Does your Northern Ireland based company or client support a lower rate of corporation tax for the region? If so, read on for how you can participate in our campaign to reignite the path to a lower rate of corporation tax for the region.   The Corporation Tax (Northern Ireland) Act 2015 contains the legislation for how a lower rate of corporation tax would work practically in Northern Ireland. However, this is subject to very specific rate-setting arrangements which mean that this rate-setting power may not be exercised unless Treasury regulations have been made. These Treasury regulations are subject to very specific conditions specifically the continued commitment of the NI executive to “take all the actions necessary to demonstrate that its finances are on a sustainable footing for the long term”.  The support of the Institute’s members for a lower rate of corporation tax in Northern Ireland has now waned in recent years with a recent Ulster Society survey showing that approximately two thirds of our members continue to support this initiative.  On foot of this ongoing support combined with the restoration of the Northern Ireland Assembly and a new government in Westminster, Chartered Accountants Ireland is embarking on a new campaign to engage with and equip policy makers with the information and tools necessary to pursue a lower rate of corporation tax for the region as one of a range of economic levers to drive growth and employment.  We are seeking companies in Northern Ireland who support this campaign and who are prepared to tell us why they support a lower rate and what it would mean for them and the region. These quotes will be included in a position paper which is expected to be launched before the end of 2024. Contact tax@charteredaccountants.ie to participate.    

In this legislative update, the Chancellor has confirmed that a tax road map for business will be outlined at the Budget on 30 October and the sunset clauses of the Enterprise Investment Scheme (EIS) and Venture Capital Trust (VCT) scheme have officially been extended to 2035. A date has also been announced for the 2025/26 Scottish Budget.  Business tax roadmap  As part of its pre-election manifesto, the new government promised that a business tax roadmap for the duration of this parliament would be delivered in order to provide businesses with certainty over the coming years when planning investments. Although no specific timetable was provided in the manifesto, this was promised within the first six months.   During recent Treasury questions, the Chancellor has now confirmed that an outline of this roadmap will be published at the Budget. This will include a commitment to cap corporation tax at 25 percent for the duration of the current parliament. Full expensing (100 percent first year allowances for new plant and machinery expenditure of companies) will also be retained.  Given the Chancellor’s comments, it seems that what will be announced on Budget Day will only be an outline of the roadmap which is likely to be finalised thereafter in conjunction with wider stakeholder input.  EIS and VCT scheme sunset clauses extended   Finance Act 2024 extended the EIS and VCT scheme to shares issued on or before 5 April 2035. However, this was subject to domestic and international subsidy obligations being met. It is now confirmed that these formalities have been completed hence earlier this month The Finance Act 2024, Section 11 (Extension of Enterprise Investment Scheme Relief and Venture Capital Trusts Relief) (Appointed Day) Regulations 2024 were laid.   This means that the sunset clauses are now officially extended from 6 April 2025 so that shares in a company (for EIS relief) or in a VCT that are issued before 6 April 2035 will qualify for relief, subject to the relevant conditions being met.  Scottish Budget date   Scotland’s 2025/26 Budget will be presented to the Scottish Parliament on 4 December 2024. This will set out the Scottish Government’s proposals for devolved taxes (such as the Land and Buildings Transactions Tax) and the income tax rates paid by Scottish taxpayers (other than on dividends and interest). It is also expected that the Scottish Government will publish its Tax Strategy on the same day which aims to set out the medium-term objectives for the Scottish tax system.  

During the summer, the Exchequer Secretary to the Treasury published a Written Ministerial Statement that also featured an update on the UK’s Pillar 2 legislation. The update confirmed that the Undertaxed Profits (UTPR) rule will be implemented in the UK for accounting periods beginning on or after 31 December 2024. Draft legislation was also published on the Country-By-Country reporting anti-avoidance rule. HMRC has provided more detail in an email to Chartered Accountants Ireland which reads as follows: “OECD Pillar 2: The government is publishing draft legislation to translate an internationally agreed anti-avoidance rule into UK legislation. The draft legislation stops attempts by multinational enterprises to avoid Pillar 2 top-up tax by exploiting a temporary simplification in the rules. The legislation will apply from 14 March 2024 and will prevent multinational enterprises that enter into certain avoidance transactions from accessing the simplification.  In addition, to provide certainty for affected businesses, the government is confirming that the UK will introduce the Undertaxed Profits Rule (UTPR) of Pillar 2 for accounting periods beginning on or after 31 December 2024 and will continue efforts to ensure the UK rules are effective and up to date.   The draft legislation on the anti-avoidance rule can be accessed on gov.uk here and we welcome any comments to pillartwoconsultation@hmtreasury.gov.uk.”  HMRC has also published further guidance on the multinational Top-up Tax and Domestic Top-up Tax for consultation. HMRC is seeking views on this further draft which includes new and updated pages of the manual. This release of the draft HMRC guidance manual includes all previously released pages (including updates in some cases) in addition to newly drafted pages.  HMRC invites comments from stakeholders on this draft guidance. Publication of the manual will begin following the review of consultation responses. Feedback is requested by 23 October to pillar2.consultation@hmrc.gov.uk.  A supplementary release of draft guidance will also follow in due course. This will include remaining draft guidance on flow-through entities, joint ventures, the insurance sector, additional top-up amounts, and the undertaxed profits rule (UTPR).  

In this week’s miscellaneous updates, a new form should be used to apply for healthcare cover in the EU and certain other countries and HMRC has published updated guidance on avoidance and evasion. The UK and Romanian governments have also agreed a reciprocal arrangement for VAT refunds and HMRC has issued a reminder that as the PAYE electronic payment deadline for September 2024 falls on a Sunday, payment must be made by 20 September. And finally, HMRC is holding a webinar on paying the national minimum wage in the care sector.  New form for applying for a healthcare certificate  HMRC has published a new form (CA8454) which should be used to apply for healthcare cover in the EU and certain other countries (Iceland, Liechtenstein, Norway or Switzerland). The form can be used if a person wishes to apply for the S1 healthcare certificate for their dependents, or themselves and their dependents, when taking maternity, paternity or adoption leave in those countries. A new interactive guidance tool intended to help workers find the correct form to use is also available.  Updated HMRC avoidance and evasion guidance   HMRC has published updated versions of the following documents:  a list of litigation decisions where it is HMRC’s view that tax avoidance was involved, and details of live corporate criminal offences (CCO) investigations. This legislation means it is a criminal offence if a corporation fails to put into place reasonable procedures to prevent associated persons from criminally facilitating tax evasion. According to this publication, at the time of writing HMRC currently has 11 live investigations and a further 28 live opportunities under review.  UK and Romania agree reciprocal VAT refund arrangement  The UK and Romanian governments have agreed a reciprocal arrangement for VAT refunds. Under the EU’s 13th Directive, UK businesses not established in Romania will be able to claim refunds of VAT paid on goods and services in Romania relating to their business activities. Businesses will be entitled to claim VAT incurred on or after 22 August 2024.   All claims must meet the eligibility criteria and application requirements set out by the Romanian tax authorities (Agenția Națională de Administrare Fiscală, ANAF/ National Agency for Fiscal Administration) to be paid.  Reminder: earlier September PAYE electronic payment deadline   HMRC has reminded employers in the August 2024 Employer Bulletin that as the September 2024 electronic payment deadline falls on a Sunday, to ensure that an electronic payment reaches HMRC on time, cleared funds must be paid into HMRC’s account by Friday 20 September 2024, unless the employer is using faster payment.  National Minimum Wage webinar  Paying the National Minimum Wage (NMW) correctly and protecting workers’ rights is a vital part of being an employer in the care sector. HMRC recognises that this is not always straightforward, and mistakes are easy to make.  HMRC, Gangmasters and Labour Abuse Authority (GLAA) and the Employment Agency Standards (EAS) inspectorate all work to support employers in avoiding those mistakes and get things right first time.   HMRC’s National Minimum Wage team are offering live webinars where they will be joined by colleagues from the GLAA and the EAS to talk through common issues found in the care sector, and how employers can protect workers’ rights. There will also be a panel of experts on hand from all three organisations to answer questions. 

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 bulletin is also available as is the latest Brexit and Beyond newsletter from the Northern Ireland Assembly EU Affairs Team.  Miscellaneous updates to guidance and publications  Internal temporary storage facilities (ITSFs) codes for Data Element 5/23 of the Customs Declaration Service,  External temporary storage facilities codes for Data Element 5/23 of the Customs Declaration Service,  Top-up your Customs Declaration Service duty deferment account,  Pay into your Customs Declaration Service cash account,  Pay for imports declared using the Customs Declaration Service,  Moving Rest of World sheepmeat, poultry and beef to Northern Ireland. 

In Irish news, the Department of Finance has published the Fiscal Monitor for August 2024, the PBO has published an overview of taxes on wealth in Ireland, and Revenue has published new guidance on the CAT reporting requirements for certain interest-free loans. In UK news, HMRC has announced a delay to the new data reporting requirements which were due to take effect for employers from April 2025 and this week’s miscellaneous updates features a new report from the National Audit Office on tax avoidance and evasion in the retail sector. Ireland The Department of Finance has published the Fiscal Monitor for August 2024 showing an Exchequer surplus. The Parliamentary Budget Office (PBO) has published an overview of taxes on wealth in Ireland. Revenue has published new guidance on the CAT reporting requirements for certain interest-free loans. UK Read about HMRC’s decision to delay the new data reporting requirements which were due to take effect for employers from April 2025. The National Audit Office has published a new report on tax avoidance and evasion in the retail sector. 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.    

From April 2025, businesses and employers were due to start providing more detailed employees’ hours data through PAYE Real Time Information submissions as proposed in the draft legislation: improving the data HMRC collects from customers. HMRC has announced that this specific aspect will not now commence from April 2025 due to concerns about their being insufficient lead in time to upgrade software and the delay caused by the general election. Although a revised timeline has not yet been announced, HMRC has said that this requirement will now not apply until April 2026 at the earliest. The announcement came in the most recent HMRC News and Information Bulletin.  In response to the initial consultation examining these proposals, Chartered Accountants Ireland expressed its concern that the additional data to be collected was not warranted.  However, the April 2025 expected implementation date for the other new data to be collected is still expected to proceed as this is still viewed as being “achievable”. At present, the data in-scope are as follows:  Directors in owner-managed businesses will be required to provide the amount of dividend income received from their own companies separately to other dividend income, and the percentage share they hold in their own companies via their Self-Assessment return,  The self-employed will be required to provide information on start and end dates of self-employment via their Self-Assessment return.  HMRC did say however that “whether and when to proceed with implementing the regulations remains subject to decisions by the new government.”   A further update on these proposals and the timeline for implementing these changes will be provided in due course.  

Revenue has amended the Tax and Duty Manual which provides guidance on the prosecution and penalty programmes for VAT non-compliance. The guidance has been amended to remove references to Employer PAYE/PRSI/USC/LPT. The guidance now also includes the name and contact details of the Prosecutions Unit and information on how to make a penalty payment. 

Revenue has confirmed that the guidance in Failure to Co-Operate fully with a Revenue Compliance Intervention is no longer relevant as all of the information is now contained in the Code of Practice for Revenue Compliance Interventions. 

Revenue has updated the Tax and Duty Manual which provides guidance on the Dependent Relative Tax Credit. The updated manual clarifies that references to “maintaining at his or her own expense”, for the purposes of this tax credit, means financially maintaining the dependant relative by meeting their everyday living costs. Further information is available in eBrief No.234/24. 

Revenue has published a new Tax and Duty Manual regarding the new capital acquisition tax (CAT) reporting requirements relating to certain interest-free loans. Where a person is deemed to take a gift in respect of a loan, they may be required to report information in relation to the loan under section 46(4A) CATCA 2003.  The guidance contains examples of loan arrangements that fall within the definition of a 'specified loan' for the purposes of the legislation. Examples of circumstances where the reporting requirement arise and the due dates for filing the information in a Form IT38 return are also provided. 

The Central Statistics Office (CSO) has published the Quarterly National Accounts for the second quarter of 2024. Modified Domestic Demand fell by 0.5 percent relative to the previous quarter, but was up 1.5 percent on an annual basis. Continued volatility in the multinational sector was reflected by a decline in gross domestic product (GDP), down 1.0 percent in Q2 2024, and declining by 4.0 percent on an annual basis.   Commenting on the figures, Minister for Finance, Jack Chambers TD, said:  “While I recognise the fall in GDP in the second quarter of this year, GDP is not a useful measure in assessing the living standards of domestic residents, given the outsized role the multinational sector plays in our economy. The fall in GDP reflects the volatile nature of activity in the multinational sector.  In terms of the domestic economy, Modified Domestic Demand – my preferred metric of Ireland’s economic performance – declined on a quarterly basis, but recorded positive growth of 1.5 per cent on an annual basis.  I am pleased to see that consumer spending contributed positively to this growth, with consumption increasing by 1.3 per cent on an annual basis. The growth in consumer spending, alongside robust exchequer figures released yesterday and the strength of our labour market highlights the relatively healthy position of our domestic economy at present.  Looking ahead, inflation has now eased back significantly and is expected to remain on a stable trajectory over the short term. This will help boost real incomes which should further support growth in our domestic economy in the second half of the year.  My Department will publish updated macroeconomic and fiscal forecasts as part of the Budget early next month. Budget 2025 will ensure we continue to support families, workers and businesses while also investing in our public services and infrastructure to prepare us for the challenges that we face now and into the future”