5 April 2023 is the deadline to ensure voluntary payments of any shortfalls of national insurance contributions (“NICs”) for the tax year up to 2016/17 are made to protect maximum entitlement to the UK state pension. In some cases it is possible to go back to 2006/07 and make voluntary contributions. Note that from 6 April 2023 it will only be possible to go back six years in future. In order to get a full basic state pension, an individual must have paid sufficient NICs for a minimum number of qualifying years in their working life. See the State pension guidance note for more information. 

New VAT penalties for late payment of VAT and late submission of VAT returns took effect from 1 January 2023. The new penalty regime applies to VAT return periods beginning on or after 1 January 2023 if a return is filed late and/or a payment is made late in respect of periods affected. A form of soft landing is being provided by HMRC such that a first late payment penalty will not be charged during 2023 as long as the business pays in full within 30 days of the payment due date.

Revenue has updated the guidelines on the Temporary Business Energy Support Scheme (TBESS) with additional information following queries received by businesses wishing to avail of the scheme. A summary of the changes is outlined in the “What’s new” page at the beginning of the guidelines. Preliminary statistics published last week by Revenue show that there are 8,849 businesses currently registered with Revenue for TBESS, with €5.9 million paid in respect of 2,984 approved claims valued €6.64 million. Over one third of the claims for TBESS came from the wholesale and retail sector, with nearly another third of claims from the accommodation and food services sector. Read the complete statistics here.

Readers are reminded that if you have chosen to pay LPT in a single payment by cash, cheque or card, you must make this payment by Thursday, 12 January. The date by which you need to pay LPT for 2023 depends on the payment option you choose.  Monthly LPT direct debits start on 15 January. The relevant dates are as follows: January 2023 - phased payments start for deduction at source and regular cash payments through a payment service provider 12 January 2023 - latest date for paying in full by cash (through a payment service provider), cheque, credit or debit card 15 January 2023 - monthly direct debit payments start and continue on the 15th day of every month 21 March 2023 - deduction date for Annual Debit Instruction (ADI) payment.

Revenue has launched the e-tender process to establish the 2022/23 panel of experts who may be called upon to assist review claims for the Research & Development Tax Credit. The link to the 2022/23 e-tender application process is included in the updated Tax and Duty Manual under the footnote on page 2 and can be accessed here.

Finance Act 2022 introduced a new rent tax credit that is available for the tax years 2022 to 2025 inclusive. Revenue has created a new Tax and Duty Manual that outlines the conditions which must be met in order to claim the new rent tax credit. The manual also outlines the process for claiming the credit. PAYE taxpayers can claim the 2022 rent tax credit by filing a Form 12 via MyAccount PAYE Services, while self-assessed taxpayers can claim the rent tax credit when filing their Form 11 via ROS. In addition, PAYE taxpayers have the option of claiming their 2023 rent tax credit in 2023 by using Revenue’s Real Time Credit facility. In such instances the credit will be apportioned equally over the tax year.

Revenue has created a Tax and Duty Manual to provide guidance on the operation of the Accelerated Capital Allowances for Farm Safety Equipment scheme available under section 285D TCA 1997. Section 285D TCA 1997 provides for a scheme of accelerated capital allowances for capital expenditure incurred, on certain farm safety equipment, by a person carrying on a trade of farming. The expenditure must be incurred in the period 1 January 2021 to 31 December 2023 and the Minister for Agriculture, Food and the Marine must certify the expenditure. Once certified, the expenditure can be written off at a rate of 50 percent per annum over two years. The scheme is subject to an overall annual budget of €5 million (excluding VAT). Additionally, there is a limit of €500,000 on the total amount of relief that can be granted to any person under this scheme.

Exchequer figures for 2022 show tax revenues increased by 22 percent relative to 2021 with €83.1 billion collected in total – the highest ever tax take. Contributing to this were income tax receipts of €30.7 billion (15 percent higher than 2021, and consistent with the strong post-pandemic recovery in employment), corporation tax receipts of €22.6 billion (a 50 percent increase on 2021), and VAT receipts of €18.6 billion (up 20 percent on last year). An Exchequer surplus of €5 billion was recorded to end-December 2022. This compares with a deficit of €7.4 billion in 2021 and the improvement reflects the significant increases in tax revenue and decline in Covid-related public expenditure. For the first time ever last year, corporation tax receipts were the State’s second-largest income stream. However, a significant part of this income is expected to be once-off in nature. It is also notable that the corporation tax figures for December were below levels expected by the Department of Finance. Commenting on the figures, Minister for Finance, Michael McGrath said: “The end-2022 Exchequer figures show a large headline surplus was recorded last year. This reflects a number of factors, including robust income tax and VAT receipts, both of which reflect the strength of the post-pandemic recovery in demand and employment. The phasing out of Covid-related expenditure is another reason for the surplus last year. By far the most important factor behind the headline surplus is the strength of corporation tax revenue – receipts from this source have doubled since just before the pandemic. My Department estimates that around half of these receipts are potentially at risk – if these receipts were excluded, we would instead be facing a significant deficit. That is why Government has acted to mitigate this vulnerability by transferring part of this windfall to the National Reserve Fund to rebuild our fiscal resources. It is also important to stress that today’s figures are, of course, backward looking. They do not offer a guide as to the challenges that we will have to address going forward. Keeping the public finances on a sustainable trajectory puts us in the best position to meet these future challenges. That is what this Government will continue to do.” Further details are included in the Fiscal Monitor December 2022.

Revenue recently published preliminary results for 2022 which provides data on tax and duty collected, compliance rates, the yield from interventions along with details of assistance provided under critical government support schemes.   Revenue collected €62.2 billion in taxes and duties and over €22.3 billion on behalf of other government departments, agencies, and EU Member States.  Timely compliance rates by Irish taxpayers for 2022 remains strong with 98 percent compliance by taxpayers in Revenue’s Large Cases and 96 percent in Medium Cases Divisions and compliance at a rate of 86 percent in other divisions of Revenue.  Revenue conducted risk management interventions generating €813 million. Revenue also secured 9 convictions for serious tax evasion and fraud, published 53 tax settlements in the List of Tax Defaulters and settled 104 tax avoidance cases yielding €16.1 million. Revenue oversaw the payment of €806.6 million under the Employment Wage Subsidy Scheme to 23,330 eligible employers in respect of 327,242 employees. The Temporary Business Energy Support Scheme has paid claims of €5.9 million to 2,984 businesses in its short time of operation. More than 70,000 businesses and individuals are availing of the Debt Warehousing Scheme in respect of just over €2.48 billion of tax debt. For more details on Revenue preliminary results for 2022 see Revenue’s press release.

Last month in a written statement to Parliament, the Chancellor announced that the Spring Budget will take place on Wednesday 15 March 2023. And it was announced that the freeze in alcohol duty rates which was due to end on 1 February 2023 has been extended six months. The Scottish draft budget 2023/24 and Welsh draft budget 2023/24 recently took place. The most recent Finance Bill completed all stages in the House of Lords in December 2022 and now awaits Royal Assent.

Revenue has published a Tax and Duty Manual clarifying the tax treatment of payments received under the Basic Income for the Arts (BIA) pilot scheme launched in April 2022. Individuals who qualify for the scheme receive a payment of €325 per week. The scheme is administered by the Department of Tourism, Culture, Arts, Gaeltacht, Sports and Media and is open to eligible artists and creative arts workers.

Last month just days before Christmas the Government announced, via a Ministerial Statement by the Financial Secretary to the Treasury, that Making Tax Digital (“MTD”) for income tax is now being delayed two years and will commence instead from 6 April 2026 and not for all businesses and landlords with turnover of more than £10,000 from 6 April 2024. Mandation of MTD for income tax is also being phased in for smaller businesses and a review is being conducted of the impact on the smallest businesses. During various HMRC forum meetings in 2022, Chartered Accountants Ireland lobbied HMRC for an easement of this nature to allow businesses, landlords and HMRC more time to prepare for this significant change. The phased mandation of MTD for income tax means that from 6 April 2026, self-employed individuals and landlords with an income of more than £50,000 will be required to keep digital records and provide quarterly updates on their income and expenditure to HMRC through MTD-compatible software. Those with an income of between £30,000 and £50,000 will need to do this from 6 April 2027. The phased mandation and delayed start date will therefore allow taxpayers time to voluntarily join the MTD for income tax trial voluntarily beforehand once the most suitable software for their circumstances has been chosen. This should allow taxpayers to participate in the MTD for income tax trial for at least one full annual tax cycles before being mandated to do so. The Government has also announced a review into the needs of smaller businesses, and particularly those under the £30,000 income threshold. According to HMRC, the review will consider “how MTD for income tax can be shaped to meet the needs of these smaller businesses and the best way for them to fulfil their Income Tax obligations. It will also inform the approach for any further roll out of MTD for ITSA after 6 April 2027”. Once that review is complete, and in consultation with businesses, taxpayers, agents, and other stakeholders, the Government will lay out the plans for any further mandation of MTD for income tax. Chartered Accountants Ireland will be engaging with this review. Mandation of MTD for income tax will not be extended to general partnerships in 2025 as previously announced. There is currently no information on if the Government intends to delay the introduction of MTD for corporation tax, which HMRC had previously stated would not be mandated before April 2026, though this is now likely to change. Basis period reform, which means that unincorporated businesses and landlords will be assessed on the tax year basis instead of the current year basis, is still proceeding from 6 April 2024 with 2023/24 being the transitional year.