In a recent visit to Ardmore Studios, the Minister for Finance highlighted recent improvements to the film and television tax incentive section 481 TCA 1997. Readers are reminded that in March 2024 the Minister signed two commencement orders to increase the cap on eligible expenditure from €70 million to €125 million and to extend the scheme to 31 December 2028. Commenting on the visit, the Minister stated: “It is fantastic to be able to see first-hand some of the amazing work being undertaken within our film sector. The industry in Ireland has seen great success in recent years and Irish production companies and talent have been consistently at the forefront of the conversation internationally when it comes to some of the biggest awards the industry has to offer. This has been a great source of pride for Ireland and I believe the recent changes to section 481 will help us capitalise on this recent success and further promote Irish culture internationally and enhance our reputation as a centre of excellence for screen production.”

Revenue has updated the Tax and Duty Manuals which provide guidance on submitting and managing enquiries using the MyAccount and MyEnquiries portals. Revenue guidance on notifications about enquiries and replies has also been updated. Guidance on submitting and managing enquiries in MyAccount includes advice about the correct naming of attachments to avoid an enquiry failing (paragraph 1.9), with updated screens are included in paragraphs 1.10 and 1.11. Guidance on submitting and managing enquiries in ROS includes information regarding the correct naming of attachments (paragraphs 1.10 and 2.11), notifications issued via MyEnquiries (paragraph 1.13), details of the limited options for raising an enquiry without having to specify the Client PPSN/Tax number (paragraph 2.5). Information is also provided about changing an email address and ensuring that the email address is registered in MyEnquiries (paragraph 2.10). Guidance on notifications about enquiries and replies includes updated information regarding Revenue’s replies to submissions about clearance in death cases (paragraph 2.1), CGT clearance for non-residents (paragraph 2.2) and CAT clearance for the distribution of an estate to a non-resident beneficiary (paragraph 2.3).

The Minister for Finance, Mr. Michael McGrath T.D., has welcomed the publication of the 2023 Annual Report of the Tax Appeals Commission (TAC). Headline figures from the report include: 1,521 appeals closed during 2023 valued at €1.386 billion 175 determinations were issued valued €409 million A decrease of 24 percent in the number of appeals on hand (1,139 in 2023 versus 1,504 in 2022) with a 60 percent reduction in the quantum of those appeals from €1.3 billion in 2022 to €519 million in 2023. Noting the significant progress made by the TAC during 2023, which includes a new portal to enable online submission, the Minister said: “The Tax Appeals Commission continues to provide an efficient, fair and cost effective appeals process for the taxpayers of the country which provides citizens with an accessible alternative to the Courts for tax appeals.” Further commentary is available in the Department of Finance’s press release.

Last week, the Department of Finance and the Department of Public Expenditure and Reform published the Fiscal Monitor for April. Tax revenues of €24.8 billion were collected to end-April, an increase of 2.6 percent, or €0.6 billion, on the same period last year. Growth was recorded in income tax, VAT and excise duties, therefore offsetting a decrease in corporation tax. Overall, the Exchequer deficit to the end of April 2024 stands at €1.2 billion. This compares to a deficit of €3.7 billion at the end of April 2023; however the position is distorted due to the transfer of €4 billion to the National Reserve Fund in early 2023. Commenting on the figures, the Minister for Finance, Michael McGrath TD, said: “April is one of the less significant months for tax revenues, but insofar as conclusions can be drawn from today’s figures, the most notable feature of the April performance is the strength in income tax receipts, continuing the trend that has been apparent so far this year. The 6.4% increase in overall tax receipts in April compared to the same month last year is a solid performance, and is in line with budget expectations. The performance of income tax and Vat year to date is encouraging, and points to a domestic economy that is holding up well despite a number of headwinds. The May returns, when further VAT and corporation tax receipts are expected, will provide a clearer indicator of the tax revenue performance. However, overall, tax revenues are ahead of the same period last year even despite the decrease in corporation tax seen last month. This is firm evidence of the fundamental strength of our economy and our labour market, and speaks to the success of Government’s careful and balanced approach to budgetary policy. As outlined in the Stability Programme Update published recently, my expectation is that the economy will experience modest growth in 2024 but importantly living standards will improve for the overwhelming majority of households as incomes rise in real terms. With inflation now moderating quite quickly, interest rates expected to fall over the period ahead, and further reductions in energy prices at the retail level anticipated, the pressures many consumers have faced will likely ease across the year and this will provide a further boost to the domestic economy. I am pleased that we are making progress in relation to the Future Ireland Fund and Infrastructure, Climate and Nature Fund Bill 2024. This is currently at Committee Stage in the Dáil and the legislation is a central part of the Government’s strategy for the long term management of the public finances.”

Revenue has provided an update regarding payment arrangements agreed to address warehoused debt. As of 16:00 on Thursday 2 May, over 10,000 Phased Payment Arrangements (PPAs) have been set up, with Revenue actively progressing a further 1,500 PPA applications. Revenue processed over €65 million in warehoused debt payments last week.  It estimates that, when PPA applications on hand are finalised and incoming payments on the Revenue Online Service (ROS) are processed, 85 percent of the €1.65 billion of debt that was warehoused at the start of April will either have been paid in full or secured under PPAs. Readers are reminded that those businesses who have not yet put arrangements in place to pay their warehoused debt risk losing the 0 percent interest rate and flexible payment options available in respect of their warehoused debt as it will become subject to standard debt collection and the standard interest rate of 8/10 percent will apply. Taxpayers can engage digitally with Revenue via MyEnquiries or ROS or, alternatively, by calling the Collector General (01 738 3663).

The Minister for Finance, Michael McGrath TD, and the Minister for Public Expenditure, National Development Plan Delivery and Reform, Paschal Donohoe TD have published the Government’s Stability Programme Update for 2024. This document sets out macroeconomic and fiscal forecasts for the periods 2024-2025 and 2023-2027 respectively.  Modified Domestic Demand (MDD) is projected to grow by 1.9 percent this year and by 2.3 percent in 2025. The projected rate of inflation is 2.1 percent as a result of declining global energy prices.  A government surplus of €8.6 billion is anticipated, though an underlying deficit would be in prospect in the absence of ‘windfall’ corporation tax receipts.  Commenting on the figures, Minister McGrath said:  “Available evidence suggests the economy is in reasonably good shape, at least in aggregate terms. Looking ahead, some of the headwinds that have dominated over the past year are set to ease as the year progresses and this should support a pick-up in economic activity.  The brightest economic spot is undoubtedly the labour market, which has remained resilient throughout the period of high inflation and rising interest rates. There are now over 2.7 million people in employment. To put this in context, three-quarters of our working age population are in work, a near record level.  Crucially, the energy price shock is dissipating and the disinflation process is now well advanced, with headline inflation expected to average just over 2 per cent this year – consistent with price stability. Against this backdrop, consumer spending is expected to pick-up over the course of the year as lower energy prices and the associated easing in inflation support an improvement in real wages and household purchasing power.  MDD growth is expected to average 1.9 per cent for this year as a whole - a modest downward revision of 0.3 percentage points from the autumn forecast. As economic conditions improve over the course of this year, MDD growth is set to accelerate to 2.3 per cent next year.”  On the public finances, Minister McGrath said:  “On the fiscal side, we are projecting a headline surplus of €8.6 billion for this year, the equivalent of 2.8 per cent of national income. This is based on the assumption of tax revenue amounting to almost €92.1 billion, a growth rate of 4.6 per cent. However, I would caution that this surplus is heavily dependent on volatile ‘windfall’ corporate tax receipts which have grown from €4 billion to €24 billion in the space of a decade. When the windfall element of these receipts – estimated at around €11 billion, or almost half the projected corporation tax yield this year – is excluded, there is an underlying deficit in our public finances.  These receipts cannot be relied upon: we saw a marked slowdown in corporation tax over the course of last year, highlighting the volatility of this revenue stream. We can say with reasonable confidence at this point that the era of corporation tax over-performance is coming to an end.  That is why this Government has decided to establish the two new long-term investment vehicles – the Future Ireland Fund and the Infrastructure, Climate and Nature Fund. The objective is to invest windfall receipts to help prepare for future known fiscal challenges. The legislation establishing the Funds is currently progressing through the Oireachtas.  The SPU projections published today reflect the resilience of our economy and Government’s commitment to continuing to invest in our public services and the productive capacity of our economy. However, it continues to be important that we highlight the vulnerabilities that remain just below the surface: it is essential that fiscal policy is framed in a manner that is careful, balanced and sustainable.  The publication of the SPU today is an important milestone in the process of preparing Budget 2025. I now look forward to the National Economic Dialogue next month and then to the preparation of the Summer Economic Statement (SES) before the summer recess. The SES will involve making important decisions concerning the parameters of Budget 2025." 

Readers are reminded that taxpayers currently availing of the Debt Warehouse Scheme have until Wednesday, 1 May 2024, to engage with Revenue to agree arrangements to repay their warehoused debt. Revenue has emphasised that there is no expectation on businesses to have all their warehoused debt repaid in full by 1 May. However, they must have engaged with Revenue, by submitting an ePPA online via ROS, to agree a phased payment arrangement (PPA).  Where a business fails to meaningfully engage with Revenue by 1 May, the balance outstanding will immediately be subject to standard debt collection proceedings and the standard interest rate of 8 percent or 10 percent will apply.   As Revenue reports increasing numbers of businesses making contact to set up PPAs and discuss the flexible payment options, the Collector General’s Division has extended opening hours for its phone lines from 9.30am to 16.30pm on Monday 29 April to Friday 3 May. The Collector General’s Division can be contacted on 01 738 3663 or through MyEnquiries.   Revenue’s online 24/7 Phased Payment Arrangement application system can be accessed through ROS, by clicking on the ‘Other Services’ section. Businesses with warehoused debt of €50,000 or more will be required to submit supporting documents with their applications. Businesses can also pay their debt through one of Revenue’s online payment channels, in full or in partial payments, and can also use an approved refund or credit to pay their outstanding balance.  Speaking about the increasing level of engagement from businesses, Revenue’s Collector General, Joe Howley, outlined:  “Applications for Phased Payment Arrangements are being submitted on a constant basis and customers are also engaging with us via phone and MyEnquiries. As a result of this increased level of engagement, over 6,500 payment arrangements for warehoused debt have now been set up on our system, an increase of over 3,700 in the period since 31 March.   The level of warehoused debt which is not yet subject to an active payment plan is now below €1 billion and this balance will continue to reduce as we approach the key deadline of 1 May. We are actively progressing a further 1,300 Phased Payment Arrangement applications at present and we are aware that many customers have financially planned to pay their warehoused debt in full on or close to 1 May, in order to fully maximise the benefit of the 0% interest rate.”  A summary of the key actions required before 1 May 2024 can be found on the Revenue website, accessible here.  

Revenue has advised us that the facility to record advance payments for employee travel and subsistence expenditure is now available on ROS. As previously reported, the Tax and Duty Manual regarding the enhanced reporting requirements (ERR) for employers provides guidance on an optional administrative practice regarding advance payments of travel and subsistence.   Under this administrative practice, an advance travel and subsistence payment may be treated, in certain circumstances, as not being subject to tax via the payroll when paid, but instead treated as a payment where no tax is deducted in respect of travel and subsistence and therefore subject to ERR reporting at the time of payment. Then, when the expense is incurred and the claim submitted by the employee/director, the employer will be required to update their ERR submission to Revenue to reflect the actual travel and subsistence expense amount in respect of that employee/director. 

Revenue has published its Annual Report for 2023. The report reflects another year of strong performance for Revenue as it collected a record amount of tax and duty, with gross receipts amounting to €127.9 billion.   2023 also saw a continuation of high voluntary compliance rates, at over 99 percent for large cases and 98 percent for medium cases. Timely compliance rates for all other cases in 2023 was 91 percent, up from 88 percent in 2022. In the same period, Revenue completed over 291,000 compliance interventions with a yield of €787 million and 85 tax avoidance cases with a yield of €16.5 million.  Revenue also published a number of other research and statistical papers on Corporation Tax, Income Tax, VAT together with a survey of PAYE customers in 2023 and an evaluation of Budget 2023 compliance measures.   Commenting on today’s publications Revenue Chairman, Niall Cody, said:  “Continued strong levels of timely and voluntary compliance rates confirm that the vast majority of taxpayers pay the right amount of tax at the right time. Given the exceptional disruption which individual taxpayers, businesses and agents have experienced over the past four years, this is an extremely positive reflection on their continued engagement with their tax compliance obligations, and the importance that society generally places on a strong culture of voluntary and timely tax compliance.   We acknowledge and thank all taxpayers and their representatives for their ongoing engagement and co-operation.”  Read the full report for more information. 

Revenue has updated the Tax and Duty Manual which provides guidance on the operation of Ireland’s bilateral Advance Pricing Agreement (APA) programme. The programme provides certainty to taxpayers regarding the process involved in applying for a bilateral APA and the ongoing reporting and administrative requirements once an APA has been entered into. The updated Guidelines take into account international best practice in relation to bilateral APAs as identified by the OECD Forum on Tax Administration (September 2022).  The main changes to the guidelines are as follows:  Including prospective years in an APA term in situations where most of the years proposed to be covered by an APA have passed by the time an agreement is reached between the competent authorities (Part 3.3).  Position to be adopted by a taxpayer in corporation tax returns filed in the period from when an APA application is submitted to Revenue until the APA is concluded (Part 4).  Electronic submission of APA applications (Part 4.2 and Part 8).  Timeframe for Revenue to make a decision in relation to the acceptance of an APA application into the APA programme (Part 4.2).  Annual reporting requirements (Part 4.5).  Timeframe for a taxpayer to notify Revenue in situations where it ceases to apply the terms of an APA (Part 4.5).  Amendment by a taxpayer, where necessary, of previously filed tax returns following the revision, revocation or cancellation of an APA (Part 5).  Relationship between transfer pricing audit and the APA process (Part 6). 

Revenue has announced the extended ROS filing and payment date for self-assessed income taxpayers and taxpayers liable to capital acquisitions tax (CAT). The due date for filing the 2023 Form 11 and the payment of taxes is Thursday 14 November 2024. This is also the due date for CAT returns and payments for beneficiaries receiving gifts/inheritances with valuation dates in the year ending 31 August 2024.  The extension is available to taxpayers who pay and file through ROS only. Where either one of these actions is completed other than through ROS, the deadline for submission and payment is Thursday 31 October 2024. 

With the news that HMRC is aiming to expand the trial for Making Tax Digital for income tax Self-Assessment (“MTD for income”) from next Monday 22 April, we take a look at recent developments in this area. The Institute still has many reservations about this project and will continue to represent members views on MTD for income tax when in attendance at HMRC forum meetings in this space. Feedback can be sent at any time to tax@charteredaccountants.ie.  Amended MTD regulations  As previously announced, MTD for income tax will commence for unincorporated businesses and landlords with business and/or property income over £50,000 from April 2026. Those with income over £30,000 are mandated from April 2027. In December 2023, HMRC consulted on the amended draft MTD for income tax regulations which Chartered Accountants Ireland responded to.  Following this consultation, The Income Tax (Digital Requirements) (Amendment) Regulations 2024 have now been laid. These, alongside the earlier regulations which they amended, set out the requirements which must be complied with, including the use of MTD-compatible software to keep and preserve business records digitally and the sending of quarterly updates of these records to HMRC. Note that the deadline for submitting quarterly MTD for income tax returns will now be the 7th day of the month after the relevant tax year quarter end, amended as recommended in the Institute’s consultation response in order to align with the VAT return filing deadline for those within VAT Stagger 1.   An Update Notice has also been published which sets out the information which will need to be sent to HMRC quarterly using MTD-compatible software. The update information that must be provided in a quarterly update period is dependent on the relevant person’s business or businesses. HMRC will also publish the Software Notice and Notice for joint property owners in the Spring, alongside detailed guidance for each. More information is also still to be published on the digital record keeping and digital links requirements.   MTD trial  HMRC’s aim in 2024/25 is to expand the current MTD for income tax trial by encouraging agents to consider which clients can sign up and then to sign them up to participate in the expanded private beta testing trial in 2024/25. This month, HMRC will be sending further communications regarding the MTD for income tax trial to its entire agent mailing list. Overall, this involves a three-armed email campaign which will provide several opportunities for agents to learn more about the testing and how to sign up.   HMRC began sending these comms last month. The next email will then be sent at launch, which will signpost agents towards the updated GOV.UK pages on compatible software, eligibility criteria, and sign-up pages.   However, as of 10 April 2024, there still remains a very limited number of software packages that are available to participate in the trial with just five vendors confirmed, although many are in development, some of which may become available during 2024/25 or later. The Institute recommends that agents carefully consider the advantages and disadvantages of signing up clients to participate in the trial.  HMRC has also now published detailed guidance in respect of the penalty regime which will apply when trial participants testing MTD for income tax make late submissions. These changes to penalties only apply during the testing phase and must be agreed to before a taxpayer can be signed up to participate in the trial.  Broadly, agents who wish to develop a list of clients that are eligible to join the expanded trial in 2024/25 should follow the below steps when considering their options:  Step 1 - assess client suitability – this can be done by using an eligibility checker to triage/filter which clients are eligible to participate.  Step 2 - discuss this with the client and get their agreement before going back into the service to actually sign them up.  Note that full client approval is needed to then progress onwards and sign the client up to participate.  The cost of MTD  HMRC has also sent the following message about the cost of MTD:  “We have also published an updated Tax Information and Impact Note (TIIN), to accompany the Regulations. Among other impacts, this sets out the latest projected exchequer benefits, operational costs, and customer cost impacts of MTD ITSA. Since we published the last TIIN in September 2021, we have updated the assumptions within the customer costs model. We have also reviewed the methodology and cost assumptions with tax professional bodies and the Administrative Burdens Advisory Board (ABAB).   We recognise that there are transitional costs for business in moving to MTD. Both these, and the continuing costs will vary depending on factors such as size, complexity, and digital capability of the business.   Continuing costs     Once implemented, MTD expansion is estimated to increase the total net continuing costs of complying with the tax system for all mandated businesses by £196m per year - about £110 per year, per business. This compares to a previous net cost estimate in 2021 of £152m per year, or about £35 per year, per business. A range of assumptions have been updated since the last estimates, including uplifting costs and wage rates in line with inflation, re-examining time spent undertaking tasks, reviewing the price of software products, and using the latest evidence on record keeping practices.   Transitional costs     The decision to increase the previous £10,000 income threshold to £30,000 means there is a smaller, more digitally able population within scope. We have therefore reduced our per-business estimate for the transitional costs, in comparison to the estimates published in our last TIIN.   We estimate the transitional costs for all mandated businesses will total £561m, which equates to about £320 per business. This compares to £1,383m (about £330 per business) in our 2021 figures. Although the reduction in population size means transitional and continuing costs are lower overall than previously estimated, we recognise that the continuing customer costs per business are significantly higher. We are confident that these updated estimates in the TIIN present a more granular and informed position. These remain estimates, not a definitive statement of costs, but we have used the most robust methodology possible to estimate and set them out in a realistic and straightforward way. ABAB have also advised that they are comfortable with the revised assumptions.   We also know that, whilst there are costs in using MTD, we expect there to be benefits in the future. For example, using compatible software will reduce opportunities for error and help businesses and landlords get their tax affairs right first time. Evidence from MTD VAT also points to the use of compatible software encouraging businesses to digitalise other elements of their business due to productivity benefits. We are committed to extending these benefits to business, self-employed individuals and landlords who are registered for Self Assessment from April 2026. The government will continue to keep the decision on whether to mandate businesses and landlords with income below £30,000 to use MTD ITSA under review, although this group can still sign up voluntarily.”  Turnover less than £30,000 population  As announced at the 2023 Autumn Statement, for now, HMRC is not extending MTD for income tax to unincorporated business and landlords with turnover less than £30,000. In February 2024 HMRC published externally commissioned qualitative research conducted with small businesses with turnover between £10,000 and £30,000 per year. Key findings from the research are set out in detail at section 1.3 of the report.  Government response to November 2023 Public Accounts Committee ("PAC") report  In February, the Government published its response to the recommendations in the PAC’s report of November 2023 on Progress with Making Tax Digital.   The PAC’s findings were based on a report by the National Audit Office (NAO) in 2023, in addition to oral evidence provided in June 2023 by members of HMRC’s Executive Committee.   Both the NAO and PAC’s work on MTD provides important scrutiny and perspective on the programme, hence the Government’s response sets out how it is addressing each of the PAC’s recommendations.   According to HMRC, the response underlines the focus on having a clear and widely understood roadmap for delivery, further explains the position on a range of wider issues, including the assessment of HMRC’s view of its benefits, and provides details of its approach to working with the software industry.   Several of the PAC's recommendations are underpinned by evidence of work that has already been implemented or which is underway with the overall aim of accelerating towards expanding the testing programme in 2024/25, so that HMRC can fully test its IT functionality well ahead of April 2026.