At the most recent meeting of the Inclusive Framework on Base Erosion and Profit-Shifting, the OECD Secretary-General Mathias Cormann welcomed the commitment of the group to resolve the outstanding issues with Amount A of Pillar One which should enable the signing of the Multilateral Convention implementing the rule by the end of June 2024. The key concern is reaching agreement on a fair allocation of taxing rights across the 147 countries who make up the Inclusive Framework.

Revenue has published a new manual on the Flat-rate Farmers Refund Order. The new guidance outlines how VAT can be reclaimed, with commentary on the necessary conditions, the types of expenditure and information required to make a claim.

Readers may be aware of a minor update to the guidance on relief for investment in corporate trades (including the Employment Investment Incentive Scheme (EIIS)), whereby the date on the face of the Tax and Duty Manual (TDM) was changed from April 2023 to May 2024. This has caused some confusion as there had been no updates to the contents of the manual since the April 2023 release. Revenue has provided an update to the Institute through the TALC Direct & Capital Taxes Sub-committee confirming that the TDM is presently being updated to reflect the changes implemented by Finance (No. 2) Act 2023. Revenue’s update is as follows: “In the course of the last meeting of the TALC Direct and Capital Taxes Sub-Committee and subsequently, queries were raised regarding the updating of TDM Part 16-00-02 “Relief for Investment in Corporate Trades” and initial risk finance investment.    We wish to advise that the matter which delayed publication of the update of TDM Part 16-00-02 “Relief for in investment in corporate trades” is still under consideration and it remains the intention to circulate a draft of the updated TDM prior to publication as soon as we are in a position to do so.  We note that a version of the TDM was recently published on www.revenue.ie stating that it was last reviewed in May 2024.  This was an error that arose whereby the retention of the TDM last reviewed in April 2023 was extended which resulted in an incorrect date on the first page.  This has been rectified and we confirm that no changes have been made to the TDM.  We regret any confusion caused.   In relation to the queries raised on initial risk finance, and in light of the delay in publication of the TDM, please note the following clarification.   We wish to confirm that it remains possible to raise initial risk finance investment in tranches as has always been the case.  The position is unchanged from that as set out in the TDM which states “Many companies who seek to raise EII, SCI or SURE supported funding, do so in tranches. That is, they embark on a fundraising round over a number of months. Shares are usually issued at the end of the fundraising round, but there may be occasions where the shares are issued as the amounts are invested. The initial risk finance investment will be the initial round of fund raising, whether the shares are issued at the end, or throughout that fundraising round. It should be noted that the shares should be fully paid up at all times throughout the relevant period.”  The initial risk finance investment requirements must be set out in the business plan in line with the legislative requirements in that regard and as specified in the TDM.  Where a business plan identifies a need for State aid in the form of initial risk finance and those funds are subsequently raised in tranches, each tranche will form part of the initial risk finance investment and will not constitute follow-on investment until the initial risk finance investment as provided for in the business plan has been raised.    Where an investment is raised in tranches, it should be noted that the rate of relief that may be availed of on investment could differ over the course of an extended period i.e. a company may be part of a RICT group that is not operating in any market at the time of one tranche of investment and it may be a company that is part of a RICT group operating in a market at the date of a later investment tranche. The rate of relief to apply to the investment will depend on whether the company is part of a RICT group that is not operating in any market or part of a RICT group that is operating for less than 10 years post incorporation or less than 7 years following its first commercial sale at the time the eligible shares are issued in line with section 496(5) TCA.  For shares issued on or after 1 January 2024, the amount of a qualifying investment that may qualify for relief is as follows: In the case of initial risk finance investment in a RICT group which has not been operating in any market, pursuant to section 496(5), 125% of the investment may qualify for relief giving rise to a rate of relief of up to 50%. In the case of initial risk finance investment in a RICT group which has been operating in any market for less than 10 years post incorporation or less than 7 years following its first commercial sale, pursuant to section 496(5), 87.5% of the investment may qualify for relief giving rise to a rate of relief of up to 35%. In the case of expansion risk finance investment pursuant to section 496(6), 50% of the investment may qualify for relief giving rise to a rate of relief of up to 20%. In the case of follow-on risk finance investment pursuant to section 496(7), 50% of the investment may qualify for relief giving rise to a rate of relief of up to 20%. In the case of investments made indirectly via a qualifying investment fund, 75% of the investment may qualify for relief giving rise to a rate of relief of up to 30%. Accordingly, in the case of a company that is raising its initial risk finance investment in tranches throughout 2024 where it is part of a RICT group that makes its first commercial sale on 1 June 2024 for example, the rate of relief will be up to 50% where the eligible shares are issued prior to 1 June 2024 and it will be up to 35% where the eligible shares are issued on or after 1 June 2024.”

The Institute is represented on two HMRC VAT forums; the Joint Vat Consultative Committee (“JVCC”) and the VAT Registration Sub-Group forum. Recent updates from each are set out below. JVCC update   The JVCC is an HMRC forum to exchange views between HMRC and representative bodies and other organisations relating to the procedures and operations of VAT, and to consider and discuss VAT issues arising from member organisations with the aim of strengthening HMRC’s understanding of the needs of the business/taxpayer. The minutes from the 125th JVCC meeting have been published and are available on GOV.UK.   The JVCC has also been advised that the new VAT Tertiary Legislation manual is now available. Except for margin scheme content, nothing in the manual new as it has all been published previously on GOV.UK. The revised margin scheme tertiary legislation is available in the manual for the first time following the withdrawal of VAT Notice 718.  To date, HMRC has not removed any force of law content from VAT Notices and so, much of it is duplicated in both this manual and its original home on GOV.UK. In due course, HMRC aims to remove legal content from its VAT Notices and replace it with plain English, where appropriate.  In the new manual, HMRC has aimed to maintain a logical structure and has included heading numbers for ease of reference. As the manual is new, HMRC is seeking feedback using the buttons in the manual.   VAT registration Sub-Group forum  Details of action points and HMRC responses from the January 2024 meeting of this forum are set out below.  A member asked whether the guidance made it clear that customers might need multiple authorisations for VAT.   This has been investigated and a change to the wording of the guidance was required and has been instigated. The guidance will be updated.  Can the VAT50 and VAT51 forms be uploaded and added to the application at the end of the online VAT registration process?  The VAT 50/51 can be either attached at the point of submission of the VAT registration within the digital journey, or taxpayers can choose to send this to HMRC via post. HMRC’s preference is that these forms are uploaded via the Vat Registration Service (“VRS”) if the taxpayer or their agent is able to do so.  Can a review be carried out regarding virtual offices and the principal place of business?  A review has been instigated and is currently ongoing. Details will be shared when an update is available.  Were specified supplies included when the previous review was carried out on compulsory registration?  HMRC has updated the rules behind the VRS to take account of these. When a person applying under these circumstances enters the words ‘SPECIFIED SUPPLIES’ in the ‘Business Descriptions’ free text box, the application will not be rejected.  HMRC has updated section 2.7 of VAT Notice 700/1 to this effect and is considering the most appropriate place to include an update in the VRS itself to best support applications.   Does the registration team no longer send out confirmation of registration changes?  VAT registration and variation outputs are generated automatically and issued to the taxpayer when the application or variation has been processed; there is no manual process to issue an output to provide the same confirmation.  Other updates  HMRC provided an update regarding queries that have been made in relation to Parish Councils and Public Bodies as follows:-  “Applications for VAT registration from public bodies should be made on a paper VAT1 as per current guidance. When we can introduce a bespoke journey into the online VAT Registration Service, we will communicate this via the appropriate channels, but there are currently no plans for this.” 

Better long-term support for the SME sector was advocated for by Director of Advocacy and Voice, Cróna Clohisey, and Institute President Barry Doyle who both represented Chartered Accountants Ireland at the National Economic Dialogue (NED) last week. The NED provides a forum for public consultation and debate ahead of Budget 2025 and this year’s theme was challenges and opportunities in a more shock-prone world. The Institute representatives also emphasised to Ministers the importance of careful consideration around the timing of new regulations and their impact on businesses, the need to simplify the tax system, in addition to enhancing the supply of childcare places. Documents and speeches from the NED can be found on gov.ie.

In its response to the consultation “Raising standards in the tax advice market – strengthening the regulatory framework and improving registration” which examined three different approaches to regulate the UK tax agent market in future, the Institute’s Northern Ireland Tax Committee sets out that its preferred approach is mandatory membership of a recognised Professional Body. However, the Committee also tells HMRC that additional regulation of practising members of Chartered Accountants Ireland is not needed. The Committee’s full response can be read in the Tax Representations section of our website.  The Committee also recommended that there should be a minimum transition period of not less than five years to ensure that the change is properly implemented, and the market is able to fully prepare and adjust. It is also recommended that HMRC consider what transitional arrangements can be introduced once a decision has been made on the approach to be taken.  

The Spring Finance Bill 2024 (official title Finance (No. 2) Bill 2023-24), which reflects many of the tax measures announced as part of the Spring Budget, received Royal Assent last Tuesday 28 May just before Parliament was dissolved on 30 May. Finance (No.2) Act 2024 now has force of law as Royal Assent is the final stage of a bill's passage through Parliament.   Some of the measures included in the Act are as follows:-  the higher rate of capital gains tax on disposals of residential properties is reduced from 28 percent to 24 percent for disposals from 6 April 2024;   the thresholds for the high income child benefit charge increased from 2024/25 onwards from £50,000 to £60,000 (lower threshold) and £60,000 to £80,000 (higher threshold); and  multiple dwellings relief for stamp duty land tax is abolished where the effective date falls on or after 1 June 2024. This change is subject to transitional arrangements. 

In this week’s EU exit corner, we bring you the latest guidance updates and publications relevant to EU exit. The most recent Trader Support Service bulletin is also available. And finally, we issue a final reminder that from today, Tuesday 4 June 2024, all export declarations must be made via the Customs Declarations Service, and not CHIEF.  Miscellaneous updated guidance etc.   Recently updated guidance, and publications relevant to EU exit are set out below:-  UK Trade Tariff: European Union and new member states;  UK Trade Tariff: preferential trade arrangements for countries outside the UK and EU;  UK Trade Tariff: relief from customs and excise duties and VAT;  UK Trade Tariff: end-use relief on goods used for a prescribed use;  UK Trade Tariff: VAT;  UK Trade Tariff: valuing goods;  UK Trade Tariff: appeals;  Managing your customs warehouse; and  Notices made under the Taxation (Cross-border Trade) Act 2018. 

Check out the latest items on the Agent Forum. Remember, in order to view each item, you must be signed up and logged in.   All agents, who are a member of a professional body, are 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. 

Technical Alert 02/2024 – Sample Engagement Letter Terms in respect to the provision of Limited Assurance under the Corporate Sustainability Reporting Directive A Technical Alert (TA) has been issued to provide assistance to members when drafting engagement letters in respect to limited assurance engagements under the Corporate Sustainability Reporting Directive (“CSRD”) which has yet to be transposed into Irish legislation. Until this transposition occurs (expected July 2024), in the interim and to allow engagement planning to commence, these engagement letter terms may be used to implement a formal contract with the entity. Addendums and/or replacement engagement letter terms may be required where significant changes are necessary; members are advised to note the important caveats in the preface to this TA. The engagement letter terms have been drafted based on current guidance in issue which may change as the CSRD regulatory landscape changes. In addition the applicable standard used is the International Standard on Assurance Engagements (ISAE) 3000 (Revised) issued by the International Auditing and Assurance Standards Board (IAASB). This may be subject to change, depending on the assurance standard that is specified for use in Ireland for CSRD sustainability assurance engagements by the Irish Auditing and Accounting Supervisory Authority (IAASA). You can access the TA here.

The Financial Reporting Council (FRC) has published anonymised key findings and good practices reported by its Audit Quality Review (AQR) team in relation to their 2020/21 audit quality inspections at the seven largest audit firms. https://frc.org.uk/news/may-2022-(1)/frc-publishes-inspection-key-findings-and-good-(1)

On 30 May the Ulster Society Public Sector Committee hosted an online lunch and learn webinar with Maire Nawaz on Effective Communication in Leadership.   You can view a copy of her presentation and the recording of the session below: Watch the webinar on YouTube Effective Communication lunch and learn slidedeck