In this week’s EU exit corner, we bring you the latest guidance updates and publications relevant to EU exit. We also update you on recent developments in relation to the Windsor Framework and the latest Trader Support Service (“TSS”) bulletin is also available. Last week it was  announced that the TSS is being extended one further year to 31 December 2024. The Institute has been lobbying for a further extension to the TSS and welcomes this decision but will be considering what permanent supports are needed in this area in future.  Update on the Windsor Framework  Last week HMRC published further details on the Windsor Framework as some significant elements of it began to take effect from the end of September.   From 30 September 2023, the new UK Internal Market Scheme expanded the range of businesses able to benefit from the new arrangements provided to protect internal UK movements, including the removal of EU tariffs. In tandem, the new sanitary and phytosanitary “green lane” arrangements took effect, including the new Retail Movement Scheme for agrifood retail products, new rules to allow plants to move into Northern Ireland and new arrangements to enable seed potatoes to move once again from Great Britain to Northern Ireland. As these changes bed down in the coming weeks and months, contact us to share your feedback and any problem areas which arise.  Miscellaneous updated guidance etc.   The following updated guidance, and publications relevant to EU exit are available:-  Customs declaration completion requirements for goods subject to sanitary and phytosanitary checks under the Northern Ireland Protocol;  Draft Decision No 1/2023 of the Specialised Committee on Participation in Union Programmes under the Trade and Cooperation Agreement adopting Protocols I and II and amending Annex 47 to the Trade and Cooperation Agreement;  Third Trade Specialised Committee on Customs Cooperation and Rules of Origin Agenda;  Using the Trader Dress Rehearsal service;  List of customs training providers;  Making an import supplementary declaration;  Making a simplified frontier declaration;  Making a full import declaration;  Data Element 2/3: Documents and Other Reference Codes (Union) of the Customs Declaration Service;  Receive goods into and remove goods from an excise warehouse (Excise Notice 197); and  Paying additional excise duty for goods moving to Northern Ireland.   

The OECD has released the latest outcomes on the implementation of Country-by-Country reporting (CbCR). CbCR is the reporting mechanism which gives effect to BEPS Action 13 and requires tax administrations to collect and share detailed information on large multi-national enterprises operating in their jurisdiction. The OECD has reported that implementation of CbCR in countries has largely been consistent with the Action 13 minimum standard.

The Carbon Border Adjustment Mechanism (CBAM) has entered its transitional phase. CBAM is Europe’s landmark tool to combat carbon leakage. It equalizes the price of carbon between domestic products and imports ensuring Europe’s climate policies are not undermined by less rigorous green standards in third countries. In last Friday’s Sustainability Bulletin, the Institute’s Sustainability Officer, Susan Rossney, included an update on the measure.

Revenue has updated the Tax and Duty Manual  on the Special Assignee Relief Programme (SARP). Paragraph 15 has been amended to provide updated guidance on the certification requirements of a relevant employer or associated company in respect of a relevant employee.   The guidance confirms that there is no statutory requirement for the relevant employer or associated company to submit a completed Form SARP 1A to Revenue within the 90-day time limit. However, this is requested to enable Revenue to review the application and confirm that an employee qualifies as a “relevant employee”.  Revenue notes that, in cases where a Form SARP 1A is not submitted to Revenue and the relief is claimed by the employee for the first time in a Form 11 tax return, the processing of the return may be delayed by Revenue pending a review as to whether the employee actually qualifies as a “relevant employee” for SARP purposes. 

In its response to the consultation “Taxation of Employee Ownership Trusts and Employee Benefit Trusts”, the Institute’s Northern Ireland Tax Committee has recommended that the UK Government undertake a full review of UK employment taxes policy, which should be targeted at assessing how this could be harnessed and reformed to ultimately incentivise employment and reduce the current labour and skills shortages in the UK.  The Committee’s submission also includes a number of recommendations which seek to reduce the cost of employment in certain areas and also recommends that an enhanced form of tax relief for training employees in key skills areas, in the form of a super deduction, should be introduced. Read the Committee’s full recommendations on page 7 of the submission.

The Institute, under the auspices of the CCAB-I, made representations on behalf of members at last week’s meeting of Main TALC. Among the issues discussed, Revenue provided an update on its position regarding the Enhanced Reporting Requirements for employers (ERR) and the tax treatment of general medical services (GMS) income of general practitioners (GPs). In addition, Revenue updated the group on issues raised at the other TALC subcommittees including updates to the wording of the VAT56A accountants’ letters, and the impact of the General Block Exemption Regulations on the Employment Incentive Investment Scheme (EIIS).  In relation to ERR, CCAB-I and all practitioners represented at the meeting continued to voice their concerns with the implementation of these measures. One of the key difficulties is the requirement to report ‘on-or-before’ the making of in-scope payments. CCAB-I raised these concerns in a letter to the Minister for Finance and reiterated these at Main TALC last week. CCAB-I also noted the need for clear guidance to be issued as soon as possible to help employers implement ERR. Revenue noted that a Tax and Duty Manual will issue by the end of October. The introduction of ERR was also contrasted with the implementation of PMOD in recent years One of the key differences being it remains unclear to many businesses just what software systems they will need to introduce to satisfy their obligations. Revenue urged employers to contact their software providers in that regard.   On the matter of the proposed changes to the tax treatment of GMS income of GPs which we have covered in recent editions of Tax News, CCAB-I expressed concerns over the potential commercial impact of the change in practice  and we will be writing to Revenue later this week. Revenue has also committed to publishing a Tax and Duty Manual on the changes as soon as possible.   The VAT56A issue arose from a recent meeting of the TALC Indirect Taxes sub-committee and Revenue has since agreed to meet with practitioners later this week to close out the matter. CCAB-I provided new wording to take account of updates to certain aspects of the professional accountancy framework. We will share the outcome of this meeting in next week’s Tax News.  Lastly, in relation to the Employment Investment Incentive Scheme and the impact of the revised GBER (which we updated readers in last week’s Tax News), Revenue committed to engaging with practitioners to consider the impact of the recent GBER updates. 

Last week we told you about changes which HMRC is making to the waiting times on the Agent Dedicated Line (“ADL”) which take effect from today, Monday 2 October 2023. The Institute wants to hear from agents calling the ADL in the next few weeks as we continue to discuss this change, and its impact, with HMRC. Broadly, the changes will mean longer waiting times with certain types of PAYE calls being rerouted to other helplines. HMRC has since shared some further information and messaging on the changes, which we have outlined below. HMRC’s Representative Body Steering Group forum, at which these changes are being discussed with us and the other Professional Bodies, has passed all feedback received to the various HMRC operational teams implementing them. For example, at present there remains a lack of clarity around the types of PAYE queries which will be diverted to other helplines. We expect to hear more on this aspect in the coming weeks.   It is also unclear how much longer an agent may expect to wait. HMRC has advised us that it will be closely monitoring the revised service and will provide further clarification which will be included in October’s Agent Update publication.  Further discussions will also be held with the Professional Bodies hence why we urge you to get in touch and share your experiences and feedback on the impact of these changes as they bed down. 

This week we bring you HM Treasury’s response to the Institute’s letter on changes to the geographical scope of agricultural property relief and the latest report from the Administrative Burdens Advisory Board (“ABAB”) has been published. At a recent meeting HMRC advised that although the marriage allowance online form is not currently mandatory, using the form may mean that claims are processed quicker. HMRC has also issued another reminder email on the recent alcohol duty changes which took effect from 1 August 2023 and a detailed update has been published on the actions identified at the February 2023 HMRC Stakeholder Conference. And finally, the latest news and information bulletin from HMRC is available.  HM Treasury responds to letter on changes to the geographical scope of agricultural property relief  At end of August, the Institute’s Northern Ireland Tax Committee wrote to the Financial Secretary to the Treasury to express its concerns in respect of the proposal to restrict the geographical scope of agricultural property relief (“APR”) and woodlands relief (“WR”)  from April 2024. HM Treasury has now responded to that letter which you can read on our website.   The Institute recently submitted evidence to the House of Lords Finance Bill Sub-Committee  inquiry into Finance Bill 2023-24 and once again raised its concerns in relation to the APR and WR draft legislation, in addition to the proposal to merge the UK’s R&D tax relief schemes from April 2024. Members will be able to read this submission when the Committee confirms it has accepted the submission as evidence.  Latest report of the Administrative Burdens Advisory Board (“ABAB”)  The Tell ABAB Survey report was recently published and details responses to April’s ‘Tell ABAB Survey’, which this year had a record 7,500 responses. In previous years, responses have averaged around 3,000. Of the responses, 86.9 percent came from businesses and 12.7 percent from tax agents. This represents a significant shift from 2022 when 67.8 percent of responses were from businesses and 32.2 percent from agents.  Board members come from a range of businesses and professions, with their goal being to make “a noticeable difference for small business by supporting HMRC in:-  helping to reduce administrative burdens; and  ensuring that the tax system is easier, quicker, and simpler.”  The key findings from the survey reveal that burdens on business remain a significant concern and they continue to increase year on year. Off-payroll working rules, Making Tax Digital and changes in importing and exporting procedures have contributed to increasing burdens during the survey period. Additionally, businesses state that they have not witnessed benefits of digitalisation yet.  The shift to nomadic working poses challenges. According to the survey, 59.5 percent of those who worked from home or had employees working from home or as nomadic workers, were familiar with HMRC’s working from home guidance. Whilst this percentage might look relatively high, these workers now form a significant part of the workforce, with over 63 percent of respondents stating that they were working from home or as nomadic workers.  There is definite evidence from the survey that guidance to business is improving. Many respondents rated the ease of understanding written correspondence and the information on YouTube videos highly. Whilst there are still problematic HMRC forms, the numbers here are relatively low and although there are remaining frustrations with GOV.UK, these are also relatively low.  Another important message is that respondents continue to express a strong desire to speak to a human advisor. Satisfaction levels on response times for telephone calls remains low, with respondents being dissatisfied with this service for that reason. 

Thursday 5 October 2023 is the deadline to notify HMRC of a new source of income or gain for 2022/23.  Those required to register for self-assessment are:- Anyone who is self-employed or a sole trader which commenced in 2022/23; Anyone not self-employed but who had a new source of income or a gain in 2022/23; or  Anyone who became a partner in a partnership, or a new partnership commenced in business in 2022/23.   Failure to register by the deadline can result in HMRC charging a failure to notify penalty.   

Revenue is to write to the owners of approximately 25,000 properties to advise them of the actions they need to take, where the data available to Revenue indicates that the recipient may have a liability to Vacant Homes Tax (VHT). Revenue has provided a sample of the correspondence which will issue in the coming days.    If a property owner receives this letter, they are required to confirm the status of their property. This is the case even if their property does not meet the relevant conditions for the tax to apply. Revenue will use the information provided to update its VHT register.   Not all property owners who will be liable to VHT will receive a letter from Revenue. If a property owner has a liability to VHT but does not receive a letter, they are still obliged to file a VHT return and complete their self-assessment obligations. A report detailing the basis on which Revenue identified a subset of those who may potentially have a liability to VHT can also be accessed here.  Property owners are responsible for determining whether they have a liability to VHT for a chargeable period and satisfying their pay and file obligations. To assist property owners in understanding their obligations in respect of VHT, Revenue has published comprehensive guidance on its website in addition to the recently published Tax and Duty Manual.  Revenue has advised that VHT will only apply to properties which are residential properties for the purposes of Local Property Tax (LPT) and have been used as a dwelling for less than 30 days in a chargeable period. VHT will not therefore apply to:  derelict or uninhabitable properties,  residential properties which were inhabited for 30 days or more in the relevant chargeable period, or  residential properties which were sold or subject to a qualifying tenancy during the relevant chargeable period.  According to Revenue’s press release, those who own a vacant residential property which does not fall within one of the above exclusions are required to confirm if their property is liable to the tax as soon as possible, and by 7 November 2023 at the latest.  During the confirmation process, property owners will have the option to claim an exemption from VHT, where applicable. It is important that owners with properties which do not fall within any of the above exclusions, but may still be otherwise exempt from the tax, file a return in order to meet their VHT obligations and claim their exemption.  As previously advised, the first chargeable period for VHT is 1 November 2022 to 31 October 2023.   VHT is set at a rate equal to three times the property’s standard LPT rate, that is, the LPT rate for the relevant band before any Local Authority Adjustment factor. The amount is calculated by the Revenue system when a return is submitted. All VHT requirements are in addition to any LPT requirements which apply to a property.  There are a range of options available to pay VHT, including:  spreading the payments over 2024 by monthly direct debit,  paying in full through an Annual Debit Instruction (ADI), and  paying in full by credit or debit card.  Property owners who intend paying by monthly direct debit should instruct Revenue by 1 January 2024. Monthly direct debit payments will then be deducted each month from 15 January 2024 to 15 December 2024. ADI payments will be taken on 21 March 2024 unless the property owner elects for an earlier date. Payment by personal credit or debit card will be processed on the day the payment details are provided.    

HMRC’s latest schedule of live and recorded webinars is now available for booking. Spaces are limited, so take a look now and save your place.  

Do you use HMRC online services? Don’t be caught out by the planned downtime to some services. HMRC are warning about the non-availability of specific services on the HMRC website, a range of services are impacted. Check the relevant page for information on planned downtime.