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.

Revenue has confirmed that, as of 9 May 2024, almost 90 percent of the €1.65 billion debt warehoused at the beginning of April 2024 has either been paid in full, secured under phased payment arrangements (PPAs), or included within a PPA which is in the process of being finalised. The balance of warehoused debt not paid or included in a PPA is €200 million. Revenue has issued circa 11,700 demands to taxpayers with warehoused debts exceeding €500.  Revenue data confirms that 775 taxpayers (10 percent) have outstanding liabilities in excess of €50,000, amounting to €130 million, with a further 3,670 (30 percent) owing between €5,000 and €50,000. The remaining 60 percent (7,279) of taxpayers owe between €500 and €5,000. The demand notice outlines the tax(es) due by the taxpayer and requests they engage with Revenue to formulate a payment plan within seven days. Continued non-engagement will result in the issue of a final demand at the end of the seven-day period and the warehoused debt will immediately be subject to standard enforcement proceedings. Revenue has acknowledged the high level of engagement from businesses and their agents throughout the duration of the Debt Warehouse Scheme and, in particular, in the lead up to the 1 May 2024 deadline, and will continue working with businesses to finalise payment plan applications which are currently in progress.

Representatives from Revenue’s Collector General’s Division (CG), attended the Oireachtas Joint committee on Enterprise Trade and Employment to discuss the Small Companies Administrative Rescue Process (SCARP). Revenue re-iterated its commitment to being a constructive participant in SCARP, reflected by a dedicated team within CG for all SCARP related queries. Further information is available on data.oireachtas.ie.

Revenue has updated the Tax and Duty Manual which provides guidance on determining which instruments can be treated as equivalent to an Additional Tier 1 instrument. Under the CRD IV (Capital Requirements Directive and Capital Requirements Regulation) Tier 1 capital, the primary funding of a bank, is made up of two components, one of which is Additional Tier 1 (‘AT1’) capital. The CRD IV sets out the features that an AT1 capital instrument must possess. Section 845C TCA 1997 provides clarity on the tax treatment of AT1 capital instruments and other substantially similar or ‘equivalent’ instruments. This manual explains the implications of section 845C in relation to certain capital instruments.

In Irish news, April Exchequer figures show solid tax revenues and Revenue provides an update on the Debt Warehousing Scheme. In UK news, HMRC has published updated guidance on tax relief for travel expenses and the new UK carrier scheme for the movement of consumer goods from Great Britain to Northern Ireland from 30 September has been launched. In International news, the joint OECD-UN initiative, Tax Inspectors Without Borders, has published its annual report.  Ireland  1.   Revenue has provided an update regarding payment arrangements agreed to address warehoused debt. 2.   April Exchequer results show solid tax revenues.  UK 3.   In this week’s miscellaneous updates, read about the updated guidance published by HMRC on tax relief for travel expenses. 4.   This week’s EU exit corner features the launch of the new UK carrier scheme which will provide authorisation to move post and parcels to consumers in Northern Ireland from Great Britain from 30 September 2024.  International 5.   The joint OECD-UN initiative, Tax Inspectors Without Borders, has published its annual report.  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. 

in this week’s miscellaneous updates, HMRC has clarified the rules for tax relief on travel expenses in the context of hybrid and flexible working and the Government is holding events over the next few weeks to discuss changes to the tax rules for those who are UK tax resident but not UK domiciled. HMRC’s latest schedule of live and recorded webinars for tax agents is available for booking. and the Labour party has published details of its plans to close the tax gap. HMRC has advised that there is likely to be delays in the provision of information to calculate overlap relief for the transitional tax year for basis period reform 2023/24 and finally, the latest News and Information Bulletin from HMRC is available.  Tax relief on travel expenses  HMRC recently updated its guidance on ordinary commuting and private travel in order to provide clarity on the rules for hybrid and flexible working. The guidance has had a new section added at 3.39.   Essentially the updated guidance confirms that there is no change in treatment – where an employee works from home on a flexible or hybrid basis, this will not be treated as a base office. The employee will still have a base office meaning that journeys from home to that location are still ordinary commuting and do not qualify for tax relief.  Events to discuss changes to non-domiciled taxation  In the Spring Budget on Wednesday 6 March, the Chancellor announced that from 6 April 2025, the remittance basis for UK tax resident but non-UK domiciled individuals will be replaced by a new tax regime. The concept of domicile as a connecting factor in the tax system will be replaced by a system based on tax residence.  Over the course of the next few weeks, the UK Government is holding a series of in person and online events for stakeholders to provide comments on the proposed changes. Anyone wishing to attend an event should register their interest - details of the events are available on GOV.UK.  Labour Party’s tax plans to close the tax gap  The Labour Party recently published its plan to close the tax gap in the event that it becomes the next government. The plans set out how the party would:-  boost HMRC’s compliance activities to tackle non-compliance;   invest in technology transformation to improve the taxpayer’s experience and reduce the tax gap; and   make legal changes to restore a genuine deterrent to tax evasion.   Disappointingly, the plans do not refer to increasing HMRC’s customer service resources.  Labour has also appointed an expert panel to advise it on how to improve compliance and modernise HMRC. The panel includes Sir Edward Troup, former HMRC Permanent Secretary and former Treasury special adviser on tax and Bill Dodwell, former tax director of the Office for Tax Simplification.  Delays in obtaining overlap details from HMRC  The tax year 2023/24 is a transition year as part of basis period reform. As a result, unused overlap relief brought forward must be used in 2023/24. From 2024/25, all unincorporated businesses will be assessable on the tax year basis.  Chartered Accountants Ireland previously recommended that HMRC develop a service to enable taxpayers to calculate their unused overlap relief where that information was not available to them. This service commenced from September 2023 with requests being able to be made for information from HMRC via an online service. Not surprisingly, HMRC has recently seen a spike in demand for this service and has now issued a warning in the most recent agent update that requests are likely to take longer to fulfil. 

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. Ahead of the next phase of the Windsor Framework which commences from 30 September 2024 for the movement of consumer parcels from Great Britain (“GB”) to Northern Ireland (“NI”), HMRC has published guidance on the new UK carrier scheme which will be used to provide authorisation to move such parcels. The UK’s Domestic Advisory Group has published various updates, including a request for new members. And finally, HMRC has sent a reminder email about the benefits of joining the UK Internal Market Scheme which provides authorisation to allow trusted traders to declare eligible goods 'not at risk' when moving them from GB to NI.  The UK carrier scheme   HMRC has published guidance on how to apply for the UK carrier scheme which will be used to provide authorisation to move consumer parcels from Great Britain to Northern Ireland when the next phase of the Windsor Framework takes effect from 30 September 2024. Carriers will first need to check if they can apply for the scheme which will also require an EORI number starting GB or XI.  Proof of a permanently established Northern Ireland business address will also be needed. If a business is not established in Northern Ireland, the address of the indirect customs representative in Northern Ireland will instead be required. Proof of business address in Great Britain will also be needed.  Applications for authorisation are now open. More information is available in the guidance as follows:-  Apply for the UK Carrier Scheme;  Sending parcels to and from Northern Ireland; and  Check if you can apply for the UK Carrier Scheme.  UK Domestic Advisory Group (“DAG”) update  The UK DAG’s Priorities report has been published and is accompanied by the following statement from its Executive Council which sets out the report’s key messages:-  “Key messages   The UK Trade and Cooperation Agreement (“TCA”) DAG representing businesses, trade unions and civil societies, has published its first report.   The report highlights short-term TCA implementation issues, priorities for the forthcoming review of the TCA and opportunities to develop the agreement further.   The UK DAG is calling on the EU Commission and UK Government to heighten their engagement and regulatory cooperation on a range of issues including the energy and climate change obligations set out in the TCA, Level Playing Field commitments, trade and customs facilitation, and business and labour mobility matters, including on using e-gates and pragmatic implementation of the EU’s Entry Exit Scheme.”  The UK Government is inviting expressions of interest by 19 June 2024 to join the UK DAG. Chartered Accountants Ireland is currently a DAG member. New applicants and existing members will be considered against the same eligibility criteria. Applicants in this campaign will be notified after the current expression of interest exercise has closed.   Miscellaneous updated guidance etc.   Recently updated guidance, and publications relevant to EU exit are set out below:-  Customs, VAT and excise UK transition legislation from 1 January 2021;  Reference Document for The Customs Tariff (Establishment) (EU Exit) Regulations 2020;  Reference Document for The Customs (Origin of Chargeable Goods) (EU Exit) Regulations 2020;  Reference documents for The Customs (Reliefs from a Liability to Import Duty and Miscellaneous Amendments) (EU Exit) Regulations 2020;  Reference document for authorised use: eligible goods and authorised uses;  Reference Documents for The Customs (Tariff Quotas) (EU Exit) Regulations 2020;  Border Force customs offices list;  Declare your goods to authorised use and completing authorised use; and  Moving processed or repaired goods into free circulation or re-exporting them. 

Do you use HMRC online services? Don’t be caught out by the planned downtime to some services. HMRC are warning about the non-availability of specific services on the HMRC website, a range of services are impacted. Check the relevant page for information on planned downtime.  

Check out the latest items on the Agent Forum. Remember, in order to view each item, you must be signed up and logged in.   All agents, who are a member of a professional body, are invited to join HMRC’s Agent Forum. This dedicated Agent Forum is hosted in a private area within the HMRC’s Online Taxpayer Forum. You can interact with other agents and HMRC experts to discuss topical issues and processes. 

A joint initiative between the OECD and the United Nations Development Programme continues to make great progress, according to the Tax Inspectors Without Borders (TIWB) Annual Report. The TIWB initiative has been running for over nine years now, resulting in over US$6.05 billion in additional tax assessments in developing countries worldwide. The TIWB initiative assists tax authorities in developing countries build capacity by providing practical, hands-on assistance auditing multinational enterprises.

In a recent visit to Ardmore Studios, the Minister for Finance highlighted recent improvements to the film and television tax incentive section 481 TCA 1997. Readers are reminded that in March 2024 the Minister signed two commencement orders to increase the cap on eligible expenditure from €70 million to €125 million and to extend the scheme to 31 December 2028. Commenting on the visit, the Minister stated: “It is fantastic to be able to see first-hand some of the amazing work being undertaken within our film sector. The industry in Ireland has seen great success in recent years and Irish production companies and talent have been consistently at the forefront of the conversation internationally when it comes to some of the biggest awards the industry has to offer. This has been a great source of pride for Ireland and I believe the recent changes to section 481 will help us capitalise on this recent success and further promote Irish culture internationally and enhance our reputation as a centre of excellence for screen production.”