We’d like to hear your views on HMRC’s consultation on the taxation of employee ownership trusts and employee benefit trusts. The consultation closes on 25 September 2023 and examines potential proposals to reform the tax treatment of each of these types of trust. Let us know your views before Monday 18 September 2023.  The aim of the consultation is to ensure that the tax regimes for these trusts remain focused on the targeted objectives of rewarding employees and encouraging employee ownership, whilst preventing tax advantages being obtained through use of these trusts outside of these intended purposes.   There’s also still time to let us know your views on the on the consultation examining potential new tax incentives for occupational health. We’d like to hear from you on this consultation by Friday 29 September 2023. 

In this week’s EU exit corner, we bring you the latest guidance updates and publications relevant to EU exit. Further guidance was published last week in relation to the Windsor Framework and the latest Trader Support Service bulletin is also available. And finally, we bring you more on the announcement last week that the UK has agreed a deal to associate to Horizon Europe.  Windsor Framework updated guidance  Last week HMRC published the following updated guidance documents (which includes guidance on moving parcels to and from Northern Ireland):-  The Windsor Framework - further detail and publications; Sending parcels to and from Northern Ireland;  Moving parcels from Great Britain to Northern Ireland under the Windsor Framework from 30 September 2024; and  The Customs (Northern Ireland) (EU Exit) (Amendment) Regulations 2023.  Horizon Europe  Last week the UK agreed a deal to associate to Horizon Europe, the EU's key funding programme for research and innovation. From 7 September 2023, UK researchers can bid into Horizon, certain that all successful UK applicants will be covered through the UK’s association (or through the guarantee) for the remainder of the programme. All calls in Work Programme 2024 will be covered by association and the UK guarantee scheme will be extended to cover all calls under Work Programme 2023.  For more information, see:- UK joins Horizon Europe under a new bespoke deal; and  Joint Statement by the European Commission and the UK Government on the UK’s association to Horizon Europe and Copernicus.  Miscellaneous updated guidance and publications   The following guidance, and publications relevant to EU exit are available:-  Customs declaration completion requirements for Great Britain;  Customs, VAT and excise UK transition legislation from 1 January 2021;  Reference Documents for The Customs Tariff (Preferential Trade Arrangements) (EU Exit) Regulations 2020;  Reference documents for The Customs (Reliefs from a Liability to Import Duty and Miscellaneous Amendments) (EU Exit) Regulations 2020;  Reference Documents for The Customs (Tariff Quotas) (EU Exit) Regulations 2020;  Reference document for authorised use: eligible goods and authorised uses;  Check simplified procedure value rates for fresh fruit and vegetables;  Apply for an Advance Origin Ruling;   Classifying edible fruit, vegetables and nuts for import and export;  Valuing imported fruit and vegetables using simplified procedure values with Method 4;  Check if a business holds Authorised Economic Operator status;  Notices made under the Customs (Import Duty) (EU Exit) Regulations 2018; and  Maritime ports and wharves location codes for Data Element 5/23 of the Customs Declaration Service. 

In Irish news this week, the Minister for Finance has welcomed growth in the domestic economy and Revenue has updated VAT guidance to reflect the application of the 13.5 percent rate of VAT from 1 September 2023. In UK news, HMRC interest rates increased again last month, and, in our lobbying update, read our letter to the Financial Secretary to the Treasury on changes to the geographical scope of agricultural property relief. In International news, the OECD has published a paper on the taxation of labour and capital.  Ireland While welcoming growth in Modified Domestic Demand in the second quarter of the year, the Minister for Finance noted that there were ‘several headwinds’ including constraints in infrastructure and slower growth among trading partners, and that it would be against this backdrop that Budget 2024 would be framed. Following the cessation of the temporary 9 percent VAT rate applying the goods and services in the tourism and hospitality sector on 31 August 2023, Revenue has updated several VAT Tax and Duty Manuals to reflect the application of the 13.5 percent rate of VAT from 1 September 2023. UK HMRC interest rates have increased again. In our lobbying update, read the Northern Ireland Tax Committee’s letter to the Financial Secretary to the Treasury on changes to the geographical scope of agricultural property relief. International The OECD has published a paper comparing the tax treatment of labour and capital income. 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 here which features news of the phasing in of exports moving from CHIEF to the Customs Declarations Service and a delay to the implementation of the new UK Border Target Operating Model for imports into the UK, including Ireland.          

The new Border Target Operating Model (BTOM), which was due to commence on a phased basis from the end of October 2023 for imports into the UK from the EU (excluding Northern Ireland), is being delayed, the UK Government is holding a series of sector specific online training sessions to prepare traders.  These include a session on 21 September 2023 dealing with exports from Ireland. More information on these events and how to register can be found at  https://www.eventbrite.com/cc/the-btom-what-are-the-sps-border-controls-2144279.

Revenue has updated the Tax and Duty Manual that deals with company reconstructions without change of ownership. Paragraphs 1 and 6 now reflect amendments made to section 400 TCA 1997 following the introduction of the Interest Limitation Rules in Part 35D in Finance Act 2021.

Revenue has updated the Tax and Duty Manual on the treatment of capital allowances where property is acquired jointly by spouses/civil partners and the expenditure is incurred by one spouse/civil partner. The guidance has been updated to confirm that this treatment is available where a property is purchased in joint names by a married couple or civil partners who are jointly assessed.

Revenue has published a new manual Tax and Duty Manual (TDM) containing operational guidance on the R&D tax credit. The relevant legislation is contained in sections 766C, 766D, 766(4D) or 766A(4C) TCA 1997. The manual provides information on submitting an R&D tax credit claim for 2022, 2023 and later years. Revenue advises that the new manual should be read in conjunction with TDM Part 29-02-03. 

Last week, the Northern Ireland Tax Committee wrote to the Financial Secretary to the Treasury (“FST”) to express its concerns in respect of the proposal to restrict the geographical scope of agricultural property relief (“APR”) and woodlands relief (“WR”) from April 2024. The Committee would also like to hear your views on a recently launched consultation examining potential new tax incentives for occupational health. Letter to the FST Draft legislation was published on “L” day in July setting out in detail the measure announced in the 2023 Spring Budget which will restrict agricultural property relief and woodlands relief to UK land and property only from 6 April 2024. In the letter to the FST, the Northern Ireland Tax Committee sets out the case for continuing to treat Irish land and property as potentially qualifying for APR and WR given the particular impact the proposal will have on Northern Ireland (“NI”) taxpayers and NI’s close proximity to Ireland. The letter also sets out the retrospective nature of the draft legislation on transactions prior to 6 April 2024 and how unfair this is. New consultation on occupational health incentives Also, on “L” day in July, HMRC and HM Treasury launched a joint consultation on tax incentives for occupational health. This consultation is open until 12 October 2023 and specifically seeks views on how expanding the existing benefit in kind exemption for medical benefits could help employers provide more services, essentially helping people back into work. We’d like to hear your views on this consultation by Friday 29 September.

Due to the increase in the Bank of England base rate at the beginning of August, HMRC subsequently announced the associated increase in its interest rates. The new rates took effect from Monday 14 August 2023 for quarterly instalment payments, and Tuesday 22 August 2023 for non-quarterly instalments payments. The two new increased rates of interest are as follows:- late payment interest, set at base rate plus 2.5 percent, is now 7.75 percent; and repayment interest, set at base rate minus 1 percent, with a lower limit of 0.5 percent (known as the ‘minimum floor’), increased to 4.25 percent.

Revenue has updated the Tax and Duty Manual on the domicile levy. The manual has been updated as follows: The position regarding claiming a credit for liabilities in calculating the levy. The meaning of the term “world-wide income”, “market value” and “Irish property”. Revenue’s powers to make and amend assessments and the right of an individual to appeal.   Information on penalties and interest. Worked examples are also provided throughout the Manual.

This week we bring you news of what is happening with the Register of Overseas Entities, and HMRC has published a new set of Compliance Professional Standards. HMRC has extended the Capital Gains Tax (“CGT”) 60-day reporting paper form trial, and we bring you the highlights from the latest Agent Updates published over the summer (110 and 111) and an email from HMRC on the changes to alcohol duty which took effect from 1 August 2023. The most recent News and Information Bulletins from HMRC (27 July and 31 August) are also available. HMRC has also emailed us to advise that the online process for obtaining overlap relief information in the context of basis period reform will commence on the later date of 11 September. Compliance Professional Standards HMRC’s Customer Compliance Group (“CCG”) has introduced and published a set of Compliance Professional Standards. The Standards set out how HMRC should apply the HMRC Charter and Civil Service values in HMRC’s compliance activity. HMRC is sharing these to be open and transparent about how it aims to conduct its work in this space. The main objective is to clearly set out the way HMRC should behave and act when conducting any form of compliance work. The standards also aim to reinforce the CCG’s commitment to HMRC’s Charter. The four Compliance Professional Standards are as follows:- Getting things right; Being aware of a taxpayer’s situation; Being responsive - communicating with taxpayers; and Treating taxpayers fairly. The standards set out how HMRC should apply the HMRC Charter and Civil Service values in compliance activity. CGT 60-day reporting paper form trial extended HMRC has extended the trial of the paper version of the CGT 60-day return for property disposals until the end of September. It should be noted that a permanent solution is still required to assist those unable to file online who had issues receiving a paper form in the post in order to file within the necessary 60-day deadline. The simplest solution to this would be for HMRC to make the form downloadable from GOV.UK, hence this is being pursued with HMRC. Highlights from the latest Agent Updates Agent Update 110 confirms HMRC’s current position on digital records and signatures. Subject to exceptions, HMRC accepts digital records including scanned copies of documents with handwritten signatures. More information is available in Agent Update 110 which also contains updates on other topical areas including PPI (Payment Protection Insurance) claims, the new Alcohol Duty rates and reliefs, the HMRC online service for the new Economic Crime Levy, the UK Internal Market Scheme, overlap relief in the context of basis period reform, and self-service Time to Pay for VAT. In Agent Update 111, read about the National Minimum Wage and the VAT treatment of second-hand motor vehicles bought in Great Britain and moved to Northern Ireland before 1 May 2023 that are still held in stock, amongst other topics.

The Department of Finance has published the latest Annual Taxation Report. The report highlights the concentration of tax receipts within certain sectors of the Irish economy, particularly the Information and Communication Technology (ICT) sector. Overall receipts for 2022 amounted to €83.1 billion. This is the highest level ever with the ICT sector accounting for around 35 per cent of corporate tax receipts and around 10 per cent of income tax revenues. Commenting on the report, Minister for Finance, Michael McGrath TD, said: “The Annual Taxation Report is a welcome contribution to the policy debate, particularly as we consider changes to tax policy in advance of Budget 2024. The report highlights that, while the headline figures are undoubtedly positive, there are still real vulnerabilities beneath the surface. This provides a timely reminder of the importance of taking the appropriate policy decisions today to secure the future of the public finances. The Government’s budgetary strategy outlined in the Summer Economic Statement sets out a pathway that will ensure we maintain our public finances on a stable trajectory, continue to invest in our public services while actively addressing the structural risks in our tax base, particularly around volatile corporation tax revenue. These are the fiscal objectives that I will have in mind as we draft Budget 2024.”