The European Council has agreed on the new directive proposal from the EU Commission to introduce an electronic tax certificate for VAT exemptions. 

Read our update on publications in this area since October 2023. Belarus: tax treaties, New Zealand: tax treaties, 2023 UK-New Zealand Memorandum of Arrangement — in force, Luxembourg: tax treaties, International Tax: UK Real Estate Investment Trusts (REIT) property income dividends — UK-Japan Double Taxation Convention, San Marino: tax treaties, Norway: tax treaties, Peru: tax treaties, Liechtenstein: tax treaties, and Romania: tax treaties.

The latest tidbits features updated guidance across a wide range of areas. Capital Gains Tax relief on gifts and similar transactions (Self Assessment helpsheet HS295), Tell HMRC that Inheritance Tax is due on a gift or trust (IHT100), Avoid and report internet scams and phishing, Check genuine HMRC contact that uses more than one communication method, Claim the residence nil rate band, HMRC email updates, videos and webinars for Self Assessment, Complain about HMRC, Tell HMRC your employment related securities scheme has ended, Submit your employment related securities return, Late registrations for employment related securities, Register your employment related securities scheme, Submit an Enterprise Management Incentives notification, How employment related securities work if you're an employer, Set up as a sole trader: step by step, Corporation Tax: penalty determinations (CT211 Notes), Tax when you get a pension, Apply for a certificate to confirm you will pay UK National Insurance while self-employed abroad temporarily (CA3837), Tax-Free Childcare, How Inheritance Tax works: thresholds, rules and allowances, Economic Crime Supervision Handbook, Pay voluntary Class 3 National Insurance, Redundancy: your rights, Tax on your private pension contributions, National Insurance rates and categories, Tax if you come to the UK, Tax on termination payments, Company Tax Returns, Check you're eligible for free childcare if you're working, Applying for probate, Business Leasing Manual, Collection of Student Loans Manual, and Tell HMRC that Inheritance Tax is due on the 10 year anniversary of a trust (IHT100d).

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. Miscellaneous guidance updates and publications Regulated aerodrome location codes for Data Element 5/23 of the Customs Declaration Service, Remote internal temporary storage facilities 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, Authorised Consignee Temporary Storage (ACTS) location codes for Data Element 5/23 of the Customs Declaration Service, and Lit of customs training providers.

In this week’s miscellaneous updates, HMRC has published a new Spotlight on using managed service company (MSC) products and the Government has published a new article which aims to provide more information on the controversial changes announced in the Budget to agricultural property relief (APR) for inheritance tax which will commence from April 2026. A new ‘side hustle’ tool has recently been published which aims to help individuals decide if income from online platforms needs to be declared to HMRC. The latest schedule of HMRC Talking Points live and recorded webinars for tax agents are available also 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. Spotlight on using managed service companies In this Spotlight, HMRC is warning individuals against using MSC products. The Spotlight also explain the difference between MSC providers and traditional accountants. By way of reminder, the MSC rules aim to prevent an individual securing a tax advantage by providing their services to end clients through an intermediary, for example a company. A number of conditions must be met for a company to be treated as an MSC, including that an MSC provider is involved with the company.  The Spotlight also provides guidance on the meaning of ‘MSC’ and ‘MSC provider,’ contains an example and sets out the following features of a common MSC product:  advertisements, for example, internet ‘pop-ups,’ which promise to maximise the person’s take-home pay, marketing which encourages the person to work using a company by becoming a shareholder, taking a small salary and receiving dividends, services are standardised and are not tailored to the person’s circumstances, fees are variable, going up when the person is working and down when they are not, and software, which usually includes ‘suggestive navigation,’ directs the person to the most tax advantageous result.  Budget change to APR The Government has published an article intended to explain the changes to APR announced at the Autumn Budget 2024. The article sets out how the changes are expected to work and includes  examples. It also contains the government’s latest figures for how many estates will be affected. Last week the Institute released a Press Release with comments from the NI Tax Committee Chair Janette Burns that sets out the disproportionate and damaging impact that the Budget’s employment and capital taxes changes will have for businesses in Northern Ireland. New HMRC online ‘side hustle’ guidance and tool Ahead of the 2023/24 online self-assessment filing deadline, a new range of resources has recently been published by HMRC to assist taxpayers with income from what is often referred to as a ‘side-hustle’ in deciding if this income needs to be reported to HMRC. Firstly, HMRC has published a new online tool which individuals can use to check if they need to declare income from using an online marketplace or social media to: sell personal possessions, goods or services, create online content, or rent out property. This includes step-by-step questions to help individuals work out if they need to tell HMRC about this type of income. A new guidance page is also available which discusses a number of common examples. HMRC is keen to stress that the rules about what is taxable income are unchanged. From 1 January 2024, digital platform operators are required to collect and report to HMRC certain details about sellers on their platforms. The first reports are due by 31 January 2025.

Ahead of the 2023/24 online self-assessment (SA) filing deadline of 31 January 2025, HMRC has issued several key reminders. Important guidance on the transition year to basis period reform, and in particular applying to HMRC for information on overlap relief, is also contained in the November Agent Update which sets out that overlap relief applications be submitted as early as possible and preferably by 31 December 2024. We also remind you that 30 December 2024 is the deadline to file 2023/24 SA returns online to ensure that a taxpayer can have their SA bill collected through their PAYE tax code when certain conditions are met. 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 at the above link also sets out how to pay a simple assessment tax bill, and 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 week the Institute attended the launch event in London on 11 December for ICAEW and the Chartered Institute of Taxation’s (CIOT) joint report on HMRC services. The report was formulated after research was undertaken with 31 firms over a period of six weeks. You can download of a copy of the report here. The report contains a number of recommendations which will be of interest to tax practitioners and government officials alike. HMRC were represented at the meeting and answered questions from the audience frankly and openly. The Institute also received a letter last month from HMRC on its services which proposes a meeting in 2025 to “review the current position and agree on our priorities.” The Institute will be engaging with this process as part of its ongoing and regular discussions with HMRC on service levels. Members can feedback on HMRC services at any time by email. The new joint report from ICAEW and the CIOT contains 10 practical recommendations which you can read on page 6. Many of these recommendations reflect the Institute’s comments on HMRC service levels in its pre-budget letter to the Exchequer Secretary to the Treasury earlier this year. Last month HMRC’s First Permanent Secretary and Chief Executive, Sir Jim Harra, gave oral evidence to the Public Accounts Committee on HMRC customer services and in particular ‘front line’ information on the Government’s additional investment in HMRC announced in the recent Budget and how this could impact on HMRC’s work. 

Ahead of the 2023/24 self-assessment online filing deadline next month, HMRC has recently updated guidance to reflect that agents should expect to wait up to 40 working days for a response to postal applications to register for an agent services account or for agent codes for corporation tax and self-assessment (SA). Previously, HMRC aimed to respond within 28 working days. If an agent already has a HMRC online services account and at least one authorised client (for SA, corporation tax, PAYE or VAT), the best action to take is to immediately create an agent services account online instead of applying by post.

Part 5 Stamp Duties Consolidation Act 1999 provides for a charge to Stamp Duty on particular instruments. Revenue has updated the guidance to state that Revenue accepts that a contract or agreement for sale (section 31A), a licence agreement (section 31B), or an agreement for a lease (section 50A) is deemed to be executed on the date on which the 25 percent threshold, as referred to in each of those sections, is reached. The guidance on section 31E SDCA 1999, which provides for a higher rate of Stamp Duty to be charged on bulk acquisitions of residential property (excluding apartments), has been updated to reflect the increase in the higher rate from 10 percent to 15 percent on 2 October 2024.

Revenue has updated the Tax and Duty Manual which provides guidance on accelerated capital allowances available for gas vehicles and refuelling equipment under section 285C TCA 1997. The scheme is available in respect of capital expenditure incurred on gas and hydrogen vehicles and refuelling equipment used for the purposes of carrying on a trade. The manual has been updated to reflect the extension of the scheme to 31 December 2025.

Revenue has published a new Tax and Duty Manual to provide guidance on the application of the leasing ringfence in sections 403 and 404 TCA 1997. The ringfence is intended to prevent the creation of tax advantages using leasing structures by restricting how excess capital allowances arising from leased machinery and plant may be used by a leasing company or group. Section 403 TCA 1997 places a ringfence around the leasing of machinery or plant generally such that capital allowances on leased machinery or plant can be set off only against leasing income, or amounts arising from “lease-adjacent” activities and not against any other income or gains of the company or wider group.  Section 404 TCA 1997 places additional restrictions on “balloon leases.” These are leases that are structured to give rise to accelerated allowances while deferring the taxation of lease receipts to the end of the lease. This ringfence may also apply to certain restructuring and sale and leaseback arrangements.  It is to be noted that these ringfences are independent of one another, apply to different types of leases, and have different rules regarding the usage of restricted allowances.

Revenue has updated the Tax and Duty Manual which provides guidance on the anti-hybrid rules. The amendments are as follows: Section 1: Introduction to hybrid mismatches, to clarify that OECD guidance on hybrid mismatches cannot be relied upon to disapply the hybrid mismatch rules in ATAD2, as transposed into Part 35C. Section 2: Mismatch outcomes, updated to introduce the concept of primary and defensive anti-hybrid rules. Section 3: Interpretation (Section 853Z), updated to include definitions of ‘deduction’ and ‘structured arrangement’. Section 4.2.1 Section 835Z(1)(a), updated to include an example of a territory that applies tax to some, but not all, entities. Section 5.1 Worldwide system of taxation, updated to include guidance on how to deal with loss making branches with trapped losses Section 7.1.1 Associated enterprises, updated to clarify scenarios where a 50 per cent Associated Enterprise Test Applies instead of a 25 per cent test.