From Monday 14 October 2024, claims for relief for employment expenses should only be made by post using form P87. The claim must now also be backed up by supporting evidence which should also be sent by post. According to HMRC, this change in process is being made as a response to a “growing tax risk driven by ineligible claims for employment expenses”. HMRC says they “are working at pace to reinstate the digital process as soon as possible”. Guidance on the new evidence requirements has also been published. From Monday 14 October, HMRC requires the taxpayer claiming relief for employment expenses to use the P87 form and provide supporting evidence to prove eligibility before the claim will be any further progressed. Some examples of acceptable evidence include receipts and copies of mileage logs which should accompany the P87 in the post. The following publications provide more detail on this: HMRC issue briefing: Evidence required to claim PAYE (P87) employment expenses, Claim tax relief for your job expenses, and Claim tax relief for your job expenses by post.

HMRC has recently been working on tidying up agent registrations and on 4 October 2024 emailed all agents asking them to provide details of their agent codes for self-assessment, VAT and corporation tax. Responses must be made by 8 November 2024 by completing the online form even if the agent/firm only has one code. We are aware that this email has caused some confusion with some believing it to be a scam/phishing attempt. The email is a legitimate email from HMRC and should not be ignored in order to ensure that an agent/firm’s continued access to online services for their clients is not interrupted or cancelled. This email has been sent to all agents who have signed up to receive HMRC agent emails and is not addressed to agent firms.  HMRC is conducting this exercise to identify codes which are no longer needed, or which are linked to entities that no longer exist due to mergers, takeovers or other changes. If this is the case, the correct legal entity will be required to obtain new authority from its clients.  Only one response is required for each legal entity. After 8 November 2024, HMRC will commence contacting firms who did not reply. It is important to note that failure to reply could lead to an agent code being cancelled by HMRC if there is no response. An agent code is the code that issued by HMRC when an agent firm first contacts them to obtain access to HMRC's self-assessment, corporation tax or VAT online services. It is used to enrol for the relevant service and may also need to be used in commercial filing software. The agent code is not the agent’s Government Gateway ID nor is it the Agent Services Account agent reference number.   Agents will have a different code for each service and may have several, for example for different branches of the same firm. Firms may also have codes to access other services; these are not to be provided as part of this exercise. For each code, you should identify if it is: still being used, not in use but is still needed, or no longer needed.   Once the response has been submitted, HMRC will send an acknowledgement which should be retained. Thereafter, HMRC will review the information submitted and make any updates necessary to its systems or it will contact the agent/firm if more information is required. 

In this week’s miscellaneous updates, we bring you news that the Court of Justice of the European Union (CJEU) has overturned a European Commission decision that the UK’s controlled foreign company (CFC) rules were state aid. From this month HMRC has begun replacing some of its texts and SMS messages with what it refers to as “branded messages” and the latest issue of HMRC’s Public Service pensions Remedy newsletter has been published. Two new non-executive directors have also joined HMRC’s board, one of whom includes the former director of the Office of Tax Simplification, Bill Dodwell. And finally, HMRC has published more information ahead of the commencement of VAT being charged on private school fees from 1 January 2025. CJEU decision says UK CFC finance company rules were not state aid The CJEU recently ruled that the UK’s CFC rules were compatible with the internal market and set aside the judgment of the General Court, ordering the European Commission to pay the court costs for those involved in the appeal. The case centred around whether the UK’s finance company exemption on the taxation of the non-trade finance profits of CFCs was tantamount to artificial diversion of profits and constituted state aid. HMRC branded messages From October 2024 HMRC has begun to replace some of the texts and SMS messages it sends to taxpayers with what it refers to as  “branded messages”. These “branded messages” use some of the features of rich communications services, in order to “modernises and improves SMS messaging”. Although HMRC says that “branded message are more secure”, it continues to advise taxpayers to follow the published guidance on identifying suspicious contact. VAT on private school fees HMRC has published more information ahead of the commencement of VAT being charged on private school fees from 1 January 2025. This confirms that education providers will be able to register for VAT from 30 October 2024. More details are available in the following publications: Check if you must register for VAT if you receive private school fees, and Charging and reclaiming VAT on goods and services related to private school fees.

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 available as is the latest Brexit and Beyond newsletter from the Northern Ireland Assembly EU Affairs Team. HMRC has sent two attachments containing key information on the latest release for the Customs Declarations Service (CDS). Finally, last week it was announced by email that the new safety and security declarations for imports into Great Britain which were due to commence from the end of this month under the next stage of the Border Target Operating Model (BTOM) have been further delayed and will now commence from 31 January 2025. CDS latest release HMRC has asked us to share two attachments containing key elements of CDS release 4.6.0. The first attachment is an update on CDS release 4.6.0.  The second attachment is an annex which makes clear what codes traders should not be using. Delayed to introduction of safety and security declarations for imports HMRC has updated its guidance to reflect the decision to delay the new import requirements for goods from the EU (and other territories that did not have requirements before 1 January 2021) which were expected to be implemented from 31 October 2024 under the next phase of the BTOM. The waiver has now been extended until 31 January 2025. HMRC will publish further information in the coming weeks and will reach out to key stakeholders to start arranging more detailed engagement sessions, including support for readiness activity Miscellaneous guidance updates and publications Safety and security requirements on imports and exports, Making an entry summary declaration, Data Element 2/3: Document and Other Reference Codes: Licence Types — Imports and Exports of the Customs Declaration Service (CDS), Reference Documents for The Customs (Tariff Quotas) (EU Exit) Regulations 2020, Reference document for authorised use: eligible goods and authorised uses, Reference documents for The Customs (Reliefs from a Liability to Import Duty and Miscellaneous Amendments) (EU Exit) Regulations 2020, Flexible Accounting System for imports (Customs Notice 100), Appendix 2 C21e: Data Element 1/11: Additional Procedure Codes, and Method of payment (MOP) codes for Data Element 4/8 of the Customs Declaration Service.

The latest edition of our tidbits features guidance updates in a range of areas and HMRC’s latest organisation chart and governance arrangements are also available. Apply as an individual to receive UK rental income without UK tax deducted, Named tax avoidance schemes, promoters, enablers and suppliers, Work out and claim relief from Corporation Tax trading losses, Disguised remuneration: settling your tax affairs, Disguised remuneration settlement terms 2020, Register a limited company as a subcontractor with payment under deduction by post, Register a partnership as a subcontractor with payment under deduction by post, HM Revenue & Customs – Our governance, Declare no return of Class 1A National Insurance contributions, Check the recognised overseas pension schemes notification list, Self Assessment: tax calculation summary (SA110) , How to apply for a certificate of residence to claim tax relief abroad, Completing your Company Tax Return, HMRC email updates, videos and webinars for VAT, HMRC email updates, videos and webinars for company directors, Public service pensions remedy newsletter — October 2023, HMRC email updates, videos and webinars for tax agents and advisers, HMRC email updates, videos and webinars for employing people, Approved offshore reporting funds, Correction of pension contributions following the public service pensions remedy, Glossary of terms for tax and National Insurance contributions for employee travel (490: Employee travel), Pension schemes: report of relevant benefit crystallisation events or transferring relieved relevant non-UK scheme assets (APSS 252), International Tax — UK Real Estate Investment Trusts (form UK-REIT DT-Company), Tell HMRC about who is dealing with the estate when someone dies, Claim a tax refund when you've flexibly accessed all of your pension (P53Z), Claim back Income Tax on a pension death benefit lump sum P53Z(DB), Claim a tax refund if you've stopped work and flexibly accessed all of your pension (P50Z), Class 1A National Insurance contributions on benefits in kind (CWG5), Penalties for a failure to correct certain offshore tax non-compliance, Details of deliberate tax defaulters, Submit information to support your claim for R&D Corporation Tax reliefs, Named tax avoidance schemes, promoters, enablers and suppliers, HM Revenue and Customs' organisation chart, How HMRC resolves civil tax disputes, HMRC Code of Governance for Resolving Tax Disputes, Dispute resolution governance board remits, HMRC Accounting Officer Assessments, How HMRC consults with Large Businesses, Inheritance Tax: reduced rate of Inheritance Tax (IHT430), Help with common risks in transfer pricing approaches — GfC7, Using the Non-resident Landlords Scheme if you’re a letting agent or tenant, Penalties for a failure to correct certain offshore tax non-compliance, People involved in transactions connected with VAT fraud, Details of deliberate tax defaulters, Inheritance Tax account (IHT400) , Claim a refund of Income Tax deducted from savings and investments (R40) , Register an unincorporated association for Corporation Tax, Corporation Tax for non-UK incorporated companies, Register an offshore property developer for Corporation Tax, Register a non-UK incorporated company for Corporation Tax if you're a UK resident, Register a non-resident company who disposed of UK property or land for Corporation Tax, Apply as a company to receive UK rental income with no UK tax deducted, Register for Corporation Tax through a dependent agent permanent establishment, Pensions schemes newsletter 162 — September 2024, How to apply for clearance or approval of a transaction from HMRC, Software developers providing customs declaration software, Admit tax fraud to HMRC using the Contractual Disclosure Facility, Pay a penalty charge for not registering or maintaining a trust, Pay Plastic Packaging Tax, Pay duty on biofuels or road fuel gas, Pay your Economic Crime Levy, and Pay the Soft Drinks Industry Levy (notice 5).

In Irish news, Finance Bill 2024, which implements the tax changes announced on Budget day, was published yesterday. We will provide our analysis in Tax News on Monday. In the UK, HMRC has changed the services it provides to agents calling the Agent Dedicated Line and further draft guidance on the Pillar Two multinational top-up and domestic top-up taxes has been published for comment. In International news, the EU and Norway have signed an agreement to strengthen administrative cooperation, combating fraud and recovery of claims for VAT purposes.  Ireland  1. The Department of Finance have published Finance Bill 2024.  2. The Minister for Social Protection, Heather Humphreys TD, has announced that the pension auto-enrolment scheme will begin on 30 September 2025.  UK  3. Read about the changes which took effect from Monday 7 October for the services that HMRC provides to agents via the Agent Dedicated Line.  4. Further draft guidance on the Pillar Two multinational top-up and domestic top-up taxes has been published.  International  5. The EU and Norway have signed an agreement to strengthen administrative cooperation, combating fraud and recovery of claims for VAT purposes.  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.     

The OECD has published a working paper on the implications for OECD tax systems of tax arbitrage through closely held businesses. The paper finds that tax incentives to incorporate and earn capital income through corporations have increased in the last two decades. It shows that there has been an increase in incorporated businesses in many OECD countries, which has been partly driven by tax factors. The paper also finds that, in many countries, a combination of tax system features, related to corporate, dividend, capital gains, gift and inheritance taxation, provide particularly strong incentives to retain earnings inside corporations.

The Institute’s Advocacy and Voice Department is hiring a new Tax Manager. The Department is responsible for the tax and public policy agenda of Chartered Accountants Ireland. We collaborate with expert colleagues drawn from practice and industry, developing, and advocating on policy matters relating to tax, financial reporting, audit and assurance, ethics and governance, and business law. The department numbers over twenty professionals. The successful candidate will report into the Institute's Tax Leader (Head of Tax). You can find more information at the above link. If you are interested in applying, send your CV and a cover letter to hr@charteredaccountants.ie.

Revenue has updated the Tax and Duty Manual which provides information in relation to DAC2 Common Reporting Standard (CRS) reporting in Ireland. The guidance has been updated to provide further clarification on the additional guidance on ResCountry Code (section 7.5). 

The Charities VAT Compensation Scheme aims to reduce the VAT burden on charities and to partially compensate for VAT paid by the charity. Under the scheme, Revenue is to refund €10 million to charities. Revenue will notify eligible charities via their ROS inbox of the refund amount being sent to their designated account. 

Revenue has published the Special Assignee Relief Programme (SARP) statistics for 2022. These provisional statistics are based on analysis of SARP employer returns filed in respect of the 2022 tax year.  From 2012 to 2022, the number of employees claiming SARP has grown from 6 to 428, with the number of employees retained, as reported by employers as a result of the operation of SARP, growing from 6 to 1,569.  SARP provides for relief from Income Tax on 30 percent of income over €75,000 (€100,000 for an employee who arrived on or after 1 January 2023), subject to an upper income threshold, where applicable. There is no exemption from USC. PRSI is payable where the individual is not liable to social insurance contributions in their home country. School fees of up to €5,000 per annum and expenses incurred on one trip home per year, where they are paid for by the employer, are not subject to Income Tax, USC or PRSI.   The aim of the relief is to reduce the cost to employers of assigning skilled individuals in their companies from abroad to take up positions in the Irish-based operations of their employer or an associated company, thereby facilitating the creation of jobs and the development and expansion of businesses in Ireland.    In 2022, 592 employers submitted SARP Employer Returns in respect of 2,663 individuals. The estimated total cost of SARP in 2022 was €48 million, of which €0.3m and €0.5m were in relation to travel and school fees respectively. 36 percent of claimants received relief through payroll. Payroll was operated on a tax equalisation basis for 17 percent of claimants.   

Tax revenues for the third quarter of 2024 were €23.4 billion, according to the recent September Exchequer figures. The figure represents a €3 billion increase (or 14.4 percent) on the same period last year. Aggregate tax receipts in the year-to-date are €68.2 billion, ahead of last year by €6.8 billion (or 11 percent), with the over-performance largely due to corporation tax receipts. An Exchequer surplus of €5 billion was recorded to end-September.  The breakdown of tax revenues is as follows:   Income tax receipts were €24.8 billion to end-September, €1.6 billion, or 7.1 percent higher than the same period last year. VAT receipts to end-September were steady at €17.9 billion, €1.2 billion (7 percent) higher than the same period last year. Although corporation tax receipts of €1.5 billion for September were down €0.2 billion (or 13.3 percent) on the same month last year, cumulatively receipts of €17.8 billion to end-September were €3.4 billion (23.3 percent) ahead of the same period last year.  Total gross voted expenditure to end-September amounted to €72.1 billion, €7.7 billion (12 per cent) above the same period in 2023 and €2.9 billion or 4.2 per cent above profile.  Commenting on the figures, the Minister for Finance, Jack Chambers TD said:   “The tax figures published today largely continue a pattern of robust growth that we have seen throughout the year, and provide further evidence of the fundamental strength of our economy.  Of course, the stand-out feature in the tax performance has been corporation tax. Even as receipts in the year to date remain well ahead of initial expectations, the decline this month reminds us of the volatility associated with this revenue stream, and why this Government has acted to mitigate our exposure to these receipts through the establishment of the Future Ireland Fund and the Infrastructure, Climate and Nature Fund.  Budget 2025, which Minister Donohoe and I presented to the Oireachtas on Tuesday, sets out a balanced and sustainable pathway for our public finances with allows us to continue to invest in our public services and infrastructure without relying on ‘windfall’ tax revenues.”