Revenue has updated the Tax and Duty Manual regarding the deduction of tax from interest payments by certain deposit takers.   The updated manual provides that deposit interest arising on the following deposits can be paid without deduction of Deposit Interest Retention Tax (DIRT):  a deposit that is solely in respect of a general payment, and work related payment if applicable, under the Mother and Baby Institutions Payment Scheme, and  a deposit that is solely in respect of monies that are beneficially owned by a Pan European Pension Product. 

The Parliamentary Budget Office (PBO) has published a paper titled Budget 2024: A Distributional Impact Analysis of Government and Opposition Tax and Welfare Packages on Irish Households. The paper analyses, by disposable household income decile and family type, the costs and distributional impacts of the government’s Budget 2024 tax and welfare packages and those proposed by Sinn Féin, Labour, Social Democrats and People Before Profit.  A fully interactive version of the results, allowing for direct comparison of the different Budget 2024 packages, is also available here. 

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 and Cabinet Office Borders bulletins are also available. Read the email from HMRC about the beginning of physical checks of imports from the EU of certain sanitary and phytosanitary (SPS) goods from 30 April 2024, which is effectively the next part of the UK’s Government’s implementation of its Border Target Operating Model and see below for some useful new resources in relation to the Windsor Framework.  Windsor Framework resources  The Northern Ireland Assembly’s EU Affairs Team recently published some new resources on the Windsor Framework which includes a summary of the UK and EU legislation required to implement it, information and flowcharts on the Stormont Brake, applicability motions, and the work of the Democratic Scrutiny Committee, and a timeline of the key events and milestones.  Miscellaneous updated guidance etc.   Recently updated guidance, and publications relevant to EU exit are set out below:-  Importing SPS controlled goods that interact with ALVS;  Data Element 2/3 Documents and Other Reference Codes (National) of the Customs Declaration Service (CDS);  Authorisation type codes for Data Element 3/39 of the Customs Declaration Service;  Data Element 2/3 Documents and Other Reference Codes (National) of the Customs Declaration Service (CDS);  Additional Information (AI) Statement Codes for Data Element 2/2 of the Customs Declaration Service (CDS);  Reference Documents for The Customs Tariff (Suspension of Import Duty Rates) (EU Exit) Regulations 2020; and  Customs, VAT and excise UK transition legislation from 1 January 2021.   

The Parliamentary Budget Office (PBO) has recently updated its comparative tool which allows users to compare their 2022 PAYE annual earnings to others in their county. It also helps them to assess affordability of property in the county. 

Revenue has updated the CAT Manual which provides an overview of the rules that apply for CAT purposes where a person receives a benefit as a result of the exercise of, the failure to exercise, or the release of a power of appointment. The updated guidance has been revised and refreshed throughout to provide clearer and more comprehensive guidance on the application of these rules. 

Following constructive engagement with Government departments, the Institute has secured a change which should make the process of hiring non-EEA accountants by way of a Critical Skills Employment Permit (CSEP) less burdensome. In recent months, member firms have reported to us a significant increase in the need to apply for bridging CSEP visas for their workers while their residency status is being processed.  New rules announced this week should substantially reduce this requirement. CSEP’s are valid for a period of two years, after which employees holding this permit can typically go on to apply for continued residence in Ireland under what is known as a Stamp 4. Since November 2023, in order to secure a Stamp 4, the holder of a CSEP was required to complete a minimum of 21-months' work following the issuance of a Stamp 1 (a permission to work visa). Delays in issuing a Stamp 1 meant that member firms have had to apply for bridging CSEPs because the 2-year CSEP would expire before accountants could meet the 21-month work requirement. Amplifying our members concerns, we called for a reinstatement of the previous system whereby a Stamp 4 could be secured 21 months from the commencement of employment in the State - rather than from the commencement of a Stamp 1. Following a sustained period of engagement with department officials, this suggestion was formally adopted by the Department of Justice with immediate effect – details of the changes can be found here. Chartered accountants are currently listed on the Government’s Critical Skills Occupations List – meaning that due to capacity shortages in the industry, suitable candidates from non-EEA jurisdictions are eligible to apply for a Critical Skills Employment Permit (CSEP) to come and work in the profession here. The Department of Enterprise, Trade and Employment and the Department of Justice have jurisdiction over the issuance of CSEP’s and Stamp 4 residence permits. Further information on CSEPs can be found here on gov.ie. The previous changes announced by the Department of Enterprise, Trade and Employment (DETE) on November 15 2023 can be found here. Should you have an issue which you would like to bring to the attention of the public policy team, please reach out via our email publicpolicy@charteredaccountants.ie

Last Tuesday 19 March 2024, HMRC announced a range of permanent changes to helpline services. However, the next day HMRC announced that the changes were being halted while HMRC “considers how best to help taxpayers harness online services”. Whilst the decision to further consider this issue is welcome, it is disappointing that feedback provided by the Institute and other Professional Bodies which raised various concerns about the proposed changes appears to not have been fully considered before the formal announcement was made last week and subsequently reversed. The Institute will engage with HMRC as it considers the way forward. Members are encouraged to provide feedback on HMRC services on a regular basis.

In Irish news, we bring you an update from the recent meeting of the main Tax Administration Liaison Committee (TALC) and Revenue has provided an important update regarding R&D claims for 2022 and 2023. In UK news, HMRC has halted the changes and restrictions to various helplines that were announced earlier this week, and today is your last opportunity to provide information to us on VAT margin scheme vehicles brought into Northern Ireland from Great Britain before 1 May 2023 which remain unsold. In International news, the European Commission has commenced a public consultation seeking feedback on the Directive on Tax Dispute Resolution.  Ireland Read our update from the recent meeting of the main Tax Administration Liaison Committee (TALC). Revenue has provided an important update regarding R&D claims for 2022 and 2023. UK The changes and restrictions announced by HMRC earlier this week in respect of various helplines will now not go ahead. Today is your last opportunity to provide information to us on VAT margin scheme vehicles brought into Northern Ireland from Great Britain before 1 May 2023 which remain unsold. International The European Commission has commenced a public consultation seeking feedback on the Directive on Tax Dispute Resolution. 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.

Revenue has updated the Tax and Duty Manual which provides guidance on the enhanced reporting requirements (ERR) for employers. The manual now provides guidance on an optional administrative practice regarding advance payments of travel and subsistence.  An advance payment of travel and subsistence to an employee or director is a perquisite and income tax, USC and PRSI must be deducted. These types of payments would therefore not typically fall within the scope of ERR as the payment does not relate to travel or subsistence incurred by the director or employee. However, when a claim for the related travel and subsistence is made to the employer, and the employer wishes to avail of the Section 114 administrative practice (i.e. not tax the travel and subsistence expense), a payroll adjustment must occur to give the effect of no tax applying to the expense amount incurred and at that point the payment becomes a reportable benefit for ERR. Revenue recognises that this may give rise to certain practical issues for employers in terms of its interaction and obligations with ERR requirements.  Therefore, Revenue will implement an optional administrative practice in respect of advance travel and subsistence payments.   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. 

Balancing the recent news that the UK tipped into recession at the end of 2023 with calls from politicians in his own party to reduce the tax burden in what is most likely an election year, Jeremy Hunt delivered the UK’s Spring Budget 2024 today. According to the Chancellor, the main announcements centred around “more investment, more jobs, and lower taxes”.   The VAT registration threshold will increase to £90,000 from April 2024, the first increase since 2017.  Full expensing which provides 100 percent tax relief for investments in new plant and machinery by companies will be extended to leased assets, when affordable. And the higher 28 percent rate of Capital Gains Tax on residential property disposals will be reduced to 24 percent from 6 April 2024. According to the Chancellor’s speech, the Northern Ireland Executive will receive an additional £100 million under the Barnett Consequential (which compensates devolved administrations with funding where Budget measures do not apply UK-wide) and from April 2025 both the regime for non-UK domiciled individuals and furnished holiday lets will be abolished with a new residence-based regime to be introduced for non-UK domiciles. However, the big ticket announcement was the 2 percent reductions in the rates of National Insurance Contributions for employees and the self-employed, both of which will take effect from 6 April 2024. Members will also be interested to hear that HMRC’s long planned consultation on “Raising standards in the tax advice market” has been launched and essentially examines options to strengthen the tax agent regulatory framework in the tax advice market, and on requiring tax advisers to register with HMRC if they wish to interact with HMRC on a client’s behalf. The Institute will be responding to this consultation and engaging with members on this important issue. The analysis in this and subsequent stories is based on the Spring Budget 2024 publications of HMRC and HM Treasury and specifically the main red book publication. Monday’s edition of Chartered Accountants Tax News will feature the tax announcements in more detail. The Spring Finance Bill 2024 is expected to be published next week, in the meantime supporting documents are available, as is the Spring Budget 2024 overview of the tax legislation and rates. You can also read the Institute’s reaction to today’s Budget.

Revenue has updated the Tax and Duty Manual for returns by employers in relation to reportable benefits under the Enhanced Reporting Requirements (ERR) which came into effect on 1 January 2024.   The updated guidance contains information about the service for compliance approach to be taken by Revenue to support businesses with the regime until 30 June 2024 as set out in a press release. During this time, Revenue will not be operating any compliance programmes in relation to the ERR and will not seek to apply any penalties for non-compliance.   The revised guidance also prescribes the reporting period, the form, and other particulars or documents that will apply in regard to reportable benefits. 

The Institute, under the auspices of the CCAB-I, made representations on behalf of members at last week’s meeting of the TALC Collection subcommittee. Among the issues discussed, Revenue provided updates on the implementation of the Enhanced Reporting Requirements for employers, the Debt Warehousing Scheme and the vacant homes tax. Revenue also reminded the group of the costs to which the VAT flat rate farmer scheme applies. Revenue is aware of an issue in the Statement of Net Liabilities process and will be contacting the affected taxpayers.  Enhanced Reporting Requirements for Employers (EER)   Despite the CCAB-I's concerns over the introduction of ERR, Revenue has advised us that the requirements will enter force from 1 January 2024. In the meantime, Revenue intends to go live with the reporting portal in the second week in December. In the meantime, Revenue will continue to hold information webinars up to 14 December 2023 on the new  requirements for employers for agents and employers.   Revenue issued e-Brief 254/23 this morning referencing an update to Revenue’s guidance on the small gift exemption, which include examples of how ERR will apply.   A recent snap poll of our members last week has indicated that 60 percent of organisations are not ready for the Enhanced Reporting Requirements. As the 1 January 2024 deadline approaches, we continue to meet with Revenue to discuss implementation and guidance. We will continue to keep members updated via Chartered Accountants Tax News.   Debt Warehousing Scheme   Revenue reported that the total debt warehoused in the scheme was €1.8 billion consisting of over 57,000 businesses, 67 percent of which owe less than €5,000 each. Over 5,500 businesses owe a combined €1.5 billion, each owing in excess of €50,000. Revenue is continuing its telephone outreach campaign contacting businesses owing in excess of €50,000.   The Debt Warehousing Scheme is currently in Period 3, running from 1 January 2023 to 1 May 2024, with interest accruing at 3 percent per annum on the unpaid debt. The 3 percent interest charge will be incorporated into the phased payment arrangement (PPA) for its duration. Where there is no PPA, the interest will be charged retrospectively.   Taxpayers have until 1 May 2024 to agree a PPA with Revenue and are reminded that they can make interim payments during this period, and also request for the offset of any refunds owing against the balance of tax warehoused.   To assist taxpayers and their agents in quantifying the PPA instalments and interest payments, Revenue is providing a PPA calculator on its website. Revenue is encouraging taxpayers to engage now in the PPA process as there is flexibility in terms of payment terms, amounts and downpayments. In addition, payment breaks can be arranged once the PPA has been commenced. A nominal downpayment amount of 0.1 percent of tax and interest can be input using the online application system to commence the process of engagement and negotiation with the caseworker.   Revenue has prepared a number of ‘How to” videos in relation to the PPA process which are now available on the Revenue website (link to videos).   Vacant Homes Tax  Revenue provided current statistics on the Vacant Homes Tax (VHT) that was due to be reported on by 7 November 2023. Of the 50,000 properties reported to Revenue, only 5,000 properties were declared vacant. Revenue wishes to remind property owners that there is only an obligation to file a VHT return where the property is vacant.  Of the 5,000 declared to be vacant, 2,000 properties have been claimed to be exempt VHT. The VHT liability on the remaining 3,000 properties is due for payment by 1 January 2024.  Earlier in the year, Revenue wrote to owners of some 25,000 properties to advise them of the actions they needed to take, where the data available to Revenue indicated that the recipient may have a liability to Vacant Homes Tax (VHT). Revenue received responses from 45 percent of this cohort. Revenue intends to review the non-responders after the due date for payment of VHT, 1 January 2024.  Statement of Net Liabilities  Revenue is aware of some 1,000 instances in the Statement of Net Liabilities process where an offset of 2022 Income Tax refund against 2023 Preliminary Tax was selected but the refund issued, resulting in an underpayment of 2023 preliminary tax. Revenue will be contacting the affected taxpayers.  VAT Flat Rate Farmers Scheme  Farmers who are not registered for VAT are not, in the normal course, entitled to credit for, or repayment of, VAT incurred by them on their business inputs. However, a flat-rate farmer, who would not otherwise be entitled to reclaim VAT on costs incurred for the purpose of their farming business, can reclaim VAT on certain costs in accordance with Value-Added Tax (Refund of Tax) (Flat-rate farmers) Order 2012. Revenue wishes to remind farmers, and their agents, that VAT reclaimable is that VAT paid in relation to costs incurred only on:  (a) the construction, extension, alteration or reconstruction of that part of the building or structure which was designed solely for the purposes of a farming business and has actually been put to use in such a business carried on by him or her,  (b) the fencing, drainage or reclamation of any land which has actually been put to use in such a business carried on by him or her, or  (c) the construction, erection or installation of qualifying equipment for the purpose of micro-generation of electricity for use solely or mainly in his or her farming business.  It is to be noted that outlay for other purposes, such as on the acquisition of milk bulk tanks, feed bins, milking parlour equipment, automatic scrappers and automatic calf feeders do not come within the scope of this refund order.