From 1 September 2024, the sale of voluntary carbon credits will be standard rated for VAT purposes if the place of supply is the UK. Revenue and Customs Brief: VAT treatment of voluntary carbon credits (VCCs) sets this out in change in treatment in more detail.  VCCs are tradable certificates that verify the reduction or removal of one metric tonne of carbon dioxide (or equivalent greenhouse gases) from the atmosphere. These differ from compliance market credits which are used within regulated emissions trading schemes.   This change in treatment reflects HMRC’s changed view that a secondary market for VCCs has emerged, and that businesses now incorporate VCCs into onward supplies.   As a result, from 1 September 2024, the sale of most VCCs will be treated as a taxable supply for VAT at the standard rate, if the place of supply is the UK. However, certain VCCs activities will continue to fall outside the scope of VAT. More detail is available in the Brief, and in the relevant HMRC manual.   

In this week’s miscellaneous updates, HMRC has advised that some 2022/23 self-assessment tax returns have yet to be processed and some taxpayers have had voluntary Class 2 National Insurance Contributions (NICs) incorrectly refunded. HMRC is also running a range of webinars over the next two weeks on various topics relevant to employers.   Delays in processing some 2022/23 self-assessment returns  HMRC has advised there is currently “a small backlog in processing returns for 2022/23”. Over the next few months “additional resource is to be brought in to help manage the existing backlog.” HMRC will advise in due course on how this may impact when filing 2023/24 returns if the taxpayer’s 2022/23 return has not been processed at that time.  Erroneous refunds of voluntary Class 2 NICs paid via Self-Assessment  HMRC has asked us to share the below message. We will update you on any further developments when details are available.  “We are aware some taxpayers with profits below the small profit threshold (voluntary payers) who have paid Class 2 NICs via SA may have had their Class 2 NICs refunded in error. Unfortunately, we are not able to identify how many, or which taxpayers are affected.   Background  An issue caused a payment file to be processed later than usual, which meant files which should have been processed on 02/02/2024 were not processed until 05/02/2024. We are now putting measures in place to make sure this does not happen again.  What this means for taxpayers  Affected taxpayers will have received a customer service message advising their payment has been paid too late and either:  Received a refund of Class 2 NICs  Not received a refund of Class 2 NICs with payment showing as a credit in SA or with payment allocated to an outstanding balance in SA, or   With payment allocated to a different SA debt.  We apologise for any inconvenience caused.   Taxpayers can check their account online or in the HMRC App to see if their Class 2 NICs are recorded on their NI record. If the year is not showing as full or they are unable to access their online accounts, they can ring the NI helpline for assistance. We have updated our advisor guidance accordingly.   The Agent Online Forum team will proceed to update the relevant thread.”  HMRC webinars for employers  HMRC is holding the following webinars over the next two weeks on a range of topics relevant to employers. Click each link below to book onto the webinar.  10 July: tax implications of an employee having more than one workplace   9 and 11 July: reimbursing employees for travel costs  16 July: tax treatment of phones, internet and homeworking. 

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.   Miscellaneous updated guidance etc.   Recently updated guidance, and publications relevant to EU exit are set out below:  Data Element 2/3: Documents and Other Reference Codes (Union) of the Customs Declaration Service Appendix 1: DE 1/10: Requested and Previous Procedure Codes  Making an export declaration using a pre-shipment advice  4-digit to 3-digit procedure to additional procedure code correlation matrix for imports;  Making an export supplementary declaration  Making a full export declaration  Notice to exporters 2024/12: export declarations move from CHIEF to CDS from 4 June 2024  Report a problem using the Customs Declaration Service  Notices made under the Customs (Export) (EU Exit) Regulations 2019  Appendix 2 C21i: DE 1/11: Additional Procedure Codes  Authorised Consignee Temporary Storage (ACTS) location codes for Data Element 5/23 of the Customs Declaration Service  Check if a business holds Authorised Economic Operator status. 

The Directorate-General for Taxation and Customs Union has published the 2024 edition of the Annual Report on Taxation. The report scrutinises the structure of tax revenues across the EU, according to their economic function and the type of tax, with a focus on the differences across countries and over time. In addition, this year the report examines the contribution of tax systems to a competitive and prosperous EU economy. Overall, the report aims to inform stakeholders of recent developments and to provide policymakers with insights that can help them improve the functioning of tax systems in the EU.  

Revenue has updated the Tax and Duty Manual which provides guidance on the payment and receipt of interest and royalties without deduction of income tax. The manual has been revised to address instances which may arise where there is a short delay in receipt of a completed certified Form 8-3-6 Interest, or completed uncertified Form 8-3-6 Interest and tax residence certificate, by the person making the interest payment. 

Revenue has updated the Tax and Duty Manual regarding the rate of tax at which repayments are to be made to reflect the 2024 rate band and tax credit values in its examples.  Section 460 TCA 1997 provides that a repayment of income tax to which a person is entitled, after the granting of any personal tax credit/relief, for any year of assessment, is to be made at the standard rate of tax or the higher rate, as appropriate. Where a person has no taxable income for a year of assessment, any tax paid by them in respect of their income for that year is refundable in full. However, any such repayment cannot exceed the difference between the correct tax liability and the amount of tax actually paid.  

Revenue has updated the Capital Acquisitions Tax Manual regarding Certificates of Discharge. References to "Clearance Letter (Form I.T. 10)" and the "Abolition of the status of CAT as a charge on property that has been the subject of a gift or inheritance in the previous 12 years" have been removed, in accordance with Finance Bill 2010.  

Charities with tax exemption are issued with a reference number beginning with the letters CHY. Section 208B(9) TCA 1997 permits Revenue to publish the name, address and CHY number of a charity. Revenue has updated the Tax and Duty Manual which provides guidance on the Charitable Tax Exemption to include a link to the list of bodies with the exemption. 

Revenue has updated the Tax and Duty Manual which provides guidance on payments made in respect of the Magdalen Restorative Justice Ex-Gratia Scheme. The updated material clarifies that the investment exemption applies to the person who received a 'relevant payment' under the scheme (paragraph 4). In addition, references to pre-2015 claims are deleted as they are no longer relevant. The usual time limits apply with regard to refund claims for the tax year 2015 and subsequent years. 

Section 112 TCA1997 provides the statutory basis of assessment for income tax chargeable under Schedule E, including the persons chargeable and the extent of the charge to tax. The charge to tax covers all salaries, fees, wages, perquisites or profits whatever derived from the office, employment or pension for the year of assessment. Revenue has refreshed the Tax and Duty Manual which provides guidance on the Schedule E basis of charge to improve ease of reference for users. Further information is available in eBrief No.181/24. 

Revenue has updated the Tax and Duty Manual which provides guidance on tax equalisation arrangements. The updated manual states that employers are required to ensure that payroll submissions under shadow payroll arrangements are accurate and reviewed for accuracy on an ongoing basis (paragraph 5, step 2). In addition, examples 5.1 and 5.2 have been updated to reflect Finance (No.2) Act 2023 amendments. 

Revenue has updated its guidance on the online Non-resident Landlord Withholding Tax (NLWT) system which commenced from 1 July 2023.   Section 1041 TCA 1997  provides that the person making the payments will be required to submit a rental notification (RN) providing certain information regarding the landlord and the rental income on which tax is being withheld. The NLWT system allows tenants/other direct payers and collection agents to input RNs for residential or commercial/agricultural properties, and provides a facility for both collection agents and tenants/others to set up a repeat RN. The manual has been updated to include guidance on setting up a repeat RN and creating a direct debit mandate (paragraph 5).  Collection agents and tenants are required to provide the unique property identifier, obtained from the landlord, when submitting the RN, such as the Local Property Tax identifier (LPT ID) for residential property. As rented non-residential properties do not have an LPT ID, the manual now includes guidance on the creation of a commercial ID for such properties (paragraph 9).  Other updates include:  Additional guidance for collection agents (paragraph 11) and non-resident landlords (paragraph 13)  ROS certificate and sub-certificate queries (appendix 2)   Extracts from the Notes for Guidance reflecting the Finance Act 2023 updates (appendix 3).  Further information can be found in eBrief No. 186/24.