HMRC has published a new section in its Employment Income manual which sets out that from 1 July 2024, certain double cab pick-ups will no longer be treated as vans for income tax purposes leading to significantly higher benefits in kind as a result of being treated as cars. The UK Government has agreed to update the terms for transitioning from the Digital Services Taxes to Pillar One and HMRC has published the latest performance data for the quarter ended 31 December 2023. And finally, this week, the National Audit Office has published its report on tax measures to encourage economic growth.   Change in treatment of double cab pick-ups  HMRC has confirmed in its Employment Income Manual that from 1 July 2024, certain double cab pick-ups will no longer be treated as vans and will be classed as cars for income tax purposes.   According to the guidance in the Employment Income Manual, from 1 July 2024, HMRC will no longer interpret the legislation that defines car and van for tax purposes in line with the definitions used for VAT purposes. This VAT approach for double cab pickups differentiated the treatment based on payload, with anything under one tonne classified as a car, and anything a tonne or more as a van. This rule was replicated as a pragmatic way of resolving the primary suitability and classification of double cab pickups. Going forward, classification of double cab pickups will therefore need to be determined by assessing the vehicle as a whole at the point that it is made available to determine whether the vehicle construction has a primary suitability as per the two-part test outlined at EIM23115 onwards.   As a result, from 1 July 2024, most if not all double cab pickups will be classified as cars when calculating the benefit in kind. This is because typically these vehicles are equally suited to convey passengers and goods and have no predominant suitability.   Transitional arrangements will apply for employers who have purchased, leased, or ordered a double cab pickup before 1 July 2024, meaning that they will be able to rely upon the previous treatment until the earlier of disposal, lease expiry, or 5 April 2028. The position prior to 1 July 2024 remains unchanged as outlined at EIM23150.   Digital Services Taxes and transition to Pillar One  The UK, together with Austria, France, Italy, and Spain, has agreed to update the terms for transitioning from their Digital Services Taxes to Pillar One and have also published a joint statement on the transitional approach.  In 2021, 130 countries of the G20/OECD Inclusive Framework agreed on a two Pillar package of reforms to the international tax framework. In support of that, in a joint statement in the same month, the US, Austria, France, Italy, Spain, and the UK announced the terms of a political compromise on the transition from existing Digital Services Taxes to the new multilateral solution and to continuing discussions through constructive dialogue.  In light of the continuing multilateral negotiations at the G20/OECD Inclusive Framework, those same countries recently announced an extension of the political compromise set forth in the October 2021 joint statement through to 30 June 2024 which is consistent with the revised timeline.   Latest HMRC performance data  The latest HMRC quarterly performance data has been published and specifically data in relation to the quarter ended 31 December 2023. Monthly performance data is also available for the month ended 31 December 2023.   The Institute continually discusses HMRC service levels with HMRC and welcomes your feedback at any time by email. We recently requested feedback in relation to the most recent self-assessment filing deadline and are still accepting feedback on this until the end of this month. Members are encouraged to get in touch and share their experiences to enable the Institute to engage more effectively on their behalf with HMRC. 

Revenue is urging PAYE taxpayers to finalise their 2023 tax position as soon as they can, to ensure that they have claimed all tax credits and reliefs they are entitled to and receive any refund they are due. Health expenses, rent tax credit and mortgage interest tax credit can all be claimed via Revenue’s online MyAccount service. PAYE taxpayers are also reminded that they need to inform Revenue of any additional income which they have earned outside the PAYE system.  

Last week, the Government published two documents as part of the Tax Administration Framework Review (“TAFR”) which represent the next steps in delivering the Government’s commitments to reform areas of tax administration. As outlined in the Government’s Tax Administration Strategy, the ambition is to create a tax system fit for the challenges and opportunities of the 21st century.  The two documents published last week are as follows: A Summary of Responses to the Simplifying and Modernising HMRC’s Income Tax Services through the Tax Administration Framework Discussion Document. Chartered Accountants Ireland response to this Discussion Document is available in the Tax Representations section of our website as document 2023/12.   This outlines the next steps in relation to the three sections in the Discussion Document:-   developing and promoting the use of HMRC’s digital services by implementing a digital by default approach whilst making alternative provisions for digitally excluded taxpayers;   improving Pay as You Earn processes which cause frustration for taxpayers; and   moving to digital registration for Income Tax Self-Assessment and reviewing the criteria used to determine which taxpayers are required to file a tax return.  A new Call for Evidence on Enquiry and Assessment Powers, Penalties and Safeguards has been launched.   This will run for 12 weeks and closes on 9 May 2024. According to the Call for Evidence, reform in these areas has the potential to simplify and modernise the tax administration framework relating to HMRC’s role to promote and enable compliance and respond appropriately to non-compliance whilst ensuring taxpayers’ rights are protected.   The Government welcomes engagement from any individual, business, or organisation with views on how these powers, penalties and safeguards can be made more efficient, effective, and simpler to understand.  HMRC is holding an online introductory session via Microsoft teams to discuss this Call for Evidence on Friday 1 March from 11-12. Please email HMRC if you would like to attend.   Further workshops will be held during the second half of the consultation period to focus in detail on the different parts of the Call for Evidence. HMRC will communicate separately about these workshops.

Readers are reminded that taxpayers availing of the Debt Warehousing Scheme (DWS) have until 1 May 2024 to either pay their warehoused debt in full or engage with Revenue on addressing the debt, including arrangements for a Phased Payment Arrangement (PPA). Revenue is encouraging taxpayers to engage now in agreeing an appropriate repayment schedule and benefit from flexible payment options and the revised 0 percent interest rate.   Taxpayers must continue to file their current tax returns and pay current liabilities as they fall due to remain in the DWS. Failure to adhere to these conditions will result in the revocation of the warehouse facility, which will result in the imposition of the standard interest rate of 10 percent, backdated to when the debt arose, and the immediate enforcement of all outstanding debt, including interest.   

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. Now that the first phase of the UK’s new import controls has commenced, we take this opportunity to remind you of the various phases in both the UK’s Border Target Operating Model and implementation of the Windsor Framework which are set out in a flyer prepared by the Institute’s Public Policy and Tax team. More guidance is set out below on the first phase of the UK’s new import controls in the context of certain meat products which confirms an extension to certain transitional arrangements until 30 April 2024, and we also take a look at the outcome from the recent Call for Evidence on Expanding export support.  Guidance on the UK’s new import controls – certain meat products  The Foreign and Commonwealth Directorate Office has asked us to share recently published guidance on minced meats, meat preparations and mechanically separated meat in the context of the UK’s new import controls which commenced from 31 January 2024 which effectively extends the transition period until 30 April 2024.   The default position is that imports of meat preparations and minced meat into Great Britain must be deep frozen. Imports of minced poultry meat and pig or poultry mechanically separated meat are not permitted.  In 2022, Ministers announced a delay in applying these prohibitions and restrictions to imports from the EU. Consequently, the government extended the statutory transition for meat preparations until 31 January 2024.   The guidance note now published confirms that the statutory transition for meat preparations did not end on 31 January 2024 and has been further extended until the end of April 2024 in line with the timetable for checks under the Border Target Operating Model (“BTOM”).  Call for evidence outcome: Expanding DBT export support in Northern Ireland, Scotland, and Wales  In this Call for Evidence, the Department for Business and Trade (“DBT”) proposed increasing its export support in Wales, Scotland, and Northern Ireland by introducing one-to-one support to complement existing services.  The DBT proposes increasing its export support in the Nations by introducing one-to-one support that complements existing services in the form of DBT International Trade Advisors (“ITAs”). ITAs are currently available in the English regions, and introducing this support to Northern Ireland, Scotland, and Wales, will ensure that DBT offers consistent export support across the UK. This rationale is set out in the corresponding document Exporting for Growth, DBT Services in the Nations.   Miscellaneous updated guidance etc.   Recently updated guidance, and publications relevant to EU exit are set out below:-  CDS Declaration Completion Instructions for Imports;  Customs declarants and declaration volumes for international trade in 2023;  External temporary storage facilities codes for Data Element 5/23 of the Customs Declaration Service;  Reference Document for The Customs (Northern Ireland) (EU Exit) Regulations 2020;  Data Element 2/3 Documents and Other Reference Codes (National) of the Customs Declaration Service (CDS);  Notices made under the Customs (Export) (EU Exit) Regulations 2019;  Data Element 2/3: Documents and Other Reference Codes (Union) of the Customs Declaration Service;  Simplified procedures exclusion list of procedure and additional procedure codes for CDS;  Data Element 2/3: Documents and Other Reference Codes (Union) of the Customs Declaration Service; and  Authorised Consignee Temporary Storage (ACTS) location codes for Data Element 5/23 of the Customs Declaration Service. 

The Oireachtas Joint Committee on Finance, Public Expenditure and Reform and an Taoiseach has released a reasoned opinion on the European Union’s proposals for a directive on Business in Europe: Framework for Income Taxation (BEFIT). In the Committee’s view, the BEFIT proposals do not comply with the principle of subsidiarity which requires that for a directive to have direct effect, the aims of that directive must not be achievable at national level and instead be better achieved at EU level.   The Committee stated that while it supports efforts to simplify tax systems and reduce the complexity of doing business in Europe, proposals of this nature must bring with them benefits that outweigh the cost and complexity of introducing them.   In our response to a public consultation on the BEFIT proposals last year, we highlighted that direct taxation should remain the sole responsibility of the national legislators on the basis of the principle of subsidiarity, as well as the principle of sovereignty. 

Revenue has updated the Stamp Duty Manual which provides general guidance on the application of section 80 SDCA 1999 to include more comprehensive guidance on the application of this section. Section 80 provides for an exemption from stamp duty on the transfer of certain property in connection with a scheme for the bona fide reconstruction of a company, an amalgamation of companies or a merger of companies undertaken in accordance with Chapter 3 of Part 9 or Chapter 16 of Part 17 of the Companies Act 2014.  

Revenue has published details of compliance with the enhanced reporting requirements (ERR), which came into effect on 1 January 2024. Revenue’s figures indicate that at 31 January 2024 over 66,000 submissions had been made by approximately 17,500 employers. These submissions relate to over 702,000 payments and benefits provided to 226,800 individual employees and directors valued almost €86 million.  Revenue has provided an analysis of the submissions as follows:  14,000 remote working daily allowance payments, valued at almost €0.7 million,  32,000 qualifying incentives under the small benefit exemption, valued at €19.3 million, and  656,000 non-taxable travel and subsistence payments, valued at €65.9 million.  Revenue will continue supporting employers and agents to comply with ERR and will host further informational webinars. Employers and agents can also contact Revenue through MyEnquiries if they have any queries, and further support is available through the National Employer Helpline, which can be contacted on (01) 738 3638 between 09.30 and 13.30 Monday to Friday.  Feedback on issues or problems you experience with the new ERR reporting regime can be emailed to the Institute and we will continue to engage with Revenue through the TALC forum. We will keep you up to date on developments in Tax News.  

The OECD is hosting the latest session in its Tax and Development Days series. This event provides an update on some of the OECD's initiatives to strengthen tax capacity and improve tax policy and compliance in developing countries and explore future challenges. Members of the public can register for this event, which is taking place virtually, and attendance is free of charge.

Costantino Lanza and Simone Brogi, two key members of the Commission’s Directorate-General for Taxation and Customs Union (DG TAXUD), recently gave a short interview discussing the new VAT Central Electronic System of Payment Information (CESOP). They discussed that the purpose of CESOP, which is an EU centralised database to which tax administrations send relevant data, is to reduce the VAT gap by enabling tax authorities to better identify online sellers of goods and services.

As European lawmakers reach provisional agreement on the final text of the EU Artificial Intelligence Act, Jackie Hennessy and Dani Michaux delve into the potential risks businesses may face In December 2023, European lawmakers announced a provisional agreement on the final text of a new Artificial Intelligence Act (AI Act), giving developers and users of AI systems the first chance to consider in detail what the proposed new framework could mean for them. Businesses are now in a position to consider the role AI plays in their organisation and how to mitigate potential risks that may arise as a result of this new legislative advancement. What is an AI system? According to the Act, an AI system is a “machine-based system designed to operate with varying levels of autonomy and that may exhibit adaptiveness after deployment and that, for explicit or implicit objectives, infers, from the input it receives, how to generate outputs such as content, predictions, recommendations, or decisions that can influence physical or virtual environments”. Why do we need this Act? The AI Act classifies AI systems into three risk categories: Unacceptable risk AI systems are considered to pose an unacceptable risk and are prohibited by the Act. These practices include systems that target vulnerable people or groups of persons, systems that materially distort a person’s behaviour, the use of biometric categorisation and identification systems and systems that classify natural persons that lead to unjustifiable detrimental treatment. High-risk AI systems are those that, based on their intended purpose, pose a high risk of harm to the health and safety or the fundamental rights of persons, taking into account both the severity of the possible harm and its probability of occurrence.    A General Purpose AI (GPAI) system displays significant generality and competently performs a wide range of distinct tasks regardless of the way the model is placed on the market. It can be integrated into a variety of downstream systems or applications. The Act is intended to ensure better conditions for the development and use of AI and is a pillar of the EU’s digital strategy. Furthermore, the Act takes aim at the emerging issue of ‘deepfake’ technology. Deepfakes are defined as “AI-generated or manipulated image, audio or video content that resembles existing persons, objects, places or other entities or events and would falsely appear to a person to be authentic or truthful”.  The Act places a requirement on deployers of this technology to disclose that the content has been artificially generated or manipulated. Who will the Act affect? The Act will impact both developers and deployers of AI systems and will legislate the following: Human oversight measures for high-risk AI systems; Effective employer obligations for organisations planning to deploy AI in the workplace; Testing of AI systems in real-world conditions; and Implementation of codes of practice for proper compliance with the obligations of the regulation for providers of General Purpose AI systems. The Act represents a major overhaul for businesses developing or deploying AI systems. Businesses doing either in the course of their work should consider how AI can be made compliant with the EU AI Act and what impact this might have on the business and its operational performance. Jackie Hennessy is the Risk Consulting Partner at KPMG Dani Michaux is EMA Cyber Leader at KPMG International

Paul Guess explains what work-related burnout means and outlines the pivotal role managers can play in prevention and recovery Many people think of ‘burnout’ as solely related to how much they work. They believe just taking some time off will relieve feelings of overwhelm and pressure and that they can quickly return to work feeling refreshed and renewed. Several factors can cause burnout, however, and it is unlikely to be resolved by taking a break. One of the most important contributors to a person’s well-being at work is their relationship with their manager. As burnout has been classified as an “occupational phenomenon” by the World Health Organization, support at work is essential to curb the rising tide of overwhelm at work.  The manager's role is critical in assessing and addressing employee burnout. Here are some tips to support leaders in preventing and managing burnout in their teams. 1. Be knowledgeable about the factors that contribute to burnout  Research has indicated the six areas that, when left unchecked, can lead to burnout. Recognising how these areas impact a team can give leaders a better idea of how to improve.  Workload Do staff have a clearly defined job description, and are their responsibilities reasonable? Additionally, do they have the resources they need to fulfil the duties assigned to them? Perceived lack of control When people feel they have a say in the decisions being made that are related to their job, it can positively affect well-being and reduce feelings of disengagement and cynicism.  Appreciation and reward When people feel the extrinsic and intrinsic rewards of their job don’t match their effort and time, they can become disengaged and unmotivated – a key indicator of burnout. Fairness Ensure that people receive fair and equitable treatment. Transparency and trust are the foundations of psychological safety within the workplace, and innovation and creativity flow from this. It is essential to effectively communicate the thinking behind decisions that impact them. Community It is vital that people feel a sense of belonging within the organisation. Develop opportunities to bring teams together and keep connections strong to build positive relationships, as loneliness and isolation are often drivers of poor mental health and well-being. Values Do the leadership’s behaviours create an environment in which people feel that it’s okay to look after their well-being? Role modelling and recognising their own management style and how it contributes to an employee’s experience is an important piece of reflective work that will lead to improved relationships. 2. Pay attention to the warning signs of poor mental health There are common indicators of burnout that managers should be aware of: poor decision making; reduced concentration levels;  feelings of overwhelm;  withdrawal; procrastination;  inability to prioritise tasks effectively;  poor timekeeping;  relationship difficulties;  expressions of anger and frustration; and  increasing cynicism and disengagement. If a manager notices these behaviours in a team member,  they must be aware of how to manage burnout in an employee. There are several steps they should take:  Start supportive conversations  Managers should use one-on-one opportunities to start exploring what might be driving any difficulty. Some people will need a little encouragement to open up, so actively listening to what they say, creating space and responding sensitively will help to reassure them that their manager is there to support them. If they feel stressed or overwhelmed by their workload, guide them on how to handle pressure. Set clear goals and spotlight progress When people don’t have clear goals, they either become stuck because they are unsure where to invest their energy or frantically churn out work in the hope it will be valuable. Good leadership involves setting clear goals that contribute to the team’s success. It’s also important to recognise progress and highlight any accomplishments or achievements by individuals or the team. Protect the team’s time A manager must protect their team’s time, especially regarding their well-being. Ensure that people take time off in light of illness, bereavement or other notable situations. Encourage people to take their annual holiday allowance and have some protected time to rest and decompress during periods away from work. Managers should always be practising the behaviours they encourage, so they must be sure to take their own time off as well. Paul Guess is a mental wellbeing expert at caba, the occupational charity supporting ICAEW