Revenue’s Tax and Duty Manual ‘C&E TAN Reports available on Revenue’s Online Service (ROS) for C&E Traders’ has been updated to include Combined Taxes Report for Importer & Payers Excise Duty Entries (EDE's) declarations.  See eBrief 091/24 for more details. 

Revenue has updated the Tax and duty manual (TDM) for Import Payment Methods to include -   postponed VAT contact details for related queries VRT payment methods to include a link to the VRT payments in ROS guide and, a link to C&E reports available in ROS along with some other minor text changes.

Earlier this month we highlighted in our Spring Budget 2024 coverage that HMRC had finally launched its long planned consultation on “Raising standards in the tax advice market” which examines three options to strengthen the tax agent regulatory framework in the UK and would also require tax advisers to register with HMRC if they wish to interact with HMRC on a client’s behalf. This consultation will close on 29 May 2024. This week we take a look at the first option set out in the consultation for potential regulation of paid tax agents, mandatory membership of a recognised professional body, and encourage you to share your views by Tuesday 7 May 2024 to enable members views to be reflected in the Institute’s  response. Next week will set out more information on option two.  Mandatory membership of a recognised professional body   This option is clearly the option which HMRC are leaning towards, but they recognise that this will depend on “the capacity and willingness” of the Professional Bodies to do so, including this Institute.   Chapter 7 (including questions 11-18) of the consultation examines this option in detail. This would involve mandatory membership of a recognised professional body with professional bodies monitoring and enforcing standards of their members and raising those standards where necessary.   Taking forward this approach would mean tax practitioners must hold membership of a professional body that is recognised as having an adequate minimum standard for its members and an adequate supervisory framework to monitor and enforce that standard.   The government considers this approach to be proportionate to the problems observed and opportunities afforded. In its view it “minimises extra costs and burdens to tax practitioners who currently meet expected standards and most professional bodies currently deliver the 3 components of a regulatory framework: subjecting their tax practitioner members to minimum standards, monitoring and enforcement action; and offering routes for customer support.”   “The government recognises there may be costs for the professional bodies in extending their supervisory frameworks to new members, with the potential for these to be passed on to clients via increased membership fees. The government will explore how best to mitigate this.  The government considers that enhancing and extending the supervisory framework operated by the professional bodies to this population of tax practitioners could achieve its aim of raising standards. However, it is dependent on the willingness and capacity of professional bodies to both strengthen the regulatory framework to raise standards of their current members who do not meet expected standards and extend membership to new members.”  The consultation also presents evidence in Annex C which according to HMRC shows that there are levels of non-compliance amongst taxpayers represented by affiliated tax practitioners. “This is why the government is looking to explore whether the regulatory frameworks currently in place across professional bodies are strong enough to raise standards in the tax advice market if the government chooses to proceed with this approach.  The government therefore wishes to work with professional bodies to understand their capacity and capability to raise standards across the market and seeks views on key questions to inform how mandatory professional body membership could be implemented in a way that best meets the objectives.  Findings from this consultation will inform whether the government pursues the introduction of mandatory professional body membership or whether another approach, such as regulation by a government body (option 3) should be pursued.” 

This week we bring you the latest HMRC performance data to the end of January 2024 and draft legislation has been published for consultation in relation to changes being made to the information businesses will need to provide to HMRC via various returns. HMRC is also warning of bogus tax refund offers and we update you below on R&D tax relief including the intensive tax relief available for businesses in Northern Ireland. And finally, a consultation has been launched seeking views on proposals for the design and administration of the UK carbon border adjustment mechanism which would commence from 1 January 2027.  Draft legislation on additional data  HMRC has launched a technical consultation which is open until 9 May 2024 and relates to two draft Statutory Instruments. The consultation examines the draft legislation which will require businesses to provide additional information to HMRC as follows:- employers will be required to provide more detailed information on employees’ hours via PAYE Real Time Information;  directors will be required to provide the amount of dividend income received from their company separate to other dividend income in addition to their percentage shareholding in the company in their Self-Assessment (“SA”) return; and  self-employed individuals will be required to provide start and end dates of self-employment via their SA return. These changes will take effect from April 2025. Finance Act 2024 introduced powers to enable the collection of this additional data and enabled HMRC to specify, through the two Statutory Instruments, the particular information required within those returns. Feedback on the draft regulation should be sent by email to HMRC at responsivenessdataconsultation@hmrc.gov.uk. Bogus tax refunds  HMRC has issued a Press Release which reports that it responded to almost 210,000 referrals of suspicious contact in the last year, up 14 percent on the previous year. More than 79,000 of these were offering bogus tax rebates. HMRC is therefore warning of a further spate in fraudsters contacting taxpayers after the 2022/23 SA deadline on 31 January 2024.  Taxpayer can help fight phishing scams by reporting any suspicious communications to HMRC:-   forward emails to phishing@hmrc.gov.uk;   report tax scam phone calls to HMRC on GOV.UK;  forward suspicious texts claiming to be from HMRC to 60599.  R&D tax relief update   At Spring Budget 2021, the government launched a review of R&D tax reliefs to ensure the UK remains a competitive location for cutting edge research, the reliefs continue to be fit for purpose and taxpayer money is effectively targeted.   As part of this review, the government announced additional support for R&D intensive SMEs, which will continue alongside the new merged scheme SME and “large” company reliefs announced at the Autumn Statement 2023.  Regulations made earlier this month on 4 March specified that the merged scheme and the amendments to the additional relief for R&D intensive SMEs will commence for companies with accounting periods beginning on or after the 1 April 2024.   As a result, the Financial Secretary to the Treasury laid before the House of Commons the Research and Development (Chapter 2 Relief) Regulations 2024 which introduce changes to the further support for R&D intensive SMEs due to particular market conditions in Northern Ireland.   Under the new rules, eligible companies in Northern Ireland will be able to benefit from relief on subcontracting expenditure undertaken outside the United Kingdom. To protect against the fiscal risk of uncapped overseas expenditure, a cap on the amount of relief that can be claimed will also be introduced, at £250,000 over a rolling three-year period.   The cap will only apply to the amount of intensive scheme relief that is above the amount that could have been claimed under the merged scheme.  Guidance on the new rules is available. Further guidance on the merged scheme R&D expenditure credit and enhanced R&D intensive support is also available. As Finance Act 2024 has received Royal Assent and the relevant Appointed Day Regulations have been made, claims for enhanced R&D intensive support for expenditure incurred on or after 1 April 2023 can now be made.  HMRC also published draft guidance on the new subcontracting and overseas rules for consultation on 9 February. HMRC is currently reviewing responses and will publish final versions of that guidance shorty.  At Spring Budget, the government also announced that HMRC will establish an Expert Advisory Panel to support the administration of the R&D tax reliefs. This panel will support HMRC to develop and update guidance, improve communications, provide insights on the types of R&D occurring across certain sectors and feedback from industry.   Given the broad array of projects and specialisms from the life sciences and tech sector, HMRC will seek representatives from these sectors and will directly reach out to relevant organisations. Further details and the terms of reference will be published in due course. This panel will supplement HMRC’s R&D Communications Forum, which will continue to provide the opportunity for broader discussion and feedback.  

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 and Cabinet Officer Borders bulletins are also available. HMRC also recently published guidance on sending parcels from Great Britain to Northern Ireland which will take effect under the Windsor Framework from 30 September 2024. And finally, we provide information on a recent update to VAT and EORI guidance.  VAT and EORI guidance  If a business deregisters for VAT, any Economic Operators Registration and Identification (“EORI”) number(s) they hold will also be removed at the same time.   By way of reminder, EORIs are needed for authorisations, including a UK Internal Market System (“UKIMS”) authorisation, and licences. To continue using these, there are actions a business needs to take which are as follows:  Authorisations (including Duty Deferment Accounts and guarantees) - contact the supervising office. This can be found in the authorisation correspondence received originally;  Licences - to continue using these please contact the issuing government department; and  If a business still needs an EORI number, they can apply for a new GB EORI number. The number is usually confirmed immediately. Once a business has a GB EORI, they will then be able apply for an XI EORI number, if needed and they meet the relevant criteria. The number will be issued within five working days of applying.  If a business needs help getting a new EORI number, please contact HMRC.   Miscellaneous updated guidance etc.   Recently updated guidance, and publications relevant to EU exit are set out below:-  Classifying footwear for import and export;  Customs Declaration Service is open for all export migration;  Get help using example declarations for exports from Great Britain to the rest of the world;  Making an export declaration using a pre-shipment advice;  Making an export supplementary declaration;  Making an export declaration in your records;  Making a full export declaration;  Tell HMRC when exports have arrived or departed a UK port;  Make and manage an export declaration online;  Get help using example declarations for exports from Great Britain to the rest of the world;  Apply for authorised consignor or consignee status; and  Report a problem using the Customs Declaration Service. 

HMRC’s latest schedule of live and recorded webinars for tax agents is available for booking. Spaces are limited, so take a look now and save your place. HMRC is also running a series of webinars on R&D tax relief.  R&D tax relief webinars  HMRC is running a series of webinars on R&D tax reliefs to aid understanding of what qualifies as R&D, how to claim relief correctly and what the new R&D merged scheme entails.  The webinars series will also cover the enhanced support available for R&D intensives schemes: Register here to learn more about 'Research and Development for tax purposes’;  Register here for more information about ‘How to claim Research and Development tax relief’; and  Visit GOV.UK to watch the recorded webinars and to register for the upcoming webinar session about the R&D merged schemes. 

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.   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. 

According to the OECD, work under BEPS Action 6 “Prevention of tax treaty abuse” continues to make steady progress. The latest peer review report on the implementation of the minimum standard on treaty shopping reveals that most agreements between members of the Inclusive Framework are already compliant with the standard. The BEPS Multilateral Instrument (BEPS MLI) seems to be the preferred tool for most countries implementing the minimum standard. 

Revenue has updated the Tax and Duty Manual regarding Tax Credit Certificates issued on a Week 1/Month 1 basis. The updated manual includes additional reasons for the issue of a Week 1/Month 1 basis Tax Credit Certificate (paragraph 1) and advise on sourcing additional information on the matter (paragraph 4). 

Revenue has updated the Tax and Duty Manual regarding the CAT self-assessment return Form IT38. The updated manual reflects the Finance (No.2) Act 2023 amendment regarding the obligation to file a CAT return where an individual is in receipt of certain interest-free loans. 

The Minister for Justice Helen McEntee TD has published a report on the role of Sheriffs in the State. The Department of Justice and the Office of the Revenue Commissioners established a Joint Review Group to focus on the future role of Sheriffs and to establish whether there is a more efficient and cost-effective system of debt collection.  The report identifies five key areas of focus and sets out 27 recommendations to support the continuation of the office of Sheriff into the future, noting its effectiveness and efficiency. The Review Group also noted that overall debt recovery rates appear to be high by international standards.    Commenting on the findings of the review, Minister McEntee said:  “I am pleased to see the importance of the office of the Sheriff recognised in this report. It is the oldest debt enforcement mechanism in the State and I welcome the recommendations to support and modernise the role to ensure its continued viability.  Key to this modernisation will be the development and implementation of an updated and streamlined joint supervision and oversight strategy between the Department of Justice and the Office of the Revenue Commissioners, and I look forward to that being developed.”  Further information is available in the Department of Justice press release.