Revenue has updated the Tax and Duty Manual regarding Controlled Foreign Company (CFC) Rules. The manual has been updated to reflect the Finance (No.2) Act 2023 amendment to section 835YA TCA 1997 concerning Irish defensive measures in respect of the CFC rules. Revenue has advised that this manual will be further updated to reflect Pillar Two related consequential amendments made to the CFC rules in Finance (No. 2) Act 2023. 

Revenue has updated the Tax and Duty Manual regarding the recovery of VAT on motor vehicles. The manual has been updated to provide further information on vehicle conversions. 

Last week we examined option one in HMRC’s long planned consultation on “Raising standards in the tax advice market” which proposes mandatory membership of a recognised professional body and is clearly HMRC’s preferred option. This week we are seeking your feedback on option two, a hybrid regulatory model in of joint HMRC and industry enforcement and encourage you to share your views with us by Tuesday 7 May 2024. Next week’s edition of Chartered Accountants Tax News will set out more information on the final option, regulation by a separate statutory government body in addition to approaches to strengthen the controls on access to HMRC’s services for tax practitioners. Joint HMRC and industry enforcement Under this option, HMRC and industry would monitor and raise standards of the market. Unaffiliated tax practitioners would have to be supervised by HMRC and professional body members would be subject to the supervisory requirements of their professional body. Note that this option is unlikely to beHMRC’s preferred option. More information on this option is set out in Chapter 6. Tax practitioners in scope of the regulatory framework would be required to become and remain a member of a recognised professional body or be supervised by HMRC to provide tax advice and tax services. According to the consultation document, this would provide greater market flexibility as tax practitioners would have a choice of either becoming a member of a professional body or being unaffiliated with any professional body and instead being supervised by HMRC as a tax practitioner. Professional bodies’ responsibilities would remain the same, which includes maintaining oversight and supervision for their members and ensuring they meet the appropriate standards. They would also remain responsible for acting where members are found to be in breach of the standards required of them. This would build on the supervisory role professional bodies currently undertake to maintain professional standards amongst tax practitioners. They would not be expected to oversee the unaffiliated market. HMRC believes that as for option one, this would have minimal impact on current professional body members who meet expected standards. Under this approach HMRC would take a greater role in maintaining and raising standards of those tax practitioners who are unaffiliated with a recognised professional body. HMRC would undertake checks of those being supervised, beyond those being proposed under mandatory registration (see Chapter 5). Checks could include adherence to the ‘Standard for Agents’ and/or complete and certify that they have met appropriate continuing professional development requirements. The practitioner would be expected to declare annually that they continued to meet requirements. Additionally, HMRC would carry out ongoing risk-based checks to ensure tax practitioners continued to meet requirements and would be responsible for enforcement when tax practitioners do not comply with standards. This approach would therefore require investment to expand HMRC’s role beyond its current role of administering the tax system and supervising some tax practitioners for AML. The ability of this approach to raise standards in the market will be dependent on the supervisory role undertaken by HMRC. However, HMRC taking on a strong supervisory role of tax practitioner professional standards whilst administering the tax system could create a conflict of interest. This is because HMRC could be perceived as acting as both judge and jury, as the department would be responsible for checking both tax compliance and setting and enforcing standards of tax practitioners, for example, where there is a difference in interpretation of the law, or where the tax practitioner considers they are acting in the best interest of the client even though HMRC disagrees with the outcome. Other risks include the added complexity in the market for example, the potential for there to be different requirements and levels of oversight and enforcement for HMRC-supervised tax practitioners compared to professional body-supervised tax practitioners. This could cause confusion and complexity for clients and start a race to the bottom if HMRC and professional bodies had differing requirements. The government would be cautious about creating a dual system of regulation that could undermine the objective of supporting consistent standards and enforcement in the pursuit of creating a level playing field.

Revenue has published a new Tax and Duty Manual to provide guidance on the VAT treatment appropriate to Deposit Return Scheme (DRS) refunds. The DRS came into operation on 1 February 2024 and provides for a small refundable deposit on drink products supplied in plastic bottles and aluminium or steel cans. The deposit is refunded to a person who returns an empty container to the DRS for recycling or reuse.  Section 92A VATCA 2010 legislates for the VAT treatment of the DRS. Because it is not possible for businesses in the supply chain (e.g. manufacturers, importers, wholesalers, retailers) to know at the time they make their supplies whether or not containers will eventually be returned when they are empty, no VAT arises on supplies of drink products in the supply chain. VAT on the deposit only arises where the container is not returned under the DRS, in which case it is the Scheme Operator, Re-turn, who is liable to account for and pay the tax. Re-turn was appointed by the Minister for the Environment, Climate and Communications to operate the DRS.  

Revenue has updated the Tax and Duty Manual which provides guidance on EU Cross-Border Payments (CESOP) registration and filing. The updated manual contains detailed guidance on the process for filing CESOP reports using Revenue Online Services (ROS). The filing facility for CESOP in ROS opened on 1 April 2024.  With a view to assisting Payment Service Providers (PSPs), or their designated filing intermediaries, with a CESOP reporting obligation in Ireland, the manual provides:  Detailed guidance on the process for registration as a resident or non-resident PSP for the purpose of CESOP reporting in Ireland;  Detailed guidance of the process for filing CESOP reports in Ireland;  Details of the technical specifications required for filing CESOP reports in Ireland.  The registration facility for CESOP filers opened in Ireland on 1 February 2024.  

The Department of Justice has published guidelines for designated persons supervised by the Anti-Money Laundering Compliance Unit. The guidelines provide assistance to those persons in understanding and meeting their obligations under the Criminal Justice (Money Laundering and Terrorist Financing) Act 2010, as amended.   The Department of Justice welcomes comments on the guidelines and will consider feedback received prior to 30 June 2024 as part of its first review process. Further information is available on gov.ie. 

Revenue has published a new Tax and Duty Manual to provide guidance on outbound payments defensive measures contained in Chapter 5 Part 33 TCA 1997, as introduced in Finance (No.2) Act 2023. The aim of these defensive measures is to prevent double non-taxation.  Chapter 5 Part 33 TCA 1997 provides for the implementation of defensive measures, by way of withholding taxes, on outbound payments of interest and royalties, and on the making of distributions, in certain circumstances. The measures apply to payments or distributions by Irish resident companies, or payments by Irish branches of non-resident companies, to associated entities who are resident, or situated, in specified territories.  

In Irish news, Revenue has written to taxpayers in relation to arranging repayment of warehoused debt and the Minister for Justice has published a review of the office of the Sheriff. In UK news, hear more about HMRC’s decision to halt its plans to make permanent restrictions to its helplines and we want to hear from you about HMRC’s Raising Standards in Tax Advice consultation for regulation of the UK tax agent market. In International news, the OECD Inclusive Framework continues to make steady progress on the implementation of the rules to tackle international tax avoidance.  Ireland Revenue has written to taxpayers in relation to arranging repayment of warehoused debt. The Minister for Justice has published a review of the office of the Sheriff. UK Hear more about HMRC’s decision to halt its plans to make permanent restrictions to its helplines. We want to hear from you about HMRC’s Raising Standards in Tax Advice consultation for regulation of the UK tax agent market. International The OECD Inclusive Framework makes steady progress on efforts to combat treaty abuse. 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.

Last Tuesday 19 March 2024, HMRC announced a range of permanent changes to helpline services. However, the next day HMRC announced that the changes were being halted while HMRC “considers how best to help taxpayers harness online services”. Whilst the decision to further consider this issue is welcome, it is disappointing that feedback provided by the Institute and other Professional Bodies which raised various concerns about the proposed changes appears to not have been fully considered before the formal announcement was made last week and subsequently reversed. The Institute will engage with HMRC as it considers the way forward. Members are encouraged to provide feedback on HMRC services on a regular basis.

Revenue’s Tax and Duty Manual ‘C&E TAN Reports available on Revenue’s Online Service (ROS) for C&E Traders’ has been updated to include Combined Taxes Report for Importer & Payers Excise Duty Entries (EDE's) declarations.  See eBrief 091/24 for more details. 

Revenue has updated the Tax and duty manual (TDM) for Import Payment Methods to include -   postponed VAT contact details for related queries VRT payment methods to include a link to the VRT payments in ROS guide and, a link to C&E reports available in ROS along with some other minor text changes.

Earlier this month we highlighted in our Spring Budget 2024 coverage that HMRC had finally launched its long planned consultation on “Raising standards in the tax advice market” which examines three options to strengthen the tax agent regulatory framework in the UK and would also require tax advisers to register with HMRC if they wish to interact with HMRC on a client’s behalf. This consultation will close on 29 May 2024. This week we take a look at the first option set out in the consultation for potential regulation of paid tax agents, mandatory membership of a recognised professional body, and encourage you to share your views by Tuesday 7 May 2024 to enable members views to be reflected in the Institute’s  response. Next week will set out more information on option two.  Mandatory membership of a recognised professional body   This option is clearly the option which HMRC are leaning towards, but they recognise that this will depend on “the capacity and willingness” of the Professional Bodies to do so, including this Institute.   Chapter 7 (including questions 11-18) of the consultation examines this option in detail. This would involve mandatory membership of a recognised professional body with professional bodies monitoring and enforcing standards of their members and raising those standards where necessary.   Taking forward this approach would mean tax practitioners must hold membership of a professional body that is recognised as having an adequate minimum standard for its members and an adequate supervisory framework to monitor and enforce that standard.   The government considers this approach to be proportionate to the problems observed and opportunities afforded. In its view it “minimises extra costs and burdens to tax practitioners who currently meet expected standards and most professional bodies currently deliver the 3 components of a regulatory framework: subjecting their tax practitioner members to minimum standards, monitoring and enforcement action; and offering routes for customer support.”   “The government recognises there may be costs for the professional bodies in extending their supervisory frameworks to new members, with the potential for these to be passed on to clients via increased membership fees. The government will explore how best to mitigate this.  The government considers that enhancing and extending the supervisory framework operated by the professional bodies to this population of tax practitioners could achieve its aim of raising standards. However, it is dependent on the willingness and capacity of professional bodies to both strengthen the regulatory framework to raise standards of their current members who do not meet expected standards and extend membership to new members.”  The consultation also presents evidence in Annex C which according to HMRC shows that there are levels of non-compliance amongst taxpayers represented by affiliated tax practitioners. “This is why the government is looking to explore whether the regulatory frameworks currently in place across professional bodies are strong enough to raise standards in the tax advice market if the government chooses to proceed with this approach.  The government therefore wishes to work with professional bodies to understand their capacity and capability to raise standards across the market and seeks views on key questions to inform how mandatory professional body membership could be implemented in a way that best meets the objectives.  Findings from this consultation will inform whether the government pursues the introduction of mandatory professional body membership or whether another approach, such as regulation by a government body (option 3) should be pursued.”