In Irish news, Revenue publishes key findings from its public consultation on VAT modernisation, guidance on Enhanced Reporting Requirements for employers is updated and the Department of Finance publishes responses to the first Feedback Statement regarding the strawman proposal on participation exemption. In UK news, we take a look at the tax policies of the two biggest parties in Northern Ireland, and HMRC releases its 2022/23 Tax Gap publications. Ireland Revenue has published a report setting out the key findings from the public consultation on modernising Ireland’s administration of VAT. Revenue has updated the Tax and Duty Manual which provides guidance on the Enhanced Reporting Requirements (ERR) for employers. The Department of Finance has published the responses it received to the first Feedback Statement on the strawman proposal on a participation exemption.   UK Read about the tax policies of the two biggest parties in Northern Ireland. HMRC’s 2022/23 Tax Gap publications have recently been published.   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.

As people across the world condemn the attack by Russia on Ukraine, they also want to show their support through donations and using their influence for humanitarian intervention. Professional accountants will find themselves in positions of influence with many stakeholders including clients, employers, employees, and local communities.  Níall Fitzgerald, Head of Ethics and Governance outlines some practical considerations for accountants and business leaders in this context:    Fundraising for humanitarian or other reliefs People and organisations are looking to help the millions of Ukrainians displaced by the invasion by donating directly or running fundraiser events. Be aware of fraud risk and recommend controls that ensure the safeguard of any monies raised and that they are used for the purpose for which they were raised. Ensure the necessary licences are obtained for any public fundraising activity. Be clear on the purpose for the funds and how they will be channelled to the beneficiaries. Ensure compliance with national charity law and check that charitable donations are only made to a properly registered charity in your jurisdiction. Social media Understandably, many people and corporates are sharing their views on Russia's  invasion of Ukraine via social media. The distinction between when a view is a personal view or that of the organisation where a person works is not always clear. If you are an officer of a company, e.g. a director, chief executive, or the public relations officer, and you are commenting on a matter related to your area of responsibility, then it is very difficult to separate your view from the corporate view. For this reason, many organisations will have clear corporate social media policies in place and that is the first reference point if in doubt. However, before reacting to a colleague's personal post, it is important to also consider their right to hold and express an opinion. There can be a cultural aspect to this within an organisation, especially where respect, tolerance, diversity and inclusion, and psychological safety are highly valued. The specific circumstances of the person expressing the view might also be taken into account, for example their emotional proximity to the issue.  Developing corporate positions Many organisations are using their influence for good by publicly denouncing the invasion of Ukraine, with some going further to withdraw from investments and business operations in Russia, and any dealings with Russian state-owned entities. These decisions are not always the most straightforward to implement. Legal and other expert advice should be sought to consider how an organisation can address contractual obligations, restructure, and relocate operations. Many Russian citizens are against the actions of the Russian Government, and Russian employees, contractors, etc., should receive fair treatment and not be discriminated against. Reporting progress and being transparent on these positions, including any setbacks, is very important as corporates will be held to account by stakeholders and members of the public to honour their commitments. Careful thought should be given before making any wide-sweeping statements. The global economy, with its complex interconnected markets, creates practical difficulties when seeking to divest of everything connected to Russia.   Whistleblowing and speaking up Clearly defined and well-communicated whistleblowing and speaking-up policies and procedures can increase an organisation’s awareness of any weaknesses in it’s internal controls and practices relating to sanctions, anti-money and anti-bribery and corruption compliance. Communicating to employees the organisation’s position in relation to this crisis and reminding them about whistleblowing and speaking-up policies and procedures, promotes a safe environment in which individuals feel comfortable to raise any concerns about the organisation’s actions, or inactions. Corporate reporting While the scale of the impact of this crisis on organisations will differ, it will dwarfed by the impact on millions of Ukrainians. Organisations have important social obligations and responsibilities to corporate stakeholders. Accountants should ensure transparency and accountability in corporate reporting by highlighting the impact of the crisis on the organisation’s operations, asset valuations and exposure to liabilities. Examples of the sources of this impact include: supply-chain disruption; the cost of ceasing operations in Russia or the conflict/invasion zones; rising commodity prices; inaccessibility of certain markets due to trade or travel restrictions; difficulty maintaining required levels of capital reserves; and loss of key customers. Accountants will have a central role in collecting, measuring, and reporting the necessary information and ensuring it is reported in accordance with legal and regulatory requirements and relevant reporting frameworks. They should also understand the limitations to their expertise and call for the involvement of experts where necessary. Directors and senior management will need to consider expert advice when making highly judgemental decisions on values and estimates and in determining the future implications for the organisation.    Boundaries between personal life and professional life Negative emotions, such as anger and fear, increase the risk of self-defeating behaviours. The developing situation in Ukraine will understandably evoke such emotions in many. In this context, it is useful to refer to guidance issued by the CCAB bodies, in July 2021, to help accountants consider and distinguish if their personal behaviour could be viewed as conduct that might discredit the profession. While the facts and circumstances of every situation will differ, the CCAB guidance provides some examples of such behaviours, including the use of seriously offensive or threatening language causing distress, or threatening behaviour, towards a client or a member of the public outside of the work environment.  This non-exhaustive list of considerations may need to be reconsidered as the crisis in Ukraine develops. In many situations, increasing ethical awareness or the ability to address an ethical dilemma requires reflection. Professional accountants may find it useful to refer to, or circulate to professional accountancy staff, the Chartered Accountants Ireland Ethics Quick Reference Guide available from our Ethics Resource Centre. This article was adapted for members overseas from an article written by Níall Fitzgerald on the Institute’s Ethics Resource Centre.

Section 598 TCA 1997 provides a relief from capital gains tax (CGT), in certain circumstances, to an individual on a disposal of business assets. As the individual must be aged 55 or more, this is commonly referred to as ‘retirement relief’. Differing levels of relief apply to individuals aged 66 years or more at the time of disposal. With effect from 1 January 2025, these differing levels of relief apply to individuals aged 70 years or over.  Revenue has updated the Tax and Duty Manual which provides guidance on disposals of business or farm on “retirement” as follows:  To reflect Finance (Covid-19 and Miscellaneous Provisions) Act 2022 changes  To reflect Finance (No. 2) Act 2023 changes  To remove content no longer relevant, and  To update examples.   

Revenue has updated the Tax and Duty Manual which provides guidelines for the procedures for Revenue debt in the Small Companies Administrative Rescue Process (SCARP), in the following areas:  Initial notification by the Process Advisor  Role of the Revenue SCARP Unit  Revenue's review process to determine its decision to include/exclude Revenue debt in the scheme  Revenue's proof of debt  Tax issues arising from the SCARP, and  Role of Revenue and the Corporate Enforcement Authority. 

The Department of Finance has published the responses it received to the first Feedback Statement on the strawman proposal on a participation exemption. In May 2024 the Institute, under the auspices of the CCAB-I, responded on the basis that it supports the introduction of a participation exemption so that the exemption applies by default with no minimum ‘opt-in’ period. There were 20 submissions to the Department and the full list can be accessed at gov.ie.  

Revenue has updated the Tax and Duty Manual which provides guidance on film withholding tax to advise film producer companies and their agents of a change to the system for uploading film withholding tax returns (section 9). The Revenue File Transfer System (RFTS) has replaced the ROS secure upload facility for this purpose. 

Revenue has informed us that it has released a number of fixes to Form 11 2023 following the report of a number of issues with its processing and computation systems. However, several items are still to be resolved:  Issues where ROS is taxing deposit interest at 40 percent,  Issues where ROS is not applying the 3 percent USC rate on non-PAYE income exceeding €100,000.   Revenue plans a further release by 15 July 2024 to apply the correct treatment to both of these areas.   The issue with Department of Social Protection (DSP) income pre-population on Form 11 2023 was fixed on 2 April 2024 and is working correctly for DSP pension payments. However, a further fix is being worked on for other DSP incomes (Jobseekers, Illness benefit, etc.).   The issue with DSP pre-population on Form 11 2022 has been incorrect since 2 April 2024, and affects late filers from that date. It is due to be fixed on 15 July.    Furthermore, the Institute has been made aware of unannounced changes to Form 11 2023  which may impact taxpayers and their agents, in particular those using third party software. We have requested that Revenue clarify the changes being made and will continue to update members via Tax News. 

Ahead of the UK’s general election on Thursday 4 July, we take a look at the tax policies of the two largest parties in Northern Ireland.  The DUP’s tax policies and promises  The Democratic Unionist Party (DUP) published its full manifesto last week. The party continues to argue that further work is needed on the Windsor Framework and “we will continue to argue the case for the full primacy of the United Kingdom internal market, and we will continue to reject the undermining of its integrity………..In October, as part of the NI Assembly vote on the current arrangements, we will not hesitate to vote against their continued application and, drawing upon the new mechanisms at our disposal, we will continue our quest through the inbuilt review.”  A lower rate of corporation tax for Northern Ireland also featured, something which the Institute has been campaigning on for many years. The Institute is currently developing a briefing paper on the benefits, challenges, and potential mitigations to any challenges of a lower rate of corporation tax for Northern Ireland which it plans to use as a mechanism to drive this issue forward.   The DUP’s analysis of a lower rate of corporation tax for Northern Ireland features on page 29 of their manifesto and reads as follows:  “Lowering the rate of corporation tax in Northern Ireland has been a longstanding DUP policy. This would boost Northern Ireland as an attractive investment opportunity, building on the strength, skill and ingenuity of our workforce. The minimum effective 15% rate in the Irish Republic places firms in Northern Ireland at a competitive disadvantage and we want to see this addressed. We continue to advocate for a reduction in corporate tax across the United Kingdom and DUP MPs opposed the increase in the main UK corporation tax rate from 19% to 25% in 2023.   The DUP believes there are a number of fundamental issues that require resolution with the Treasury before the powers to vary corporation tax rates - which are already provided for in law - can be enacted. We are clear that progress must be based on solid foundations. That means ensuring a process of implementation that protects spending on public services in the short to medium-term.”  DUP MPs will also campaign to:   Oppose the freeze on the personal tax allowance and higher rate income tax threshold  Seek further reductions in national insurance  Support an increase in the starting age for employee national insurance  Encourage the government to explore the merits of moving to single tax on all income, replacing income tax and national insurance  Freeze vehicle excise duty  Abolish VAT on domestic electricity bills  Maintain the freeze on fuel duty  Oppose any increase in insurance premium tax   Increase the tax-free childcare allowance from 20 percent to 35 percent  Remove the cap on tax free childcare above £2,000  Scrap VAT on school uniforms  Support the triple lock on state pensions   Support the personal allowance for pensioners always being above the amount of the state pension  Increase the VAT registration threshold for SMEs to £100,000 and then uprate it in line with inflation  Drive up the number of SMEs benefiting from tax reliefs  Ensure the national insurance liability for small businesses is fair: the Employment Allowance should be uprated in line with increases to the national living wage  Promote greater awareness of capital allowances and R&D tax reliefs among local businesses  Explore the potential introduction of an online sales tax targeting online corporates and marketplaces  Support robust efforts to crack down on global tax evading corporations  Aim for the VAT system to be better utilised to incentivise investments that promote improved productivity through low-carbon and green technologies  Continue to campaign for a reduction in VAT for hospitality across the UK, and   Expand UK research & development tax relief for small and medium sized enterprises to include capital expenditure.  In its 2022 Assembly Election manifesto, the DUP also argued that the necessary capacity did not exist for Northern Ireland to devolve additional fiscal powers. That remains its position at this time.   Sinn Fein’s tax policies  Sinn Fein published its full manifesto in mid-June, a 10 page document which did not contain any detail on tax pledges. However publicly, the party has taken a slightly different position to the DUP on the devolution of more fiscal powers arguing that although there are "important considerations" about the political and administrative capacity for Stormont to take on new responsibilities, the experiences of Scotland and Wales demonstrate that this capacity can be developed over time which "it is not a reason in itself to not consider devolution". 

Revenue has published a report setting out the key findings from the public consultation on modernising Ireland’s administration of VAT. The initial stage of the consultation, which launched in October 2023, focused on the modernisation of Business to Business (B2B) and Business to Government (B2G) VAT reporting, underpinned by eInvoicing.  The Institute’s response to the consultation, under the auspices of the CCAB-I, was one of 1,118 responses received by Revenue. The majority of responses were received from VAT registered businesses, of which 54 percent operate as a sole trader or partnership. Only 20 percent of business respondents trade in goods only, 55 percent provide only services, with 25 percent providing both goods and services.   The majority of business respondents had annual turnover not exceeding €700,000, with 46 percent reporting annual turnover of less that €100,000. By contrast, just 6 percent of responses were from firms whose turnover is more than €12 million each year.   Businesses and other stakeholders both emphasised the need for modernisation to be implemented cost-effectively and within existing businesses systems as far as possible, with minimum business disruption in terms of cost and resource time. An appropriate lead-in time with phased implementation and a suitable transition period, supported by early publication and certainty on the detailed technical requirements with a strong preference that these specifications should be consistent with VAT in the Digital Age (ViDA) is a priority. They also highlighted the importance of maintaining robust controls and data security measures to safeguard sensitive financial information from cyber threats and data breaches.  Revenue acknowledges and thanks all those who took the time to contribute to the process. It notes that further consultations and other public engagement will follow, as reform proposals take clearer shape, are tested, refined, and put into operation.  The CCAB-I will continue to work with Revenue on this project via the TALC Indirect Forum and TALC VAT Modernisation Subgroup and will keep readers updated.  

The latest Tax Gap publications for 2022/23 were published last month by HMRC and set out how the tax gap has increased by £1.7 billion to £39.8 billion in absolute terms. In percentage terms the tax gap is 4.8 percent (5.2 percent 2021/22) of the £823.8 billion total theoretical tax liabilities for 2022/23. The tax gap is the difference between what HMRC expects the total tax take for 2022/23 to be, and the actual tax received. According to the statistics in the publications which are linked below, small businesses accounted for nearly two thirds of unpaid tax.   The largest components of the tax gap by tax type are the Corporation Tax gap and the Income Tax, National Insurance Contributions and Capital Gains Tax gap, both at a 34 percent share, followed by the VAT gap with a 20 percent share. As in previous years, the tax gap from small businesses is the largest component of the tax gap by taxpayer group which was a 60 percent share in 2022/23.   There was also strong year-on-year growth in HMRC’s tax receipts in these two years, most likely due to fiscal drag. You can read the published receipts figures on GOV.UK.  The 2022/23 Tax Gap publications are as follows:  Measuring tax gaps tables  Quality report: Measuring tax gaps, and  Measuring tax gaps 2024 edition: tax gap estimates for 2022 to 2023.   

Do you complete expenses and benefits returns? Or do you complete online filing for employment related securities? If so, you have a key role to play in ensuring returns are submitted by the 2023/24 filing deadline of 6 July 2024 and payments are made on time. The 2023/24 deadline to apply for a PAYE settlement agreement (PSA) is 5 July 2024, with payments due by 22 October 2024 (19 October 2024 if not paying electronically).  By way of reminder, from 6 April 2023, forms P11D and P11D(b) can only be submitted online by employers (except for the digitally excluded). Also, since 6 April 2023, an online service is available for employers and their agents to apply for a PSA.   It should also be noted that where Enterprise Management Incentive (EMI) options are granted on or after 6 April 2024, although the statutory reporting deadline is 6 July following the end of the tax year, some plan rules require the employer to notify HMRC within 92 days of grant. If this is the case, failure to report within the deadline can lead to the option lapsing or becoming non-tax advantaged. We recommend that employers check any EMI plans urgently to ensure this deadline is not missed.     Here’s a reminder of the key deadlines:  6 July 2024 - deadline for submitting all 2023/24 P11D(b) and P11D forms, and the employee must receive their copy of the P11D  6 July 2024 – deadline for online reporting of the 2023/24 annual return in respect of employment related securities  19 July 2024 - deadline for non-electronic payment of Class 1A National Insurance Contributions (NIC) for 2023/24, and   22 July 2024 - deadline for electronic payment of Class 1A NIC for 2023/24.   Looking ahead to the future, we also remind you that from April 2026, the reporting and payment of income tax and Class 1A National Insurance Contributions on benefits in kind must be done via payroll software.  

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 also available and HMRC is warning about issues with license data flows between the Customs Declarations Service (“CDS”) and the Department for Business and Trade's (DBT) electronic licensing systems.   CDS licensing issues  HMRC has become aware of issues with licence data flows between the CDS and the DBT’s electronic licensing systems (also known as SPIRE/LITE). According to HMRC, these are temporary issues which happen if a CDS export declaration contains errors that impact the licence. If this occurs, the declaration cannot progress to cleared. HMRC has published guidance for declarants on how to deal with the issue and is currently working on a resolution with the DBT. An update will be provided in due course.  Miscellaneous updated guidance etc.   Recently updated guidance, and publications relevant to EU exit are set out below:  Authorised Consignee Temporary Storage (ACTS) location codes for Data Element 5/23 of the Customs Declaration Service  Known error workarounds for the Customs Declaration Service (CDS)  Claim repayment or remission of charges on rejected imports  How to claim a repayment of import duty and VAT if you've overpaid  Transit newsletters — HMRC updates  Internal temporary storage facilities (ITSFs) codes for Data Element 5/23 of the Customs Declaration Service  Data Element 2/3: Documents and Other Reference Codes (Union) of the Customs Declaration Service, and  Apply for release of a private vessel on payment of Customs Duty and VAT.