Our last update on HMRC services covered the announcement by the Financial Secretary to the Treasury before the dissolution of Parliament of an additional £51 million in funding for HMRC to help deal with the pressures on its phonelines and address declining service levels. Earlier this month, the Institute attended a bespoke meeting with HMRC during which HMRC advised that it is working to source additional resources using this £51 million.   This will take some time and we therefore remind you that HMRC previously advised that even if additional funding was received, quarters one and two of 2024/25 are likely to see a further decline in services. HMRC’s longer term strategy is still to move most taxpayers to digital services.   At the above bespoke meeting, the Institute and the other Professional Bodies discussed and highlighted a number of pain points in the UK tax system and in particular pointed out the lack of agent service for areas such as changes to tax codes.   The Institute will continue to monitor this issue and engage with HMRC and the new Government as it considers the way forward. We welcome your feedback at any time on HMRC services by email.  

Ahead of next month’s election, the Institute for Fiscal Studies recently published an article on reform of Inheritance Tax and an assessment of the previous government’s record on tax between 2010 and 2024. HMRC is currently conducting taxpayer education research and its latest schedule of live and recorded webinars for tax agents is available for booking. Spaces are limited, so take a look now and save your place. And finally, Belarus has unilaterally suspended its Double Tax Agreement with the UK, although the UK considers it to still be in force.  Institute for Fiscal Studies publications  The Institute for Fiscal Studies (“IFS”) has published an article on options to make inheritance tax (“IHT”) fairer which it says would also raise more revenue. In the article, the IFS notes that despite the highest rate being 40 percent, the availability of reliefs and exemptions means that the effective rate of IHT peaks at 25 percent for estates worth between £3 million and £7.5 million and declines to just 17 percent on estates worth £10 million or more.   The article also considers the potential impact of removing the special treatment of AIM shares, imposing a cap on agricultural and business property relief, and ending the tax-free passing-on of pension pots.  The IFS has also published an assessment of the government’s record on tax between 2010 and 2024. Not surprisingly, it notes that a common theme has been a move towards greater complexity. Since 2010, more than a dozen new taxes have been introduced and many existing taxes have been made more complicated. The IFS notes that, taken together, the changes have ‘made the tax system harder to understand and harder for taxpayers to navigate’.   HMRC taxpayer education research  HMRC has recently updated its guidance on genuine HMRC contact to flag that it is currently conducting a new research initiative. As a result, taxpayers may be contacted by HMRC or by People for Research with an invitation for them to take voluntarily participate in a focus group to understand how HMRC can improve education for taxpayers.   Belarus unilaterally suspends Double Taxation Agreement with the UK  Last month, HMRC confirmed in an update on GOV.UK that Belarus Council of Ministers has unilaterally suspended provisions of many of its Double Tax Agreements, including the 2017 UK-Belarus Double Taxation Convention. 27 countries have been impacted with provisions affected from 1 June 2024.   The Council Resolution has suspended provisions relating to dividends, interest, and capital gains. The same Resolution also introduces discriminatory taxes on dividends and other income in respect of businesses located in one of the 27 countries with effect from 1 April 2024. This means that Belarus is not honouring agreed limits on what it may tax at source and has placed other restrictions on the conduct of business by non-Belarusians in Belarus.  The UK-Belarus Convention does not permit this unilateral action. The UK Government views this action with utmost seriousness and has asked Belarus to reverse its action. It considers the treaty to remain in force and is continuing to comply with its terms. Next steps are being considered and more information will be provided in due course. 

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 and Cabinet Officer Borders bulletins are also available. The Windsor Framework Democratic Scrutiny Committee has published another report, this time on Regulation (EU) 2024/1252 which aims to establish a framework for ensuring a secure and sustainable supply of critical raw materials.  Windsor Framework Democratic Scrutiny Committee report  The most recent Brexit and Beyond Bulletin from the NI Assembly’s EU Affairs team features the Windsor Framework Democratic Scrutiny Committee's report on Regulation (EU) 2024/1252 that aims to establish a framework for ensuring a secure and sustainable supply of critical raw materials.  According to the Committee, most of the regulation does not fall within the scope of the Windsor Framework, although some articles of it do make technical amendments to a number of EU Regulations that do apply under it.   However, the Committee concluded that having considered its commissioned legal advice, the replacement EU act does not significantly differ, in whole or in part, from the content or scope of the regulations which it amends.  Miscellaneous updated guidance etc.   Recently updated guidance, and publications relevant to EU exit are set out below:  Submit a claim using the second-hand motor vehicle payment scheme if you do not have a UK business establishment;  Reference Document for The Customs (Northern Ireland: Repayment and Remission) (EU Exit) (Amendment) Regulations 2023;  Check if you can pay less duty if your goods are imported into authorised use;  Data Element 2/3: Documents and Other Reference Codes (Union) of the Customs ;Declaration Service;  Software developers providing entry summary declaration support;  Search the register of customs agents and fast parcel operators;  CDS Declaration Completion Instructions for Exports;  List of customs training providers;  Attending an inland border facility; and  External temporary storage facilities codes for Data Element 5/23 of the Customs Declaration Service. 

We have compiled the latest updates to various HMRC VAT publications, briefs, and guidance. Pay the VAT due on your One Stop Shop VAT Return;  Updates on VAT appeals;  Help with VAT apportionment of consideration — GfC2 Guidelines for Compliance;  Food products (VAT Notice 701/14);  VAT on movements of goods between Northern Ireland and the EU;  VAT Assessments and Error Correction;  Revenue and Customs Brief 7 (2024): VAT Treatment of Voluntary Carbon Credits;  VAT Assessments and Error Correction;  Appoint a tax representative if you are a non-established taxable person registering for VAT in the UK;  Cancelling your VAT registration (VAT Notice 700/11);  Group and divisional registration (VAT Notice 700/2);  Draft regulations: amendments to the VAT (Refund of Tax to Museums and Galleries) Order 2001;  VAT Flat Rate Scheme;  VAT Registration;  Forms for claiming a VAT refund if your business is registered in a country outside the UK;  Get your postponed import VAT statement; and  VAT Assessments and Error Correction. 

In Irish news, Revenue has announced that the ‘service to support compliance’ approach for the Enhanced Reporting Requirements will continue to the end of 2024. Meanwhile, Revenue’s Business Division is to commence a Level 1 compliance project focusing on pension contributions and instances where the VAT registration threshold may have been exceeded, and its Personal Division is to write to PAYE taxpayers with under/overpayments for 2020. In UK news, ahead of the UK general election next month, we take a look at the tax policies of the two main UK parties, and in the Institute’s response to the consultation on the introduction of the UK’s carbon border adjustment mechanism, we ask if HMRC will be able to cope with the administration of another tax. Ireland Revenue has confirmed that the period of ‘service to support compliance’ for the Enhanced Reporting Requirements is extended to the year end. Revenue’s Business Division is to commence a Level 1 compliance project focusing on pension contributions and instances where the VAT registration threshold may have been exceeded. Revenue to write to PAYE workers with over/underpayments for 2020. UK Read about the tax policies of the two main parties in Westminster ahead of next month’s general election. The Institute questions HMRC’s ability to cope with the administration of another tax in its response to the consultation on the introduction of the UK’s carbon border adjustment mechanism.   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.

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 available, and the Windsor Framework Democratic Scrutiny Committee has published a report on EU regulation 2024/1157 on shipments of waste.  Windsor Framework Democratic Scrutiny Committee  Earlier this month, the Committee published its report on the EU regulation on shipments of waste, specifically Regulation (EU) 2024/1157, a published replacement EU act. The Committee concluded that the EU law “significantly differs, in part, from the content or scope of the EU instrument which it amends or replaces”. It was not able to reach a view on whether the replacement EU act “would have a significant impact specific to everyday life of communities in Northern Ireland in a way that is liable to persist”. You can read more about this in the 10 June 2024 Brexit and Beyond newsletter, published by the Northern Ireland Assembly’s EU Affairs team.  Miscellaneous updated guidance etc.   Recently updated guidance, and publications relevant to EU exit are set out below:  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;  Summary of movements of goods into Northern Ireland from Great Britain 2023;  Using a suppliers’ declaration to support a proof of origin;  The Customs (Miscellaneous Amendments) (No. 2) Regulations 2024;  External temporary storage facilities codes for Data Element 5/23 of the Customs Declaration Service;  Maritime ports and wharves location codes for Data Element 5/23 of the Customs Declaration Service;  Attending an inland border facility;  Internal temporary storage facilities (ITSFs) codes for Data Element 5/23 of the Customs Declaration Service; and  Get help using example declarations for exports from Great Britain to the rest of the world. 

In this week’s miscellaneous updates, HMRC is asking tax agents to stay alert to malicious software which can lead to suspension of agent accounts and has identified that some agents/Professional Bodies are using out of date versions of the SA1 form (Register for Self-Assessment if you are not self-employed) which HMRC no longer maintain. New guidelines for compliance in respect of football agents’ fees and dual representation contracts have been published; as part of this, HMRC is asking interested parties to complete a survey on the new guidelines.   Importance of staying alert to malicious software HMRC has asked us to share the below reminder about staying alert to malicious software, how this can lead to suspension of agent accounts, and what action to take if this happens.  “Agents are frequently targeted by criminals who attempt to trick them into downloading malicious software (or malware) onto their devices. This software can give fraudsters access to Agent tax accounts and, in some cases, the personal details of clients. If malware is not completely removed, even after a password change or even the creation of a completely new account, the criminals still retain access.   If we suspect that an agent has inadvertently acquired malware on one or more of the devices they use for their work, and that this has resulted in client data being compromised, we take immediate action to suspend the account.   If we suspend an agents account due to suspected malware, we write to the agent to advise them on the steps they need to take. This includes securing all affected devices before contacting HMRC’s Online Service Helpdesk to initiate the process of un-suspending their account.   Agents should regularly ensure that any software they use is up-to-date, check their antivirus protection is switched on and is up-to-date, and avoid clicking links or downloading attachments in suspicious or unexpected emails.   Nobody is immune from fraud. Criminals are great pretenders and will take any opportunity to steal information from customers and use this to access our systems. Before sharing personal or financial details, we always urge customers to visit HMRC phishing and scams GOV.UK to check the sender or caller is genuine.   To help fight these crimes, forward suspicious texts claiming to be from HMRC to 60599 and emails to phishing@hmrc.gov.uk. Report tax scam phone calls to us on GOV.UK. You can find more information on cyber security at National Cyber Security Centre: https://www.ncsc.gov.uk/.”  Out of date SA1 forms  HMRC has sent the below message about the use of out of date SA1 forms for registering for self-assessment if you are not self-employed.  “We have been made aware that some professional bodies/agents are displaying or using links containing obsolete versions of the SA1 PDF which HMRC no longer maintain. The information held on these forms is not up to date, such as the telephone number, return address, and Self-Assessment criteria.  Would you/agents kindly review the links you are using and:  Remove any old links from your websites, communications, etc; and  Make sure you/agents only display/use the two options below.  First option: SA1 shortform which can be completed and submitted online at: https://www.gov.uk/guidance/register-for-self-assessment-if-you-are-not-self-employed  Agents can use their Government Gateway user ID and password to access this form.  This form offers a personalised service, and the form can only be seen once all the required questions have been answered.  Second option: SA1 Print and Post: SA1 G-form at LC Forms (tax.service.gov.uk)   This form is filled in online, then printed and posted.”   New guidelines for compliance - football agents’ fees and dual representation contracts  HMRC has published “Help with Football Agents’ Fees and Dual Representation Contracts – GfC6”. These Guidelines for Compliance (“GfC”) are for football agents and football clubs and focus on:  HMRC’s view on dual representation contracts; and  Employer duty and VAT compliance risks for football agents’ fees and dual representation  HMRC is stressing that these guidelines do not change its view of compliance risks in other taxes and that these GfC should be read alongside HMRC’s published guidance. According to HMRC, following these guidelines will help to reduce the risk of making errors, therefore reducing the risk of any penalty charges.  In the “Give feedback on these guidelines” section, HMRC has included a survey which should take less than three minutes to complete. Feedback from this survey will be used to:  establish any areas you may still have trouble understanding;  understand where improvements can be made to the guidelines;  measure experience of using the guidelines; and  improve future GfC publications.  HMRC has asked us to highlight that you can only use the survey to provide feedback anonymously about the guidelines. Do not provide any personal data that might identify you or your clients. The survey is not a route to contact HMRC for specific enquiries. If you have any specific questions or want to provide more detailed feedback, please email ccgguidelinesforcompliance@hmrc.gov.uk.  

That was just one of the concerns raised by the Institute in its submission to “Consultation on the introduction of a UK carbon border adjustment mechanism” (“CBAM”). The Institute’s full response can be read in the Tax Representations section of our website and also highlighted the urgent need for clarification in respect of the ongoing uncertainty as to how the EU CBAM will apply to Northern Ireland under the Windsor Framework, and specifically the application of the EU CBAM to imports from non-EU countries.  The submission also focused on the need for adequate time to prepare for the introduction of the UK’s CBAM which must be preceded by guidance and systems that have been developed in close conjunction with stakeholders.   HMRC’s compliance approach to this new tax should incorporate a soft landing approach with penalties automatically suspended for two years, unless HMRC has evidence of deliberate behaviour. The Institute also highlighted the importance of providing educational support to businesses and customs intermediaries. 

Ahead of next month’s general election, the main parties in the UK have now published their party manifestos. Links to each of these are set out below. We also take a closer look at the tax policies of the Conservative and Labour parties as the two parties likely to have the most seats in Westminster after the general election on 4 July.  Tax policies – the Conservative Party  The Conservatives have pledged the following:  There will be no increase in the 25 percent main rate of corporation tax;  The rate of employee National Insurance Contributions (“NICs”) will be reduced by a further 2 percent to 6 percent;  Class 4 NICs for the self-employed, currently 6 percent, will be abolished and there is a long-term plan to end NICs altogether;  Income Tax and VAT will not rise;   There will be no increase in the rate(s) of Capital Gains Tax (“CGT”);  The manifesto is silent on Inheritance Tax; and   Child benefit will be assessed at the household level with no high income child benefit charge for couples earning up to £120,000; this would be a doubling of the current £60,000 threshold.  Tax policies – the Labour Party  The Labour Party has pledged the following:  Corporation tax will be capped at the current main rate of 25 percent for the duration of parliament (five years);  There will be no increases in income tax, NICs and VAT. However, the same promise is not made for CGT and pensions tax relief;  There are a range of tax increases aimed at wealthier voters including the closure of what is referred to as “non-dom tax loopholes” and VAT will be applied to private school fees;  A business taxation roadmap will be published;   There are “plans to modernise HMRC and change the law to tackle tax avoidance. We will increase registration and reporting requirements, strengthen HMRC’s powers, invest in new technology and build capacity within HMRC. This, combined with a renewed focus on tax avoidance by large businesses and the wealthy, will begin to close the tax gap and ensure everyone pays their fair share”; and  There is a commitment to only one major fiscal event every year.  Party manifestos are available at the following links:  The Conservative and Unionist Party manifesto;  The Labour Party manifesto;  The Liberal Democrats manifesto; and,  The Green Party manifesto.  The Scottish National Party manifesto has not yet been published. 

Revenue has updated the Tax and Duty Manual which provides guidance on C&E TAN Reports available on ROS for C&E traders. The updated guidance now includes details for TAIN agent (Tax Agent) access in ROS to C&E reports for their clients. Further information in relation to postponed VAT reports where a declaration is invalidated has been included and clarification included where only one transaction and one payment is submitted in a month. 

Revenue has updated the Tax and Duty Manual which provides guidance on the taxation of crypto-asset transactions. The guidance now includes minor clarifications, including confirming that Central Bank Digital Currencies (CDCC) are to be treated as currency assets and not crypto assets for tax purposes. 

Revenue has updated the Tax and Duty Manual which provides registration and filing guidelines for DAC7. The guidance has been updated to reflect information required when registering as a Foreign Platform Operator (section 3).