Revenue has updated the Tax and Duty Manual which provides guidance on the general principles of taxation regarding the leasing of machinery or plant. The manual sets out current Revenue guidance on general matters relating to the taxation of leases of machinery or plant and supersedes previous guidance in this area.   It reflects the general legislative framework applicable when calculating taxable profits and gains related to leases of machinery or plant following the commencement of Finance (No.2) Act 2023 on 1 January 2024. The Institute, under the auspices of the CCAB-I has been providing feedback to Revenue on this updated guidance through the TALC Leasing subgroup.  

HMRC has published updated guidance on full expensing to clarify that corporate partnerships are able to claim, subject to the expenditure qualifying, and the National Audit Office has published its annual reports on the administration of Scottish and Welsh income tax. Various guidance documents on the creative sector reliefs have been updated (see below) and we update you on the removal of the functionality to copy existing VAT clients across to the Agent Services Account (“ASA”) which was previously covered in September and December 2023. The latest HMRC organisation structure is available on GOV.UK and the process for applying for probate in England and Wales has changed. HMRC has also sent its latest News and Information Bulletin.  Updated guidance on creative sector reliefs  HMRC has published updated guidance as follows:-  Claiming Film Tax Relief for Corporation Tax;  Claiming Animation Tax Relief for Corporation Tax;  Claiming High-end Television Tax Relief for Corporation Tax;  Claiming Orchestra Tax Relief for Corporation Tax;  Claiming Theatre Tax Relief for Corporation Tax;  Claiming Video Games Tax Relief for Corporation Tax;  Claiming Children’s Television Tax Relief for Corporation Tax;  Claiming Museums and Galleries Exhibition Tax Relief for Corporation Tax;  Creative industry tax reliefs for Corporation Tax;  Claiming Video Games Expenditure Credits for Corporation Tax; and  Claim Audio-Visual Expenditure Credits for Corporation Tax.  Removal of functionality to copy existing VAT clients across to the Agent Services Account – update  HMRC has provided an update on this issue which confirms that the functionality will be removed from 16 February 2024. A series of questions and answers which we received from HMRC which provides more information is set out below. HMRC has also provided additional information in an email.  “What is happening?  HMRC is removing ‘VAT for Agents’ from the Online Agent Authorisation Service (OAA).  From 16 February 2024, agents who wish to be authorised to represent their clients for VAT must do so in the Agent Services Account (ASA). This process is known as a ‘digital handshake’.  On the same day, HMRC will remove the ability to copy across ‘VAT for agents’ authorisation codes from OAA to ASA.   How does this affect agents?  If agents already use the Agent Services Account for all VAT authorisations, they will see no change.  If agents use ‘VAT for Agents’ in OAA they must stop doing so as soon as possible. From 16 February, the service will be removed from OAA.   This means that agents will no longer be able to use the ‘VAT for Agents’ service in OAA to seek authorisation to represent clients or copy across relationships to their Agent Service Account.  Any ‘VAT for Agents’ authorisation codes generated in the Online Agent Authorisation service before 16 February must be used before 18 March 2024.   How will this affect an agent’s clients?  If an agent has already used OAA to get authorisation to represent a client for VAT, they will see no change.   For new VAT authorisations completed on the Agent Services Account, an agent’s clients must use the web link agents send to them to complete a digital handshake. Clients must have a Government Gateway ID to do this.  Agent’s clients must complete their part of the digital handshake within 21 days of the agent receiving the link. After 21 days, the link will expire, and you will need to begin the process again to generate a new link.  HMRC will not send any links or codes directly to an agent’s clients when an agent seeks authorisation to represent them.  Guidance to support agent’s clients through the digital handshake is available on GOV.UK.  Why is this happening?  HMRC has a number of online services available to agents, many of which are now nearing the end of their lifespan.  To provide a better service to agents, HMRC is starting to move all the functions from these legacy services into a single point of access: the Agent Services Account. By doing so, HMRC aims to make using online services simpler and more consistent across all areas of work.  The Agent Services Account offers agents the ability to transact for VAT clients and to get authorised to represent them. This also removes the need to map across details to ASA using authorisation codes generated in OAA.”  Change to probate in England and Wales  Both HMRC and the HM Courts and Tribunal Service (“HMCTS”) have updated the process for applying for probate in England and Wales. As a result, form IHT400 has been updated.   The change means that personal representatives applying for probate in England and Wales no longer need to complete form IHT421 (probate summary). Instead, when HMRC receives and processes the IHT400, a letter will issue with a unique code and estate value details which should then be used when applying for probate through the HMCTS online portal.  The process for applying for probate remains the same in Northern Ireland and Scotland.  

Revenue has updated the Tax and Duty Manual in respect of the relief for farm restructuring available under section 604B TCA 1997 to reflect the extension to the relevant period in which the initial restructuring transaction must be completed from 30 June 2023 to 31 December 2025. This amendment was announced in Finance Act 2023.  

Revenue has deferred the 2023 DAC7 filing deadline for platform operators until tomorrow, Wednesday 7 February 2024 (previously 31 January). This extension applies to the reporting of information on certain sellers on their digital platforms to Revenue and the provision of information to these reportable sellers.    Revenue has provided further clarification on a number of technical queries relating to DAC7 reporting requirements for platform operators (POs). In this regard, Revenue has confirmed that files to be uploaded cannot be encrypted, but the upload is facilitated through the secure ROS environment. Revenue’s ROS security page and data protection policy provide further information on the technical measures in place for security of customer data.  Revenue has also provided written clarification on the following matters pertaining to Council Directive 514 of 2021 Annex V:  Electing to carry out Due Diligence on Sellers: POs are not obliged to advise the competent authority that they have carried out the due diligence on Active Sellers only (Section II(G)).  Excluded Platform Operator: an Excluded Platform Operator has to register and also advise the competent authority annually that it continues to an Excluded Platform Operator (Annex V, Section I(A)(3)). This can be done by filing a nil return as an EPO on an annual basis.  Notification to Sellers of Information Reported under DAC 7: the reportable seller is to be provided with a copy of the information reported under DAC 7 no later than 31January (Section III(A)(5)), even where a PO is aware that there is likely to be a correction to the sellers’ data. The information provided to the seller can subsequently be updated in line with the correction filed.  Revenue’s customer service team is available to answer queries by email: DAC7@revenue.ie. Details can be found on Revenue.ie. 

Last week, HMRC confirmed that it is continuing to offer webchat services for the Agent Dedicated Line (“ADL”) beyond 31‌‌‌ ‌‌January 2024 for both Self-Assessment (“SA”) and Pay as You Earn (“PAYE”). Effectively this appears to permanently change how HMRC handles some agent queries and follows on from recent restrictions introduced to the types of queries dealt with by HMRC on both the ADL and its SA helpline. More information is available in an email sent last week by HMRC. If members have questions which have not yet been addressed or experience any problems with these further changes, please get in touch.    The email confirms that agents will be able to access webchat via HMRC’s digital assistant without the need to transfer to a HMRC representative. Agents with “complex or urgent SA queries” can still speak to an adviser on the ADL, selecting option 1 from the menu.   The PAYE webchat service will focus on repayment queries and can be accessed through the PAYE digital assistant. Agents with PAYE coding queries or complex PAYE queries can once again call the ADL, selecting option 2 from the menu. 

The Institute would like members who were involved in the recent 2022/23 Self-Assessment filing deadline to get in touch with their feedback. We’d like to specifically hear about your experiences in making contact with HMRC, particularly in light of the recent restrictions in the Agent Dedicated Line and Self-Assessment helpline.  

Finance Bill 2023-24 continues its passage through the parliamentary process with report stage having taken place yesterday, Monday 5 February 2024. This will be followed by the Bill’s third reading in the House of Commons after which the Bill will proceed to the House of Lords. Last week the House of Lords Finance Bill Sub-Committee published its report into the Bill after thanking those who contributed to its inquiry into the Bill’s draft clauses. The Institute’s submission to the inquiry, which can be viewed on the Tax Representations page of our website, focused on the impact of merging the SME and large company R&D tax relief schemes and restrictions to the geographical scope of agricultural property relief from April 2024.  Last week the Government published details of amendments and new clauses ahead of report stage. These were accompanied by an Explanatory Note and Tax Information and Impact Note, where applicable, and are summarised as follows:-  New Clause 5 — Electricity generator levy, new investment exemption;  Amendments 7 to 8 to Schedule 1 — R&D intensity ratio and preventing double counting of amounts in total relevant expenditure;  Amendment 1 to Schedule 1 — R&D: avoidance of double-claiming and gaps in entitlement during transition;  Amendments 3 to 5 to Schedule 6 — imposing information requirements for creative sector relief to provide for consequences of non-compliance short of the total invalidity of the claim. 

The Minister for Finance, Michael McGrath TD, has announced that, from 31 January 2024, PAYE taxpayers can claim the Mortgage Interest Tax Credit for 2023 through Revenue’s myAccount service. Self-assessed taxpayers will be able to claim the tax credit via the ROS Form 11 by mid-February 2024.  The 2023 Mortgage Interest Tax Credit is based on the increase in interest paid in 2023 over interest paid in 2022 and is available for homeowners with an outstanding mortgage balance on their principal private residence of between €80,000 and €500,000 on 31 December 2022 and who are compliant with Local Property Tax. The tax credit is the lower of 20 percent of the increased interest paid in 2023 compared to 2022, or €1,250.   To claim this tax credit, taxpayers are required to file a 2023 Income Tax Return and upload their certificates of mortgage interest for 2022 and 2023 together with confirmation of their mortgage balance at 31 December 2022.   It is estimated there are approximately 208,000 mortgages eligible for the tax credit. The projected cost of this temporary tax credit, introduced in Budget 2024, is €125 million on a once-off basis.  Speaking today, Minister McGrath said:  “The Government is acutely conscious of the impact increases in interest rates have had on many mortgage holders. In light of this, I introduced a temporary one year, targeted Mortgage Interest Tax Relief scheme as part of Budget 2024.  This forms a further element of a comprehensive package of cost of living supports in Budget 2024 which include energy credits, income tax and USC reductions, and welfare increases which are helping households throughout the country.  I am pleased to announce that PAYE taxpayers can now submit a claim for this relief by logging on to Revenue’s myAccount service and filing an income tax return for 2023. Self-assessed taxpayers will be able to claim the relief in mid-February.  Last week, I launched a public information campaign to raise awareness among taxpayers of the range of tax credits and reliefs available and how they can claim those credits and relief. As I have stated many times, I encourage all taxpayers to avail of the full suite of credits and reliefs available to them, including Mortgage Interest Tax Relief.” 

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. HMRC has also asked us to advise that the UK intends to open the Import One Stop Shop Scheme for businesses established in Northern Ireland for registration from 1 March 2024. Full guidance is due to be published soon. And finally, Saturday 3 February 2024 saw the return of the Northern Ireland Assembly after a two-year absence. Deal with DUP sees return of Northern Ireland Assembly  Last week the DUP and UK Government reached a deal which culminated on Saturday in the return of the Northern Ireland assembly. After the deal was announced earlier in the week, the UK Government published the accompanying Command Paper and associated documents, including legislation, which sets out more detail. The agreement and corresponding legislation were then debated in Parliament.  Essentially, the Windsor Framework (UK Internal Market and Unfettered Access) Regulations 2024 will amend the UK Internal Market Act 2020 in order to provide protection in law against exit procedures on goods moving from Northern Ireland to Great Britain. The regulations amend the Definition of Qualifying Northern Ireland Goods (EU Exit) Regulations 2020 to ensure that unfettered access benefits Northern Ireland traders only, not businesses which may divert goods to Northern Ireland to obtain the same benefit.   The Institute expects UK Government officials to provide more information in due course on what this specifically means for traders and will advise accordingly in Chartered Accountants Tax News in future.  Miscellaneous updated guidance etc.   Recently updated guidance, and publications relevant to EU exit are set out below:-  CDS Declaration Completion Instructions for Imports;  Appendix 23 Imports: Declaration Category Data Sets;  Appendix 1 Inventory Imports: DE 1/10: Requested and Previous Procedure Codes;  Reference Documents for The Customs Tariff (Suspension of Import Duty Rates) (EU Exit) Regulations 2020;  Reference Document for The Customs Tariff (Establishment) (EU Exit) Regulations 2020;  Reference Document for The Customs (Origin of Chargeable Goods) (EU Exit) Regulations 2020;  Reference Documents for The Customs Tariff (Preferential Trade Arrangements) (EU Exit) Regulations 2020;  Receive goods into and remove goods from an excise warehouse (Excise Notice 197);  Appendix 22: Declaration Category Data Sets Landing Page and Introductory Text;  Simplified Procedures Exclusions List of Procedure and Additional Procedure Codes for exports  CDS Declaration Completion Instructions for Exports;  Appendix 1 Inventory Exports: DE 1/10: Requested and Previous Procedure Codes;  Appendix 24: Declaration Category Data Set; and  External temporary storage facilities codes for Data Element 5/23 of the Customs Declaration Service.

Revenue has issued notices to employers advising them of free online webinars it will host in February 2024, using Eventbrite, to give an overview of the Enhanced Reporting Requirements (ERR). The notice, issued to employers’ ROS inboxes, contains a link Revenue’s ERR webpage where a ticket can be booked to attend additional webinars on a date that suits them.    This presentation, which will be followed by a Q&A session, will address:   An overview of ERR and employer responsibilities   eRegistration for ERR  Requesting Employer Reporting Notifications (ERN)   Submission of expense/benefit details by file upload or by online form  Viewing expenses/benefits by submission type and   Feedback on issues or problems you experience with the new ERR reporting regime can be emailed to the Institute and we will continue to engage with Revenue through the TALC forum. We will keep you up to date on developments in Tax News.  

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.  

The Financial Reporting Council has released a thematic review entitled “Reporting by the UK’s largest private companies”. The thematic review seeks to develop the understanding of the quality of reporting by some of the UK’s largest private companies. The thematic review is a useful document for preparers of financial statements as it highlights areas of good quality reporting, which companies are encouraged to consider in preparing their annual reports, as well as omissions and areas for improvement identified during their research.