This week we bring you a report from HMRC that Russia considers itself to have unilaterally suspended substantially all of its Double Tax Treaty (“DTT”) with the UK, and HMRC is seeking feedback on the impact that the Self-Assessment Helpline closure has had on the work of agents. A reminder has been issued that from 20 July 2023 assignments of income tax repayments are not accepted as valid nominations and minutes are available from the May 2023 Wealthy External Forum meeting which the Institute was represented at. We have also been asked to remind companies of the need to submit the additional information claim form when submitting claims for R&D tax relief. And finally, the House of Lords Finance Bill Sub-Committee has opened an inquiry into the draft Finance Bill 2023/24; the deadline for written evidence submissions is Friday 6 October 2023.  Suspension of UK/Russia DTT  Russia has suspended substantially all material provisions of many of its Double Taxation Agreements by Presidential decree dated 8 August 2023. This action affects 38 countries, including the 1994 UK-Russia Double Taxation Convention, and the UK was notified on 15 August 2023.  The suspension includes the treatment of dividends, interest, royalties, capital gains, business profits, employment income and pensions, together with protection against discrimination. The provision for elimination of double taxation has not been fully suspended. The suspension likely means that Russia will not honour any agreed limits on what it may tax at source, and that only limited relief from double taxation will be available in Russia.  According to the announcement on GOV.UK, the UK-Russia Convention does not permit this unilateral action hence the UK has asked Russia to reverse the suspension, considers the treaty to remain in force, and is continuing to comply with its terms. The government is considering next steps and will provide further information in due course.  Impact of SA helpline temporary closure on agents  HMRC is currently evaluating the impact of the recent closure of its Self-Assessment Helpline which reopened earlier this month following a closure period from 12 June to 4 September 2023. As part of this, HMRC is also seeking to better understand the impact of the closure on agents. If you have any feedback about the impact on agents that you think would be valuable to share, please email external.affairs@hmrc.gov.uk.  Deeds of assignment no longer treated as nominations  From the date of the Spring Budget on 15 March 2023, assignments of income tax repayments were rendered void. However, for a transitional period only, HMRC continued to accept nominations of income tax repayments as non-legally binding nominations.   This transitional period ended in July meaning from 20 July 2023 any assignment of an income tax repayment is no longer accepted as a nomination. As a result, HMRC will repay the taxpayer directly where there is no valid nomination.  Reminder: importance of submitting additional information form with R&D tax relief claims  HMRC has asked us to issue a reminder that from 8 August 2023, R&D tax relief claims by companies will only be considered as valid when accompanied by the additional information form (“AIF”). According to HMRC, nearly half of all R&D tax relief claims received between 8 August and 3 September 2023 did not include the AIF.  As a result, we are aware that HMRC is in the process of writing to companies and/or agents that have submitted claims for R&D tax relief without the AIF. The letter advises that the R&D claim is not valid and as a result has been removed from the company tax return but can be reinstated if the return is amended to include the R&D claim and the AIF, if this is within the time limit to do so.  The letter advises that boxes 656 and 657 of the company tax return should be ticked, where appropriate, to indicate that a R&D claim notification and AIF have both been submitted.   Readers are advised that a known error is preventing some claimants (those claiming under the “large” company R&D expenditure credit scheme) from making an entry in both boxes 655 and box 657.  HMRC advises that if an error appears, the company should not make entries in these boxes and should instead use the white space on the corporation tax return to say that an R&D claim is being made and the AIF has been completed and submitted.  

Today is the deadline to tell us your views on HMRC’s consultation on the taxation of employee ownership trusts and employee benefit trusts. The consultation closes next Monday 25 September 2023 and examines potential proposals to reform the tax treatment of each of these types of trust. Let us know your views by close of business today, Monday 18 September 2023. The aim of this consultation is to ensure that the tax regimes for these trusts remain focused on the targeted objectives of rewarding employees and encouraging employee ownership, whilst preventing tax advantages being obtained through use of these trusts outside of these intended purposes.  

In this week’s EU exit corner, we bring you the latest guidance updates and publications relevant to EU exit and the latest Trader Support Service and Borders Weekly Stakeholder bulletins are also available. Miscellaneous updated guidance etc.   The following guidance, and publications relevant to EU exit are available:-  Known error workarounds for the Customs Declaration Service (CDS);  Classifying drones and aircraft parts for import and export;  Classifying electrical equipment for import and export;  Classifying tobacco for import and export;  Remote internal temporary storage facilities codes for Data Element 5/23 of the Customs Declaration Service;  Internal temporary storage facilities (ITSFs) codes for Data Element 5/23 of the Customs Declaration Service;  Maritime ports and wharves location codes for Data Element 5/23 of the Customs Declaration Service;  Data Element 2/3: Documents and Other Reference Codes (Union) of the Customs Declaration Service; and  Data Element 2/3: Document and Other Reference Codes: Licence Types – Imports and Exports of the Customs Declaration Service (CDS). 

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.  

Check out the latest items on the Agent Forum. Remember, in order to view each item, you must be signed up and logged in. HMRC has also recently updated the Agent Dashboard which now includes Inheritance Tax. This dashboard is updated on a weekly basis and should be regularly checked to ascertain expected processing dates and HMRC’S current performance and service levels.  All agents, who are a member of a professional body, are also invited to join HMRC’s Agent Forum. This dedicated Agent Forum is hosted in a private area within the HMRC’s Online Taxpayer Forum. You can interact with other agents and HMRC experts to discuss topical issues and processes. 

Revenue has updated the Help to Buy – Summary Guide for Applicants to reflect recent changes to the Help to Buy (HTB) online system. The updated guidance provides more detail on various steps involved in making a HTB application. 

Revenue has updated the Tax and Duty Manual on the tagging and submission of financial statements in iXBRL. The updated guidance reflects the withdrawal of older taxonomies and the acceptance of the 2023 taxonomies. In addition, the requirement for the ‘PrincipalCurrencyUsedInBusinessReport’ tag in all iXBRL submissions from 2 September 2023 is confirmed. 

The Parliamentary Budget Office has published a new briefing note on Recent Reforms to European Union Value Added Tax 2020-2022 providing a brief overview of some the most recent initiatives from the European Commission to tackle tax avoidance and modernise the EU’s VAT rules.  Recent reforms to VAT in the EU from 2020 to 2022, include:  The Package for Fair and Simple Taxation  The VAT e-Commerce Package   VAT in the Digital Age   The ‘Reduced VAT Directive’  

A key function of the Institute’s Tax Department is responding to the various public consultations which arise throughout the year. We normally update you on the work we do as it arises. However, as we took a break from issuing Tax News in August, we are providing an update this week on the latest contributions.  Where the Irish Government seek feedback on a particular matter, we typically respond under the auspices of the CCAB-I where there is a tax focus. The CCAB-I’s Tax Committee South is the body responsible for overseeing the submissions that we prepare. This body provides the vital technical input, and their role is pivotal in the overall quality of our output. We have summarised the latest contributions to the public discourse below.  Feedback Statement on New Taxation Measures to apply to Outbound Payments  This consultation was a follow-up to the Department of Finance’s public consultation in November 2021. The Feedback Statement contained a range of proposals based on the feedback received then. The legislation proposed sets out measures to apply to outbound payments of interest, royalties, and dividends to prevent perceived double non-taxation.   In our submission, CCAB-I noted the significant tax reforms which have taken place in successive Finance Acts and the impending landmark legislation being introduced as part of the EU Minimum Taxation Directive. As a result, a range of measures to safeguard against double non-taxation outcomes have already been introduced and have already had a significant impact.   In that regard we urged caution in terms of increasing the compliance burdens faced by MNE groups and asked that the new legislation is targeted at double non-taxation outcomes and not unintended ones. CCAB-I also recommends that any new legislation is drafted in a simple and targeted manner, so genuine commercial transactions are not affected and Ireland’s competitiveness as a home for international investment remains in situ.  Pillar Two Implementation Second Feedback Statement  This consultation was a follow-up to the Department of Finance’s initial feedback statement in May of this year. Since the first feedback statement, we have been engaged extensively with the Department of Finance and Revenue via the TALC BEPS Sub-committee. The key area of focus for the Government ahead of Finance (No.2) Bill 2023 is in the design of the Qualified Domestic Minimum Top-up Tax. In addition, we noted the need for clarity as to the interaction of the accountancy frameworks under which the various entities in an international group operate.  Funds Sector 2030: A Framework for Open, Resilient & Developing Markets  This consultation by the Department of Finance is a wide-ranging and ambitious project. CCAB-I's contribution has focused on the tax-related issues, primarily contained in Sections 5, 6 and 7 of the consultation. We have highlighted the success of the Irish funds regime and how integral it is to the overall Irish financial services’ sector. We have made several key suggestions which we believe will improve the functioning of the funds’ sector and ensure Ireland remains an attractive location for fund managers across the world. 

A delegation from the Institute under the auspices of the CCAB-I attended the September meeting of the TALC Indirect Taxes Sub-committee. Issues discussed included proposed updates to the wording of the VAT56A accountant’s letter (in lieu of the accountant’s certificate on the form itself) to Revenue.  The Institute has been engaged extensively with Revenue’s representatives seeking agreement of wording to satisfy Revenue’s requirements in lieu of certification. We understand there is mixed experience from practitioners with some Revenue officials accepting versions of the letters that other officials are refusing. We also raised concerns with the move to single-year authorisations under the VAT 56A procedures where before the same operations would have been granted two and/or three-year authorisations.  The minutes of the meeting will be approved at the next meeting in November. You can access the minutes from all previous meetings here.  

A delegation from the Institute, under the auspices of the CCAB-I, attended the September meeting of the TALC Direct and Capital Taxes sub-committee. Among the issues discussed were the definition of “farmer” for the purposes of agricultural relief, the tax treatment of GMS income among partners in a GP practice, and the Employment Investment Incentive Scheme (EIIS).  Regarding agricultural relief, Revenue is examining the impact of “replacement land” on the definition of “farmer”. It was also noted that the manual needs to be updated generally.  On the EIIS, Revenue is considering the impact of the updated General Block Exemption Regulation (GBER) on the scheme. Revenue is engaged with the Department of Finance presently and will suggest a meeting between the Department of Finance and stakeholders in due course.  The minutes of the meeting will be published on revenue.ie once they are approved at the next meeting in November. You can access the minutes from all previous meetings here.