer in business decisions on whether to use the Common Transit Convention. HMRC is also writing to businesses that complete export declarations, and it is also confirmed that the long-awaited duty reimbursement scheme will open for claims from the end of this month. The Institute was also in attendance at last week’s UK Domestic Advisory Group (“DAG”) meeting and raised questions on the Windsor Framework. UK DAG meeting The Institute is a member of the UK DAG, and was in attendance at last week’s meeting which gave group members the opportunity to put questions to Pedro Serrano, the EU’s Ambassador to the UK, Sir Oliver Heald, Leader and Co-chair of the UK-EU Parliamentary Partnership Assembly, and representatives from the UK Government. The Institute asked the Ambassador if he was able to share any insights from the EU in respect of how the Windsor Framework (“WF”) is being implemented, from the perspective of potential discrepancies between the UK and EU publications on the framework, and if the EU is satisfied that the new goods movements red and green lane processes will be ready from September 2023. The Ambassador responded that the ongoing relationship between the UK and EU remains positive and all possible work is being doing to implement the WF in the agreed manner. The UK Government also responded to this question and said that the Government is very committed to implementing the WF, and more information and guidance will follow as soon as possible, in addition to the guidance published last week. The UK is working very closely with the EU on that information and guidance.  Duty reimbursement scheme After much lobbying by the Institute, including our letter earlier this year, it is now confirmed that from 30 June 2023, the UK Government will launch the reimbursement scheme for EU duty paid on “at risk” goods which can be shown to not have entered the EU. More information on how the scheme will work was also provided at a meeting on the Windsor Framework several weeks ago, attended by Chartered Accountants Ireland – see our stories here and here. The scheme will be backdated to 1 January 2021, and will also apply to red lane goods movements which should originally have been green lane, under the WF revised trade operating model. The Customs (Northern Ireland: Repayment and Remission) (EU Exit) (Amendment) Regulations 2023 underpin the scheme. It is not yet clear if HMRC will pay interest on overpayments received under the scheme. Single Trade Window Deloitte, working with IBM, has been announced as HMRC’s chosen technical delivery partner to build and maintain the platform on which the Single Trade Window (“STW”) will be hosted. The STW aims to simplify traders’ interactions with the border. The World Customs Organisation (“WCO”) defines such Single Windows as ‘a facility that allows parties involved in trade and transport to lodge standardised information and documents with a single-entry point to fulfil all import, export, and transit related regulatory requirements’. The STW, at its core, ensures a single-entry point for border data, which results in reduced duplication for users. HMRC aims to work closely with Deloitte and IBM to ensure stakeholders’ views continue to be fed into the design of the UK STW. Consultation on introducing a voluntary standard for customs intermediaries As announced at the 2023 Spring Budget, a consultation has now been launched on the proposal to introduce a voluntary standard for customs intermediaries, with the aim of improving the quality of service across the sector. This consultation closes on 30 August 2023 and This will seek views on: the objectives of a voluntary standard, and what format it could take; how a voluntary standard could be designed and implemented; the potential content of a voluntary standard; and training and educational offerings for the intermediary sector, which would support the introduction of a voluntary standard. This consultation will be of interest to customs intermediaries, traders (particularly those who use or are considering using a customs intermediary), and any other members of the border industry with an interest in and/or understanding of the customs intermediary sector. HMRC will be holding webinars regarding this consultation where policy officials will explain further the scope of the consultation and the consultation process. If you would like to attend one of these webinars, please contact HMRC by emailing customsintermediariesconsultation@hmrc.gov.uk. The Common Transit Convention and the role of the accountant/chief financial offer HMRC has sent the below request on the role of the accountant/chief financial officer in the context of the Common Transit Convention (“CTC”). “We would like to understand better the role of the accountant and/or chief financial officer in business decisions on whether to use the CTC or not, when importing and exporting goods to the European Union and other European countries, so that we can shape future guidance and communication products to key decision makers. Who we are? We are from the Transit Policy Team in the Customs Policy and Strategy Directorate in HMRC. The CTC is a European wide Convention that the UK acceded to in our own right on Exiting the EU. It allows signatories to the Convention to move goods easily across multiple customs territories until the goods arrive at their final destination, where Customs Duties and VAT are paid. This means that the Duty and VAT are suspended until the final destination, offering cash flow benefits to businesses. What we do? We are working on improving our support and guidance on the CTC to help businesses decide if it may be useful to them. And in the Chancellor’s Spring Statement we announced a package of Transit simplifications for businesses, particularly those using the CTC Trusted Trader scheme which allows businesses to start and end Transit movements at their own premises rather than going to a government office at the port. More information on these measures can be found here.  We’d love to talk to you, if you would be interested then please contact us at transitpolicymailbox@hmrc.gov.uk.” Moving to the Customs Declarations Service for exports HMRC is currently writing to businesses that complete export declarations to make them aware of the key dates for transitioning from the current CHIEF system to the Customs Declarations Service (“CDS”) by the end of November 2023. Traders should therefore check that HMRC has the correct email address to ensure that they are informed at the right time. From 1 December 2023, all export declarations must be made through the CDS. However, traders should not try to move export declarations to the CDS before September 2023, unless contacted by HMRC. Currently, specific types of export declarations cannot be made through the CDS and must still be submitted using CHIEF. HMRC is writing to businesses making these declarations to inform them of when they can start using the CDS.  The current timetable for full transition of export declarations is as follows: from May 2023, HMRC has been contacting traders submitting the highest number of export declarations but only through the Goods Vehicle Movement Service, and has advised them to start making export declarations through the CDS. from July 2023, HMRC will contact all remaining export declarants to make sure they are ready to make export declarations through the CDS by setting out the actions they need to take and signposting to relevant guidance. from September 2023, the CDS is expected to be open for making declarations for all export routes. Next steps Traders that have not already done so should carry out the following steps to prepare for making export declarations through the CDS: Apply for an Economic Operator Registration and Identification (EORI) number beginning with ‘GB’; Subscribe to the CDS; Read the latest CDS guidance. Contact HMRC with any questions. Miscellaneous updated guidance etc. The latest guidance updates, and publications relevant to EU exit are as follows:- Customs, VAT and Excise UK transition legislation from 1 January 2021; Appendix 2: DE 1/11: Additional Procedure Codes of the Customs Declaration Service (CDS); Method of payment (MOP) codes for Data Element 4/8 of the Customs Declaration Service; Additional Information (AI) Statement Codes for Data Element 2/2 of the Customs Declaration Service (CDS); Appendix 2: DE 1/11: Additional Procedure Codes; Appendix 1 Inventory Imports: DE 1/10: Requested and Previous Procedure Codes; Appendix 2 C21i: DE 1/11: Additional Procedure Codes; The Customs (Miscellaneous Amendments) Regulations 2023; Notices made under the Customs (Export) (EU Exit) Regulations 2019; Notices made under the Customs (Import Duty) (EU Exit) Regulations 2018; Data Element 2/3: Documents and Other Reference Codes (Union) of the Customs Declaration Service; and Appendix 1: DE 1/10: Requested and Previous Procedure Codes.

HMRC has begun sending a monthly email containing updates on the plastic packaging tax (“PPT”). This month’s email is available to read. HMRC has also sent an email with key reminders on the PPT.

The Spring Finance Bill 2023 (official title: Finance (No 2) Bill (Session 2022-23)) continues its passage through the parliamentary process with Committee Stage recently completed. The Bill now moves on to Report Stage, although no date has yet been announced for this, however this is expected to take place after the House of Commons returns from recess. Following Committee Stage completion, an amended version of the Bill has been published. The Committee considered all the remaining clauses of the Bill that had not been examined during the Committee of the whole House. All clauses were passed including amendments tabled by the Government.

In March we reported that 31 July 2023 was the extended deadline to ensure voluntary payments of any shortfalls of national insurance contributions (“NICs”) for the tax year up to 2016/17 were made to protect maximum entitlement to the UK state pension. Last week, the Government announced that the deadline is now extended to 5 April 2025. This announcement also confirms that the rate of voluntary contributions made up to 5 April 2025 will remain at 2022/23 rates. You can check your NICs record here. In order to get a full basic state pension, an individual must have paid sufficient NICs for a minimum number of qualifying years in their working life. See the State pension guidance note for more information. 

The National Audit Office (“NAO”) has published its report “Progress with Making Tax Digital”. The report considers progress to implement Making Tax Digital (“MTD”), and whether HMRC’s latest plans provide confidence that the programme will deliver value for money. Its main conclusion is that the repeated delays and rephasing of MTD has undermined its credibility and increased its costs. . HMRC has responded to the NAO’s report in an email from its CEO, Jim Harra. Specifically, the NAO report looks at:- HMRC’s original vision, options and plans for MTD; HMRC’s progress between summer 2017 and the end of 2022; and the realism of HMRC’s latest plans. The report focuses on the MTD programme from 2016 onwards and does not assess wider changes within HMRC, but these are referred to where they relate to MTD. Appendix one describes the NAO’s audit approach and evidence base. Appendix two shows planned implementation dates for digital record keeping by business taxpayers since 2015. The report’s conclusions are set out below. HMRC’s vision to digitalise the tax system has the potential to bring about a step-change in the system’s efficiency and effectiveness. The principle of digitalising tax has broad support among stakeholders provided it makes it easier to pay tax. HMRC launched digital record keeping for VAT for larger businesses on time, but it needed more time to move taxpayer records off legacy systems due to the extent of data issues it had to deal with. The report found that HMRC’s initial timeframe for MTD was unrealistic. It did not allow sufficient time for HMRC to explore the full range of options that would achieve the programme’s aims and select one that it could implement. Each announcement has set an ambitious timeframe for delivery, with several aspects of the MTD programme to be delivered in parallel. The repeated delays and rephasing of MTD has undermined its credibility and increased its costs. There is a risk that delivery partners and taxpayers disengage from a programme that can only succeed if those groups significantly change their behaviour. Higher costs were not inevitable, had HMRC taken more time to plan and consider the realism of the options. The report further concluded that HMRC has not demonstrated the programme offers the best value for money for digitalising the tax system, with later business cases significantly underplaying the total cost to customers of making the change. The programme should now develop a robust business case which includes a comprehensive and up-to-date assessment of the costs to customers of implementing MTD. Planning was also found to have been too high-level and the risk remains that further delays will add costs and defer benefits. HMRC is reviewing how MTD will work for businesses and landlords with lower Self-Assessment income. The report found that it should take this opportunity to assess how far the programme is improving services, reducing burdens, and making the tax system easier to comply with and use lessons from this review to ensure the wider programme is finally on track to secure the benefits it has long promised.

Do you complete expenses and benefits returns? Or do you complete online filing for employment related securities? If so, you have an important role to play in ensuring returns are submitted by the 2022/23 filing deadline of Thursday 6 July 2023 and payments are made on time. By way of reminder, from 6 April 2023, forms P11D and P11D(b) can only be submitted online by employers (except for the digitally excluded). Note that ICAEW has shared how filing P11Ds online can work when a different agent is authorised for PAYE. Amendments can also only be made online from the same date. Also, since 6 April 2023, a new online service is available for employers and their agents to apply for a PAYE Settlement Agreement (“PSA”).  Here’s a reminder of the key deadlines next month:- 6 July 2023 - deadline for submitting all 2022/23 P11D(b) and P11D forms - and the employee must receive their copy of the P11D; 6 July 2023 – deadline for online reporting of the 2022/23 annual return in respect of employment related securities; 19 July 2023 - deadline for non-electronic payment of Class 1A National Insurance Contributions (NIC) for 2022/23; and 22 July 2023 - deadline for electronic payment of Class 1A NIC for 2022/23. To save on administration, don’t forget to consider PAYE Settlement Agreements, where relevant. For 2022/23 these must be agreed by tomorrow, Wednesday 5 July 2023, with payments due by 22 October 2023 (19 October 2023 if paying by post). HMRC is also reminding employers of the expenses and benefits position of COVID-19 position of tests and equipment.

ECOFIN, under the Swedish presidency, has pursued work on key files, including the amendment of the Directive on administrative cooperation for tax purposes, the proposals comprised by the “VAT in the Digital Age” package, the revision of the Energy Taxation Directive, the update to the EU list of non-cooperative jurisdictions for tax purposes, as well as the proposal for a Directive to prevent the misuse of shell entities for tax purposes. The draft report includes an update on the progress of these initiatives.

The OECD’s Forum on Tax Administration (FTA) Knowledge Sharing Network held its first virtual meeting last week. The group will gather for a series of meetings where practical advice will be shared, as well as lessons learned on the administrative and implementation aspects of the Two-Pillar Solution.

The transitional implementation of the Carbon Border Adjustment Mechanism (CBAM) will run from 1 October 2023 until the end of 2025. The European Commission has published its first call for feedback on the rules governing the implementation of CBAM during its transitional phase. During the transitional phase, traders will only have to report on the emissions embedded in their imports subject to the mechanism without paying any financial adjustment.