In Irish news, the Employers’ PSRI threshold is to increase from 1 October 2024, and we are delighted to confirm that TaxSource Total, the Institute’s free online tax resource, has been updated for Finance Act 2023 and Finance (No. 2) Act 2023. In UK news, as the National Audit Office criticises HMRC performance, additional investment has been announced for HMRC to fund its services and we remind employers and agents that 31 May 2024 is the deadline for providing the 2023/24 P60 to employees. In International news, the EU has reached political agreement on the FASTER withholding tax initiative. Ireland The Employers’ PRSI threshold is to increase from 1 October 2024, as part of a range of measures intended to support small and medium enterprises announced by Government last week. TaxSource Total, the Institute’s free online tax resource, has been updated for Finance Act 2023 and Finance (No. 2) Act 2023. UK Read about the additional investment announced for HMRC to fund its services as the National Audit Office criticises HMRC performance in 2022/23. Friday 31 May 2024 is the deadline for provision of the 2023/24 P60 to employees. International The EU has reached political agreement on the Directive on Faster and Safer Relief of Excess Withholding Taxes (FASTER). 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.

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. 

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.  

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 is also available. And finally, last week the UK’s Foreign Secretary and the European Commission’s Executive Vice-President published a joint UK-EU statement on the meetings of the Partnership Council and Withdrawal Agreement Joint Committee.  Latest meetings of the Partnership Council and Withdrawal Agreement Joint Committee.  Last week the Foreign Secretary Lord Cameron and European Commission Executive Vice-President Maroš Šefčovič published a joint UK-EU statement on the meetings of the Partnership Council and Withdrawal Agreement Joint Committee which took place in Brussels on Thursday 16 May.  On the same day it was announced that the UK and EU also ratified a new set of arrangements which aim to ensure that Northern Ireland traders can fully benefit from the UK’s independent free trade policy. The deal means over 13,000 tons of lamb, beef, and poultry including from key Free Trade Agreement partners, such as Australia and New Zealand, will now be covered by UK tariff rate quotas.  Miscellaneous updated guidance etc.   Recently updated guidance, and publications relevant to EU exit are set out below:-  Search the register of customs agents and fast parcel operators;  UK customs office codes for the Customs Declaration Service;  Apply to use simplified procedures for import or export (C&E48);  Report a problem using the Customs Declaration Service;  Navigate the CDS Declaration Instructions for Final Supplementary Declarations (FSD);  Navigate the Customs Declaration Service instructions for inventory exports;  Navigate the Customs Declaration Service (CDS) Bulk Import Reduced Data Set (BIRDS) Declarations and Customs Clearance Request (CCR) completion instructions for inventory imports; and  Navigate the CDS Declaration Instructions for Exports. 

In this week’s miscellaneous updates, HMRC has published updated guidance on research and development (“R&D”) tax relief and the latest guidelines for compliance published by HMRC examine common errors in capital allowances claims for plant and machinery. The form for reporting CGT on residential property gains has recently been reformatted and HMRC has published updated guidance for employer’s on giving foreign tax credit relief. Foreign businesses can now apply for gross payment status under the construction industry scheme and, finally, HMRC’s 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.  Updated guidance on R&D tax relief  HMRC has published updated guidance on R&D tax relief as follows:-  Research and Development (R&D) Tax Relief: Enhanced R&D intensive support for loss-making SMEs based in Northern Ireland;  This guidance covers claiming enhanced R&D intensive support (“ERIS”) as a loss-making, small and medium sized enterprise (“SME”) based in Northern Ireland. The Research and Development (R&D) Relief (Chapter 2 Relief) Regulations 2024 make provision for loss-making, R&D intensive SMEs with a registered office in Northern Ireland.  SMEs registered in Northern Ireland whose business activities involve no element of trade in goods, and no relevant activities in relation to electricity, can choose to opt out of these provisions by notifying HMRC.  Affected companies are not subject to the restrictions for relief on payments to overseas contractors or providers of externally provided workers and will be able to claim enhanced R&D intensive support, subject to a rolling 3-year limit. Above this limit, relief is available under the new merged scheme.  Enhanced R&D intensive support allows loss-making R&D intensive SMEs to:-  deduct an extra 86 percent of their qualifying R&D revenue costs as an additional deduction in calculating their adjusted trading loss, in addition to the 100 percent deduction which is already available to make a total of 186 percent deduction; and  claim a payable tax credit, which is not liable to tax, and which is worth up to 14.5 percent of the surrenderable loss.  Submit information to support your claim for R&D Corporation Tax reliefs.  The guidance on what detailed information is needed to send to HMRC to support R&D tax relief claims, and when and how to submit it has also been updated.  Guidelines for compliance (“GFC”) 5 - common errors in capital allowances claims for plant and machinery  HMRC recently published GFC 5 which aims to assist taxpayers and agents in managing risks in making a claim for capital allowances on plant and machinery. The guidelines set out areas where errors are commonly made and includes a recommended approach for making a claim and keeping records. According to HMRC, the guidelines do not represent a change in the law or HMRC policy.   In November 2021 HMRC announced that it would be publishing GFC as part of its action being taken in response to its review of tax administration for large businesses. GFCs aim to provide practical guidance and greater transparency on the approaches HMRC regards as higher or lower risk and the associated response.   CGT on UK residential property gains  Disposals of UK residential property must generally be reported to HMRC within 60 days of completion. This deadline applies to anyone UK or non-UK tax resident with transactions able to be reported to HMRC on paper in some cases. Recently, the format of the paper form changed from a PDF to an online form. Once completed, the form should be printed and posted to HMRC, as before.   HMRC has been contacting some taxpayers by email in relation to reporting these transactions. HMRC is following up on these emails by contacting taxpayers by phone in order to gather feedback on the email.  New guidance for employers giving foreign tax credit relief  HMRC has published updated guidance for UK employers on providing foreign tax credit relief (“FTCR”) to employees. If an Appendix 5 arrangement is in place, the employer is able to offset foreign tax deducted from the employee’s pay against tax due under PAYE via FTCR. This offset is limited to the employee’s UK income tax liability.   Foreign businesses and the Construction Industry Scheme (“CIS”)  Businesses based outside the UK can now use form CIS305 to register as a subcontractor and apply for gross payment status under the CIS. 

The deadline for employers to provide employees with their P60 for 2023/24, either on paper or electronically, is Friday 31 May 2024. The P60 summarises the employee’s total pay and deductions for the year.   By that date, employers must give a P60 to all employees on payroll who were working for them on the last day of the tax year (5 April 2024). If an employer is exempt from filing payroll online, copies of P60s can be ordered from HMRC. 

Last week the Financial Secretary to the Treasury announced £51 million in funding for HMRC to help deal with the pressures on phonelines and improve its declining service levels. More information on this is available in a Written Ministerial Statement. The announcement of this investment came just two days before the National Audit Office (“NAO”) published a highly critical report on HMRC customer service.  HMRC has made clear that the additional investment being made does not affect its strategy to become a digital first tax administration and it is therefore seeking cooperation and support on this journey from taxpayers and the Professional Bodies. As previously advised, the Institute will continue to monitor this and will be attending a bespoke meeting with HMRC later this month to discuss the way forward further.   In the meantime, we 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 whilst HMRC plans the way forward  The NAO report reviewing HMRC services in 2022/23 concluded that HMRC’s telephone and correspondence services have been falling below the expected service levels for too long, and that HMRC has not achieved planned efficiencies.  The report continued:   “To achieve value for money HMRC must provide a timely and effective service for those needing help with their tax or benefits, even as it attempts to reduce costs.  Forecasting how far and fast digital services will reduce demand for telephone and correspondence is highly uncertain and, so far, digital services have not had the effect HMRC hoped for. While the total number of telephone calls has reduced, the total amount of time advisers are spending on each call has increased, meaning HMRC’s workload has reduced more slowly than reductions in call volumes.  In the face of funding pressures, HMRC has pressed on with attempts to reduce costs despite its poor performance. HMRC and customers have been caught in a declining spiral of service pressures and cuts.  HMRC has been unable to cope with telephone demand and consequently fallen short in processing correspondence and dealing with telephone calls according to procedures, creating further service pressures. HMRC felt it had no choice but to close phone lines to catch up and compel people to use digital services. It has had to reverse this approach in the face of stakeholder opposition.  HMRC now faces a significant challenge without increasing capacity. Its approach to cutting services as it introduces new digital solutions has been too aggressive. HMRC needs to allow more time for new services to bed in, understand the difference they make, and then make staff reductions when the benefits are demonstrated. Otherwise, services will continue to suffer, and unnecessary service pressures and contact will remain.  HMRC cannot be certain that tax revenue is not suffering as a result. There are opportunities to reduce unnecessary levels of contact and improve efficiency. HMRC must demonstrate it understands how to make these gains, and form more realistic plans for how to deliver these, while ensuring it maintains service levels.” 

Last week, the Government announced a range of measures intended to support small and medium enterprises (SMEs) and to help reduce costs for those businesses. Arguably the most widely discussed measure was the announcement by the Minister for Social Protection, Heather Humphreys TD that the Employers' PRSI threshold will increase from €441 to €496 with effect from 1 October 2024. This will ensure that employers with employees working full time on the national minimum wage will not be required to pay the higher rate of employers' PRSI of 11.05 percent and will instead pay the lower rate of 8.8 percent.  The Minister for Enterprise, Trade and Employment, Peter Burke TD announced the enhancement of a range of business supports as well as the reopening the Increased Cost of Business (ICOB) Scheme until 29 May 2024. He also announced the introduction of a second payment of the ICOB grant for businesses in the retail and hospitality sectors. Further measures announced in the package include increasing the maximum amount available under the Energy Efficiency Grant Scheme to €10,000 and reducing the business contribution rate from 50 percent to 25 percent.  Speaking following the announcement of the measures, the Minister for Finance, Michael McGrath TD said:  "The package of measures being announced today is fair and balanced, and underlines the recognition across government of the crucial role SMEs play in our economy and in communities across Ireland. As Minister for Finance, I very much welcome the progress that has been made in relation to the Tax Debt Warehouse scheme. This has been a vital support to viable businesses during the dark days of the pandemic and in the period since. I would also like to thank the Revenue Commissioners for the positive and proactive approach they have taken to engaging with firms. The success of the scheme is a testament to the collaborative approach taken by a broad range of stakeholders and demonstrates the government’s commitment to supporting our business and enterprise sector." 

TaxSource Total is Chartered Accountants Ireland searchable, complete and freely available online tax resource. This excellent online resource has now been updated for Finance Act 2023 and Finance (No.2) Act 2023. The legislation available includes the Taxes Consolidation Act 1997, the Stamp Duty Consolidation Act 1999, the Capital Acquisitions Tax Consolidation Act 2003, and the Value-Added Tax Consolidation Act 2010.  (Please note that previous users may need to clear their cache (Ctrl+F5) to enable access to the updated content.) 

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).