The European Commission has welcomed the Court of Auditors' special report on the EU's efforts to combat harmful tax regimes and corporate tax avoidance. The report acknowledges the progress made by the Commission and Member States in implementing the EU's framework to tackle these issues. The Court of Auditors' report highlights the key measures introduced by the EU, such as the Anti-Tax Avoidance Directive, the Directive on Administrative Cooperation in the field of taxation, and the Tax Dispute Resolution Mechanisms Directive. The report notes that these measures have contributed to a more transparent and fair tax environment in the EU.

In this week’s post EU exit corner, we bring you the latest guidance updates and publications relevant in the post EU exit environment. The most recent Trader Support Service bulletin is also available as is the latest Brexit and Beyond newsletter from the Northern Ireland Assembly EU Affairs team. And finally, we remind you that from 1 January 2025, the Windsor Framework (WF) introduces new rules in the UK for product licensing and labelling. WF changes from 1 January 2025 From 1 January 2025, the WF introduces new rules in the UK for product licensing, labelling, and the EU Falsified Medicines Directive (FMD). This is designed to ensure that medicines can be approved and licensed on a UK-wide basis by the Medicines and Healthcare products Regulatory Agency (MHRA) and medicines can be supplied in the same packs across the UK. It also provides for the disapplication of FMD safety features for medicines marketed and supplied in Northern Ireland. Further information is available in the guidance here on the MHRA Windsor Framework Hub. Miscellaneous guidance updates and publications Locations you need to submit an ‘arrived’ export declaration before moving goods, Importing certain agricultural goods and food from outside the UK, How to use your duty deferment account, Check how to get your import VAT certificate (C79), Submit a pleasure craft report, Designated export place (DEP) codes for Data Element 5/23 of the Customs Declaration Service, Data Element 2/3: Documents and Other Reference Codes (Union) of the Customs Declaration Service, and External temporary storage facilities codes for Data Element 5/23 of the Customs Declaration Service.  

In this week’s miscellaneous updates, HMRC has published a range of new guidelines for compliance (GFCs) and further updated guidance on Pillar Two has been published. The National Audit Office has published its annual report on HMRC and regulations on the penalties applicable to late payment of tax have been laid. And finally, the latest fuel advisory rates, which apply to employees using a company car, have been published and should be used from 1 December 2024. New GFCs The following new GFCs have been recently published: pay as you earn settlement agreement calculations, the apprenticeship levy and the national insurance employment allowance, patent box computations, and the economic crime levy. According to HMRC, GFCs “explain HMRC’s view on complex, widely misunderstood or novel risks that can occur across tax regimes” and are published to help taxpayers “avoid non-compliance”. The full range of GFCs published to date is available on GOV.UK. Pillar Two updated guidance HMRC has published further Pillar Two guidance which sets out: how and when to pay domestic top-up tax and multinational top-up tax, and how to use HMRC's online services for replacing the filing member on a Pillar 2 top-up taxes account. This confirms that the 15-character reference provided at registration must be used when making payments which should be made no later than: 30 June 2026 (if the first accounting period the group is required to report top up taxes ends on or before 31 December 2024), 18 months after the last day of the group’s accounting period (if the first accounting period the group is required to report top-up taxes ends after 31 December 2024), and the later of 30 June 2026 and 15 months after the last day of the group’s accounting period for all other periods. National Audit Office (NAO) HMRC report The NAO has published its annual report on HMRC. The report summarises the key relevant information and insights that can be gained from its examinations of HMRC and HMRC’s annual report and accounts and is intended to support the Treasury Committee, committees working with the Department for Business and Trade and the Department for Work and Pensions, and MPs in their examination of HMRC. The report includes: the role and remit of the department, how the department is structured, where the department spends its money, key spending commitments and major programmes/developments, the department’s key areas of work, and key challenges facing the department this Parliament. This report updates the NAO’s previous report published in 2019. Regulations for late payment of tax penalties The Penalties for Failure to Pay Tax (Schedule 26 to the Finance Act 2021) (Assessments) Regulations 2024 were published last month and entered into force on 4 December 2024. These regulations are aimed at taxpayers who “intentionally avoid a second Late Payment Penalty by not paying their tax before the end of the two-year time limit”.   The regulations allow HMRC to assess and charge the second late payment penalty where the outstanding tax has not been paid in full, towards the end of the two-year time limit.

Due to the decrease in the Bank of England base rate at the beginning of November, HMRC subsequently announced the associated decreases in its interest rates. The new rates took effect from Monday 18 November 2024 for quarterly instalment payments, and 26 November 2024 for non-quarterly instalments payments. The two new decreased rates of interest are as follows:- late payment interest, set at base rate plus 2.5 percent, is now 7.25 percent; and repayment interest, set at base rate minus 1 percent, with a lower limit of 0.5 percent (known as the minimum floor), is now 3.75 percent.

Last week the Scottish Finance Secretary, Shona Robison, delivered the draft Scottish Budget 2025/26. Chapter 2 of this Budget publication sets out the Scottish Government’s tax policy and strategy. Scotland’s Tax Strategy: Building on our Tax Principles was also published last week. The key tax devolved to Scotland is income tax. The draft Budget announced that for 2025/26, the starter rate band will increase by 22.6 percent and the basic rate band will increase by 6.6 percent meaning that the thresholds for paying both the basic and intermediate rates of tax will increase by 3.5 percent, both of which are above inflation. The higher, advanced, and top rate thresholds will be frozen to the end of the current parliamentary term in Spring 2026. Our fellow Professional Body ICAS has been looking at these measures in more detail. The Scottish Fiscal Commission has also published its report Scotland’s Economic and Fiscal Forecasts – December 2024 along with a one page graphic of key figures and a summary document. Background information is also available including spreadsheets with data for tables and charts. The following documents were also published: Scottish tax ready reckoners, Scottish Income Tax 2025/2026: factsheet, Scottish Budget 2025/26: pre-budget engagement summary, and Climate Xchange: International evidence on fiscal levers to deliver reductions in greenhouse gas emissions.

Earlier today HMRC advised us that some of its telephone helplines are currently experiencing a reduced level of service due to a technical issue. HMRC first made us aware of this late last week. HMRC is working urgently to resolve this. Taxpayers and agents can continue to use online services, where relevant, which we have been advised are working as normal.

Comments from Chartered Accountants Ireland were included in a recent Sunday Independent article on the operation of benefit-in-kind on staff benefits. The Institute’s Head of Tax, Gearóid O’Sullivan was recently featured in the Sunday Independent answering readers’ questions on the rent tax credit and dividing land that is jointly owned.

Revenue has published the following new VAT manuals:  VAT notes for guidance following Finance Act 2024, and VAT treatment of share transactions and trading platforms. In addition, the following manuals have also been updated:  VAT Treatment of Factoring and Invoice Discounting, VAT and Solicitors includes a new paragraph (4) on legal fees relating to lenders, and VAT treatment of stock exchange fees has been updated to provide guidance on the current regime.

Section 125A SDCA 1999 provides for a stamp duty to be levied on certain health insurance contracts entered into between health insurers and their customers. Revenue has updated the Stamp Duty Manual which provides guidance on the levy on authorised insurers. The updated manual now includes the rates of the levy for accounting periods commencing on or after 1 April 2025, as provided for by section 10 of the Health Insurance (Amendment) and Health (Provision of Menopause Products) Act 2024, which was enacted on 11 November 2024.  The following stamp duty manuals have also been updated to reflect amendments to Part 9 SDCA 1999 contained in Finance Act 2024:  Part 9: Levies Part 9 - Section 126AB - Further levy on certain financial institutions

Revenue has published a new Tax and Duty Manual which provides guidance on obtaining a corporation tax deduction for stock exchange listing expenditure. With effect from 1 January 2025, new section 81D TCA 1997 provides corporation tax relief for expenditure of up to €1 million incurred by a company on listing its shares for the first time on an EEA stock exchange. According to the manual, the admission to trading of the company’s shares must take place on or after 1 January 2025 and on or before 31 December 2029.   

Revenue has updated the Tax and Duty Manual which provides guidance on pre-letting expenditure in respect of vacant residential premises. The updated manual now reflects the extension to 31 December 2027 for the deduction of expenses incurred on a vacant residential property against rental income from those premises under section 97A(2) TCA 1997.  

The Central Statistics Office (CSO) has published the Quarterly National Accounts for the third quarter of 2024. Modified Domestic Demand increased by 1.3 percent relative to the previous quarter and was up 4.1 percent on an annual basis. Gross domestic product (GDP) grew by 3.5 percent in Q3 2024 and increased by 2.9 percent on an annual basis.  Commenting on the figures, the Minister for Finance, Jack Chambers TD, said: “I am pleased to see continued strength in the domestic economy in the third quarter of 2024. Modified Domestic Demand – my preferred metric of Ireland’s economic performance – grew by 1.3 per cent on a quarterly basis and recorded strong annual growth of over 4 per cent. Importantly, growth on an annual basis has been broad based in nature with both consumer spending (1.7 per cent) and modified investment (10.4 per cent) making a positive contribution. This solid growth is consistent with the strength of our labour market and the robust exchequer figures released yesterday. Taken together these metrics all demonstrate that the economy has performed strongly this year. While today’s figures are encouraging they are, of course, backward looking. Indeed, the economic outlook has become increasingly uncertain and risks are now clearly titled to the downside with the most pressing risks external in nature. As a small, open and highly globalised economy, Ireland is particularly vulnerable to any deterioration in the external environment.  Put simply, these are risks that we cannot control directly – we must instead focus on managing what is in our control. In particular, we must continue to build up our fiscal buffers, invest in our people and our infrastructure, and ensure the economy remains competitive. This will help ensure that we are in the best position possible to address future challenges.”