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.

Revenue has launched a public consultation on modernising Ireland’s administration of Value-Added Tax (VAT). Revenue’s objective is to introduce real-time digital reporting for VAT, supported by electronic invoicing (eInvoicing).  Advancements in digital technology offer the possibility to align VAT compliance obligations more closely with normal business processes, reducing compliance costs and yielding efficiencies for tax-compliant businesses, while enabling Revenue to focus more effectively on combatting fraud. At European Union (EU) level, discussions are currently underway on the European Commission’s VAT in the Digital Age (ViDA) proposals for similar developments in respect of cross-border transactions between Member States.  This consultation focuses on modernising Business to Business (B2B) and Business to Government (B2G) VAT reporting through eInvoicing. The consultation period will run from Friday 13 October 2023 to 12 January 2024. The consultation, in questionnaire format, can be viewed here.  The Institute, under the auspices of the CCAB-I will respond to the consultation and members wishing to provide input can email us.  Announcing the commitment on Budget Day, Minister McGrath further commented:  “With the continued advancement of technology, it is important that the State continuously assesses its current operations to ensure that we are keeping pace with that advancement and that we are fully availing of the opportunities available.  Therefore, I welcome today’s announcement from the Revenue Commissioners launching a public consultation on updating and modernising Ireland’s VAT system, which represents an important start on this significant body of work. I would encourage businesses and their representatives to engage with the public consultation and to have their say in the development of the future of VAT reporting and VAT invoicing processes.” 

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.

HMRC’s latest schedule of live and recorded webinars is now available for booking. Spaces are limited, so take a look now and save your place. A webinar is also being held on the VAT reverse charge for the construction sector, which will take place at 1.45pm on Tuesday 14 November. Businesses can sign up here. HMRC has also sent an email setting out details of a National Minimum Wage webinar.

In this week’s EU exit corner, we bring you the latest guidance updates and publications relevant to EU exit. The latest Trader Support Service bulletin is also available and HMRC has also launched an enhancement to the advanced valuation ruling service which is now available to all traders. Advance valuation ruling service update Previously, agents who represented traders who were not able to use a business tax account could not avail of HMRC’s advance valuation ruling service as this was only accessible through the business tax account. This has now been made possible. HMRC’s advanced valuation rule service intends to provide traders and agents with legal certainty on the valuation method for imported goods, for a period of three years. The service has been operating since April 2023. Miscellaneous updated guidance etc. The following updated guidance, and publications relevant to EU exit are available:- Notices made under the Customs (Northern Ireland) (EU Exit) Regulations 2023; Notices made under the Customs (Northern Ireland) (EU Exit) Regulations 2020; Data Element 2/3: Document and Other Reference Codes: Licence Types – Imports and Exports of the Customs Declaration Service (CDS); Data Element 2/3 Documents and Other Reference Codes (National) of the Customs Declaration Service (CDS); Making an entry summary declaration; Appendix 2: DE 1/11: Additional Procedure Codes of the Customs Declaration Service (CDS); Authorisation type codes for Data Element 3/39 of the Customs Declaration Service; Data Element 2/3: Documents and Other Reference Codes (Union) of the Customs Declaration Service; Apply for an Advance Valuation Ruling; and Additional Information (AI) Statement Codes for Data Element 2/2 of the Customs Declaration Service (CDS).

This week we bring you news about a recent issue with student loan deductions and payrolled benefits in kind (“BIKs”) and HMRC is promoting the use of the ‘Pay by Bank Account’ service which is available from online filing services. Probate queries are now handled by the Courts and Tribunal Service instead of HMRC and a new toolkit is now available to help agents and advisers assess if a taxable remittance to the UK has been made. And finally, HMRC has issued a reminder email about recent changes to the UK’s research and development tax relief regimes, including the new claim notification form and the additional information form which must be used. And HMRC has also asked us to share with you an email on the McCloud Digital Service Launch and changes to the Agent Dedicated Line. Issue with student loan deductions and payrolled BIKs  HMRC has recently identified that a small number of student loan borrowers have been overcharged student loan repayments on their Self-Assessment (“SA”) tax return. The issue has arisen because HMRC calculates student loan repayments using the total PAYE income declared on the SA return. However, student loan deductions are not due on payrolled BIKs that are not subject to Class 1 NIC. Information is contained in Agent Update 112 on the steps HMRC is undertaking to correct this. In addition, guidance on the steps to take when completing the next SA return to prevent a reoccurrence of this issue are also available.  Paying HMRC using open banking – enhancement HMRC has asked us to highlight its ‘Pay by Bank Account’ service (which makes use of opening banking technology) which is available from online filing services and which has recently been enhanced with further enhancements due to be launched soon. Previously the only option was to make an immediate payment to HMRC which sometimes made this unattractive for taxpayers filing their return in advance of the due date for payment of the relevant tax.   HMRC has recently enhanced the service to make it possible to schedule payment for a future date (which cannot be beyond the due date for payment). This feature is now live for the following taxes: VAT; PAYE; PAYE settlement agreement; PAYE late payment or filing penalty; and Class 1A NIC. HMRC also intends the service to be available soon for: Capital gains tax; Self-assessment; Simple assessment; Corporation tax; VAT one stop shop; the soft drinks industry levy; and the plastic packaging tax. Changes to probate phone lines  From Monday 2 October, HMRC is no longer offering a dedicated probate phone line. If a person has a probate query, they should contact the HM Courts and Tribunals Service probate phone line. If a person has an inheritance tax query, they should contact HMRC. 

In its response to the Tax incentives for occupational health: Consultation, the Northern Ireland Tax Committee recommends that a significant increase be made to the current £500 benefit in kind (“BIK”) exemption limit for occupational health. In addition, the UK Government should also consider a BIK exemption for private medical insurance, where there is a link to returning to work. This would be of particular benefit in Northern Ireland where NHS waiting lists are longer than the rest of the UK. An overall review of UK employment taxes policy and a number of recommendations also feature to reduce the cost of employment. Read the key recommendations in the Committee’s submission on page 10.

31 October 2023 is the self-assessment paper filing deadline for 2022/23 to avoid penalties. Readers are reminded that if an online self-assessment return cannot be filed by virtue of one of the online filing exclusions or special cases (search GOV.UK for details as these regularly change) meaning the return must be filed on paper instead, then in those cases, the 2022/23 paper filing deadline is extended to 31 January 2023. A reasonable excuse claim should accompany such returns.

At the recent meeting of the FTA, which brought together tax commissioners and delegates from around the world, representatives agreed on new areas of collaboration to transform the future of tax administration. The three areas identified were the vision of Tax Administration 3.0, effective implementation of the Two-Pillar Solution, and enhancing global capacity building efforts.

A new report published by the OECD reflects on the importance of the international tax agenda for African economies. The report was commissioned at the request of the G7 president, Japan, to inform discussions at the G7-Africa Ministerial Roundtable held in October.

The OECD has published a new convention on implementing Amount A of Pillar One. Amount A of Pillar One sets out rules for the reallocation of profits of the largest and most profitable multinationals to countries regardless of their physical presence. As such, it is seen as a key measure in bringing international tax policy into the modern era. The OECD has forecasted that the proposals could produce global annual tax revenue gains of as much as €32 billion with the greatest gains flowing to low and middle-income countries.

The role of performance measurement and control in prisons in the UK and Ireland continues to evolve, write Mariannunziata Liguori and Martin Kelly The prison sector in the United Kingdom (UK) and the Republic of Ireland (ROI) is significant and forms the backbone of the criminal justice system in both jurisdictions. In 2021, approximately £5.4 billion was spent on the prison system in the UK, where His Majesty’s Prison and Probation Service (HMPPS), an executive agency of the Ministry of Justice (MoJ), is responsible for 117 prisons in England and Wales, including 104 public prisons and 13 private. Three private sector companies – G4S, Sodexo and Serco – manage the private prisons with a combined operational capacity of 16,000 places. As of March 2021, there were 78,058 prisoners overall. In ROI, the annual budget for the Irish Prison Service (IPS) for that year was €395 million, for an average of 3,792 prisoners. The IPS operates as an office of the Department of Justice (DoJ). There are currently 12 prison sites in the Irish prison estate, none run privately. We have recently conducted research exploring the relationships among key stakeholders and performance management tools involved in the provision of prison services in both the UK and ROI. Key stakeholders In the UK, specifically in England and Wales, within HMPPS, the Prison Group Directors are responsible for the operational delivery and strategic development of up to seven prisons at a time. To manage the contracts with private providers, moreover, there is a Head of Custodial Contracts for HMPPS, who ensures that the private contractors deliver to the expected standards.  At the local level, prison governors are expected to provide vision and strategic direction for prisons, ensuring that their site is secure and operationally stable, while maintaining decency and compliance with key performance metrics and targets. In the ROI, the governor in charge of each prison is accountable to the Minister for Justice, through the Director General of IPS, for the safe and secure custody, care and rehabilitation of the prisoners in their care. The governor is also responsible for effective corporate governance at prison level and for cost-effective performance against agreed plans. The research highlighted that, in the ROI, key stakeholders (DoJ, IPS and governors) considered a strong and clear governance system as essential. IPS and governors were perceived as the main actors through whom all decisions and changes had to pass and be approved. A main underlying factor emerging in the provision of prison services was the ability to manage relationships across the wide range of stakeholders and levels involved. Such relationships were influenced by both human agents’ behaviours/attitudes and contextual/physical factors (such as regulation, changes in control and performance measurement systems, availability of resources, contractual aspects, etc.). When compared with the UK, a greater emphasis on softer control and measurement aspects, such as social and human conditions, as well as Health and Safety, became apparent in the ROI. Within the UK, on the contrary, key stakeholders (MoJ, HMPPS, governors and contractors) emphasised contract management issues as being critical to the delivery of services. In both jurisdictions, the role of, and relationships between, the governors and HMPPS/IPS were of critical importance. The empirical evidence suggested the need for greater clarity on their respective roles and responsibilities. The contention for increased efficiency and transparency has led, over time, to a proliferation of new control and performance measurement tools, with an excessive emphasis on standardised and quantified performance measures. If care is not taken, this could lead to a diminution of accountability by narrowing the focus of management on a few numbers, rather than the overall quality of the service provision. Performance measurement and control The research showed that, compared with the ROI, the UK stakeholders at all levels were more wedded to business-like approaches, stressing the importance of efficient and cost-effective prisons and good contracts to manage their services. In both jurisdictions, and regardless of their public/private nature, prisons mainly replicated external mandatory controls and measures. However, there was also an acknowledgement of the unifying role played by accounting and measurement practices and the benefits that common standards and professionalism could bring when new knowledge and techniques are integrated into existing systems. In 2018, a new performance framework, the Prison Performance Tool (PPT), was introduced in the UK to monitor the performance of prisons. Similar in principle to the Balanced Scorecard, the PPT uses a data-driven assessment of performance in each prison to derive overall prison performance ratings. Data for the various measures in the PPT, along with overall prison ratings, are released at the end of each year on GOV.UK, as part of the Prison Performance Ratings publication. These ratings are publicly available and form the basis of a league table of prison performance. The PPT performance measures are weighted according to HMPPS’s priorities. For example, in 2019/20 there was an emphasis on safety and drug levels, living conditions and risk management, as well as security measures and data quality. In ROI prisons, more integrated and comprehensive performance-measurement systems are currently being developed with the aim of strengthening governance and accountability, improving the prisoner’s journey and the safety and security of prisons. IPS has recently introduced a new operating model to align functional responsibilities between directorates and the various operational sites (including prisons) and to provide clarity on decision-making authority and accountability. The Oversight Agreement 2022–24 sets out the key governance and reporting arrangements. Consistently, IPS is required to develop a multi-year Strategic Plan. This defines the mission, vision and values of the service and is expected to incorporate appropriate objectives and goals along with relevant indicators and targets against which performance can be measured. At present, only a limited number of performance metrics are produced and made publicly available. Moreover, such quantitative performance data are limited in scope. For instance, there is no breakdown of figures for each prison, so it is difficult to see which are performing well, or otherwise, against the relevant targets. While key stakeholders in both the UK and ROI indicated that many of the performance measures in place were relevant, governors frequently pointed out that prisons were not sufficiently resourced to achieve some of the targets set, which ultimately affected the prisoners’ experience. It was concerning, in particular, that there was still relatively limited information, in the public domain, in relation to health and education in prisons. With reference to private prisons in the UK, moreover, the role of the public sector controller was identified as being particularly critical. The controller is the MoJ’s on-site representative in each private prison and effectively monitors performance on the ground. Private prisons’ performance is measured through the same system public sector prisons are subject to. In addition to this, however, each contract also has specific contract-delivery indicators (CDIs) built into it with financial incentives. If a private prison operator does not meet its target for a CDI, it may incur a financial penalty. Contracts between private prison providers and the MoJ are highly complex. The contracts are normally an extensive suite of documents comprising the main contract and up to 30 detailed schedules, many with their own constituent parts and appendices. For the 13 private prisons in England and Wales, there was a significant level of compliance and assurance reporting. Private prisons were generally perceived to be under greater control and scrutiny, when compared with their public counterparts, because of the greater contract detail and the presence of public sector controllers within their walls. A potential concern in this area would be the narrow competitive base of the UK prison market and, consequently, the MoJ and HMPPS’s continued reliance on the same few contractors, even when there is evidence of inadequate performance levels.   Conclusions The prison system represents a unique context in which many different stakeholders collaborate. Partnerships are critically important to ensure good performing prisons. Governors in both jurisdictions were conscious of the limitations of performance measurement and that existing indicators did not always reflect their priorities. If the application of performance measurement systems is perceived as inflexible, staff will focus on short-term achievements, paying less attention to the longer-term impacts. The enabling or constraining effect of the systems set in place, and their ability to influence, in one way or another, decisions and behaviours was perceived as being particularly important. If performance is to be effective, an integrated and inter-organisational governance approach becomes essential. Whilst the research highlighted that some excellent work is being carried out in individual prisons in both the UK and ROI, there is still some ambiguity as to how, exactly, this is being effectively captured within the wider performance reporting and control systems of the public sector. In both jurisdictions, there is a clear and increasing desire for consultation and inclusion in decision-making processes. The role of performance measurement and control is evolving and no longer covers only the assessment of organisational results, but increasingly includes managing change, organisational relationships and the external environment. Successful prisons will be those that broaden their view, from looking inward to looking outward towards the community. This article is one of the outputs of a research project by Mariannunziata Liguori (Durham University Business School) and Martin Kelly (Queen’s Management School, Belfast) funded by Chartered Accountants Ireland Educational Trust