After some weeks of speculation, the Minister for Finance, Michael McGrath TD, has announced that the interest rate applicable to warehoused debt will be reduced from 3 percent to 0 percent. Revenue has confirmed that, where a taxpayer has already paid warehoused debt subject to interest at 3 percent, they will get a refund of that interest. Pending the legislative change, Revenue has confirmed that it will operate the reduced interest rate on an administrative basis.   Minister McGrath also noted the flexibility in the approach Revenue is taking in working with taxpayers in relation to warehoused debt. Such flexibility will be applied on a case-by-case basis and could include the extension of payment arrangements beyond five-years and the removal of the requirement to make an initial downpayment.  As previously reported, taxpayers availing of the Debt Warehousing Scheme (DWS) have until 1 May 2024 to either pay their warehoused debt in full or engage with Revenue on addressing the debt, including arrangements for a Phased Payment Arrangement (PPA). Taxpayers must continue to file their current tax returns and pay current liabilities as they fall due to remain in the DWS and benefit from the 0 percent interest rate and flexible payment options. Failure to adhere to these conditions will result in the revocation of the warehouse facility, which will result in the imposition of the standard interest rate of 10 percent, backdated to when the debt arose, and the immediate enforcement of all outstanding debt, including interest.  Commenting on the change to the scheme, Minister McGrath stated:  “This Government is acutely aware of the ongoing cost pressures faced by businesses and is determined that viable businesses are given every chance to succeed in a challenging trading environment.  Acknowledging this, I have today announced that the interest rate applicable to outstanding warehouse liabilities will be reduced from 3 percent to 0 percent. I will be bringing forward the necessary legislation to give effect to this and Revenue has confirmed that it will implement the 0 percent on an administrative basis in the meantime. Where a business has already paid warehoused debt, which was subject to interest at 3 percent, it will get a refund of that interest. This will ensure that all taxpayers are treated fairly.  My Department has engaged extensively with Revenue on this matter and I welcome their statement in relation to flexibility on Phased Payment Arrangements in respect of warehoused debt including offering extended durations for payment and accepting much reduced, or minimal, levels of down payment.  Although the total debt warehoused has decreased by €1.4 billion since January 2022, €1.72 billion remains outstanding. I also note that the number of businesses in the warehouse has reduced from approximately 105,000 at its peak to just under 57,500 and this demonstrates that businesses are doing their best to pay the amounts due but some businesses need additional space and time to address their liabilities.  Warehoused debt arose during the periods when businesses were significantly impacted by public health restrictive measures imposed during the COVID-19 pandemic. These changes to the scheme have been agreed in recognition of the unique nature of the warehoused debt and in light of the Government intention to support otherwise viable businesses to continue to trade while having the opportunity to reduce their warehoused liabilities in a structured and manageable way.  The key message is that businesses should engage with Revenue: Businesses availing of the Tax Debt Warehousing scheme need to engage with Revenue prior to 1 May 2024. To avail of the flexible approach to tax debt warehousing we are outlining today, they must also file their current tax returns on time and meet their current tax liabilities as they fall due.  As the Revenue statement said, Revenue will be pragmatic and flexible in relation to the payment plans on warehoused debt and will work with businesses in the scheme so that they can secure the viability of their business into the future.”  Speaking about Revenue’s approach to the payment of warehoused debt, Revenue’s Collector General, Joe Howley, said:  “Revenue has a proven track record in successfully agreeing flexible payment arrangements and over 2,100 businesses have already entered payment arrangements for an aggregate €158 million of warehoused debt.  The Debt Warehouse Scheme was an unprecedented measure introduced in an exceptional period to give viable businesses an opportunity to survive an emergency. Many of the businesses involved had never before built-up debt with Revenue. We are firmly committed to supporting viable businesses that have warehoused debt.   We will provide businesses, having regard to the circumstances of each individual business, with every possible flexibility in managing the payment of their warehoused debt, including the level of down payment, if any, to commence the payment arrangement, an extended payment duration, and the availability of payment breaks and payment deferral if temporary cash flow difficulties arise during the arrangement term.  The essential conditions for success are that current returns and payments are kept up to date and that there is engagement with us about their plans to deal with the warehoused debt.  We want viable businesses to survive and thrive. The purpose of the supports, such as the Wage Subsidy Schemes and the Debt Warehouse Scheme, was to maintain viable businesses and support employment. The success of those supports is clear. We recognise that most businesses continued to be timely compliant through the period and many have paid some or all of their warehoused debt. We are determined that, as we work through the warehoused debt, we will continue to support viable business.  I therefore encourage individual businesses to get ready now and engage with Revenue on addressing their warehoused debt, having regard to their individual circumstances. We are ready to work with businesses so that they can secure the viability of their business into the future, whilst ensuring that their current tax liabilities are filed and paid on time.”  Revenue guidance will shortly be updated to reflect the change announced today. In the interim, an information booklet outlining possible payment options for warehoused debt is available here.  

In Irish news, the CCAB-I responds to the consultation on the taxation of share-based remuneration and Revenue launches a PAYE taxpayer information campaign. In UK news, we remind you that new customs rules for certain imports into Great Britain came into effect this week and HMRC publishes information on claims for overpaid NICs. In International news, the OECD considers changes to the definition of permanent establishment.    Ireland The Institute, under the auspices of the CCAB-I, has responded to the consultation on the taxation of share-based remuneration. Revenue has launched a public information campaign to raise awareness among PAYE taxpayers about claiming the range of tax credits and reliefs available. UK New customs rules for certain imports into Great Britain came into effect this week. HMRC has published information on claims for overpaid National Insurance Contributions. International  The OECD considers changes to the definition of permanent establishment.   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.

Many of you will be aware that the 2022/23 online self-assessment (“SA”) filing deadline is later this week on Wednesday 31 January 2024 which is also the deadline for paying any balancing payment of income tax and Class 4 National Insurance for 2022/23 and the first payment on account for 2023/24. HMRC has issued a reminder that taxpayers can enter into a payment plan to arrange time to pay their outstanding tax bill (broadly, this can be used where the taxpayer owes less than £30,000). The guidance on self-assessment for postmasters affected by the Horizon scandal has also been updated. Reminder: we’d still like to hear from you about the impact of HMRC’s helpline restrictions on filing 2022/23 SA returns by the deadline. Please get in touch when you get the opportunity to do so as we will be accepting feedback into the early weeks of February 2024. 

The minutes from the 124th Joint Vat Consultative Committee meeting, which Chartered Accountants Ireland is represented on, have been published. HMRC has introduced a new form for appealing corporation tax penalties and we update you below on using the agent reference number when a payment is to go to a nominee. HMRC has published initial information on how employers and employees can claim back national insurance contributions previously paid as a result of a recent Upper Tribunal decision (see below) and a consultation has been opened on the draft IR35 (off-payroll working rules) legislation changes which aims to enable taxes already paid by individuals to be deducted when recovering the tax due under PAYE. In Scotland, the Scottish Government has published a draft Statutory Instrument to amend the Land and Buildings Transaction Tax. See also a message from HMRC about agent authorisation duplication of letters.  The agent reference number and nominations  We remind you that from 26 February 2024, if a payment is to be made to a nominee, the agent reference number (“ARN”) must be used on all P87 employment expenses and marriage allowance transfer claim forms submitted to HMRC. The ARN is a unique identifier for each legal entity registered with HMRC as an agent and previously was used by HMRC mainly for internal purposes. However, going forward the ARN will be used more frequently when agents contact or are dealing with HMRC.   Claims for overpaid National Insurance Contributions (“NICs”)  The decision in Laing O’Rourke Services Ltd and Willmott Dixon Holdings Ltd vs HMRC case, which HMRC is not appealing, opens up claims for refunds of employee and employer NICs by way of disregarding part of the car allowance from earnings for NICs purposes if an employee has undertaken or claimed business mileage at less than the maximum 45p a mile.   In two recent Bulletins (November 2023 Agent Update and December 2023 Employer Bulletin) HMRC has provided initial information ahead of full guidance on how employees and employers can backdate claims for refunds.  For a claim to be successful all the existing rules still apply. The disregard should be based on “quantified and evidenced business miles driven”. As a result, claims will not be successful if evidence cannot be provided. No disregard is available on payments made that are within the definition of relevant motoring expenditure if salary is sacrificed from an individual’s pay.   Changes to Scotland’s land and buildings transactions tax (“LBTT”)  The Scottish Government recently published a draft Statutory Instrument which will amend the LBTT.   The changes will introduce a new exemption from LBTT for local authorities and there are various amendments to the additional dwelling supplement (“ADS”), which adds an extra 6 percent supplement to the LBTT paid in Scotland.   The legislation will take effect from 1 April 2024 once approved by the Scottish Parliament.  Duplication of agent authorisation letter  HMRC has advised us that some newly registered agents may receive a copy of their authorisation letter at least twice, if not more. HMRC apologises for this confusion and advises that that there is no need to contact them if duplicate authorisation letters are received.    

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 available. We remind you that the first phase of the UK’s Border Target Operating Model for imports into Great Britain commences later this week from 31 January 2024. And finally, the conclusions of last year’s 2023 Civil Society Forum (“CSF”) between the UK and the EU have been published (Chartered Accountants Ireland participates in the UK Domestic Advisory Group which feeds into the annual UK and CSF meeting). UK Border Target Operating Model (“BTOM”) first phase commences from 31 January 2024  In just two days’ time, the UK’s BTOM commences when new border requirements come into effect when importing certain commodities, including some food, into Great Britain. This marks the start of the introduction of the UK’s new BTOM. Two reminder emails have been sent to us by the UK Government (one from HMRC and one sent on behalf of the Department for the Environment, Food and Rural Affairs) setting out the changes in more detail. You can also read more about the first phase of the BTOM in an article in Accountancy Ireland’s Briefly.   Miscellaneous updated guidance etc.   Recently updated guidance, and publications relevant to EU exit are set out below:-  Bringing commercial goods into Great Britain in your baggage; Taking commercial goods out of Great Britain in your baggage; Notices made under the Customs (Import Duty) (EU Exit) Regulations 2018; Notices made under the Customs (Export) (EU Exit) Regulations 2019; Declare commercial goods you’re taking out of Great Britain in your accompanied baggage or small vehicles; Report payments and view your allowance for non-customs state aid and customs duty waiver claims; What you can do if things are seized by HMRC or Border Force; The Taxation (Cross-border Trade) (Miscellaneous Amendments) Regulations 2024 and The Ship’s Report, Importation and Exportation by Sea (Amendment) Regulations 2024; Customs declaration completion requirements for Great Britain; Search the register of customs agents and fast parcel operators; Customs Declaration Service communication pack; Appendix 21: Import Declaration Category Data Sets; and Appendix 2: DE 1/11: Additional Procedure Codes of the Customs Declaration Service (CDS).

This month’s tidbits cover guidance on how to confirm the identity of HMRC representatives and a range of corporation tax return forms have been updated.   

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. 

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. 

The OECD Working Party 1 – a subgroup of the OECD Committee on Fiscal Affairs in charge of the OECD Model Tax Convention – has proposed changes to the application of Article 5 of the Model Tax Convention to extractible natural resources. The proposed changes aim to develop an alternative provision for activities in connection with the exploration and exploitation of extractible natural resources. The OECD published feedback received on the proposals which can be read here.

Last week, the Institute, under the auspices of the CCAB-I, responded to the public consultation on the Standard Fund Threshold (SFT). The SFT was originally designed to limit the level of tax relief available on the capital value of pension benefits accrued by an individual at the time of retirement. When introduced, the SFT was €5 million but had reduced to €2 million by 2014.   In our response, we recommend that the level of the SFT should be linked to changes in the Consumer Price Index. In addition, we suggested that consideration is given to harmonising the treatment of public and private sector pensions as regards the application of the SFT rules when the limits are breached.   

Revenue has published 2023 PAYE statistics which show that over 472,000 PAYE income tax returns have been processed for 2023. This represents an increase of almost 30 percent on the number of returns processed in the same period last year. 275,000 of the returns filed to date have resulted in an overpayment of tax. Health expenses and the rent tax credit account for the largest additional claims returned by taxpayers. The 2023 mortgage interest tax credit is expected to be available to claim later this week.   The Minister for Finance, Michael McGrath T.D., in conjunction with Revenue, has launched a public information campaign to raise awareness among PAYE taxpayers about claiming the range of tax credits and reliefs available. PAYE taxpayers are also reminded that they need to inform Revenue of any additional income which they have earned outside the PAYE system.  Welcoming the launch of this information campaign, Minister McGrath said:  “Since 1 January 2024, €203 million has already been refunded to individuals’ bank accounts as a result of the 2023 returns filed by PAYE taxpayers to date, but Revenue records indicate that a further €480 million may have been overpaid during the year.  I therefore encourage all PAYE taxpayers to log on to Revenue’s myAccount service to finalise their tax position as soon as they can, to ensure that they have claimed all tax credits and reliefs they are entitled to and receive any refund they are due.”  Further information is available in Revenue’s press release.