The Department of Finance has published the Annual Taxation Report September 2022 highlighting the resilience of tax revenue during the pandemic. Overall receipts amounted to €68.4 billion, the highest level ever. Higher corporate tax receipts reflect the importance of pharma, med-tech and ICT in Irish economic activity. The reallocation of existing employees to higher wage sectors and/or full-time employment was a driver of the robust performance of income tax. Recognising that the multinational sector accounts for a large share of both corporation tax and income tax, the report identifies this concentration of risk as a significant vulnerability for the public finances. Commenting on the report, Minister for Finance, Paschal Donohoe, said: “The Annual Taxation Report is an important contribution to discussions on how taxation policy can respond to economic challenges, and will complement the work of the Commission on Taxation and Welfare. The analysis shows that, while the headline figures are very positive, our tax system contains significant structural vulnerabilities, especially in respect of income tax and corporation tax. It is essential that we rebuild our fiscal buffers to ensure that we are able to weather future shocks that could impact on these receipts.”

Revenue has updated its Travel and Subsistence Civil Servant Rates webpage to reflect the revised rates effective from 1 September 2022.

Revenue has published a new Stamp Duty Manual containing guidance on the operation of section 83F of the Stamp Duties Consolidation Act (SDCA) 1999 regarding the repayment of stamp duty where certain residential units are designated cost dwellings. It provides for a repayment scheme in relation to stamp duty paid at the rate of 10% on the acquisition of residential property, where the property is designated as a cost rental dwelling by the Minister for Housing, Local Government and Heritage under Part 3 of the Affordable Housing Act 2021 within 6 months of acquisition.

Revenue has expanded its Capital Acquisitions Tax Manual regarding the CAT treatment that applies where a limited interest is terminated early to include general guidance on limited interests. In addition, Revenue has published a new Capital Acquisitions Tax Manual that provides guidance in the CAT treatment of rights of residence.

Revenue has published an updated suite of MyEnquiries Tax and Duty Manuals, which now contain separate manuals to deal with Submitting and Managing MyEnquiries in MyAccount and Submitting and Managing MyEnquiries in ROS. Other changes include details of MyEnquiries Data Retention Policy, auto-registration for new ROS registrations, removing email addresses and notifications about MyEnquiries including tax clearance and eCG50 applications in MyAccount. At a recent TALC MyEnquiries subgroup meeting, Revenue recommended members use the Exceptional Contacts facility where they experience delays in response times to queries outside the Revenue Customers Service Standard. Positive feedback has been recently received from members that have used this facility.

Revenue has published a Tax and Duty Manual containing changes to the 2021 ROS Form 11, as updated in July 2022. Recent changes include updates on non-resident landlords and the LPT surcharge, additional claim fields for health and safety equipment in the Self-Employed panel, and prefilled information on rental income. Further information is available in Revenue’s eBrief 162/22. Revenue has also released an updated version of Form 1 2021 in ROS Offline hence members should ensure that they are using the latest version of Form 1 2021.

In Irish news, Revenue is working on an issue with the filing of Form CT1s using ROS Offline and readers are again reminded to update their bank details when changing from Ulster Bank/KBC. In UK news, the rate of interest for late payment of tax has increased again and HMRC has now published more detailed guidance on Making Tax Digital for income tax, as recommended by Chartered Accountants Ireland. In International news, the OECD publishes public comments received on the Progress Report on Amount A of Pillar One. Ireland 1.     Revenue has confirmed an issue with the filing of Forms CT1 for 2021 and 2022 in ROS Offline that is expected to be resolved by Saturday, 3 September. 2.     Remember to update bank details with Revenue for both online payments and repayments where there has been a change of banks as a result of Ulster Bank and KBC exiting the market. UK 3.     Read about the increase in the rate of interest on late and repayments of tax. 4.     HMRC has published more detailed guidance on Making Tax Digital for income tax and has announced the closure of the online VAT portal. International 5.     The OECD published comments received on the Progress Report on Amount A of Pillar One. 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.  

Originally posted on Business Post 06 August 2022.  The resolution of the agriculture emissions problem requires it to be seen for what it is: a problem of oversupply of a by-product The vote of no confidence put down by Sinn Féin in the Dáil last month was a failure. Not only that, it seemed to galvanise the government parties while rallying some of the independents in the Dáil, whether they belonged to the government parties’ gene pool or not. Thus stabilised, government ministers should have gone on their summer holidays feeling reasonably secure, until the dispute over carbon emissions targets came to prominence. Climate change is not a little thing, but it should not trigger a crisis within government over carbon emissions targets in the farming sector. The concerns of farmers serve as a magnifying glass on political activity, and this particular magnifying glass can burn. The government’s position is not helped, either, by a discernible scepticism about climate concerns in the public mind fuelled by growing concerns over energy security. Fear of unbearably hot conditions over the next decade are being eclipsed by fear of unbearably cold homes over the next winter if Russian gas supplies to Europe are turned off. The EU’s relatively unambitious plan to cut gas consumption by 15 per cent has fallen foul of so many terms, conditions and exclusions that the net reduction might well be a lot less. It depends on every EU member state playing nice, and there are no guarantees of that. Few enough leaders across Europe have sufficient political capital to withdraw any existing services, or impose widespread restrictions on their electorates, and hope to survive the next election. This fact is at the root of the EU’s difficulties in agreeing restrictions on energy consumption, even if they can make the Russian sanctions regime more effective. Agreeing restrictions to make Ireland’s carbon sanctions regime more acceptable to the electorate is also at the heart of the current government problem, of which this is only the first instalment. If the government can survive this rattling over the next few months, it will be due in no small part to the disarray of the opposition on the issue. In all this, however, both government and opposition parties have missed the potential of commercial policies when it comes to achieving their objectives. There are many ways to view the problem of carbon emissions in the agriculture sector, but its resolution requires it to be seen for what it is: a problem of oversupply of a by-product. Agricultural oversupply can be resolved. In the past, butter mountains have been levelled and wine lakes have been drained when agriculture policies were modified to manage them. And before anyone starts whinging about subsidies to farmers, remember that for all its faults, the Common Agricultural Policy (CAP) is designed to ensure food security at reasonable prices for consumers. This is not just about incentives, but about euros and cents. If, despite protestations, the national herd gets forcibly reduced, say by 25 per cent, then the prices paid to eligible farmers need to increase by 33 per cent through direct government intervention. It won’t make the prospect of herd reduction attractive for the farming industry, because farmers are justifiably proud of their herds and of the quality of their produce. Equally, however, farmers are business people who, for the most part, recognise that restrictions for a broader purpose in their industry are sometimes necessary. One of the faults of the current CAP is that it is not clear enough about funding climate action. There won’t even be a method to measure its impact “until 2026 at the latest”, according to the EU’s own factsheets. So much for the notion that what gets measured gets done. More broadly, providing higher agriculture subsidies in Ireland to combat climate change may not be particularly effective. The world market for beef or dairy is unlikely to contract just because Ireland produces less. In this case, the ultimate consumer is the planet, not the person. We would be responding to the science, not to the demand. Perhaps the main obstacle to such a strategy is the lack of imminence of the problem. Climate activists the world over have seen their objectives topple down the policy agendas as governments grapple with Russia’s invasion of Ukraine and its consequences. It is hard to marshal political support for any problem not crystallising before the next election, or even before the summer holidays. Dr Brian Keegan is Director of Public Policy at Chartered Accountants Ireland

Revenue has asked us to remind readers to update their bank details for both online payments and repayments where they have changed banks as a result of Ulster Bank and KBC exiting the market. Revenue noted that there may be a need to update the details under more than one tax head and where different bank accounts are used for both tax payments and refunds.

As a result of the 0.5 percent increase to the Bank of England base rate earlier this month, HMRC interest rates for late payment increased recently by 0.5 percent, mirroring the increase in the base rate. The rate of interest payable on most late payments of tax increased to 4.25 percent from 3.75 percent from 15 August 2022 for quarterly instalment payments of corporation tax and from 23 August 2022 for non-quarterly instalment payments of corporation tax and most other taxes. The rate of interest on repayments also increased for the first time in many years from 0.5 percent to 0.75 percent from the same dates.

From 1 November 2022, HMRC has announced that its online VAT return portal will close to the majority of VAT registered businesses who should be using Making Tax Digital (“MTD”) for VAT. HMRC has also now published more detailed guidance on MTD for income tax as recommended by Chartered Accountants Ireland in its response to the recent consultation on the MTD for income tax tertiary legislation. Closure of online VAT return portal From 1 November 2022, businesses and agents will only be able to file VAT returns using MTD for VAT compatible software. Businesses will no longer be able to use their existing VAT online account to file their quarterly or monthly VAT returns. However, the online VAT return will remain available to those with a digital exclusion exemption and businesses that file annual returns will still be able to use their VAT online account until 15 May 2023. VAT registered businesses must sign up to MTD for VAT and use MTD for VAT compatible software to keep their VAT records and file their VAT returns. From 24 August 2022, HMRC began contacting businesses that still need to sign up. If a business hasn’t signed up to MTD and started using compatible software already, they must follow these steps:- Step 1 - choose MTD-compatible software that’s right for your business – you can find a list of software  on GOV.‌‌‌UK. Chartered Accountants Ireland recommends you discuss this with a Chartered Accountant. Step 2 - check the permissions in your software – once you’ve allowed it to work with MTD, you can file VAT returns. Step 3 - keep digital records for current and future VAT returns. Step 4 - sign up for MTD and file future VAT returns using MTD-compatible software. MTD for income tax detailed guidance HMRC has now published more detailed MTD for income tax guidance in the following publications:- Check if you can sign up for MTD for Income Tax; Check when to sign up for MTD for Income Tax; Using MTD for income tax; and Sign up as an individual for Making Tax Digital for Income Tax.

Last Friday, HMRC published guidance on changes and issues affecting the Corporation Tax online service. This means that at present various claims and other actions are currently restricted. HMRC has also sent a further update on the pausing of R&D tax credit repayment claims which we set out in full later. The main corporation tax claims and other corporation tax issues currently restricted are:- annual investment allowance claims in excess of £200,000; loans to participators charged at the new Section 455 tax rate of 33.75% applicable from 6 April 2022; research and development (“R&D”) enhanced expenditure claims (but not SME R&D payable tax credit claims or R&D expenditure credit (RDEC)) for accounting periods beginning on or after 1 April 2022; and companies claiming both RDEC and reporting income tax deducted from profits. According to the guidance, HMRC aims to resolve these issues from 16 September 2022 so that returns can be filed. In the meantime HMRC will accept paper returns - see HMRC’s service issues page on how to file paper returns and the other criteria which must be satisfied. More information is also available in the guidance on the other specific types of claims and scenarios affected. Further update on the pausing of R&D tax credit repayment claims The full update from HMRC reads as follows:- “As you may be aware, we recently had to pause some R&D payments and extend our standard processing times. We are now in a position to explain why we needed to do this:  Since April we have faced an increase of fraud within the RDTC relief. While some of this fraud is opportunistic, some is linked to organised criminal gangs. As you would expect, HMRC responded quickly by pausing all payments and by strengthening our systems accordingly.  Our aim is to protect the R&D scheme from such attacks while minimising any delays or enquiries for legitimate claimants. However, in this instance, the nature of the attacks (alongside the fiscal risk to the Exchequer) meant we had to respond quickly and robustly by pausing all R&D payments on the 28th April 2022.   Our operational response culminated with further risk assurance checks to react to the increased number of fraudulent claims. Since April 1st we have received over 8000 RDTC claims, which all need to go through our further scrutiny processes.   We do recognise that these additional checks may cause delays to legitimate businesses and appreciate their patience as we work through these exceptional circumstances.  We want to reassure legitimate claimants that we are working hard to expediate claims as soon as we can. While we are pleased that we could restart paying RDTC claims from the 10th May 2022, the nature of the additional operational checks (required to protect the R&D relief) means that it is not currently feasible to offer a 28 day payment turnaround for claims and we think the standard service level will need to be 40 days.  We are working to recover from the recent pause in payments and expect to be processing 80% of claims within 40 days, by the end of August 2022. While we cannot go into the detail of our ongoing investigations and compliance activity, we do want to explain to tax agents that we have a duty to challenge irregular claims, requesting more information if we believe it is appropriate. We have already issued over 1000 letters to claimants which have been identified as high risk, challenging irregular claims. As soon as we have further news on our progress, we will let you know. With this in mind, we ask R&D claimants to bear with us and kindly ask them not to contact the R&D helpline/mailbox to chase their claims. We also ask you not to contact any HMRC official about a claim. Instead, agents should check the company’s online account to check the status of their claim.  We hope that our recent activity reassures agents that we are committed to tackling abuse of the R&D relief scheme, ahead of the R&D reforms announced previously at Autumn Budget 2021. If you become aware of any fraudulent R&D claims, please do make us aware through our usual reporting systems, see below: Report tax fraud or avoidance to HMRC HMRC: disclosure service Admit tax fraud to HMRC using the Contractual Disclosure Facility.”