Revenue has updated its guidance across several areas of Stamp Duty to reflect the recent amendments passed in Finance (No. 2) Act 2023. Stamp Duties Consolidation Act 1999 – Notes for Guidance 2023 Special provisions relating to uncertificated securities Exemptions and reliefs from stamp duty Transfers of land to young-trained farmers – section 81AA Farm consolidation relief – section 81C Levies Schedule 1: Stamp duties on instruments

The 2 percent reduction from 12 percent to 10 percent in Class 1 employee’s national insurance contributions (“NICs”), which was announced in the 2023 Autumn Statement, took effect from Friday 6 January 2024. HMRC has updated rates and allowances: National Insurance contributions to reflect this.  The legislation to enact this and the other NICs changes announced is contained in the National Insurance Contributions (Reduction in Rates) Act 2023 which received Royal Assent on 13 December 2023.   This Act includes the legislation to:   reduce the employee class 1 NIC rate from 12 percent to 10 percent from 6 January 2024;  set the blended rate for directors as 11.5 percent for 2023/24;  reduce the Class 4 NIC rate for the self-employed from 9 percent to 8 percent from 6 April 2024; and  remove class 2 NIC for the self-employed with profits above the lower profits threshold from 6 April 2024.   A further change to the treatment of VAT on sanitary products also took effect from 1 January 2024. 

As always, over the Christmas period, several Tax and Duty Manuals (TDMs) have been updated. Please take note of any areas of particular interest. Key Employee Engagement Programme (KEEP) (updated to reflect Finance Act 2022 amendments following EU Commission approval) Road Haulier Drives (Employees) – Subsistence rates – TDM 05-02-10 (updated for Enhanced Reporting Requirements (ERR)) Salary sacrifice arrangements – TDM 05-01-01k Taxation of Non-Irish Resident Landlords – TDM 45-01-04 The Provision of Free or Subsidised Accommodation – TDM 05-01-01c Special Assignee Relief Programme (SARP) – TDM 34-00-10 (including details of the new online portal for employer certification) Guidelines for Agents or Advisors acting on behalf of taxpayers – TDM 37-00-04b (including linking for ERR and SARP) VAT Notes for Guidance – ( updated to reflect Finance (No. 2) Act 2023) Registration and Filing Guidelines for DAC7 – TDM 33-03-05 Universal Social Charge – TDM 18D-00-01 (updated to reflect Finance (No. 2) Act 2023) Vacant Homes Tax – TDM 11B-01-01 (updated to reflect Finance (No. 2) Act 2023) Defective Concrete Products Levy – TDM 18E-00-01 (updated to reflect Finance (No. 2) Act 2023) Stamp Duty – Further levy on certain financial institutions – Part 9 (updated to reflect Finance (No. 2) Act 2023) Reporting Requirement for Payment Service Providers on Cross-Border Payments (related legislation effective from 1 January 2024) Recognised Clearing Systems – TDM 08-03-04 (updated to reflect Finance (No. 2) Act 2023) LPT – Meaning of a “residential property” – TDM 01-01 Mortgage Interest Tax Credit – TDM 15-01-11B VAT – Electronic Publications; VAT – Supply and installation of solar panels; VAT – Printing and printed matter; VAT – Flat-rate scheme for farmers; VAT – Sale of Live Animals by Auction (Mart) PAYE Regulation 16 – Arrears of pay being paid to an employee who has left an employment

As readers should be aware, the taxation of medical doctors participating in the General Medical Service (GMS) Scheme was high on the Institute’s agenda throughout 2023. In September of last year, we wrote to the Minister for Finance expressing our concerns about the proposal to assess GMS income on the treating doctor rather than as income of the practice, as we were unable to resolve the matter any further through the TALC process (as the matter required legislative amendment). Following our representations, the Minister introduced a Committee Stage amendment to the Finance (No.2) Act 2023 resulting in the introduction of section 1008A TCA 1997. The amendment provides that income received under a GMS contract by doctors in partnership can be treated as income of that partnership once the appropriate elections are made. Readers should note that employed doctors who are not partners in a partnership will taxed under self-assessment rules on GMS income from 1 January 2024. Revenue has now updated its guidance - General Medical Service (GMS) Scheme payments to medical practitioners – TDM 04-01-15 – setting out how medical partnerships can apply the new provision and the time-limits for making the necessary elections.

This week we bring you the most recent news and information bulletin from HMRC and the latest Agent Update 115 was published last month. Readers are reminded that from 1 January 2024, the new reporting rules for digital platforms commenced and HMRC recently launched a new voluntarily disclosure facility to enable taxpayers to pay any unpaid tax on crypto assets.  Agent Update 115  Agent Update: issue 115 is available. Get the latest guidance and information including:  how to help contractors steer clear of tax avoidance schemes;  changes to the Self-Assessment helpline and Agent Dedicated Line;  changes to the process for claiming payment protection insurance tax relief repayments;  preparing for changes for goods moving from the island of Ireland to Great Britain which commence from the end of January 2024; and  national insurance contributions rate changes in 2024.  New reporting rules for digital platforms  Readers are reminded that from 1 January 2024, UK digital platform operators are required to report details of their sellers to HMRC. As a result, HMRC has updated its guidance on selling online and paying taxes. The guidance explains if you regularly sell goods or services through an online marketplace, this activity could be treated as a ‘trade’ for UK tax purposes, and you may have to pay tax on your profits. However, if you are just selling some unwanted items that have been laying around your home, such as the contents of a loft or garage, it is unlikely that you will have to pay tax. If you buy goods for resale or make goods with the intention of selling them for a profit, then you are likely to be trading and will have to pay tax on your profits.  However, if your total income from trading or providing services online was less than £1,000 (before deducting expenses) in any tax year, you are not required to inform HMRC nor pay any tax on the profits (this is due to the Trading and Miscellaneous Income Allowance).  Crypto asset disclosure facility  At the end of November 2023, HMRC launched a new voluntarily disclosure facility to enable taxpayers to pay any unpaid tax on crypto assets. The launch of this facility follows on from the joint statement earlier in November 2023 by the UK Government and 47 other countries, to implement new transparency and information sharing requirements in respect of crypto-asset platforms by 2027 via the Crypto-Asset Reporting Framework. The joint statement confirms the intention of signatories to implement that standard by 2027.   HMRC has now begun sending emails to some taxpayers which it believes has unpaid tax on crypto asset transactions.    

Following the recent Supreme Court decision in Karshan (Midlands) Ltd t/a Domino’s Pizza [2023] IESC 24 (“Karshan”) which ruled that delivery drivers should be recognised as employees, Revenue has updated its Code of Practice on Determining Employment Status (Employed or Self-Employed) – TDM 04-01-17. Several linked TDMs have also been updated and Revenue will be issuing separate guidelines addressing the implications of the judgment. Revenue will also be updating its guidance on the taxation of couriers 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 Office Borders bulletins are also available. We also update you on the rules of origin for electric vehicles and batteries and the latest work of the House of Lords Windsor Framework Sub-Committee. HMRC has also sent an email reminder with useful preparation hints and tips for the first phase of its Border Target Operating Model which takes effect from 31 January 2024 for goods imported directly into Great Britain from Ireland.  UK and EU agreement on rules of origin for electric vehicles and batteries extended to  2026  The UK and EU have agreed to extend the Trade and Co-operation Agreement rules of origin for electric vehicles and batteries until 31 December 2026. This was confirmed by the release of a UK Press Notice and is confirmed in the Partnership Council decision.  House of Lords Windsor Framework Sub-Committee update  The House of Lords Windsor Framework Sub-Committee (formerly known as the House of Lords Protocol Sub-Committee) recently wrote to the Foreign Secretary asking for greater clarity on the regulatory divergence issues arising from the Windsor Framework, following consideration of evidence it received as part of the recent inquiry.  In November 2023, the Committee launched a short inquiry into regulatory divergence arising from EU and domestic legislation, in the context of the Windsor Framework and took evidence from academic, policy and legal experts, a range of business organisations, farming representatives and the government.  In its letter, the Committee draws attention to a number of key issues which were highlighted in the evidence it received, including:  The impact of regulatory divergence;  Potential opportunities of regulatory divergence;  Benefits of the Windsor Framework relating to regulatory divergence;   Potential risks relating to regulatory divergence; and  Mechanisms for managing regulatory divergence.  Miscellaneous updated guidance etc.   The following updated guidance, and publications relevant to EU exit are available:-  External temporary storage facilities codes for Data Element 5/23 of the Customs Declaration Service;  Bringing commercial goods into Great Britain in your baggage;  Notices made under the Customs (Import Duty) (EU Exit) Regulations 2018;  Restricted and controlled goods for merchandise in baggage;  Notices made under the Customs (Export) (EU Exit) Regulations 2019;  Declare commercial goods you’re bringing into Great Britain in your accompanied baggage or a small vehicle; and  Data Element 2/3 Documents and Other Reference Codes (National) of the Customs Declaration Service (CDS). 

The Minister for Finance, Michael McGrath TD issued a press release welcoming the implementation of the EU Minimum Taxation Directive (Pillar Two) into Irish law. The legislation will see Irish companies who are part of multinational enterprises with global turnover in excess of €750 million paying a minimum effective rate of taxation of 15 percent on their profits. While over 99 percent of companies in Ireland will be unaffected by the rules, the legislation represents the most significant update to tax law in recent years. Commenting on the new rules, Minister McGrath noted: “In October 2021, Ireland, along with almost 140 other jurisdictions, signed up to the OECD Two Pillar solution to address the tax challenges arising from the digitalisation of the economy. This has been described as a once-in-a-generation agreement and the pinnacle to the process of international tax reform that began over a decade ago. The rules become effective today in Ireland and in many other jurisdictions across the world. By implementing the global agreement on minimum effective corporate tax, Ireland demonstrates our continuing commitment to agreed, multi-lateral international tax reforms. The decision to join this global agreement was not taken lightly. Ultimately, it is our assessment that the positive effects will be greater than the challenges, as the agreement has the potential to bring much-needed stability to the international tax framework after the turbulence and uncertainty of recent years, safeguarding our future competitiveness by providing a sound and stable basis for inward investment into Ireland in the long-term. It is important to note that Revenue estimates that there may be approximately 1,600 multinational entity groups with a presence in Ireland that will come in scope of Pillar 2. The vast majority of businesses, those with revenues of less than €750 million per annum, will continue to pay corporation tax at the 12.5% rate. It is my firm belief that a key benefit of a more settled international tax policy environment will be an increased scope to focus on domestic tax policy in the enterprise sector, with several initiatives to improve aspects of the overall tax system announced in Budget 2024. These include an increase in the R&D tax credit from 25% to 30% which will incentivise businesses of all sizes to invest in their future productive capacity, as well enhancements to the Employment Investment Incentive, Start-up Capital Incentive and Start-Up Relief for Entrepreneurs schemes and a new lower rate of CGT for angel investors.”

Last year, the Exchequer recorded a surplus of €1.2 billion, down €3.8 billion from 2022. Although there was a growth in tax revenues, this was offset by increases in public expenditure as well as the transfer of €4 billion to the National Reserve Fund. Commenting on the figures, Minister for Finance Michael McGrath TD noted: “The end-year figures show an Exchequer surplus of €1.2 billion in 2023. Tax receipts came in largely as anticipated and reflect the underlying strength of our economy, especially the labour market. It must be acknowledged, however, that the budgetary surplus includes windfall corporation tax receipts which, if excluded, would result in an underlying deficit. In this regard, it is important to stress the more modest growth rate in this revenue stream over the past year as well as the inherent volatility in these receipts. Indications are that pandemic-era surge in exports in a small number of sectors – which drive corporate profitability in Ireland – are now unwinding; this would mean more modest growth in corporation tax receipts in the coming years. These developments underscore the importance of ensuring that permanent fiscal commitments are not made on the basis of transitory revenues. The establishment of the two new-long term savings vehicles (the Future Ireland Fund and the Infrastructure, Climate and Nature Fund) will allow us to prepare for future structural challenges while limiting our exposure to volatile windfall revenues. At the same time, Government continues to invest in public services and in boosting the productive capacity of our economy.” For more information, you can read December’s Fiscal Monitor.

Last week, Revenue published preliminary headline results for 2023 showing record-breaking total collections for tax and duties of €87.2 billion, as well as a further €26 billion on behalf of other government departments (including local property tax and PRSI). Income tax, corporation tax and VAT were the largest contributors to the tax take in 2023 at €32.9 million, €23.8 million and €20.3 million respectively, all higher than 2022 figures. The next highest contributor was excise at €5.6 million. Combatting non-compliance remains a key priority for Revenue, as well as confronting taxpayers seeking unfair advantages by means of various tax-avoidance schemes. In addition, administering the new Pillar Two legislation (ensuring certain multinational enterprises pay a minimum level of taxation) will be a priority. Businesses will also be required to settle warehoused debt by 1 May 2024. At the time of writing, debt warehoused under the Debt Warehousing Scheme stands at €1.4 billion. In their press release, Revenue noted: “The past four years have been a period of exceptional disruption in which we suspended our enforcement activity for a considerable period of time. This has had an impact on timeliness of payment and the levels of debt. At the end of 2019 the debt available for collection was €0.9 billion compared to €1.4 billion now. Our Debt Management System, which we developed in 2019, is now fully deployed in dealing with outstanding liabilities. Where taxpayers experience challenges in being timely compliant, we strongly encourage them to engage with us as soon as such difficulties start to emerge so that a mutually agreeable solution that takes account of their financial circumstances can be agreed. In the absence of meaningful and timely engagement with Revenue, Revenue will proceed with appropriate collection and enforcement action to recover the debt.”

As the new year commences, so too do the new obligations for employers under the Enhanced Reporting Requirements. As previously advised, all employers are now required to make returns of certain non-taxable benefits and expenses in real-time. Revenue has advised that “a service for compliance approach” will be taken to 30 June 2024. During this period, Revenue will not be operating compliance programmes in relation to ERR and so we understand that Revenue will not seek to apply any penalties for non-compliance during this time.

Revenue has published a new Tax and Duty Manual to provide guidance for Payment Service Providers (PSPs) who have an EU Cross-Border Payments (CESOP) reporting obligation in Ireland. The manual includes: guidance on the registration process and procedures for resident and non-resident PSPs for the purpose of CESOP reporting in Ireland, an outline of the process for filing CESOP reports in Ireland, and an outline of the technical specifications required for filing CESOP reports in Ireland. The registration facility for CESOP filers will open in Ireland on 1 February 2024.