Ahead of the 2023/24 online self-assessment filing and payment deadline of Friday 31 January 2025, several key reminders are set out below. Readers should also be aware that HMRC staff are planning strike action over the coming weeks which you can read more about in a separate story in this edition. Members are also advised to contact the Institute by email if they experience any issues in the coming weeks which prevent the filing of 2023/24 self-assessment returns before the deadline so that we can discuss with HMRC. 2023/24 transition year to basis period reform Important guidance on the transition year to basis period reform, and in particular applying for information on overlap relief, was contained in the November 2024 Agent Update which we highlighted last month. HMRC has also published a new tool to help calculate overlap relief if HMRC is unable to provide the information on unused overlap relief. By way of reminder, 2023/24 is the transition year of basis period reform after which the tax year basis of assessment commences in full from 2024/25 for all unincorporated businesses. In 2023/24, any unused overlap relief from earlier tax years must be used.  To use HMRC’s new tool, information is required from business records, including the date the business started or the date an individual joined a partnership. According to HMRC “reasonable estimates” should be used if not all the information required is available.   Simple assessment tax bills  HMRC is reminding taxpayers who have received a simple assessment letter to pay any tax outstanding for 2023/24 by the later of: 31 January 2025; and three months from the date of issue of the letter. Guidance is also available on how to pay a simple assessment tax bill, including what action to take if a taxpayer is unable to pay the full amount due by the deadline. Scams HMRC is warning that fraudsters are increasingly targeting people with offers of tax refunds, or demanding payment of tax to obtain personal information and banking details. HMRC’s advice to taxpayers is to check if contact is genuine using the guidance on GOV.UK before taking any action.  

Last month we highlighted to readers a November letter from HMRC to the CEOs of the Professional Bodies seeking a meeting to discuss HMRC services. The Professional Bodies responded jointly to that letter on 23 December 2024 and will be meeting with HMRC as proposed. Members will be updated on developments in Chartered Accountants Tax News and are reminded that you can feed back on HMRC services at any time to us by emailing tax@charteredaccountants.ie. The response to HMRC sets out the key strategic issues for the various bodies and their members and focuses on HMRC’s strategic challenges in relation to improving its services the headlines from which are as follows: How can the demand for phone and post contact be reduced, The need for an electronic communication tool, The importance of establishing a system for progress tracking, Quality of advice available on HMRC helplines, Retaining phone and post services, and Compliance including the need for HMRC to address how it is currently utilising the compliance powers it has available. Many of these are issues which the Institute has already highlighted to HMRC in previous discussions and several also featured in our pre-Budget submission in October 2024. The letter did not address other key strategic areas such as raising standards and potential regulation of the tax profession and acknowledged that the £51m additional Government investment in HMRC announced in May 2024 is starting to impact.

HMRC has contacted us to advise of industrial action in the coming weeks in the period to Friday 14 February 2025. According to HMRC, “robust plans are in place” to ensure  it is able to continue delivering critical services. HMRC has advised that its Employer Services phone line and webchat will be open daily from 8am-6pm as usual, however callers may experience longer wait times.   The helplines expected to be affected are: The Employer helpline,  and The Construction Industry Scheme helpline.   HMRC has advised that it will keep the opening hours and service levels under review and will update us in advance of any changes. There are currently no expected impacts on other services.  HMRC is also updating taxpayers and agents on GOV.UK and via recorded message on its helplines. Callers will hear a message which tells them about the industrial action and the increased waiting times. This message is also encouraging callers to use digital services.  HMRC is strongly encouraging the use of digital services rather than waiting to speak on the phone. Some of the main topics callers call these helplines about, which they can do online are:  get a quick answer to queries using the digital assistant, Check the status of your CIS refund in the ‘Where’s My Reply’ tool (only call if the date has passed), and Check your balance in the Business Tax Account.   For technical support with online services use the Online Services helpdesk. 

The OECD has published a working paper which explores the relationship between the location of multinational enterprises (MNEs) global business functions and effective corporate taxation. The paper provides valuable insights into the structure of MNEs global value chains, as well as the real economic impacts of corporate taxation.

In this week’s miscellaneous updates, the minutes from the most recent meeting of the Joint Vat Consultative Committee, which Chartered Accountants Ireland is represented on, are available on GOV.UK. The most recent HMRC Agent Update is available as is the 19 December 2024 Stakeholder Digest which includes information on the appointment of the new HMRC CEO when the current CEO Sir Jim Harra retires in April 2025. A recent report from the National Audit Office (NAO) features suggestions to reduce the tax gap and HMRC has published an online tool to help workers or employment businesses using umbrella companies work out gross and net pay. HMRC has also recently launched new online services for platform operators to register and submit reports. VAT on private school fees applies from 1 January 2025 and the latest schedule of HMRC Talking Points live and recorded webinars for tax agents are available for booking. Spaces are limited, so take a look now and save your place. And finally, check HMRC’s online services availability page for details of planned downtime and the online services affected. Latest Agent Update Agent Update: issue 126 is now available. Get the latest guidance and information including: the best way to pay voluntary National Insurance contributions, Simple Assessment, extended period for issuing tax calculation (P800) letters, The upcoming Self-Assessment deadline, and helping to test HMRC’s pay calculator for umbrella company workers. NAO report on the impact of fraud and error on public funds In this report the NAO suggests three ways to reduce the tax gap: HMRC should ensure that it understands the impact of its compliance work so that it can target activities to bring in the most tax revenue, HMRC should make it easier for taxpayers to comply and get help, so they pay the right amount of tax, and HMRC should ensure that tax rules are soundly designed and easy to comply with and evaluate and iterate rules as required. New online tool Last month HMRC collated their guidance, tools and documents for umbrella companies and those that use their services into a single page on GOV.UK. In addition, a new online tool designed to estimate gross and net pay from an umbrella company for a single role and the associated tax deductions was also published. Online services for platform operators Last month HMRC published a new online service to enable platform operators to register with HMRC. Note that even excluded operators who will not be submitting reports will still need to register with HMRC by Friday 31 January 2025. HMRC has also published a new service for platform operators to use to manage their digital platform reporting account after completing the registration process i.e. the service to be used for submitting reports and updating details. Both services are accessed via the Government Gateway ID.

The European Commission has published the annual VAT Gap in the EU Report, which measures the difference between expected VAT revenues and the amount actually collected. Most EU Member States have made significant progress in reducing the VAT compliance gap which was €89 billion in 2022, compared to €121 billion in 2018.

In this week’s post EU exit corner, we bring you the latest guidance updates and publications relevant in the post EU exit environment. The most recent Trader Support Service bulletin is also available as is the latest Brexit and Beyond newsletter from the Northern Ireland Assembly EU Affairs team. The Northern Ireland Affairs Committee has opened an inquiry into the operation of the Windsor Framework (WF) which is accepting evidence until the end of this month and HMRC has sent an email reminder that from 31‌‌‌ ‌‌January 2025 the next stage in the UK’s Border Target Operating Model commences when all European Union imports into Great Britain (GB) will require safety and security declarations. HMRC has also been writing to businesses which move non-qualifying Northern Ireland goods from Northern Ireland to GB to advise how this change will impact; more information on this is set out below. Moving non-qualifying Northern Ireland goods from Northern Ireland to Great Britain from 31 January 2025 From 31 January 2025, a business moving non-qualifying Northern Ireland goods will be required to submit an entry summary declaration prior to the goods arriving in GB  on the following routes:   Northern Ireland to GB, Northern Ireland to GB via Ireland, and European Union to GB via Northern Ireland The requirement for an entry summary declaration is in addition to the existing requirement for an import and export declaration for non-qualifying Northern Ireland goods moved from Northern Ireland to GB.  Which goods will require entry summary declarations?   There is no requirement for entry summary declarations for qualifying Northern Ireland goods, which will continue to benefit from unfettered access arrangements. Businesses can move qualifying goods directly from Northern Ireland to GB without customs or other controls, with extremely limited exceptions. This means the vast majority of goods moving from Northern Ireland to GB will not require entry summary declarations.  However, the following goods will require entry summary declarations from 31 January 2025: goods under a customs special procedure,  goods in authorised temporary storage,  goods which are moved from Northern Ireland and do not merely pass through Ireland before entering GB, and    goods indirectly exported from the European Union to GB via Northern Ireland which do not meet the definition of qualifying Northern Ireland goods when in Northern Ireland.   More information about qualifying Northern Ireland Goods can be found at https://www.gov.uk/guidance/moving-qualifying-goods-from-northern-ireland-to-the-rest-of-the-uk. More information on making an entry summary declaration is available at https://www.gov.uk/guidance/making-an-entry-summary-declaration. A business will need to discuss with their haulier or carrier to understand their plans for submitting the entry summary declaration on their behalf to ensure all parties are ready for this change. This may also include discussing whether there is any additional information they will need the business to provide in order to complete the declarations. The Trader Support Service will continue to submit the export declaration requirement for goods that require these when moved from Northern Ireland to GB.  It will also support the submission of entry summary declarations for non-qualifying Northern Ireland goods from 31 January 2025 when these are moved from Northern Ireland to GB and Northern Ireland to GB through Ireland.  Miscellaneous guidance updates and publications Moving goods between Great Britain and the UK Continental Shelf, Notice made under the Customs (Records) (EU Exit) Regulations 2019, List of customs training providers, Using similar goods to replace customs special procedure goods, Notices made under the Customs (Import Duty) (EU Exit) Regulations 2018, Notices made under the Taxation (Cross-border Trade) Act 2018, Notices made under the Customs (Export) (EU Exit) Regulations 2019, Pay less import duty and VAT when re-importing goods to the UK, Maritime ports and wharves location codes for Data Element 5/23 of the Customs Declaration Service, and External temporary storage facilities codes for Data Element 5/23 of the Customs Declaration Service.

The OECD/G20 Inclusive Framework on BEPS has published the Harmful Tax Practices – 2023 peer review reports on the exchange of information on tax rulings as part of the focus on improving transparency.

Last month, the Tax Administration EU Summit brought together the leaders of tax administrations from across the European Union to discuss their complex challenges. The event demonstrated the collective commitment of EU tax administrations to work together  to address common challenges.

The EU-Chile Interim Trade Agreement (ITA) will enter into force on 1 February 2025, replacing the previous EU-Chile Association Agreement. The ITA introduces a simpler approach to establishing preferential origin, allowing the use of self-certification based on statements on origin or importer’s knowledge.

Last month, the OECD released a pricing tool and fact sheets to facilitate the implementation of Amount B under Pillar Two. The purpose of Amount B is to provide for a simplified and streamlined approach to the application of the arm’s length principle to in-country baseline marketing and distribution activities, with a particular focus on the needs of low-capacity countries. The adoption of Amount B remains under consideration by OECD member countries.

Emma Broderick explains how suppliers of virtual events must account for VAT where customers are located, complicating compliance The EU VAT treatment of live streaming and virtual events services has changed with effect from 1 January 2025. Suppliers of such events will need to consider whether it will be necessary to account for VAT in multiple EU jurisdictions and how to efficiently manage any associated registration ‘footprint’. A virtual event isn’t defined in VAT law, but could include live-streamed events or other online events that involve people interacting in a virtual environment rather than meeting in a physical location.  The change is intended to apply VAT where the service is consumed, in line with the normal place of supply rules for business-to-business (B2B) services and similar rules for electronically supplied services provided on a business-to-consumer (B2C) basis. New measures Currently, VAT is levied on live-streamed events, including virtual events, where that event takes place. This means that live-streamed events are subject to VAT in the country in which the event is taking place, even if the viewers are located in a different jurisdiction. This is the case regardless of the business or non-business status of the customer. From 1 January 2025, EU law applies VAT to such events where the viewer, or customer, is located. This operates as follows: For B2B supplies, the EU business recipient may be required to self-account for reverse charge VAT in their EU country of establishment. For B2C supplies, the supplier will be responsible for collecting and remitting VAT in the EU country where the customer is located. This is intended to bring the VAT treatment of virtual events into alignment with that of other telecommunication, broadcasting and electronically supplied services (including streaming services or the delivery of other pre-recorded content). A pan-European €10,000 threshold applies for EU and NI businesses, and a nil threshold applies for non-EU established businesses. This change follows an amendment to the VAT place of supply rules for certain events services in Directive 2022/542. Irish law has not yet been amended to implement these changes, but we anticipate a statutory instrument to this effect will be issued in the coming weeks. Going forward The VAT treatment of events provided on a B2C basis will change considerably and bring about increased costs of compliance for businesses providing such B2C virtual services. The provider of the online events may need to register and charge VAT in each EU country where their final customers reside. Suppliers of live-streamed and virtual events will need to think about how to identify the location of their consumers and understand the impact of being subject to VAT in another EU jurisdiction. There is a VAT registration simplification available, known as the VAT One Stop Shop, to facilitate one single-EU-wide registration to remit output VAT on supplies, but there remains a challenge of monitoring differing VAT rates across the EU and pricing, contracting and invoicing decisions associated with this. The impact on cross-border B2B supplies should be less significant, as business customers should be able to self-assess for VAT on the reverse charge basis in their country of establishment, but suppliers will still need to consider invoicing and relevant VAT reporting requirements. Emma Broderick is a tax partner at Grant Thornton