Revenue has updated the Tax and Duty Manual which outlines the procedures for agents or advisors acting on behalf of taxpayers. As previously advised, Revenue is ending the practice, generally known as the “A2” process, of making repayments of income tax and/or USC to the bank accounts of tax agents, rather than directly to taxpayers. 

Section 599 TCA 1997 provides for relief from capital gains tax (CGT) on the transfer by an individual, who has attained 55 years of age, of certain business or agricultural assets to a “child”, as defined in the section. Revenue has updated the Tax and Duty Manual which provides guidance on section 599 to reflect the Finance Act 2024 amendments. The key changes are: To provide the option to an individual to defer the CGT liability arising on such a disposal made on or after 1 January 2025, as the value of the assets exceeds the €10 million limit on relief granted, To provide for a general anti-avoidance provision in respect of relief granted on transfers of qualifying assets from an individual to a child, and the potential deferral of CGT arising in respect of such transfers, and To provide new and updated examples and information on the operation of the relief, and a restructuring of the content for ease of reference.

Revenue has updated the Tax and Duty Manual which contains an overview of the administration of Pillar Two,  the global minimum level of taxation for multinational enterprise groups and large-scale domestic groups. The updated guidance reflects amendments to Part 4A TCA 1997 contained in Finance Act 2024 as follows: clarification of the meaning of a “designated filing entity” (Section 2.3), clarification that the specified return date of an entity shall be 30 June 2026 where the specified return date of that entity, or group, would otherwise arise before 30 June 2026 (Section 2.8), clarification that the notification date of an entity or group shall be 31 December 2025 where a registration notification date of that entity, or group, arises before 31 December 2025 (Section 3), clarification that GloBE taxes fall due and payable on 30 June 2026 where the specified return date would otherwise arise before 30 June 2026 (Section 13), Table 1 - five year elections provides for the allocation of deferred tax expense election (Section 19.1), and Table 2 - annual elections provides for the simplified calculations safe harbour election (Section 19.2). Revenue has also updated the Tax and Duty Manual which provides guidance in relation to the operation of the Pillar Two rules as follows: widely held investment funds, master-feeder investment funds and umbrella fund/sub fund structures (Section 5.1), the interaction of tax residency and location of a constituent entity in certain circumstances (Section 5.4), the interaction of Part 35A TCA 1997 and Section 111P(4) TCA 1997 (Section 7.2). refundable and marketable transferable tax credits and intra-group financing arrangements (Section 7.2), and identifying the "ownership holder" referred to in Section 111AQ(1) TCA 1997 (Section 11.1). Revenue has advised that this manual will be further updated in due course to reflect the amendments made to Part 4A by Finance Act 2024.

Revenue has updated the Tax and Duty Manual regarding the Vacant Homes Tax (VHT) to provide for the increase in the rate of VHT from five times to seven times the basic rate of local Property Tax. The rate change applies for the chargeable period from 1 November 2024 to 31 October 2025 and all future chargeable periods.

Revenue has published updated Capital Acquisitions Tax Manuals to reflect the following Finance Act 2024 amendments: Reporting requirement in relation to gifts in respect of certain loans to include certain low-interest loans with effect from 1 January 2025, and Capital acquisitions tax exemptions to include certain ex-gratia payments made under the cervical check non-disclosure ex-gratia scheme and payments made under phase 1 of the Stardust ex-gratia payment scheme.  

Revenue has updated several manuals to reflect amendments introduced in Finance Act 2024, as well publishing a new manual on the VAT treatment of heat pump heating systems.  The updated manuals are as follows: VAT treatment of Food and Drink supplied by wholesalers and retailers clarifies that the standard rate of VAT applies to juice extracted from, and other drinkable products derived from, fruit, vegetables, plants, grains, seeds, or pulses and, that milk substitute drinks derived from plants will continue to be subject to the zero rate of VAT, Management of special investment funds clarifies that the management of an Irish Alternative Investment Fund (AIF) managed by an Irish AIF Manager (AIFM) is covered by the fund management exemption. The exemption also applies to the management of an Irish AIF managed by a non-Irish AIFM including where the AIFM is registered with a competent authority of a Member State, VAT treatment of the special flat-rate scheme for farmers includes the new flat rate addition rate of 5.1 percent, Construction services includes a consequential amendment arising from the application of the second reduced rate to the supply and installation of low emissions heat pump heating systems.  

The rates of Stamp Duty applying to the acquisition of residential property were increased by section 90 Finance Act 2024 and apply to instruments executed on or after 2 October 2024. The revised standard rates are: 1 percent on the consideration up to €1 million, 2 percent on any consideration exceeding €1 million up to €1.5 million, and 6 percent on any consideration exceeding €1.5 million. This section also provides that the new 6 percent rate will not apply on the acquisition of three or more apartments in the same apartment block. In addition to the standard rates, the higher rate of stamp duty to be charged on the acquisition of 10 or more residential properties, excluding apartments, in any 12-month period, increased from 10 percent to 15 percent. The following Stamp Duty Manuals have been updated to reflect these changes: guidance on shares deriving value from immovable property situated in the State under Section 31C SDCA 1999, Schedule 1 – stamp duties on instruments, Section 83DA - repayment of stamp duty under affordable dwelling purchase arrangements, Section 83DB – repayment of stamp duty in respect of certain residential units, and Section 31E – stamp duty on certain acquisitions of residential property. In addition to the above, Notes for guidance - Stamp Duty 2024 have been published, which reflect the Finance Act 2024 changes to the Stamp Duties Consolidation Act 1999.

Revenue has updated several Tax and Duty Manuals to reflect amendments introduced in Finance Act 2024. The updated guidance includes the manual on Outbound Payments and the guidance on foreign pension lump sums. Outbound payments defensive measures manual has been updated regarding excluded payments, and instances under Section 817U(6) TCA 1997 where a tax transparent entity and its owners/members are located in the same territory. In addition, example 5.1.2 has been revised to provide clarification on the association test as it applies in that example, Guidance on the taxation of foreign retirement lump sums reflects the amended definition of "standard chargeable amount" in Section 790AA TCA 1997 to mean €500,000 less the tax free amount, currently €200,000 (Paragraph 4.3.1 ), effective from 1 January 2025, Central Electronic System of Payment Information (CESOP) reflects the provision for a penalty regime for non-compliance by Payment Service Providers with their obligations under Part 9A VATCA 2010,   Dependent Relative Tax Credit - from 1 January 2025 the value of the credit will increase to €305, and the "specified amount" will increase to €18,028, Home Carers Tax Credit - from 1 January 2025 the value of the credit amounts to €1,950, Blind Person's Tax Credit - from 1 January 2025 the value of the credit amounts to €1,950 per qualifying individual, Single Person Child Carer Credit - from 1 January 2025 the value of the credit amounts to €1,900, and PAYE/USC Regulations - Emergency Tax has been updated to reflect the increase in tax rates and tax bands for 2025.

Revenue has updated the Tax and Duty Manual on the Research and Development tax credit to incorporate the Finance Act 2024 amendment to the first instalment threshold. Section 766C was amended to increase the first instalment threshold amount from €50,000 to €75,000. The amendment applies in respect of accounting periods commencing on or after 1 January 2025,  The manual has also been updated to include examples to reflect the increased first instalment threshold amount. Any relevant existing examples in the manual have been updated accordingly.

As is the case at the end of the year, Revenue has updated several other Tax and Duty Manuals including guidance on the Co-operative Compliance Framework and PAYE services. You can find a complete list of the updated guidance below. Co-operative Compliance Framework for Large Corporates Division (LCD) and High Wealth & Financial Services Division (HW&FSD) guidance updated to include references to HW&FSD where appropriate, following the move of the financial services branches from LCD to HW&FSD. In addition, contact details for LCD and HW&FSD have been updated (section 7), The maintenance of proper books and records guidance is updated to reflect the period for which certain records and linking documents must be retained, PAYE Services - Manage your Tax has been updated to remove reference to the Rent Tax Credit from the Real Time Credit section as it does not require the mandatory upload of receipts via Receipts Tracker, The Investment Undertakings guidance has been updated to reflect the legislative amendment that a repayment of exit tax is available where it arises from the investment of a relevant payment by a relevant person under the Mother and Baby Institutions Payment Scheme Act 2023 or under the Cervical Check Tribunal Act 2019, and The Non Routine Revenue Powers guidance has been updated to include section 3.7 which relates to claims for privacy and legal and professional privilege during a premises search.  

Ahead of the 2023/24 online self-assessment filing and payment deadline of Friday 31 January 2025, several key reminders are set out below. Readers should also be aware that HMRC staff are planning strike action over the coming weeks which you can read more about in a separate story in this edition. Members are also advised to contact the Institute by email if they experience any issues in the coming weeks which prevent the filing of 2023/24 self-assessment returns before the deadline so that we can discuss with HMRC. 2023/24 transition year to basis period reform Important guidance on the transition year to basis period reform, and in particular applying for information on overlap relief, was contained in the November 2024 Agent Update which we highlighted last month. HMRC has also published a new tool to help calculate overlap relief if HMRC is unable to provide the information on unused overlap relief. By way of reminder, 2023/24 is the transition year of basis period reform after which the tax year basis of assessment commences in full from 2024/25 for all unincorporated businesses. In 2023/24, any unused overlap relief from earlier tax years must be used.  To use HMRC’s new tool, information is required from business records, including the date the business started or the date an individual joined a partnership. According to HMRC “reasonable estimates” should be used if not all the information required is available.   Simple assessment tax bills  HMRC is reminding taxpayers who have received a simple assessment letter to pay any tax outstanding for 2023/24 by the later of: 31 January 2025; and three months from the date of issue of the letter. Guidance is also available on how to pay a simple assessment tax bill, including what action to take if a taxpayer is unable to pay the full amount due by the deadline. Scams HMRC is warning that fraudsters are increasingly targeting people with offers of tax refunds, or demanding payment of tax to obtain personal information and banking details. HMRC’s advice to taxpayers is to check if contact is genuine using the guidance on GOV.UK before taking any action.  

Last month we highlighted to readers a November letter from HMRC to the CEOs of the Professional Bodies seeking a meeting to discuss HMRC services. The Professional Bodies responded jointly to that letter on 23 December 2024 and will be meeting with HMRC as proposed. Members will be updated on developments in Chartered Accountants Tax News and are reminded that you can feed back on HMRC services at any time to us by emailing tax@charteredaccountants.ie. The response to HMRC sets out the key strategic issues for the various bodies and their members and focuses on HMRC’s strategic challenges in relation to improving its services the headlines from which are as follows: How can the demand for phone and post contact be reduced, The need for an electronic communication tool, The importance of establishing a system for progress tracking, Quality of advice available on HMRC helplines, Retaining phone and post services, and Compliance including the need for HMRC to address how it is currently utilising the compliance powers it has available. Many of these are issues which the Institute has already highlighted to HMRC in previous discussions and several also featured in our pre-Budget submission in October 2024. The letter did not address other key strategic areas such as raising standards and potential regulation of the tax profession and acknowledged that the £51m additional Government investment in HMRC announced in May 2024 is starting to impact.