Welcome to this week’s Technical Roundup. In developments this week, the European Financial Reporting Advisory Group (EFRAG) has announced that it has completed its due process regarding amendments to IAS 21, the Effects of Changes in Foreign Exchange Rates: Lack of Exchangeability and has submitted its Endorsement Advice Letter to the European Commission.  The European Banking Authority has extended its AML/CFT guidelines to crypto-asset service providers (CASPs). The new guide highlights risk factors and mitigating measures CASPs must consider. Read more on these and other developments that may be of interest to members below. Auditing IAASA Consultation on ISA (Ireland) 505 IAASA has published a Consultation paper seeking views on their proposed revisions to International Standard on Auditing (ISA) (Ireland) 505 External Confirmations with related conforming amendments to ISA (Ireland) 600 (Revised February 2023) Special Considerations – Audits of Group Financial Statements (Including the Work of Component Auditors). The proposed effective date of the revised standard is for audits of financial statements for periods beginning on or after 15 December 2024. Responses are requested by Friday 23 February 2024. The consultation paper and proposed revised standard can be found here along with the proposed conforming amendments and a response template. IAASB Consultation on publicly traded and public interest entities definitions The IAASB has launched a consultation process on proposed narrow scope amendments to ISQMs, ISAs AND ISRE 2400 (REVISED) to achieve greater convergence with the International Ethics Standards Board for Accountants’ (IESBA) International Code of Ethics for Professional Accountants (Including Independence Standards). These proposed revisions have two key objectives: align definitions and requirements in IAASB standards with new definitions in the IESBA Code. the amendments would extend the applicability of existing differential requirements for listed entities to meet heightened stakeholder expectations regarding audits of public interest entities (PIE). Key proposed revisions include extending the scope of the entities included under the International Standards on Quality Management and the International Standards on Auditing such that they will be subject to: Engagement quality reviews; providing transparency in the auditor’s report on specific aspects of the audit, including auditor independence, communicating key audit matters, and the engagement partner’s name; and communicating with those charged with governance to help them fulfil their responsibility overseeing the financial reporting process. Responses are requested by 8 April and the documents can be accessed here. Financial Reporting EFRAG, the European Financial Reporting Advisory Group, has published its December 2023 update which summarises public technical discussions held and decisions taken during the month. EFRAG has announced that it has completed its due process regarding amendments to IAS 21, The Effects of Changes in Foreign Exchange Rates: Lack of Exchangeability, and has submitted its Endorsement Advice Letter to the European Commission. EFRAG has published its draft comment letter on the International Accounting Standards Board’s (IASB) Exposure Draft ED/2023/5 Financial Instruments with Characteristics of Equity (Proposed amendments to IAS 32, IFRS 7 and IAS 1). Comments are welcomed by EFRAG by 20 March 2024. ESMA, the European Securities and Markets Authority, has published the latest edition of its newsletter. Anti – money laundering 10 January 2024 saw the commencement of the Money Laundering and Terrorist Financing (Amendment) Regulations 2023 (Amending Regulations), which were laid in mid-December and provide for changes to the enhanced due diligence (EDD) requirements in relation to so-called domestic PEPs (i.e. a politically exposed person entrusted with prominent public functions by the UK).  The Economic Crime and Corporate Transparency Act (ECCTA) received royal assent on 26 October 2023. It includes a new much-debated failure to prevent fraud offences and new enhanced powers for UK Companies House bringing changes to the way it will conduct its business. Few of the provisions will apply immediately with secondary legislation and system development within Companies House required for many of the provisions. The Institute has produced a brochure outlining some of the changes which may be of interest to members which can be accessed here. One of the intentions of the ECCTA is to improve the accuracy and quality of the data of the registers of Companies House and to help tackle economic crime and drive confidence in the UK economy. Companies House have published a summary of steps that will be taken to  improve Companies House data and also outlines a new identity verification process that will be operational later in 2024. One of what the Serious Fraud Office in the UK describes as key provisions of the ECCTA came into force on 15 January 2024 with the extension of the Serious Fraud Office’s section 2A ‘pre-investigation’ powers. Prior to the extension the SFO writes (in a social media newsletter) that it could under section 2A obtain information from companies or individuals to support its intelligence work and to help determine whether to open an investigation.  From the 15 January SFO notes it has these powers across every intel operation - including fraud.  This means it can now obtain data such as banking records before a formal investigation even begins, which will also allow them to restrain assets more quickly where they identify they could be at risk - helping to speed up the early investigative stage of their cases and better protect victims’ money. Sustainability The IFRS Foundation and Global Reporting Initiative have published a summary of interoperability considerations for greenhouse gas (GHG) emissions. This illustrates the areas of interoperability a company should consider when measuring and disclosing Scope 1, Scope 2 and Scope 3 GHG emissions in accordance with both GRI 305: Emissions and IFRS S2 Climate-related Disclosures. IFAC, The International Federation of Accountants, has published “A Literature Review of Competencies, Educational Strategies, and Challenges for Sustainability Reporting and Assurance”. This report discusses the new and existing competencies required of accountants to meet the sustainability-related disclosure, reporting and assurance challenges faced by stakeholders. Other news The Government recently approved guidance on the use of AI in the Public Service, brought to Cabinet in the wake of agreement on a new European AI Act reached between the European Parliament and the Council.  The Government has instructed that all AI tools used by the Irish Public Service should comply with seven requirements for ethical AI that have been developed by the European Commission’s High Level Expert Group. The European Banking Authority’s latest AML/CFT Newsletter is out. Take a look for the latest on consultations, new guidelines, risks and the EBA's work on tackling financial crime. The European Banking Authority has extended its AML/CFT guidelines to crypto-asset service providers (CASPs). The new guide highlights risk factors and mitigating measures CASPs must consider. The Government Chief Whip, Minister Naughton, has published the Spring 2024 legislative programme with 46 priority bills due for progression. The AI Advisory Council, established by Minister of State with responsibility for Digital, Dara Calleary TD, to provide independent expert advice to government on artificial intelligence policy, met for the first time on 17 January. The Council will provide independent expert advice to government on artificial intelligence policy, with a specific focus on building public trust and promoting the development of trustworthy, person-centred AI. For further technical information and updates please visit the Technical Hub on the Institute website.    This information is provided as resources and information only and nothing in the information purports to provide professional advice or definitive legal interpretation(s) or opinion(s) on the applicable legislation or legal or other matters referred to in the information. If the reader is in doubt on any matter in this complex area further legal or other advice must be obtained. While every reasonable care has been taken by the Institute in the preparation of the information we do not guarantee the accuracy or veracity of any resource, guidance, information or opinion, or the appropriateness, suitability or applicability of any practice or procedure contained therein. The Institute is not responsible for any errors or omissions or for the results obtained from the use of the resources or information contained herein.  

In Irish news, Institute representatives attended the first meeting of the TALC Simplification subgroup and Revenue has updated the guidance for returns by employers in relation to reportable benefits under the Enhanced Reporting Requirements. In UK news, in its response to the consultation on the updated draft Making Tax Digital (“MTD”) for Income Tax Legislation, the Institute once again reiterates the need for a higher exemption limit, and this week’s miscellaneous updates features the concerns of the Administrative Burdens Advisory Board in relation to MTD.  Ireland Institute representatives, under the auspices of the CCAB-I, attended the first meeting of the TALC Simplification subgroup last week. Revenue has released the 2023 ROS Form 11. Revenue has updated the guidance for returns by employers in relation to reportable benefits under the Enhanced Reporting Requirements (ERR) which came into effect on 1 January 2024.   UK Read the Institute’s response to the latest MTD consultation on the updated draft legislation. This week’s miscellaneous updates features the 2023 Annual Report of the Administrative Burdens Advisory Board which looks at MTD for Income Tax amongst other issues.     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 previously reported, taxpayers have until 1 May 2024 to agree a Phased Payment Arrangement (PPA) with the Irish tax authorities to repay tax debt held within the Debt Warehousing Scheme.  However, some changes to the scheme are expected following comments last week from Minister for Finance, Michael McGrath TD, as he urged businesses to engage with Revenue. The remarks follow reports that businesses in certain sectors will face difficulties in repaying the warehoused debt. Revenue’s stated priority is to assist taxpayers in addressing the payment of their warehoused debts as flexibly as possible and are encouraging taxpayers to engage with officials now to address the debt position.  The Institute will keep members apprised of any updates via Tax News. The Debt Warehousing Scheme is currently in Period 3, running from 1 January 2023 to 1 May 2024, with interest accruing at 3 percent per annum on the unpaid debt. The 3 percent interest charge will be incorporated into the PPA for its duration. Where there is no PPA, the interest will be charged retrospectively.   Taxpayers are reminded that while they have until 1 May 2024 to agree a PPA with Revenue, they can make interim payments during this period, and also request for the offset of any refunds owing against the balance of tax warehoused.   Revenue has prepared a number of ‘How to” videos in relation to the PPA process which are now available on the Revenue website (link to videos).   The Institute will continue to keep members updated via Tax News.

Following the extension to 31 December 2025 of the scheme for accelerated capital allowances for energy-efficient equipment, as provided for in section 285A TCA 1997, Revenue has updated the relevant Tax and Duty Manual. 

Following amendments made in Finance (No.2) Act 2023, Revenue has updated the Tax and Duty Manual which provides guidance on the income tax exemption of certain profits from the microgeneration of electricity by an individual their main residence.   Section 216D TCA 1997 provides for an exemption from income tax, USC and PRSI for certain profits arising to a qualifying individual from the microgeneration of electricity. Finance (No.2) Act 2023 increased the exempt amount from €200 to €400 and extended the scheme to 31 December 2025.   There is no requirement for individuals to include the exempt profits in an income tax return, but where the annual profit exceeds the exempt amount, that excess must be declared and will be subject to income tax, USC and PRSI under Schedule D Case IV. 

Revenue has updated the Tax and Duty Manual that provides guidance on the Interest Limitation Rule (ILR). The updated manual includes a new section 15 which addresses the interaction of ILR and foreign currencies. 

Revenue has updated the Tax and Duty Manual that provides procedures for valuing property for Tax and Duty purposes. The updated guidance outlines the revised processes for obtaining independent property valuations for Tax and Duty purposes, including referral to the Valuation Division of Tailte Éireann. 

Revenue has updated the Tax and Duty Manual for returns by employers in relation to reportable benefits under the Enhanced Reporting Requirements (ERR) which came into effect on 1 January 2024.   The updated guidance contains information about the service for compliance approach to be taken by Revenue to support businesses with the regime until 30 June 2024 as set out in a press release. During this time, Revenue will not be operating any compliance programmes in relation to the ERR and will not seek to apply any penalties for non-compliance.   The revised guidance also prescribes the reporting period, the form, and other particulars or documents that will apply in regard to reportable benefits. 

Following the commencement of the enhanced reporting requirements for employers (ERR), Revenue has updated the Tax and Duty Manual in respect of the  Income Tax (Employments) Regulations 2018. The updated manual reflects the changes made as a result of the Income Tax (Employments) Regulations 2024 S.I No.1 of 2024, effective from 4 January 2024.  This Institute, under the auspices of CCAB-I will continue to engage with Revenue on ERR and will keep members updated on operational developments.   The regulations have been amended to include definitions specific to ERR. Further amendments address the requirements:  to use an employment identifier for each employee where the employee’s PPSN is available;  to notify Revenue of the relevant particulars of the payment/benefit on or before the provision of any reportable benefit to an employee;  to retain all documents and records relating to the provision of a reportable benefit to an employee for a period of six years after the end of the year to which they refer.  Further information is available in eBrief no.011/24. 

In response to the consultation on the draft updated MTD for Income Tax legislation, the Institute took the opportunity to highlight its ongoing concerns in relation to this project, including the need to uplift the exemption limit. In addition, the lack of available software and small numbers currently participating in the trial are worrying. The Institute’s Northern Ireland Tax Committee was responding to the consultation opened last month into the draft legislation which has been updated to reflect the changes announced in December 2022 and as part of the Small Business Review in November 2023.  Key recommendations also featured in the Institute’s response include the following:- HMRC should seek to develop the detailed guidance on MTD for Income Tax after a period of consultation with stakeholders - this should contain practical worked examples/case studies of different scenarios and should carefully distinguish between the digital recording keeping requirements and functional compatible software requirements;  This guidance should be published in a timely manner in advance of the commencement date;  HMRC should work at pace and aim to publish the final MTD for Income Tax legislation, associated notices, and more detailed guidance as a matter of urgency;   The tax year from which new sources of trading or property income falling within MTD for Income Tax should be reported should be amended to the next tax year after acquiring that new source of income;   The quarterly filing deadline should be set as the seventh day of the next month to align with the VAT return filing deadline;   Unincorporated businesses should be able to move out of MTD for Income Tax in the next tax year where, turnover has fallen below the exemption limit and by a significant percentage; and   HMRC should undertake a detailed matching exercise to remove any anomalies so that quarterly update information matches that reported on the relevant self-assessment returns for trading and property income. 

As previously advised, Revenue has launched a public consultation on modernising Ireland’s VAT administration, seeking stakeholder feedback regarding Business to Business (B2B) and Business to Government (B2G) VAT reporting supported by mandatory e-invoicing. Revenue has extended the consultation period from 12 January to Wednesday, 31 January 2024.  The Institute, under the auspices of the CCAB-I, is responding to this consultation. Members wishing to provide input can email us.  

This week we bring you the news that the 2023 annual report of the Administrative Burdens Advisory Board “Better tax for better business” highlights its concerns in relation to Making Tax Digital for income tax. The notes from the most recent meeting of the Wealthy External Forum meeting which was held in October 2023 are available; Chartered Accountants Ireland is represented on this forum by a member firm. The OECD Inclusive Framework has released the third set of Pillar 2 administrative guidance and HMRC has confirmed that donations to charities of crypto assets do not qualify for gift aid tax relief.   Administrative Burdens Advisory Board “Better tax for better business” report   The 2023 annual report of the Administrative Burdens Advisory Board “Better tax for better business” was published last month. Amongst other items, the report highlights Making Tax Digital for income tax (“MTD for ITSA”) as a priority area and in particular, that testing via the trial “will be mission critical for MTD ITSA, which is a far more complex proposition than MTD for VAT.” Overall, the Board concludes that time is short, and many challenges remain.  The Board is also concerned about the emerging climate and messaging used by HMRC this year which discourages taxpayers from calling HMRC helplines. Although it has some sympathy with HMRC in trying to encourage taxpayers to do some basic research and checking themselves, rather than always calling HMRC helplines, restrictions on helplines need to be carefully considered and designed when there is so much that taxpayers (and HMRC) can still find difficult and make mistakes with during tax administration activities. HMRC need to work towards a system where helpline support is there for genuine difficulties - which in turn means improving guidance. The Board is also keen to continue exploring where there is further scope to simplify and modernise the tax system.  OECD Pillar 2 administrative guidance   The updated guidance released last month includes the below items. Clarifications for the transitional Country-By-Country reporting safe harbour as follows:- Purchase price accounting adjustments in financial accounts;  Various calculation and application issues; and  A rule that requires adjustments to the tested jurisdiction’s profit before tax and income tax expense with respect to certain hybrid arbitrage arrangements.   Clarifications for the application of other aspects of the GloBE rules as follows:-  Calculation of the €750 million revenue threshold;  Mismatch between Fiscal Years of UPE and another Constituent Entity;   Mismatch between Fiscal Year and Tax Year of a Constituent Entity;  Further guidance on the allocation of Blended CFC Taxes;   Transitional Filing Deadlines for MNE Groups with Short Reporting Fiscal Years; and  A simplified Calculation Safe Harbour for Non-Material Constituent Entities.   According to an email from HMRC, it is the UK’s intention to ensure that this latest guidance is reflected in the UK Pillar 2 legislation. HMRC has also asked us to draw your attention to the release of additional draft HMRC guidance on which views are welcome by email.   Donations to charities of crypto assets  HMRC has recently updated its guidance on gift aid which confirms that donations of crypto assets do not qualify for gift aid relief. This is on the long-held view of HMRC that such assets are not currency or money. Should the crypto assets be converted into ‘money’ and then donated to the charity, then this may qualify for gift aid tax relief if the relevant conditions are met.