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.

Readers are reminded that PAYE taxpayers can claim the 2022 rent tax credit by filing a Form 12 via MyAccount PAYE Services, while self-assessed taxpayers can claim the rent tax credit when filing their Form 11 via ROS. In addition, PAYE taxpayers have the option of claiming their 2023 rent tax credit in 2023 by using Revenue’s Real Time Credit facility, apportioning the credit equally over the tax year. Revenue's preliminary statistics for 2023 Q1 review indicate that over 226,000 Rent Tax Credit claims have been made by over 209,000 PAYE taxpayers. Of these, 89 percent of the tenancies are registered with the Residential Tenancies Board (RTB) with 11 percent being ‘rent-a-room’ or ‘digs’. With only 1.7 percent of claims for rent payments made on behalf of children, all other claims refer to the individual’s own rental payments. To claim the rent tax credit for rent paid for a taxpayer’s child, the property must be registered with the Residential Tenancies Board (RTB) and used by the claimant’s child as their principle private residence to facilitate their study obligations. Properties that are rented for the child under a ‘digs’ or ‘rent-a-room’ arrangement or that are RTB exempt will not qualify for the rent tax credit.  

Revenue has updated its Tax and Duty Manual regarding the submission of iXBRL financial statements as part of corporation tax returns.  From 2 September 2023, Revenue will accept iXBRL submissions tagged with the FRC's 2023 Irish Extension Taxonomies. The EU IFRS taxonomy now contains tags for IFRS 17 - Insurance Contracts and these should be used by entities who prepare their accounts in accordance with that standard. In addition, Revenue will require that all iXBRL submissions declare the functional / presentation currency of the financial statements using the “PrincipalCurrencyUsedInBusinessReport” tag from 2 September 2023.

Institute President Sinéad Donovan and Tax and Public Policy Lead Cróna Clohisey represented Chartered Accountants Ireland at the National Economic Dialogue (NED) 2023 last week. The NED provides a forum for public consultation and debate ahead of Budget 2024 and this year’s theme was The economy in 2030: enabling a sustainable future for all. The discussion centred on the need to move the focus of economic dialogue towards more medium-term issues, with much debate around whether to spend or save the projected economic surplus. The need to accelerate housing supply, protect living standards and continue to invest in public services, all against the back-drop of managing inflation, formed part of many of the contributions. Institute representatives emphasised to Ministers the importance of addressing capacity building within the economy, particularly in housing and set out suggestions around using the tax system to boost supply. Documents and speeches from the NED can be found on gov.ie.

In Irish news, the Institute attended the National Economic Dialogue 2023 this week, and Revenue has published a new manual on the Non-Resident Withholding Tax. In UK news, read some more key messages from a recent meeting on the Windsor Framework and HMRC is temporarily closing its self-assessment helpline from 12 June until 4 September 2023. In International news, we bring you an update on the new DAC8 rules on crypto-assets.  Ireland The Institute was represented at the National Economic Dialogue 2023 forum hosted by both the Department of Finance and Department of Public Expenditure and Reform. Revenue has published a new manual on the Non-Resident Withholding Tax system. UK Read part two of our key messages on the Windsor Framework. HMRC has closed its self-assessment helpline for almost three months. International Update on the new DAC8 rules on transparency for crypto-assets. 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.

On 29 May, we updated you on key messages from a recent meeting with the Northern Ireland Joint Customs Consultative Committee on the Windsor Framework (“WF”). Today we provide more details on the matters discussed including NI-GB unfettered access, more on both the UK Internal Market Scheme and the Reimbursement Scheme, news about the treatment of mixed loads, and an update on XI EORI numbers. HMRC has since updated a number of publications which are referenced below. Unfettered NI-GB access Officials confirmed that there will be no changes to goods movements from NI-GB, hence unfettered access will continue to be available and protected with, as it is currently, no export requirements needed other than for exceptional goods such as endangered species, hazardous chemicals, etc. UK Internal Market Scheme (“UK IMS”) It is confirmed that the new UK IMS, which will replace the UK Trusted Trader Scheme (“UK TTS”) from 1 October 2023, will include a higher commercial processing threshold and broader sectoral exemptions. As the scope of UK IMS is wider than the current UK TTS, there will be some additional authorisation requirements. In addition to company directors, HMRC will check whether senior employees responsible for the movement of goods under the scheme have any serious criminal offences recorded in relation to economic crime. There will also be more detailed questions on record keeping and internal controls. HMRC will also undertake checks to ensure that traders are “of good financial standing.” HMRC will also provide new guidance on obligations when moving goods under the scheme with traders required to sign a declaration to confirm they have read and understood the guidance, and that they understand their obligations under the scheme. Traders currently holding authorisation under the UK TSS will be contacted by HMRC in order for re-authorisation to commence for the UK IMS and will need to login using their Government Gateway to complete enrolment onto the UK IMS. This should be done within six weeks of receiving contact from HMRC about re-authorisation, to ensure UK IMS enrolment before 30 September 2023. The new UK IMS is now open to apply for authorisation.  The reimbursement scheme The reimbursement scheme will allow for reimbursement of tariffs paid on goods classed as being at risk which later become/became not at risk under the original Protocol and on goods which move in the new red lane which should originally have been green lane movements under the WF. This includes the following scenarios:- Final sale of goods takes place in NI; Goods are consumed in NI; Goods are destroyed in NI; Goods are moved back to GB from NI; and Goods exported to RoW (Rest of World). In order to claim, the trader must gather evidence to support the claim and submit this to HMRC where a caseworker will consider the application. Mixed loads It was confirmed that mixed loads (green and red lane movements in the same container) will be possible under the WF, however red lane goods within mixed loads will be subject to full customs and SPS checks, hence this will slow down such movements. Miscellaneous A number of questions were taken away for more detailed consideration including the treatment of different goods movements such as EU/Ireland-NI-GB, NI-Ireland-GB and GB-NI-EU/Ireland. We will share the responses to all queries when available. A query was also raised in respect of how goods movements under the WF interact with the proposed Border Trade Operating Model. Post and parcel movements (C2C, B2C, B2B) are to be covered in a separate meeting but will not switch on until 1 October 2024 and new quotas are in place for categories 7 and 17 of UK steel. XI EORI number HMRC has recently written to businesses with a GB registered business address who hold an XI EORI number to confirm if they have a permanent business establishment (“PBE”) in NI or if they still need their XI EORI number for the limited customs purposes for which this is provided. Businesses meeting the criteria to retain their XI EORI number for the limited list of other customs purposes do not have to be established in NI. This validation exercise letter invites traders to upload evidence of a PBE in NI or to select on the G-form that they meet the criteria to retain their XI EORI number. Updated guidance and publications HMRC has also published and updated a number of guidance documents as follows:- The Windsor Framework - further detail and publications; How to make sure the correct duty is applied to goods you bring into Northern Ireland from countries outside of the EU and UK; Sign up for the Trader Support Service; Declare goods using the UK Trader Scheme if you bring goods into Northern Ireland; Check if you can bring your goods into Northern Ireland from Great Britain without paying duty; and Declaring goods you bring into Northern Ireland 'not at risk’ of moving to the EU.  

From today, Monday 12 June, until 4 September 2023, HMRC is closing its self-assessment helpline. This decision was notified to Chartered Accountants Ireland in a meeting just one day before the official announcement last week and was not consulted on in advance. The decision was embargoed until the official announcement on Thursday 8 June. We would be keen to hear your feedback on the impact of this decision. Note that this does not affect self-assessment queries on the Agent Dedicated Line which we understand was restored to full status again from 2 June. This week’s News and Information from HMRC also covers the closure of the helpline. The decision to close the helpline is clearly as a result of ongoing pressures on HMRC’s services due to resource constraints and limited and falling real time budgets. The Institute is highlighting the continued impact this is having on agents and taxpayers and makes several recommendations to the UK Government in the 2023 Next Financial Year position paper which will be published later this week. In the meeting during which HMRC notified the Professional Bodies of this closure, a number of questions were asked the answers to which are reproduced below. “If someone needs to withdraw a return how can they do this with no phone line? Almost any task that can be actioned or query that can be resolved on the phone, can also be sorted via webchat. This includes withdrawing a Self-Assessment (“SA”) return.  We advise customers to use our ‘Ask HMRC online’ digital assistant. If your query can’t be dealt with this way, you will be put through to our webchat service. If you need to file then how can you do this? You can file online – just like the 97% of SA customers who already use HMRC’s online services to file. Almost every query that can be resolved on the phone, can also be done via webchat. Anyone who needs extra support if their health condition or personal circumstances make it difficult for them to contact HMRC, can get support from our Extra Support team.  Otherwise, the helpline will re-open on 4 September this year so customers can receive expert support in the five months running up to the SA deadline on 31 January 2024. What if someone actually needs to speak to us? Any customers with an urgent SA query will be able to get support through our digital assistant, and where appropriate they may be routed to our SA webchat facility or a technical expert, for example, if the customer is in financial distress.  If customers are digitally excluded or qualify for extra support, we’ll ask our colleagues who respond to webchat, to refer them to our Extra Support Team following their usual processes.  What is the plan B if customers can’t speak to HMRC? Almost any task that can be actioned or query that can be resolved on the phone, can also be sorted via webchat. We advise customers to use our ‘Ask HMRC online’ digital assistant. If your query can’t be dealt with this way, you will be put through to our webchat service. We recognise that some agents may have to deal with more contact from their clients as a result of this change. However, we encourage agents to let their clients know that anyone with complex queries that they need additional help resolving, should use our ‘Ask HMRC online’ digital assistant. If their query can’t be dealt with this way, they will be put through to our webchat service. Almost any task that can be actioned or query that can be resolved on the phone, can also be sorted via webchat. How are the digitally excluded going to be supported? How do they access the Extra Support Team if not through the SA helpline? Anyone who needs extra support if their health condition or personal circumstances make it difficult for them to contact HMRC, can get support from our Extra Support team.  If customers need extra support, they can get a phone or video appointment with the extra support team. Ask your advisor when you call any HMRC helpline or use the extra support team webchat service. Are there plans to close the ADL line? The Agent Dedicated Line (ADL) is unaffected by this change, so agents can still call us during this period. The ADL opening hours are Monday to Friday: 8am to 6pm. There are no current plans to make any further changes to the opening times. Will we stop putting out comms about filing early if there is no support available? Our Early Filing campaign will begin on 4 September when the phoneline reopens. However, we will continue to encourage customers to file early and online. If customers have any complex queries that they need additional help resolving, we would recommend they use our ‘Ask HMRC online’ digital assistant. If their query can’t be dealt with this way, they will be put through to our webchat service. Almost any task that can be actioned or query that can be resolved on the phone, can also be sorted via webchat.”

From 1 May 2023, the new VAT related payment scheme for certain second-hand cars came into operation. HMRC has recently updated guidance for the scheme which now provides guidance for EU businesses on how to claim a payment if they do not have a business establishment in the UK. EU businesses can make their claim directly to HMRC from 1 August. They can prepare to make their first claim by:- appointing someone to deal with a claim on their behalf; or requesting access to the HMRC Secure Data Exchange Service to submit a claim electronically. The guidance pages relevant to this are as follows:- How to claim a VAT-related payment using the second-hand motor vehicle payment scheme if you do not have a business establishment in the UK; Submit a claim using the second-hand motor vehicle payment scheme if you do not have a UK business establishment; and Appoint someone to deal with VAT-related payments using the second-hand motor vehicle payment scheme. Other guidance pages relevant to the scheme are:- Check which records to keep for second-hand vehicles you export to the EU for resale; Sales of second-hand motor vehicles in Northern Ireland; Claim a VAT-related payment if you buy second-hand motor vehicles in Great Britain and export them to the EU for resale; Check which records to keep for second-hand vehicles you move to Northern Ireland for resale; and Claim a VAT-related payment if you buy second-hand motor vehicles in Great Britain and move them to Northern Ireland for resale.

The Institute recently responded to the consultations Expanding the cash basis and Simplifying and modernising HMRC’s income tax services. Both submission responses are available to read in the Tax Representation section of our website. Key points from each are set out below. The Department of Finance has also published a factual summary report of responses to the “Consultation on devolution of more fiscal powers” launched late in 2022 by the then Finance Minister. Chartered Accountants Ireland’s response to that consultation is available to read on our website. The report will help inform any incoming Finance Minister’s considerations regarding further fiscal devolution, and it would then be for a future Executive to consider any potential recommendations. Expanding the cash basis The following key points and recommendations are made in the Institute’s response to this consultation:- The cash basis should remain as opt-in only. The turnover limit should be aligned with the thresholds used for the VAT cash accounting scheme, which should also be uprated. The rules for vehicles in the cash basis should be reformed and simplified. A review of the simplified expenses regime should be undertaken, and their rates uprated. A number of recommendations are made to improve the self-assessment form in order to both raise awareness of the cash basis and minimise the impact of businesses moving between the cash basis and the accruals basis. The exclusion for business premises renovation allowance and claims for research and development allowance should be removed. A number of the current restrictions should be removed including the restriction on sideways loss relief and relief for interest costs. The cap on certain income tax reliefs needs to be uprated. The additional income tax and Class 4 NIC as a result of the transitional adjustments should be spread over a number of tax years via an election. A number of recommendations are made to lessen tax complexity. The Office of Tax Simplification’s (“OTS”) recommendations on tax education tools/learning should be included in the Tax Administration Strategy and HMRC should explore the potential to provide basic tax information or training to young people on entering the workforce. Simplifying and modernising HMRC’s income tax services Key points and recommendations are as follows:- HMRC should seek additional investment for the final two tax years of the current spending review period to ensure that current service levels do not further deteriorate and to support the introduction of new digital services. HMRC should focus on its current objectives for simplifying income tax services before considering more radical reform. A number of recommendations are also made to lessen tax complexity. Taxpayers should be able to opt out of the “digital by default” approach. HMRC’s current transformation project should include the development of a secure email communication channel for taxpayers and agents.   HMRC must develop, implement, and maintain online services and contact routes specifically for agents. A facility for agents to access their clients’ data should be included in the development of new online services. Agent services for taxpayer registration should also be developed in tandem with the development of any online taxpayer registration system. HMRC should examine the root cause of the ongoing high levels of amendments needed to PAYE codes and a review should be conducted of how RTI data could be used more effectively by HMRC. The March 2022 recommends of the OTS in its “Evaluation paper on improvements to the operation of the PAYE system” should also be considered by HMRC. Tax refunds for employees should not be processed into their employer’s payroll bank account and HMRC should consider how a similar system for PAYE could be implemented in the UK like the system currently available to taxpayers in Ireland. A roadmap should be published setting out how the digitally excluded will be catered for. Any new services must contain the necessary safeguards to protecting sensitive taxpayer data. A number of suggestions are made to improve the current ITSA criteria and codifying in legislation should be avoided. HMRC should consider how tax guidance principles can be developed outside Government Digital Service constraints and the recommendations made by the Low Income Tax Reform Group in its report on guidance should also be reviewed and considered for implementation. HMRC will need to embark on an education and communication campaign to communicate any new online services to taxpayers and agents. Several recommendations are also made to improve taxpayer education and awareness of the UK tax system. A full roadmap for the future delivery of the Tax Administration Strategy needs to be published.

HMRC has recently updated its Check when you can expect a reply from HMRC tool. This can now be used to check when you should receive a reply to certain types of requests about PAYE for employers, national insurance contributions issues, including registering a PAYE scheme and claiming a Construction Industry scheme refund. HMRC advises that the Where’s my reply tool and/or the HMRC service dashboard should be consulted for the expected response date before any progress chasing calls are made.