In this week’s post EU exit corner, we bring you the latest guidance updates and publications relevant in the post EU exit environment. The most recent Trader Support Service bulletin is also available as is the latest Brexit and Beyond newsletter from the Northern Ireland Assembly EU Affairs team. HMRC has also asked us to highlight a current issue with the Customs Declarations Service (CDS) and its inability to accept certain characters.  CDS issue  The CDS is currently unable to accept special and diacritic characters. HMRC has asked us to share their guidance giving examples of these. This also explains what to do in certain circumstances such as where the user has an approved licence with such characters. HMRC is aiming to fix this issue in Spring 2025.  Miscellaneous guidance updates and publications  Simplified Process for Internal Market Movements (SPIMM) and UK Carrier (UKC) Scheme: Procedure Code to Additional Procedure Code correlation matrix,  SPIMM and UKC Scheme: terms and conditions,  SPIMM and UKC Scheme: Customs Simplified Procedures Guidance,  SPIMM and UKC Scheme: CDS Declaration and Customs Clearance Request Instructions,  SPIMM and UKC Scheme: Navigate the Customs Declaration Service Declaration Instructions,  SPIMM and UKC Scheme: Declaration Category Data Sets,  SPIMM and  UKC Scheme: Procedure Codes,  SPIMM and UKC Scheme: Additional Procedure Codes, and  SPIMM and UKC Scheme: Customs Declaration Service Data Element Completion Guide. 

In this week’s miscellaneous updates, the OECD has published updated Pillar Two guidance and employment expenses relief claims can be made online again for all qualifying employment expenses. HMRC has also published detailed guidelines for compliance (GFC) and a Revenue and Customs Brief on the VAT treatment of remedial works.  OECD publishes updated Pillar Two guidance  Last week, the OECD published the following documents:  Administrative guidance on article 9.1 of the GloBE model Rules, which clarifies the treatment of deferred tax assets arising from tax benefits provided by a government. However, the Inclusive Framework has agreed that, for a two year grace period, jurisdictions will not apply 9.1 to neutralise the deferred tax expenses arising from arrangements that were entered into before 18 November 2024, unless the deferred tax expense exceeds 20 percent of the relevant excluded deferred tax asset amount originally recorded,  Administrative guidance on articles 8.1.4 and 8.1.5 which clarifies how groups will be required to complete GloBE Information Returns (GIR) when there is a difference between domestic legislation and the GloBE model rules,  A list of jurisdictions whose legislation for the Income Inclusion Rule and Domestic Minimum Top-up Tax (DMTT) have been granted transitional qualified (and DMTT Safe Harbour) status by the Inclusive Framework, and  An update to the GIR, a XML schema user guide for tax administrations, and a Multilateral Competency Authority Agreement on the exchange of GloBE information.   All of the updated guidance is available on the OECD website at: Global Anti-Base Erosion Model Rules (Pillar Two).   Online claims for relief from all employment expenses restored  HMRC has recently fully restored the online option for an employee to make a claim online for tax relief for all types of employment expenses. This was restored for uniform, work clothing, and tool expenses from 31 October 2024. However, from 23 December 2024, an employee can make a claim and submit evidence for all qualifying employment expenses online using a new iForm. Note that agents cannot make claims online and can only do so by post.  From Monday 14 October 2024, claims for relief for employment expenses had only been possible by post using form P87 and were required to be backed up by supporting evidence.   More information and guidance is available in the following publications:  HMRC policy paper: Evidence required to claim PAYE (P87) employment expenses, and  HMRC guidance: Claim tax relief for your job expenses.  VAT treatment of remedial works  HMRC has published a GFC and a Revenue and Customs Brief on the VAT treatment of remedial works. The GFC includes illustrative examples to help stakeholders understand how these rules apply. See the following documents for more information:  Help with VAT treatment of remedial works — Guidelines for Compliance GfC11, and  Revenue and Customs Brief 3 (2024): VAT on cladding remediation work. 

A new R&D disclosure facility recently went live on GOV.UK and HMRC has set out its position following the First-tier Tribunal (FTT) decisions in Collins Construction Ltd v HMRC [2024] UKFTT 951 (TC) and Stage One Creative Services Ltd v HMRC [2024] UKFTT 1059 (TC).  New R&D disclosure facility  HMRC’s new R&D disclosure facility went live last month on 31 December 2024. This facility has been designed to make it easier for taxpayers or their agents, to disclose non-deliberate inaccuracies in R&D claims to HMRC.  This facility is for:   R&D tax reliefs claims which are out of time to amend via the company tax return; and   Taxpayers who have self-served R&D tax relief claim inaccuracies by mistake, despite taking reasonable care or carelessness.  Any deliberate inaccuracies disclosed will be re-directed to the contractual disclosure facility as tax fraud.   The facility itself is a form on GOV.UK. The accompanying GOV.UK page details the information required to complete the disclosure, which includes uploading computations, explanations and the submission of a letter of offer. The facility also enables taxpayers/agents to self-serve any tax, tax credit repayments, interest, and penalties due. Once received, HMRC will review the disclosure and if the offer is satisfactory a letter of acceptance will be issued. This facility does not require notification of the intention to make a disclosure.  FTT cases  In both these cases, the FTT found in favour of the appellant companies. HMRC has been considering the outcome of the cases and has decided that it will not be appealing the decisions.  HMRC has set out that it recognises clarity is needed on the impact of these cases on open enquiries, appeals, and other claims with subcontracted R&D and subsidised expenditure issues.   HMRC is now considering the wider impacts these FTT decisions have on such claims and aim to publish further guidance on this next month. HMRC is also contacting companies with existing enquiries this month to update them on next steps. 

Both Finance Bill 2024/25 and The National Insurance Contributions (Secondary Class 1 Contributions) Bill continue their passage through parliament.   Finance Bill 2024/25  Committee of the whole House for the Finance Bill took place last month on 10 and 11 December. The Bill is therefore currently at Committee stage with the next stage of its progress being scrutiny by the Public Bill Committee. This is expected to have concluded by 4 February 2025. In preparation for this, last month the Government published proposed amendments to the Bill and associated updated explanatory notes.   A meeting took place with HMRC on 18 November to discuss the changes to the taxation of non-UK domiciled individuals which are contained in the Bill. The Institute was in attendance at that meeting the minutes from which have been published on GOV.UK.  The National Insurance Contributions (Secondary Class 1 Contributions) Bill  This Bill implements the changes to employers National Insurance Contributions (NICs) from 6 April 2025 as announced in the Autumn 2024 Budget. It is now at Committee Stage in the House of Lords.   The Bill provides for the 1.2 percent increase in employers NICs from 13.8 percent to 15 percent and the reduction in the secondary threshold to £5,000. It also increases the annual employment allowance (which currently reduces the employer’s NIC liability of eligible employers by up to £5,000) to £10,500 and removes the qualifying requirement to have a total secondary Class 1 NICs liability of less than £100,000 in the prior year. 

The Platform for Collaboration on Tax is compiling a concise set of high-level principles that are designed to help navigate the policy, legislative and administrative issues related to tax incentives. It has published a draft version of its Tax Incentives Principles as it seeks feedback on its contents from tax policymakers, practitioners and experts by 10 February 2025.

The European Parliament’s Subcommittee on Tax Matters (FISC) hosted a public hearing on the impact of taxation on gender equality in the EU. The hearing examined tax policies that are considered obstacles to promoting gender equality and tax policies that can contribute to advancing gender equality.

Kenya has deposited its instrument of ratification for the Multilateral Convention to Implement Tax Treaty Related Measures to Prevent Base Erosion and Profit Shifting (BEPS Convention). The BEPS Convention will enter into force on 1 May 2025 for Kenya.

The Co-Chairs of the Inclusive Framework on BEPS have provided an update on the progress made in developing a final package for Pillar One of the Two-Pillar Solution.

The OECD has released the updated GloBE Information Return (GIR) which incorporates clarifications on completing the GIR. It also includes a template to use to notify jurisdictions that they will receive the GIR through exchange of information. Each constituent entity of an MNE Group is required to annually file a GIR with the tax administration of the jurisdiction where it is located to support the administration of the GloBE rules.

A strong organisational culture drives performance, retention and reputation. Laura Magahy outlines how to shape and sustain culture for competitive advantage Organisations ignore culture at their peril. We need only look back to the global financial crisis and recent controversies across several charity and public sector institutions to see the results of weak organisational culture. Peter Drucker may have never actually said, “Culture eats strategy for breakfast”, but Ford Motor Company President Mark Fields certainly did when he put it on his office wall in 2006. This is much more than a catchy slogan. It underlines a critical truth: no matter how well-crafted a strategy might be, it will fail if the culture in an organisation doesn’t actively encourage its people to live it. In short, without a coordinated framework for supporting a culture that will drive the company’s vision forward, achieving it will not be possible. Conversely, organisations with a strong, positive and supported culture enjoy significant benefits, including improved performance, enhanced employee recruitment and retention and better overall reputation. The cultural wake-up call The 2008 global financial crisis cast a spotlighted cultural failings in financial institutions as a key contributing factor. By 2012, corporate culture began to be seen as a key strategic element to prevent future crises. In 2018, the Central Bank of Ireland conducted a behaviour and culture review of Irish banks. What followed was the establishment of the Irish Banking Culture Board, which was set up to drive cultural change in financial institutions. More recently, other high-profile scandals have led a number of public sector authorities, agencies and charitable bodies to look seriously at organisational culture as part of essential governance oversight and reputation protection. Defining and assessing organisational culture The challenge facing organisations is how to determine if they have the right culture and, indeed, what that culture should be. There is no identity for setting the ideal or target organisational culture. The nature of the individual organisation and the circumstances in which it operates are of fundamental importance and must be considered. For example, the culture required for a commercial, sales-focused organisation may be different to that of a public service provider; where a number of organisations are merging, they may need to define a new culture for the new entity; when a new agency is being established or has an expanded remit, they may need to reset their target culture. In all cases, the target culture must be aligned with what the organisation and its leaders want to achieve to support their mission, vision and values. Organisational culture, if not actively supported and monitored, tends to grow and evolve organically and frequently in unintended and unexpected ways. It is created through the behaviours that are displayed by both the top management and local leaders through their day-to-day actions. Four common culture types Broadly speaking, organisational culture will often fall into one of four general categories. Each is based on different value drivers, which depend on various factors, including whether the organisation is more internally or externally focused, how flexible and innovative it needs to be to deliver on its mission and what its risk appetite should be. Clan culture: Internally focused, promoting long-term cohesion, with core values of commitment, communication and staff development. Hierarchical culture: Also internally focused, prioritising efficiency, consistency and structure in the pursuit of a common goal. Adhocracy culture: Externally oriented, with a long-term vision; competitive, driven by innovation, agility and transformation. Market culture: Also externally focused, with a sharp emphasis on customer service, goal achievement, market share and profitability. In reality, most organisations exhibit a blend of these types. What really matters is if it is the right target culture for what the organisation needs and, if not, what the right one would be. Characteristics of strong vs. weak cultures Strong organisational cultures typically exhibit traits such as: Honesty and transparency; Strategic and forward-thinking approaches; Respect and accountability; Adaptability and reliability; and A shared sense of purpose. In contrast, weak cultures are often characterised by: Siloed thinking; Short-term focus; Low employee morale; High staff turnover; Over-concentration of power; and Lack of trust and engagement Cultural variation across departments It should be emphasised that uniformity of culture across different parts of an organisation is not necessarily critical for mission delivery. As long as the people within the organisation are aligned with the same goals and values, then cultural variation or sub-cultures across departments and divisions can co-exist. For example, adhocracy may suit a research and development department, while the sales operation may find a market culture more appropriate. As long as they share the behaviours and values of a strong, positive culture, they can work together in harmony or at least in a mutually supportive environment. Laura Magahy is Head of Public Sector Consulting at Forvis Mazars

Moira Cronin explains how the Digital Operational Resilience Act will impact Irish-based financial services providers, enhancing ICT risk management and digital resilience The Digital Operational Resilience Act (DORA) came into effect on 17 January 2025. Designed to consolidate and upgrade information and communications technology (ICT) risk requirements in the financial sector, DORA applies common standards to all financial system participants. Its aim is to mitigate ICT and cyber risks across providers’ operations. So, what does this Act mean for financial services providers based in Ireland? Legal basis DORA removes obstacles to—and improves the establishment and functioning of the internal market for—financial services, by harmonising the rules applicable in ICT risk management, reporting, security control testing and ICT third-party risk. Subsidiarity The proposal harmonises the digital operational component of a deeply integrated and interconnected sector already benefitting from a single set of rules and supervision in most other key areas. For ICT-related incident reporting, only EU harmonised rules could reduce administrative burdens and financial costs associated with reporting the same ICT-related incident to different EU and national authorities. Proportionality Proportionality is designed in terms of scope and intensity through qualitative and quantitative assessment criteria. While the new rules cover all financial entities, they are also tailored to the risks and needs of their specific characteristics in terms of their size and business profiles. Proportionality is also embedded in the ICT and cyber-risk management rules, digital resilience testing, reporting major ICT-related incidents and oversight of critical ICT and cyber third-party service providers. Choice of instrument The measures needed to govern ICT and cyber risk management, ICT and cyber-related incident reporting, testing and oversight of critical ICT and cyber third-party service providers must be contained in the regulation to ensure that the detailed requirements are effectively and directly applicable in a uniform manner, without prejudice to proportionality and specific rules foreseen by this regulation. Three DORA requirements businesses should aim to achieve are: 1. ICT-related incident reporting One of the main requirements for financial entities is to establish and implement a management process to monitor and log ICT and cyber-related incidents, followed by an obligation to classify them based on criteria detailed in the regulation and further developed by the European Supervisory Authorities (ESAs) to specify materiality thresholds. Only ICT-related incidents deemed significant must be reported to the competent authorities. 2. Cyber operational resilience testing The capabilities and functions included in the ICT risk management framework need to be periodically tested for preparedness, identification of weaknesses, deficiencies or gaps and prompt implementation of corrective measures. This regulation allows for a proportionate application of digital operational resilience testing requirements depending on financial entities' size, business and risk profiles. 3. ICT and cyber third-party risk The regulation is designed to ensure a sound monitoring of ICT and cyber third-party risk; financial entities shall be required to observe several key elements in their relationship with ICT and cyber third-party providers, remaining fully responsible for complying with and discharging all obligations. To this end, contracts governing this relationship will be required to include: At least a complete description of services; An indication of locations where data is processed; Full-service level descriptions accompanied by quantitative and qualitative performance targets; Relevant provisions on accessibility, availability, integrity, security and protection of personal data; Inspection and audit by the financial entity or an appointed third-party; Clear termination rights; and Dedicated exit strategies. As such, DORA should be taken into consideration in close coordination with NIS Directive version 2, CBI Operational Resilience Guidelines and the EU Critical Infrastructure Directive. DORA is part a package of digital finance measures designed to further enable and support the potential of digital finance in terms of innovation and competition while mitigating the risks arising from it. It aligns with the European Commission's priorities to make Europe fit for the digital age and build a future-ready economy that works for the people. Moira Cronin is Digital Risk Partner at PwC Ireland

Two distinctly opposing leadership ideologies now exist, but could one damage your organisation? Michael O'Leary explores the current state of leadership Thirty years ago, the late Colin Powell, former US Secretary of State, listed 18 lessons for leaders in a presentation titled A Leadership Primer. He talked about authenticity, optimism, challenging others and not being afraid to be challenged back. Fast forward to 2025. A friend with a successful track record as a leader and entrepreneur says he fears the examples young people are now exposed to by political leaders around the world –namely, their values, naked self-interest and fervent intolerance for people different from themselves. Beyond Powell’s single set of leadership principles, we now have two diametrically opposing “successful” leadership ideologies – one which engages others around common goals, innovation and adaptability and the other around a populist, narcissistic personality, sewing divisiveness and confrontation. Growth in disinformation on social media and in vested print media has spurred an undesirable social contagion of the latter, meaning organisations now need to consider how to combat these external influences on their internal leadership behaviours. As the global economy stumbles, having a positive, optimistic and thriving organisation culture is essential. Who you recruit as a leader determines your culture. Here are the three leadership traits we see too often in geopolitics and how to avoid hiring them. Trait 1: Strict dogma and rigid perspective Even leaders who deliver results occasionally believe that to get things done, they need to do it themselves. The consequences include a feeling of exclusion for employees and that their opinions are not wanted. This erodes collaboration and disengages the team over time. Hire leaders who can give examples of adapting on the move and can describe in detail how they brought their teams on a new journey. Look for leaders who have recognised when to pivot and have engaged with their teams to work out a new direction or multi-pronged approach. Trait 2: Intense control and single-mindedness In extreme cases of dictatorial leadership, curiosity is deliberately stifled. The leader seeks to control matters tightly to their agenda. Curiosity has deep riches; it is the key to continuous improvement, innovation and building connections between people. Leaders should inspire their teams to be open-minded and look for new ways of achieving outcomes. Ask your potential leadership hires to outline examples of where they have completely let go of an issue and had it worked through by a team or team member to the point of resolution. Look for leaders who can respond quickly when asked to give an example of inquisitiveness. Trait 3: Investing only in self Fear of the unknown can drive irrational levels of support for geopolitical leaders, even in the face of their aberrant conduct. Within the context of organisational leadership, self-absorbed leaders are dangerous to team or group morale. Their staff turnover will often be higher as their lack of authenticity undermines their credibility. How self-aware is the leader you are interviewing? Are they attuned to their emotions and impact on others? Can they give examples of areas in which they need development? Do they rely too heavily on their charisma? While it can be useful in motivating others, it can also suggest a potential for arrogance and the need to be at the centre of attention. Though the world and our organisations currently face an unusual number of difficulties, organisation leaders with the right traits understand how to insulate against malign influences and navigate challenges. Their ability to bind intellectual agility to practical demonstration is what makes them outstanding leaders. They do this by behaving in a diametrically opposing manner to those political leaders who seek personal gain at an extreme cost to their citizens. Michael O'Leary is Chairperson at HRM Search Partners