Guidance

Issue 109 of Agent Update

Published 14 June 2023

This month’s content

Technical Updates and Reminders

Developments and changes to legislation and allowances relating to UK tax including:

Tax

EU Exit

HMRC Agent Services

Details of live consultations and links to responses, changes to HMRC service and guidance, including:

Agent Forum and engagement

Latest updates from the partnership between HMRC and the main agent representative bodies. Including:

Technical updates and reminders

Tax

Tax returns for 2022 to 2023 — file now

Tax agents offer a valuable service to their clients and contributed towards the success of Self Assessment 2023 (SA23).

Over half of the 12 million tax returns received by the SA23 deadline were submitted through a tax agent. Over half of these (54%) were submitted in January, with 540,000 coming in on deadline day.

Now that we’ve entered a new tax year, tax returns for 2022 to 2023 can be submitted any time now, up until the deadline. We’re strongly encouraging agents and individuals to submit their tax returns well before the January deadline for the following reasons:

• filing now, does not mean customers pay now — the payment deadline of 31 January remains the same and many customers are not aware of this
• customers will find out what they owe (if anything) in advance — knowing what they need to pay will help them make informed decisions about their finances — it might mean they can book a holiday or make an investment, or it might mean they have to budget and try and save money
• knowing what your clients owe might mean they could reduce their payment on account due in July
• they’ll find out sooner if they’ve paid too much tax and are due a refund
• they can avoid the chance of penalties by getting their tax return done and out of the way, meaning they can concentrate on the important things in their life
• avoid last minute stress — HMRC’s busiest time is January, so call wait times are longer as services are under pressure — also, if something goes wrong or if they (or you) need support, then it means it will not be a rush to sort it out before the deadline
• if they cannot pay, then they’ll know in advance and can set up Budget Payment Plan

Tax agents can support their clients by providing the advice given above and by putting processes in place to nudge clients into filing early. This will help demonstrate the value of agents in helping their clients be efficient, organised and it will save them any unnecessary stress.

You can find out more in our information on filing your tax return early on GOV.UK.

Economic Crime Levy for anti-money laundering regulated businesses — HMRC Online Service now open for registrations

Background

The Economic Crime Levy (ECL) is an annual charge that will affect entities (organisations) that are supervised under the Money Laundering Regulations (MLR) and whose UK revenue exceeds £10.2 million per year.

The Economic Crime Levy will be collected by one of 3 collection authorities:

• the Financial Conduct Authority (FCA)
• the Gambling Commission (GC)
• HMRC

Find out more information on Economic Crime Levy, including understanding who your collection authority is.

The information in this message is only for those whose collection authority is HMRC.

Tax agents cannot register their clients for Economic Crime Levy. Affected HMRC-supervised entities must register themselves for it.

What customer need to do

Affected HMRC-supervised entities must:

• register for the Economic Crime Levy
• submit a return every year
• pay a fee every year

Affected HMRC-supervised entities only need to register for the Economic Crime Levy once. They’ll need to submit an online return and pay the levy every year that their UK revenue exceeds the threshold. They must submit a return and make the Economic Crime Levy payment by 30 September each year.

The payment for the financial year from 1 April 2022 to 31 March 2023 is due on 30 September 2023.

To pay Economic Crime Levy to HMRC, affected HMRC-supervised entities will first need to register before declaring and paying their liability.

How to register

Affected HMRC-supervised entities must register for the Economic Crime Levy using the HMRC online service.

The service is now open for Economic Crime Levy registrations.

Customers can access the service and register for Economic Crime Levy. They will be issued with an access code to enable them to complete the registration process.

The HMRC online service will be updated in the coming months so that affected HMRC-supervised entities can submit a return and make their Economic Crime Levy payment. HMRC will issue a further message when these updates have been made.

Helping customers steer clear of tax avoidance schemes

HMRC is reminding contractors and agency workers that we publish details of tax avoidance schemes, and their promoters to help customers steer clear of or exit them.

We began publishing information about tax avoidance schemes in April 2022 and the list now contains the details of over 35 schemes. The list is continuously updated and we now also publish information about some of the promoters’ company officers, as well as the marketing material used.

This is not a complete list of all tax avoidance schemes currently being marketed. There may be other schemes, promoters, enablers and suppliers that HMRC cannot publish information about at this time.

Find out about the named tax avoidance schemes, promoters, enablers and suppliers.

We also run a Tax avoidance — do not get caught out campaign to help contractors spot the warning signs of tax avoidance, report suspicious companies, and get support to leave tax avoidance schemes.

Contractors Duncan and Tanya share their personal video stories of what it was like for them to be caught up in tax avoidance to help other people learn from their mistakes.

You can help protect your clients from the risks of tax avoidance by sharing with them our campaign messages, including published details of tax avoidance schemes, and telling them about our tools and guides.

If one of your clients thinks they may be caught up in tax avoidance, encourage them to get in touch with us as soon as possible. We can support them to get out of the scheme and back on track.

Employment status guidance for locum pharmacists to be withdrawn with effect from 30 June 2023

From 30 June 2023, we will be updating our Employment Status Manual (ESM) to remove specific occupational guidance for Locum Pharmacists. These include:

• ESM4270 — Particular occupations: locum pharmacists
• ESM2063 — Agency and temporary workers: agency legislation — provisions from 6 April 2014: supervision, direction or control example — locum pharmacist

Updates to our general Employment Status Manual, and the availability of the Check Employment Status for Tax (CEST) tool have removed the need for much of our occupation-specific guidance.

As set out in ESM4270 a written document by itself cannot determine employment status. If a pharmacy business has made an employment status determination based solely on the written contract, they should immediately re-examine that determination based on the facts of the engagement using our CEST tool.

Employer Enquiry Helpline

If after reading our guidance you still have questions about determining employment status, you can contact the HMRC employer’s helpline:

Telephone: 0300 200 3200

Opening times:

Our phone line opening hours are:

Monday to Friday: 8am to 6pm

Closed on weekends and bank holidays.

Payment Increase to the Apprenticeships Care Leavers’ Bursary

The Department for Education (DfE) has announced that the bursary available to care leavers, aged 16 to 24, undertaking apprenticeships will increase from the current payment rate of £1,000 to £3,000. The bursary is available to individuals who have been in the care of a local authority anywhere in the UK, as long as the apprenticeship they enter into is based in England.

The increased rate will be available for new starters from 1 August 2023. This increase is intended to keep up with the rising costs of living and incentivise apprenticeship take up among young care leavers who are currently eligible for the bursary. It will be paid in instalments across the first year of their apprenticeship.

DfE recognises that care leavers face higher living costs than their peers as they live independently at a younger age and may not have a wider family network for support. The increased rate will help those in care and care leavers access and complete apprenticeships, providing them with a great route into sustainable employment. The payment will not affect the care leaver’s entitlement to claim tax credits.

Employers and training providers will continue to receive an additional £1,000 in funding for every apprentice who is a care leaver aged 16 to 24.

More information on Apprenticeships care leavers’ bursary guidance is available on GOV.UK.

The bursary is tax-free

In 2020, HMRC introduced an exemption to make sure that the bursary to care leavers who undertake an apprenticeship will not be subject to Income Tax and National Insurance contributions.

This is because young people leaving care can experience additional barriers to getting an apprenticeship, and the government wanted to support these individuals as much as possible. Therefore, they introduced the exemption to make sure those receiving this payment, receive the full benefit of the bursary. This also makes sure the tax treatment of a bursary to care leavers who undertake an apprenticeship is the same as the tax treatment of a bursary to care leavers who enter higher education.

An amendment has been made to regulations to ensure the increased payment remains exempt from Income Tax and National Insurance contributions.

More information can be found on Tax information and impact notes: Income Tax, National Insurance contributions: exemption for bursary payments to care leavers.

Overlap relief — preparing for the new tax year basis

This summer, HMRC is planning to launch an online form for submitting requests for details about overlap relief. This will provide an easier way to submit requests and make sure that these are dealt with separately from general post.

HMRC will also be publishing additional accompanying guidance on overlap relief and the changes to the rules for the new tax year basis.

Taxpayers with an accounting date other than 31 March or 5 April who are affected by the move to the new tax year basis may need to find out the details of their overlap relief. They’ll need to do this ahead of submitting returns for the 2023 to 2024 transitional year.

Overlap relief information can only be provided if these figures are recorded in HMRC systems, taken from information submitted by taxpayers as part of previous tax returns. If this information has not been submitted in tax returns, HMRC will not be able to provide it.

When looking at a request for overlap relief information, HMRC needs some details about a business to be able to find the correct figures to report back to the taxpayer. If you want to submit a request for information ahead of the launch of the online form, HMRC asks that you provide as much of the following information as possible:

• customer name
• National Insurance number or Unique Taxpayer Reference (UTR)
• either name or description of business, or both
• whether this business is a sole trader or part of a partnership
• if the business is part of a partnership, the partnership’s UTR
• date of commencement of the self-employed business, or date of commencement as a partner in a partnership (if not known, then the tax year of commencement)
• the most recent period end date up to which the business used to report its profit or loss

Ahead of more guidance being published on GOV.UK, information on overlap relief and basis period reform is provided in the Business Income Manual. Information is also available in a GOV.UK news article on basis period reform.

Corporate Interest Restriction — appointment of reporting company by HMRC

We want to clarify the situations in which HMRC will appoint a reporting company for a Corporate Interest Restriction (CIR) group.

As you may know the Corporate Interest Restriction legislation allows groups to appoint a reporting company. That reporting company must then submit group-level Interest Restriction returns going forward.

Most groups that are potentially affected by CIR have appointed a reporting company and submitted Interest Restriction returns. This is because certain benefits can only be accessed through such a return. Having an Interest Restriction return also allows a group to carry forward certain group-level allowances and therefore it is generally beneficial for a group to appoint a reporting company and submit an Interest Restriction return even when there is no current CIR disallowance.

HMRC will no longer appoint a reporting company for a group simply because the group has not made its own appointment by their deadline, and later realises that it would be beneficial to have a reporting company. However, HMRC will continue to use its power to appoint a reporting company where there is a risk that tax is at stake. For example, where HMRC considers that a group should have a CIR disallowance that is not being reflected in the group companies’ company tax returns.

Guidance on Restriction on Corporation Tax relief for interest deductions is available on GOV.UK.

More guidance is available on Interest restriction: administration: reporting requirements.

Spotlight 62 — dividend diversion scheme used by owner managed companies to fund education fees

HMRC is aware of a tax avoidance scheme currently being marketed to owner managed companies designed to divert dividend income from themselves to their minor children. The scheme is promoted as a tax efficient way to fund children’s school fees.

More information is available on GOV.UK about Spotlight 62 — dividend diversion scheme.

The arrangements seek to avoid tax by diverting dividend income away from parents who own their own company to their minor children. The children pay tax on the dividend received. However, due to their £12,570 tax-free personal allowance, £1,000 dividend allowances and their eligibility to the dividend basic tax rate they pay much less tax than if their parents received the dividend.

HMRC’s view is that this scheme does not work as the arrangements are caught by specific anti-avoidance legislation contained in Income Tax (Trading and Other Income) Act 2005, from section 619 onwards, that prevents this type of arrangement providing the tax advantage that is sought.

If any of your clients are using the tax avoidance scheme outlined in the Spotlight, you should encourage them to leave and settle their tax affairs as outlined in the Spotlights.

If you are selling such schemes, be aware that HMRC will pursue those who promote or enable tax avoidance. This includes using the enablers penalty regime for anyone who designs, sells or enables the use of abusive tax avoidance arrangements which are later defeated by HMRC. HMRC will also use its powers under the Promoters of Tax Avoidance Schemes regime against those who continue to promote tax avoidance schemes.

Publication of new Code of Practice 9

A new Code of Practice 9 (COP9) is being published on 14 June 2023.

HMRC’s Fraud Investigation Service is launching a new COP9 Code of Practice on 14 June 2023.

COP9 is where, in appropriate cases, taxpayers have the opportunity, to admit tax fraud, pay the tax they owe and significant penalties, and HMRC will not pursue a criminal investigation into the behaviour they disclose. The refreshed Code of Practice is part of a wider push to re-establish COP9 as HMRC’s primary civil investigation tool in tackling tax fraud. It has been developed in consultation with agents and other professionals.

The new Code of Practice:

• restates the Code of Practice, so that the COP9 recipient fully understands that the Contractual Disclosure Facility (CDF) is an opportunity offered to them as an alternative to a criminal investigation
• resets the terms of the CDF contract to make sure the recipient is clear on exactly what they are signing up to, HMRC’s expectations throughout the investigation, and the serious consequences of their non-compliance

New sections have also been added to the Code of Practice. These:

• reinforce the criminal underpin in COP9 by emphasising the different circumstances when a COP9 case can escalate to a criminal investigation and ultimately to prosecution
• clarify when COP9 can cover fraud in respect of HMRC functions not involving tax
• set out what HMRC can do, if the COP9 recipient rescinds their admission of deliberate behaviour, after they have accepted the CDF offer

If you have any questions about the revised COP9, email centre,cop9@hmrc.gov.uk.

You can read more about HMRC’s approach to tax fraud on GOV.UK.

Anyone with information about tax fraud should report it online or call our Fraud Hotline on 0800 788 887.

EU Exit

New interactive guidance and gform for self-employed customers working abroad

HMRC has introduced new interactive guidance on GOV.UK . This supports customers who are working abroad and applying for a certificate to confirm they pay UK National Insurance. It will help your clients access the correct application form by answering a few simple questions.

We’ve also created a new gform (CA3837) to apply for an A1 certificate, for customers who’ll be self-employed while working abroad. This has been designed to streamline the application process, after taking into consideration recent customer feedback.

The gform also includes an email validation service to give quicker access to customers without a Government Gateway or Business Tax Account.

HMRC Agent Services

New webinar: Agent Forum — working with the agent community

A new webinar will be delivered on 21 and 27 June 2023 entitled Agent Forum — working with the agent community. The webinar will explain the role of the Agent Forum, offer good practice tips, and show how to use the forum to raise widespread, systemic issues and receive a response from HMRC experts.

Reserve a place on Agent Forum — working with the agent community webinar for either of the dates.

VAT registration — improving our service

On Monday 22 May 2023, HMRC closed the VAT registration helpline — a subsidiary of the VAT helpline — so that our advisers time could be used more effectively to process applications. This has allowed us to process hundreds of additional VAT registration applications each day.

We took this decision because over 85% of calls to the VAT registration helpline were from customers who want an update on their applications. This information is already available through the ‘Where’s my reply’ tool on GOV.UK.

We’re committed to responding to our customers within 40 days of submitting their applications. We’re asking customers not to contact HMRC within that first 40 days to progress chase. However, should a reply not be received within 40 days, customers can check on the progress of their application using our dedicated email inbox: vrs.newregistrations@hmrc.gov.uk.

Customers who have not received a response to their application within 40 days, will receive a reply to their email within 5 working days. We will not respond to the email if the application has already been dealt with.

Digitally excluded customers can get help through the main VAT helpline where their applications were submitted more than 40 days ago.

We’re committed to being responsive to our customer needs as part of our HMRC Charter standards, and we’re keen to make sure our business model represents the best possible value for money for the taxpayer.

We recognise that performance across our core service lines still needs some improvement. This approach has helped us to improve our customer service levels by allowing our colleagues to prioritise processing of these applications, while our customers get the information they need through digital channels.

Accessing the Income Record Viewer

The quickest and easiest way to check your clients pay, tax details, employment history and pension information is by using the Income Record Viewer.

You need an agent services account to use Income Record Viewer. You must also get your client’s consent using our digital services to access their information.

Our short useful video, which you can pass on to your clients, shows them how to authorise your request using their Government Gateway Account.

How to authorise an agent for the Income Record Viewer

The Income Record Viewer provides instant and secure access to a wealth of information about your client which includes:

• PAYE information for the current year plus the 4 previous tax years
• employment records, including time in employment, their PAYE reference, the pay and tax details for each of their employment
• student loan repayments, if any, collected through payroll
• latest tax code for the current tax year including all allowances and deductions
• taxable benefits provided by an employer such as company car and medical insurance and whether these are forecasted (P11D not received yet) or actual (P11D received)
• state and private pension information
• details of any underpaid tax and other debts such as tax credits or Class 2 National insurance contributions collected through their tax code.

We want our customers to use our improved digital services to access information rather than calling us.

Going online for routine tasks, saves you time and money, and it frees up our advisers so they can help customers with complex queries or who do not have access to digital services.

Anti-Money Laundering Supervision videos to help businesses

HMRC has launched 4 new Anti-Money Laundering Supervision video guides. These are to help customers get things right first time when registering with HMRC for money laundering supervision.

They are:

Risk assessments for anti-money laundering supervision which explains:

• how to identify and assess the risks to your business
• how to implement and maintain internal controls

How to keep records for anti-money laundering supervision which explains:

• how long you must keep your records for
• what records you must keep

Identifying and reporting suspicious activity for anti-money laundering supervision which explains:

• what’s a suspicious activity report
• how to submit a suspicious activity report

Training your employees to comply with money laundering regulations which explains:

• what training you should provide
• what training records you should keep

You can share these with anyone you know who may find them useful.

You can find all HMRC’s videos for Anti-Money Laundering Supervision on GOV.UK.

Consultation on the introduction of a voluntary standard for customs intermediaries

At Spring Budget 2023, the government announced a package of measures to streamline and simplify customs processes for businesses. As part of these measures, HMRC has now launched a consultation on introducing a voluntary standard for customs intermediaries.

The consultation, which launched on 5 June 2023 and will run for 12 weeks, is in response to feedback from the 2022 Call for Evidence on the customs regime.

You can view the consultation document on GOV.UK.

How to get involved

If you have an interest in the customs intermediary sector and would like to get involved in the consultation, email responses or enquiries to customsintermediariesconsultation@hmrc.gov.uk.

HMRC will be holding several webinars to engage with interested parties on the consultation. If you would like to attend, let us know in your email.

Support for customers who need extra help

We have principles of support for customers who need extra help. These set out our commitment to support customers according to their needs, and underpin the HMRC Charter.

Find out how to get help and what extra support is available.

Tax agent toolkits

HMRC have 20 Tax agent toolkits available for you to download and use. They have been designed to address the most common errors seen from previous years. They include checklists of the key issues to consider and links to HMRC technical guidance and manuals.

Our toolkits are currently being updated.

Here is the breakdown of toolkits by category:

• Capital Gains Tax toolkits
• Toolkits for companies
• Employer toolkits
• Toolkits for individuals
• Property Rental toolkit
• Trusts and Estates toolkits
• VAT toolkits

By identifying the most common errors this may prompt a conversation between you and your clients to make sure submissions are correct.

Contact

Complain to HMRC

To make a complaint to HMRC on behalf of your client you must be appointed as their Tax Adviser.

Where’s My Reply? for tax agents

Find out when you can expect to get a reply from HMRC to a query or request you have made. There is also a dedicated service for tax agents to:

• register you as an agent to use HMRC Online Services
• process an application for authority to act on behalf of a client

Manuals

You can check the latest updates to HMRC manuals or subscribe to automatic notification of changes. You can also suggest improvements for pages of our manuals by using the feedback options in the page footer.

Online

Online training material and useful resources for tax agents and advisers

HMRC videos on YouTube, online learning modules, and live and pre-recorded webinars are available for tax agents and advisers. They provide you with free help, learning and support on topical subjects.

Publications

Employer Bulletin

The latest edition of Employer Bulletin is now available and contains topical and useful information about PAYE processes and procedures. For employers to be informed when it is available on the website, they must first register to receive the email alerts.

National Insurance Services to Pensions Industry: countdown bulletins

Countdown Bulletin 53 has been added to this collection.

Pension schemes newsletter

This newsletter is published by HMRC’s Pension Schemes Services to update stakeholders on the latest news for pension schemes.

Revenue and Customs briefs

These are briefs announcing changes in policy or setting out the legal background to an issue. They generally have a short lifespan, as announced changes are incorporated into permanent guidance and the brief is then removed.

Agent Forum and engagement

Self Assessment repayment delays

A bespoke meeting on Self Assessment repayment delays was held on 24 May 2023 with members of the Issues Overview Group. Our Subject Matter Experts were able to address several detailed issues members had previously raised. The discussions included a comprehensive breakdown of the repayment process. We will continue to review our guidance and communications and will make improvements to bring greater clarity on the process.

Marriage Allowance

At a meeting on 24 May 2023, we advised the Issue Overview Group (IOG) members that we are continuing to investigate various issues raised by members and agents. These relate to Marriage Allowance transfer elections made on the Self Assessment return. Once we finish investigating the issues raised, we will update our various sources of content relating to Marriage Allowance. This will include GOV.UK pages, the Self Assessment return, and its associated notes pages, as well as our own internal guidance for HMRC staff.

We are taking on board the views and contributions made by Issue Overview Group members and aim to make the guidance on Marriage Allowance transfer elections clearer. In addition, we will include advice to our Self Assessment customers and agents on how to avoid several issues they are telling us about.

As we continue to resolve the issues raised, we will provide interim updates on our progress in subsequent Agent Update articles, and directly to Issue Overview Group members.

Linking emails to clients

Colleagues within HMRC’s Operational Excellence, Data Office and Digital Teams have been working together to find out if our services hold the agent and client reference and how we can replay this on correspondence to agents. Within the PAYE service, we’ve identified that we hold agent and client references for nearly 70% of customers who employ an agent. Digital colleagues are now investigating the cost and feasibility of including this on agent outputs as well as looking to quantify what data is held on our Self Assessment services.

Verifying systemic issues on the Agent Online Forum

A key purpose of the Agent Forum is to enable agents to highlight and get supporting evidence of potential systemic issues such as, items which may be affecting many agents and will have a significant impact on operation of the tax system. Posts which are clearly client specific will be removed or locked. Some posts which at the outset appear to be client specific may need to be verified as not systemic by Agent Forum administrators. On these occasions, the posts will be left open for more evidence to be provided by agents.

Income Record Viewer

The Income Record Viewer service is receiving positive feedback from agents that it’s a helpful tool and easy to use, saving them up to 20 minutes per client. Monitoring of performance and feedback will continue to inform any future enhancements to the service and agents are invited to continue to provide evidence of issues they are experiencing on the Agent Forum. Work is continuing on the changes to show tax codes for previous years. It is anticipated this will be in live service by September 2023.

Contact Information for professional and representative bodies

AAT

ACCA Jason Piper

AIA David Potts

ATT

CIMA

CIOT Technical

CIPP Lora Murphy

CPAA Alison Hale

IAB

ICAEW Caroline Miskin

ICAS Tax Team

ICB Jacquie Mount

ICPA Tony Margaritelli

IFA John Edwards

VATPG Ruth Corkin

If you are not a member of a professional body, contact the Agent Engagement mailbox.