Revenue has updated the Tax and Duty Manual which provides guidance on the taxation of domestic employees by domestic employers. The updated manual provides clarity on how domestic employees declare income from the domestic employer and includes updated bank account details. 

Revenue has updated the Tax and Duty Manual regarding the levy on certain financial institutions (the bank levy) provided under Section 126AA SDCA 1999. The manual has been updated to reflect that the levy provided under section 126AA has not been extended beyond 31 December 2023 as it has been replaced by a revised bank levy for the year 2024, provided for under section 126AB SDCA 1999. 

Revenue has recently published the following new VAT guidance:  VAT treatment of negotiation services in respect of financial services.   VAT treatment of construction services. The reverse charge construction Tax and Duty Manual marked as no longer relevant.  the VAT treatment of fixtures and fittings.  In addition, the VAT guidance on the Supply of Property has been updated to provide further clarity in relation to taxable supplies of property. 

Revenue has updated the Capital Acquisitions Tax Manual which provides guidance on the Statement of Affairs (Probate) Form SA.2 and the probate application process. Updated guidance regarding application for clearance under section 48(10) CATCA 2003 to distribute benefits to non-resident beneficiaries is provided for persons that are submitting their request through MyAccount.   In addition, guidance regarding the appointment of an Irish resident agent where beneficiaries are non-resident has been redrafted to align it with the applicable sections in the Capital Acquisitions Tax Consolidation Act 2003. 

Revenue has updated the Tax and Duty Manual regarding unapproved share options to reflect changes introduced in Finance (No.2) Act 2023. By virtue of section 128 TCA 1997, from 1 January 2024 the taxation of a gain realised on the exercise, assignment or release of share options no longer falls under individual self-assessment. Instead, employers are responsible for collecting income tax and USC from employees on share option gains and remitting those taxes to Revenue as part of the payroll process.   A consequential amendment was made to the Social Welfare Act with regard to the collection of PRSI by employers. 

Following representations at the recent meeting of the TALC Direct and Capital subgroup, Revenue has updated the Stamp Duty Manual for company reconstructions and amalgamations under section 80 SDCA 1999. The guidance has been updated to confirm that Revenue accepts that the transfer of a 100 percent shareholding of a company carrying on a business in its own right constitutes the transfer of an undertaking.   The manual has also been updated with the deletion of the following paragraph:  “In certain circumstances, the holding of an investment may constitute an undertaking, if there is active (as opposed to passive) ownership of the investment concerned. In this regard, Revenue will generally accept that a 100% shareholding may constitute an undertaking for the purposes of section 80.” 

Latest Exchequer figures show that tax revenues to the end of February were €12 billion, up 5.5 percent on the same period last year. Income tax receipts of €5.3 billion were recorded, a 5.7 percent annual increase, with VAT receipts up 4.8 percent compared to end-February 2023 figures. At €0.6 billion to end-February, corporation tax receipts were slightly down on last year.   An Exchequer deficit of €0.1 billion was recorded at the end of February (the deficit at the end of February 2023 was €2.5 billion, although this included the transfer of €4 billion to the National Reserve Fund). On a 12-month rolling basis, the Exchequer recorded a surplus of €1.5 billion. The underlying position for the period is a decrease of €1.5 billion with increased public expenditure offsetting growth in tax receipts.  Commenting on the latest figures, Minister for Finance, Michael McGrath said:  “Today’s figures largely represent the continuation of trends observed last month and towards the end of last year. The 7% increase in tax revenues in February compared to the same month last year is to be welcomed, and is further evidence in particular of the strength of the labour market. The 5.5% growth in tax revenues across the first two months of the year is broadly consistent with our forecast on Budget day. However, I would emphasise that it is too early at this stage in the year to draw any conclusions about the trajectory of tax receipts, particularly before the key corporation tax payment months. The coming months will provide a firmer indication of the pattern of tax receipts across the year. Overall, our economy has proven to be remarkably resilient against the backdrop of significant external uncertainty. In a more shock-prone world, it is essential that we maintain our public finances on a sustainable footing: this is the best way to ensure that we are in the strongest possible position to respond to external challenges. Work on drafting the legislation to provide for the Future Ireland Fund and the Infrastructure, Climate and Nature Fund is now at an advanced stage, and I look forward to bringing it to government shortly.” 

Last week, the TALC BEPS Sub-Committee convened its first meeting of the year. There was a significant and detailed discussion on various matters relating to the EU Minimum Taxation Directive (“Pillar Two”). The various representative bodies had submitted a significant number of queries in advance of the meeting. There was also a discussion on the guidance on the new outbound payments defensive measures.  Outbound Payments Defensive Measures – draft TDM and discussion of submissions  Practitioners noted that they were generally satisfied with the draft TDM. While a number of comments were made at the meeting, the overall guidance should be of great benefit to taxpayers and their agents as they apply the new provisions.  Pillar Two: Update on draft Revenue TDM and discussion of submissions  Practitioners submitted a significant number of queries in advance of the meeting which were discussed fully at the meeting. A number of matters remain for discussion at OECD Working Group level (which Revenue is a party to). The discussion will be laid out fully in the minutes which can be found at the usual place on Revenue’s website in due course. 

Last week, the TALC Indirect Taxes Sub-Committee convened its first meeting of the year. A delegation from Revenue’s Tax Registrations division presented to the group. We will make these slides available in due course. Below we include a summary of the key points for practitioners to consider when making a VAT registration application.  VAT Registration  Revenue advised that when making a VAT registration application, taxpayers and their agents should consider the following (and where possible include with the application):  Demonstrate that the applicant is an Accountable Person within the meaning of sections 5 & 9 VATCA 2010.  Provide a brief description of the business activity.  Provide documentary evidence of the business activity/trade in Ireland.  Provide documentary evidence of the business activity/trade from Ireland to other EU Member States (where applicable).  Clearly outline the place of supply of the relevant goods and/or services.  Provide evidence for the place of supply.  Where possible, provide incoterms of sale, details of duty paid, details of where ownership is exchanged, etc.  Revenue also explained that for ‘Intention to Trade’ applications, European Courts have clearly stated that tax authorities are entitled to “objective evidence of the intention”. Revenue guidance suggests that such evidence may include leases, contracts tools of the trade, etc. In addition business plans and other such supporting documentation would also assist in such applications.  Revenue then explained some of the reasons why applications are disallowed, including:  CRO-registered with mainly non-resident directors or a single Irish -resident director.  No proper place of establishment, e.g. use of an agent’s address, PO Box, or virtual/serviced office as business address.  No evidence of contracts or customers.  Inability to produce a valid invoice.  No employees, or only an agent/director listed as an employee. 

Revenue has updated the Tax and Duty Manual which provides guidance on the enhanced reporting requirements (ERR) for employers. The manual now provides guidance on an optional administrative practice regarding advance payments of travel and subsistence.  An advance payment of travel and subsistence to an employee or director is a perquisite and income tax, USC and PRSI must be deducted. These types of payments would therefore not typically fall within the scope of ERR as the payment does not relate to travel or subsistence incurred by the director or employee. However, when a claim for the related travel and subsistence is made to the employer, and the employer wishes to avail of the Section 114 administrative practice (i.e. not tax the travel and subsistence expense), a payroll adjustment must occur to give the effect of no tax applying to the expense amount incurred and at that point the payment becomes a reportable benefit for ERR. Revenue recognises that this may give rise to certain practical issues for employers in terms of its interaction and obligations with ERR requirements.  Therefore, Revenue will implement an optional administrative practice in respect of advance travel and subsistence payments.   Under this administrative practice, an advance travel and subsistence payment may be treated, in certain circumstances, as not being subject to tax via the payroll when paid, but instead treated as a payment where no tax is deducted in respect of travel and subsistence and therefore subject to ERR reporting at the time of payment. Then, when the expense is incurred and the claim submitted by the employee/director, the employer will be required to update their ERR submission to Revenue to reflect the actual travel and subsistence expense amount in respect of that employee/director. 

After the closure of the Office of Tax Simplification in 2023, HM Treasury and HMRC were set a mandate to focus “on simplifying the tax code”. In January of this year, the government published an update on progress made towards tax simplification. The Spring Budget 2024 contained further details of this work by setting out specific metrics which will be used to track progress being made, especially for small businesses and individuals.   From HMRC’s annual customer survey, a new survey, the government will track the views of small businesses and individuals on the ease of dealing with tax issues, and the ease of finding information. The government will also measure how easy taxpayers find it to deal with HMRC from a survey offered after using HMRC’s telephony or digital services. Lastly, the government will monitor HMRC’s estimate of the net change in cost to businesses of meeting tax obligations from fiscal event measures. These metrics will be kept under review and enhanced, taking into account feedback from stakeholders.  The Spring Budget 2024’s main red book publication also sets out several measures which deliver “further administrative reforms to make it easier for individuals and sole traders to meet their tax obligations by”. In summary, these are as follows:  Easing the payment of inheritance tax before probate or confirmation - from 1 April 2024, personal representatives of estates will no longer need to have sought commercial loans to pay inheritance tax before applying to obtain a “grant on credit” from HMRC; and   Investment in digital services - simplifying access for those who want to pay in instalments in advance via a Budget Payment Plan, or in arrears via a Time to Pay Arrangement from September 2025.  The government also badged the following Spring Budget 2024 measures as simplifying underlying tax rules:  Abolishing the current tax regime for non-UK domiciled individuals;  Announcing the end of the Alcohol Duty Stamps scheme;   Abolishing the furnished holiday lets tax regime from 6 April 2025; and  The forthcoming consultation on reform of Class 2 NIC. 

Freezes in both fuel and alcohol duty, a new duty on vaping and increased tobacco duty, and the abolition of stamp duty land tax multiple dwellings relief feature in this section together with the news of additional investment in HMRC to tackle collection of tax debt and a range of other measures.   Fuel duty  The current levels of fuel will be maintained for a further 12 months via extending the temporary 5p fuel duty cut and cancelling the planned inflation-linked increase for 2024/25. Following a review, the government will maintain the difference between road fuel gas and diesel duty rates until 2032.  Alcohol duty  Alcohol duty is being frozen from 1 August 2024 until 1 February 2025. This extends the six-month freeze announced at Autumn Statement 2023 and will result in 2p less duty on an average pint of beer, 1p less duty on an average pint of cider, 10p less duty on an average bottle of wine, and 33p less duty on an average bottle of spirits than if the planned duty increases had gone ahead.  Vaping and tobacco duty  The government will introduce a new duty on vaping products from 1 October 2026, with registrations for the duty expected to open from 1 April 2026. The rates will be £1 per 10ml for nicotine free liquids, £2 per 10ml on liquids that contain 0.1-10.9 mg nicotine per ml, and £3 per 10ml on liquids that contain 11mg or more per ml. A 12-week consultation has been launched on the policy design and technical details. The government will also introduce a one-off tobacco duty increase of £2 per 100 cigarettes or 50 grams of tobacco from 1 October 2026.  Stamp duty land tax   From 1 June 2024, the government is abolishing stamp duty land tax (“SDLT”) Multiple Dwellings Relief (“MDR”). MDR is a bulk purchase relief where the rate of SDLT is normally determined by the total consideration given for land and it is currently available to any purchaser buying two or more dwellings in a single transaction, or linked transactions. It allows the purchaser to calculate the SDLT payable based on the average value of the dwellings purchased as opposed to their aggregate value.  Property transactions with contracts that were exchanged on or before 6 March 2024 will continue to benefit from the relief regardless of when they complete, as will any other purchases that are completed before 1 June 2024. The government will also engage with the agricultural industry to determine if there are any particular impacts that should be considered further.  Legislation will be updated to ensure that from 6 March 2024, registered providers of social housing in England and Northern Ireland are not liable for SDLT when purchasing property with a public subsidy and public bodies will be exempted from the 15 percent anti-avoidance rate of SDLT for high value residential properties.   From 6 March 2024, the rules for claiming SDLT first-time buyers’ relief will be amended so that individuals buying a leasehold residential property through a nominee or bare trustee will be able to claim the relief, including victims of domestic abuse.  Investment in HMRC  The government is investing £140 million “to improve HMRC’s ability to manage tax debts.” The aim is to expand HMRC’s debt management capacity “to support both individual and business taxpayers out of debt faster and collect tax that is due.”   Air Passenger Duty (“APD”)   The 2025/26 APD rates for economy passengers will increase in line with forecast inflation. Rates for those flying premium economy, business and first class and for private jet passengers will also increase by forecast inflation and will be further adjusted for recent high inflation.  Landfill tax rates  Landfill tax rates for the year 2025/26 will be adjusted to better reflect actual inflation and ensure that the tax continues to incentivise investment in more sustainable waste management infrastructure. The standard rate of landfill tax will increase to £126.15 per tonne and the lower rate will increase to £4.05 per tonne.  VAT    The government referenced the Office for Budget Responsibility’s recent review of the VAT Retail Export Scheme and specifically the original costing of the removal of tax-free shopping. The government will consider these findings alongside industry representations and broader data, and welcomes any further submissions in response to these findings.  The government will launch a consultation on the impacts of the July 2023 High Court decision in Uber Britannia Ltd v Sefton MBC next month. A range of viable options will be explored to ensure that this case’s ruling does not have any undue adverse effects on the private hire vehicle sector and its passengers. In this case, The High Court considered the regulation of Uber's business model outside of London, and specifically whether the private hire vehicle operator is acting as a principal when entering into a contractual obligation with the passenger to provide the journey. This in turn has potential VAT consequences in terms of whether the private hire vehicle operator is acting as a principal or an agent, and therefore may impact on the tax base on which VAT should be charged.  Gift Aid legislation  The Digital Markets, Competition, and Consumers Bill is introducing new protections for consumers who take out subscription contracts. The government will amend existing gift aid legislation so that charities can continue to claim gift aid while complying with these new protections. The government’s intention is that these amendments will be in place by the time the relevant provisions of the Bill come into force.  Crypto-Asset Reporting Framework   The government has launched a consultation which seeks views on how best to implement the Crypto-Asset Reporting Framework and amendments to the Common Reporting Standard. As previously announced in November 2023, these changes will be made in time to ensure that information exchanges take place from 2027.  Transfer of Assets Abroad   The government will legislate in the Spring Finance Bill 2024 to ensure individuals cannot use a company to bypass this anti-avoidance legislation, Transfer of Assets Abroad, in order to avoid UK income tax. The changes will take effect for income arising to a person abroad from 6 April 2024.   The Umbrella Company Market    The government will provide an update on the recent consultation on tackling non-compliance in the umbrella company market at Tax Administration and Maintenance Day next month. In summer 2024 the government will also publish new guidance relevant to workers and other businesses who use umbrella companies.  Economic Crime Levy adjustment   From 1 April 2024, the rate at which entities with UK annual revenue greater than £1 billion, and which are regulated for Anti- Money Laundering purposes, will pay the Economic Crime (anti-money laundering) Levy will increase from £250,000 to £500,000 per annum.   Environmental land management and ecosystem service markets   Following consultation, the government will extend the existing scope of agricultural property relief from 6 April 2025 to land managed under an environmental agreement with, or on behalf of, the UK government, Devolved Administrations, public bodies, local authorities, or approved responsible bodies. The government will also establish a joint HM Treasury and HMRC working group with industry representatives to identify solutions that provide clarity on the tax treatment of ecosystem service markets.