Following the introduction of the EU Minimum Taxation Directive (“Pillar Two") by Finance (No. 2) Act 2023, Revenue has now published its first detailed guidance on the application of the rules. The guidance is contained in TDM Part 4a-01-02 should be read in conjunction with Part 4A TCA 1997.  The guidance provides an overview of the main Pillar Two charging rules. It also contains a detailed correlation table which cross references the legislation contained in Part 4A TCA 1997 with:  The relevant article of the EU Minimum Tax Directive  The relevant article of the OECD Model Rules  OECD Commentary, where relevant  OECD Administrative Guidance, where relevant.  The guidance has been drafted by Revenue following robust and ongoing engagement with stakeholders (including the Institute under the auspices of the CCAB-I) via the Tax Administration Liaison Committee (TALC), specifically the TALC BEPS sub-committee. The guidance will likely be subject to ongoing development as Revenue and practitioners began working through the detailed calculations required under the Pillar Two rules.  

Revenue has updated the Tax and Duty Manual regarding the relief for certain income from leasing of farmland under section 664 TCA 1997. The updated guidance reflects amendments introduced in Finance (No.2) Act 2023.    The definition of a 'qualifying lessor' has been amended with a new 7-year holding requirement on farmland purchased under a contract entered into on or after 1 January 2024. An explanation of this amendment and the associated anti-avoidance rules are outlined in section 5.  

Payments made in respect of the Mother and Baby Institutions Payment Scheme are exempt from income tax under section 205B TCA 1997. Revenue has now updated the Tax and Duty Manual which outlines the procedures for paying deposit interest without deduction of Deposit Interest Retention Tax (DIRT).  

Revenue will host an information webinar on enhanced reporting requirements (ERR) for employers on Tuesday 21 May 2024. Registration for the free webinar can be booked through Revenue’s Eventbrite webpage with a further webinar scheduled for Thursday 13 June 2024. Revenue has also posted informational videos on its website to assist employers with their ERR submissions.  Feedback on issues or problems you experience with the new ERR reporting regime can be emailed to the Institute and we will continue to engage with Revenue through the TALC forum. We will also keep you up to date on developments in Tax News.  

The EU has reached political agreement on the Directive on Faster and Safer Relief of Excess Withholding Taxes or FASTER. The FASTER initiative aims to boost cross-border investment and combat tax fraud, particularly in light of the ‘Cum/Ex’ and ‘Cum/Cum’  scandals. The FASTER rules include: A common EU digital tax residence certificate Two fast-track procedures complementing the existing standard refund procedure The creation of national registers for certified financial intermediaries and an EU certified financial intermediary portal Standardised reporting obligations. 

In Irish news, the Institute launches its Pre-Budget 2025 submission and Revenue issues demands to taxpayers with warehoused debt. In UK news, read the Institute’s response to the Call for Evidence on enquiries and assessments and this week’s miscellaneous updates features a range of matters relevant to agents. In International news, the European Commission has commenced a call for evidence on the Directive for Administrative Cooperation (DAC).  Ireland The Institute, under the auspices of the CCAB-I, has launched its Pre-Budget 2025 submission. Revenue has issued demands to taxpayers with warehoused debt. UK Read the Institute’s response to the Call for Evidence on enquiries and assessments. This week’s miscellaneous updates features a range of matters relevant to agents. International The European Commission has commenced a call for evidence on the Directive for Administrative Cooperation (DAC). 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.  

That’s according to the Northern Ireland Tax Committee in its response to “Call for Evidence The Tax Administration Framework Review: enquiry and assessment powers, penalties, safeguards.” The Committee is highlighting that when an enquiry has been opened, which is accompanied by an informal request for information, a 30-day deadline is usually set for submission of information to HMRC with an expectation that this is provided within 30 days from the date of the correspondence, and not from the date the taxpayer receives it. However, often there is a delay in the taxpayer receiving the correspondence.   This, coupled with ongoing resource constraints being experienced by tax agents and their clients, can make it extremely challenging to reply within the 30-day deadline, which is even shorter when correspondence is not received until much later.  Once information is submitted, often a response is not received from HMRC for several months and in some cases, there have been delays of up to six months. Agents and taxpayers feel held to account by being made to work to meet unreasonable deadlines and demands when HMRC is not held to the same standard.   Taxpayers are able to apply to Tribunal at any time to request closure of an enquiry, however in reality, many are reluctant to do so due to the costs involved and therefore there is currently no real impetus on HMRC to respond promptly.   There is also inconsistency in being able to agree with HMRC a longer time period within which to respond to information requests. Some officers follow HMRC guidance in this area, however others do not.   The submission therefore makes the following overall recommendations:  The deadline for provision of informal and formal information requests should not be set at 30 days “as rote” and should be agreed upfront with the taxpayer/their agent taking into account HMRC’s own guidance in this area;   The agreed deadline should begin from the date that correspondence is received by the taxpayer and should be set in working days only;   HMRC should respond more promptly once it has received information and should issue an acknowledgment to the taxpayer/agent setting out when a more detailed response can be expected; and  To strengthen the rights of taxpayers, the power to request that a Tribunal directs HMRC to issue an enquiry closure notice should be strengthened where there has been a significant delay by HMRC of six months or more in responding to correspondence from the agent/taxpayer. This safeguard should enable the taxpayer to recover their costs where the Tribunal’s decision is that HMRC should close the enquiry. HMRC should be directed to do so within 30 days of the Tribunal’s decision.  

In this week’s miscellaneous updates, we provide an update on various issues relevant to agents and the latest VAT road fuel charges which apply from 1 May 2024 are available. HMRC has updated its guidance on taking reasonable care and a new online service has been launched for payment of voluntary national insurance contributions. HMRC has been writing to community amateur sports clubs asking them to check that they remain eligible, and the latest Agent Update 119 is now available. And finally, a new consultation has been launched on vaping products duty.  Update for agents   HMRC has recently set up a new service which means that agents to can make a complaint to HMRC online via the government gateway. The complaint can cover their own agent services or be made on behalf of a client. It is no longer necessary to complain via post and agents are encouraged to make complaints going forward via this new service. Agents will need to have the relevant authorisation to act on behalf of their clients recorded with HMRC before using it. New functionality has now been added to the Agent Services Account which now allows agents to change contact details online. Changes can be made to their postal address, email address, business name and phone number. See the updated guidance.  A new service for agents was also launched last month which also allows agents to register employment benefits which will be taxed through payroll from 2025/26 onwards in advance of the move to mandatory payrolling of benefits. Find out what the PAYE for Agents online service is for, what you can do in the service and how to do it. To access this service, the agent must opt in to use the employer liabilities and payments service.   You can use this service to tell HMRC about any employment benefits that will be taxed through your client’s payroll from 2025/26 including:  mileage and motoring expenses;  private medical expenses; and  relocation expenses.  By way of reminder for all tax years up to 2025/26, i.e. until 2024/25, the employer or their agent must continue to submit P11Ds for benefits and expenses that have not been payrolled.  Reasonable care guidance  HMRC has republished its guidance on how to make sure you take reasonable care if you need to send tax returns and other documents to HMRC, and what happens if you do not.  If you do not take reasonable care HMRC will charge penalties for inaccuracies.  HMRC will take your individual circumstances into account when considering whether a taxpayer has taken reasonable care. If the taxpayer has used tax avoidance arrangements, there are different rules about what ‘reasonable care’ is.  HMRC’s Compliance Handbook shows a list of the taxes and documents that penalties for inaccuracies apply to, as well as details of the dates on which these penalties can first apply.  Launch of digital service for voluntary National Insurance contributions  The Government recently launched a new online service for checking if voluntary National Insurance contributions (“NICs”) will increase the amount of state pension. The new digital service is called Check your State Pension forecast and is a joint service by HMRC and the Department for Work and Pensions, which is a fully end-to-end digital solution.  The service will show taxpayers by how much their state pension could increase and details of the voluntary NICs they would need to pay to achieve this. It allows most people under state pension age to view gaps in their NICs record and securely pay voluntary contributions to fill those gaps if it will benefit them. Confirmation that payment has been received and that their NICs record will be updated will also be provided. Individuals can access the Check your State Pension forecast or use the HMRC app.  It is usually only possible to make voluntary NICs for the previous six tax years. However, an extension is currently in place which allows individuals to fill gaps in their NICs record for periods from the tax year 2006/07 up to 2017/18 by making voluntary contributions by 5 April 2025.   Letters to community amateur sports clubs  In recent weeks HMRC has been writing to community amateur sports clubs (“CASC”) asking them to check if they are still eligible to stay within the scheme and avail of its benefits.  To be eligible for the scheme a CASC must:  be open to the whole community - this means that membership and facilities should be open to all without discrimination;  have affordable membership fees  be organised on an amateur basis  have no limit to the number of players a club can pay, as long as the total amount paid to all players is less than £10,000 in a year  have as its main purpose to provide facilities for eligible sports and encourage people to take part.  not exceed the income limit of £100,000 a year from non-member trading and property income;  be managed by ‘fit and proper persons’;  meet the location condition, where the scheme is open to qualifying clubs established in the UK, EU, Liechtenstein, Norway, or Iceland.  If a club still meets the conditions of the scheme, no further action is needed. However, if a club no longer meets the conditions for CASC status, HMRC must be contacted to explain the reasons why it is no longer eligible for the scheme and the date eligibility ended. This can be done by emailing CPCECLPICASC@hmrc.gov.uk or writing to the address at the top of the letter. HMRC will then contact the clubs to discuss the options available.  Latest Agent Update  Agent update: issue 119 is available now. Get the latest guidance and information which this month includes:-  the national insurance contributions checker tool and rate changes reminder;  reporting rules for digital platforms – digital reporting service;  Capital gains tax - common mistakes to avoid;  Research and development tax relief changes from 1 April 2024; and  An update on the VAT DIY housebuilders scheme.   

HMRC has published Revenue and Customs Brief 5/24 Tour Operators’ Margin Scheme for business to business (B2B) wholesale supplies which sets out a change in treatment as a result of a recent Tribunal decision. The ‘non-established taxable person’ (“NETP”) section of its VAT registration manual has also been updated.  TOMS Brief 5/24  The TOMS is a mandatory VAT accounting scheme for businesses involved in certain travel services. Under TOMS, tour operators cannot recover VAT on services they buy but only account for VAT on their profit margin.   As set out in the brief, HMRC’s previous policy on B2B wholesale supplies has now changed following a recent First Tier Tribunal case. This means that tour operators may opt out of TOMS for these supplies. This change is effective immediately. As a result, HMRC’s VAT Notice 709/5 has also been updated to reflect this new policy.  NEPT guidance updated HMRC has recently updated its guidance in the NETP section of its VAT registration manual. The updated guidance is merely a refresher and does not change existing policy. It includes:  A general improvement to overall content and language;  A new page on transfers of a going concern;  A new page on overseas sellers and online marketplaces;   Information on the reverse charge and low value consignments of goods; and  Removal of redundant pages and various references to outdated processes. 

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. The House of Lords Sub-Committee on the Windsor Framework (“WF”) has opened a new inquiry which is examining strengthening Northern Ireland’s voice in the context of the WF and the Committee has also raised concerns about the future supply of veterinary medicines to Northern Ireland. HMRC has also issued a reminder that there are now just a few weeks until the 4 June deadline for making export declarations via the Customs Declarations Service (“CDS”) instead of CHIEF.  Future supply of veterinary medicines to Northern Ireland  The House of Lords Sub-Committee on the Windsor Framework has written to the Northern Ireland Office Minister raising serious concerns about the future supply of veterinary medicines to Northern Ireland.   The Committee recently concluded its inquiry into the potential consequences of the EU Veterinary Medicinal Products Regulation taking effect in Northern Ireland at the end of December 2025, when the grace period is due to end.   Witnesses who appeared in front of the Committee are concerned about the additional costs this would entail for producers and have provided evidence that this could affect the economic viability of supplying the small Northern Ireland market with estimates suggesting that over 30 percent of veterinary medicines could be discontinued for Northern Ireland under the rules.   The Committee is also highlighting the link between animal and human health. Serious concerns have been raised about the potential consequences for public health in Northern Ireland and on the island of Ireland if access to certain veterinary medicines is lost.   The Chair of the Sub-Committee, said, “We are stressing the need for a positive and swift outcome within what is a tight timescale complicated by upcoming elections in the EU and UK.”  Exports to move to CDS by 4 June  A reminder Press Release was published last week reminding businesses that by 4 June, all export declarations must be made via the CDS. Traders can register for CDS via GOV.UK. The 4 June deadline has been moved several times.   According to the Press Release, the CDS provides businesses with a more user-friendly, streamlined system with greater functionality. It has been running since 2018 for import declarations and more than 117 million customs declarations have already been submitted through CDS.  HMRC is working closely with the border industry and directly contacting all declarants and traders to urge them to access the available support now and transfer over to CDS.  Businesses with customs agents should ensure their agent is ready to use CDS. Those without a customs agent must prepare to make their own declarations using software that works with the system.  Miscellaneous updated guidance etc.   Recently updated guidance and publications relevant to EU exit are set out below:  Internal temporary storage facilities (ITSFs) codes for Data Element 5/23 of the Customs Declaration Service;  Authorised Consignee Temporary Storage (ACTS) location codes for Data Element 5/23 of the Customs Declaration Service;  Designated export place (DEP) 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;  CDS Customs Clearance Request Completion Instructions for Inventory Exports;  Find payroll software that is recognised by HMRC; and  CDS Declaration Completion Instructions for Exports. 

The European Commission is seeking feedback on Directive 2011/16 EU on administrative cooperation in the field of direct taxation, or the Directive for Administrative Cooperation (DAC) as it is also known. The call for evidence is part of an overall evaluation of the DAC and is required under Article 27(1) of the DAC. The feedback window closes on 30 July 2024.

Last week, the Institute, under the auspices of the CCAB-I, responded to the Department of Finance’s feedback statement on the Strawman proposal for a participation exemption for foreign dividends. The Institute has been calling on the Government to introduce legislation establishing a territorial basis of taxation in Ireland. The Strawman proposal is the next step in this process. While we welcome this step in the process, we continue to call on the Government for a similar feedback statement on a participation exemption for foreign branch profits. You can read our full response here. Below, we summarise our main points for consideration in advance of finalising the legislation: We recommend that there is no minimum ‘opt-in’ period. Where a company receives a distribution from an in-scope territory, then the default position should be that the distribution is exempt. The dividend exemption should apply to distributions received from companies located in any jurisdiction other than those on the EU list of non-cooperative jurisdictions for tax purposes. Ideally, we would prefer that there is no geographic limitation on the participation exemption. Alternatively, the exemption could be disapplied where the payor company is located in a no-tax/zero-tax jurisdiction or, where the jurisdictional tax rate is less than 9% (borrowing from the OECD Subject-to-Tax rule). We recommend that the reference to “voting rights” is removed. This should not be a condition of the foreign dividend exemption. A bona fide test is not required as it introduces an unnecessary layer of complexity. The existing anti-avoidance provisions in Irish tax law are sufficiently robust. The relief should be available for income distributions received on or after 1 January 2025, i.e. there should be no reference to accounting periods.