Guidance

Issue 111 of Agent update

Updated 21 September 2023

Technical updates and reminders

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

Tax

EU Exit

Making Tax Digital

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

Reporting of Electricity Generator Levy receipts

There are currently no boxes available on the Corporation Tax return for the submission of Electricity Generator Levy (EGL) receipts or the levy amounts payable.

These will be updated in the April 2024 release of the CT600 tax return.

If you need to notify us of EGL receipts and the amount of levy payable before the CT600 is updated, enter these figures in boxes 986 (Energy (Oil and Gas) Profits Levy (EOGPL) amounts liable), and 501 (EOGPL payable) respectively.

Plastic Packaging Tax — Mass Balance Approach consultation

On 18 July 2023, the government published a consultation on using a mass balance approach (MBA) for Plastic Packaging Tax (PPT).

The consultation looks at:

• whether an MBA can be used as a way of working out the recycled content in packaging made from chemically recycled plastic waste
• the way in which certification schemes could be used
• identifying the controls and standards required

It also asks whether:

• immediate packaging of human medicines should continue to be exempted from PPT
• if pre-consumer waste should be considered recycled material under PPT.

Have your say and add your response on the Mass Balance Approach consultation before the 10 October 2023. Information is on GOV.UK at Plastic packaging tax - chemical recycling and adoption of a mass balance approach.

Alcohol Duty new rates and reliefs introduced on 1 August 2023

At Spring Budget 2023, the Chancellor confirmed changes to the structure of the Alcohol Duty system, creating standardised tax bands for all alcoholic products based on alcohol by volume (ABV).

The changes to the Alcohol Duty structure and the new reliefs took effect this month, from 1 August 2023. This includes:

• a Small Producer Relief, which reforms and extends the relief previously enjoyed by small breweries, to producers of all alcoholic products under 8.5% ABV

• a reduced rate for draught products, also known as Draught Relief, which reduces the tax due on draught alcoholic products under 8.5% ABV, packaged in containers of at least 20 litres, and designed to connect to a qualifying dispense system

Changes also include transitional arrangements for producers and importers of some wine products to help them move to the new method of calculating the duty on their products. This allows businesses to use an ‘assumed strength’ of 12.5% ABV, when calculating the duty for wines with an ABV between 11.5% and 14.5%. This measure is in place for 18 months, from 1 August 2023 until 1 February 2025.

To learn more about the changes on GOV.UK read the guidance in English or listen to recordings from previous webinars. You can also read the guidance in Welsh.

If you support a Small Producer they can also use the Small Producers Relief calculator on GOV.UK to work out their reduced duty rate.

Capital Gains Tax on UK property paper return

As announced in Agent update 106, HMRC has made the paper version of the Capital Gains Tax on UK property return, with notes to help you complete the return, available to download on a trial basis.

The trial began in February 2023 and has been extended until the end of September 2023 to allow more time to determine whether it is meeting customers’ needs. HMRC will continue to review usage of the forms for the duration of the trial period.

The downloadable forms do not replace the online Capital Gains Tax on UK property account and are only intended to assist those who cannot report and pay tax using the online service.

As a reminder, paper returns must only be made in certain circumstances. The full list of circumstances can be found on GOV.UK. If your circumstance is not listed but you are having difficulty reporting online, contact HMRC for further help.

Non-resident UK individuals should continue to use the alternative sign in process to report and pay through the Capital Gains Tax on UK Property Account, unless digitally excluded. Details of the alternative sign-in process can be found in HMRC internal manual CG-APP18-160.

Removal of country-by-country reporting notification requirement

Country-by-Country Reporting is a mechanism for the reporting of financial information by certain large, multinational enterprises, which is then shared under treaties with the tax authorities of jurisdictions where those enterprises operate.

Customers who file Country-by-Country reports are no longer required to submit notifications to HMRC.

The requirement was removed by Statutory Instrument with effect from 26 July 2023.

The guidance in the International Exchange of Information Manual has also been updated.

Research and Development (R&D) tax relief reform — updates

Reminder: new requirements for claiming R&D tax relief

As of 8 August 2023, all companies claiming R&D tax relief are required to submit an additional information form before their Corporation Tax return containing the claim. Visit GOV.UK to check how to access the additional information form, as well as what is required and when to submit.

For accounting periods starting on or after 1 April 2023:

• some customers are required to provide claim notification ahead of a claim for R&D tax relief — claim notification must be provided via an online form and submitted no later than six months after the end of the period of account that the claim falls into
• customers can claim qualifying expenditure on data licences and cloud computing costs

Visit GOV.UK to check how to access the claim notification form, including what is required and when to submit.

Publication of draft legislation: additional relief for R&D intensive companies, merger of the SME and research and development expenditure credit (RDEC) schemes

At Legislation Day on 18 July draft legislation on the additional tax relief for R&D intensive companies, and the proposed merger of the SME and RDEC schemes was published for consultation.

The government has also published a summary of responses to the initial consultation on the proposed merger which ran from 13 January to 13 March 2023.

No decision has yet been taken on whether the schemes will be merged.

Overlap Relief — preparing for the new tax year basis

On 11 September 2023, HMRC is launching 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 be publishing additional accompanying guidance on overlap relief and changes to the rules for the new tax year basis. The guidance on changes to reporting income from self employment and partnerships is available on GOV.UK.

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. However, in these circumstances, it may be possible to provide historic profit figures, to allow overlap relief to be recalculated.

When you fill out the online form for details about overlap relief, you need to have the following information:

• customer name
• Unique Taxpayer Reference (UTR)
• name or description of business, or both
• business address
• whether the 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 start date and the end date up to which the business used to report its profit or loss
• the year(s) the accounting period changed (if applicable)

You will also be asked for your contact details and, if this is how you would prefer a response, to confirm that your client consents to HMRC replying by email.

Further information on overlap relief and basis period reform is provided in the Business Income Manual and HMRC is also running a series of webinars for agents (read section ‘Live webinars’) about the new tax year basis.

Update on UK implementation of global tax reform

Previous editions of agent update (Agent update 110, Agent update 107, and Agent update 105) explained that work is ongoing at UK level to implement changes to the international corporate tax framework.

On 18 July, the government published proposed draft amendments to the multinational top-up tax legislation in the Finance (no2) Bill 2023, which would introduce the Undertaxed Profits Rule (UTPR) when implemented. The UTPR is a backstop rule that ensures that any top-up taxes that are not paid under another jurisdiction’s income inclusion rule (IIR) or domestic minimum top-up tax rule (DMTT) will be brought into charge.

At Autumn Statement 2022 the government announced its intention to introduce a multinational top-up Tax and a domestic top-up tax for accounting periods beginning on or after 31 December 2023 and implement the UTPR with effect no earlier than accounting periods beginning on or after 31 December 2024.

The draft UTPR provisions are consistent with this. They will not take effect until they have been included in a Finance Bill and regulations have been made by Treasury to set a commencement date, which will not be before accounting periods beginning on or after 31 December 2024.

Other Pillar 2 amendments

As part of the draft legislation the government has also set out amendments to the multinational and domestic top-up taxes to respond to stakeholder observations and to ensure consistency with the Organisation for Economic Cooperation and Development (OECD) model rules and administrative guidance. The draft legislation can also be accessed in Finance Bill 2023-24. It does not reflect the material published by the OECD in July, described in more detail below.

We welcome representations on all the draft legislation to ensure it operates effectively. You can provide comments by emailing pillar2.consultation@hmrc.gov.uk and including “HMRC draft legislation” in the subject line. The consultation closes on 12 September 2023.

New Administrative Guidance and GIR published

On 17 July 2023, the OECD published new administrative guidance on the IIR and DMTT and an update to the Globe Information Return. These documents, which the UK has agreed with other Members of the Inclusive Framework, can be accessed on the OCED website.

The published material includes:

• a safe harbour for domestic minimum taxes which will protect the UK tax base and reduce administrative burdens for business by removing the need to make multiple calculations
• further provisions for the treatment of tax credits, which include technical amendments to ensure UK businesses can better access the rules and clarification of the treatment for marketable tax credits

• a time limited safe harbour from the UTPR, where a country’s nominal tax rate is above 20%

• detailed guidance on currency conversion rules and substance-based income exclusion (SBIE)
• agreement on the information to be reported to tax authorities, including provisions to protect taxpayer confidentiality and options for reducing burdens

The government welcomes this guidance to improve the working of these rules for business and tax administrations and is committed to ensuring the UK rules are consistent with the globally agreed approach. Future amendments to the legislation are likely to reflect this new guidance.

Contacting the Pillar 2 Compliance team

As a reminder, we’ve set up a new Pillar 2 Compliance team who are supporting customers prepare for their first Pillar 2 obligations. The team will work with the adviser community, to help us understand any problems groups may have, and what action we can take to overcome them. You can contact the Pillar 2 Compliance team at: pillar2mailbox@hmrc.gov.uk.

Reporting rules for digital platforms

New rules are being introduced that will require digital platform operators in the UK to collect and verify information about users selling goods or services on their platforms. Digital platform operators will have to report this information to HMRC. HMRC will use the information to help sellers get their taxes right and identify, and tackle, non-compliance.

Digital platform operators will also have to provide sellers with a copy of the information they sent to HMRC. This will help sellers to get their taxes right.

Digital platform operators must start collecting information from 1 January 2024. The first reports are due by 31 January 2025.

The Platform Operators (Due Diligence and Reporting Requirements) Regulations 2023 is available on GOV.UK.

You can find more information about these rules on GOV.UK.

HMRC will publish guidance on these rules in the Autumn.

EU Exit

Second-hand motor vehicles bought in Great Britain and moved to Northern Ireland before 1 May 2023 that are still held in stock

Businesses that trade in used motor vehicles in Northern Ireland which they have sourced from Great Britain (England, Scotland and Wales), should check their records to identify any vehicles that they have had in stock since before 1 May 2023. This is because there are changes in the way they will have to account for VAT on any of these vehicles that they resell after 31 October 2023.

If businesses have second-hand motor vehicles in stock that they bought in Great Britain and moved to Northern Ireland before 1 May 2023, these will only be eligible for the VAT margin scheme if the business resells them by 31‌‌‌ ‌‌October 2023.

If businesses resell the vehicles after 31 October 2023, they will have to account for VAT on the full selling price of the vehicles.

Second-hand motor vehicle payment scheme

Businesses who bought second-hand vehicles in Great Britain and moved them to Northern Ireland on or after 1 May 2023 for resale, will not be able to use the VAT margin scheme when they resell them.

However, they may be able to claim a VAT-related payment under the second-hand motor vehicle payment scheme.

Further information

Find out more about motor vehicles you had in stock on 1 May 2023, and how to claim a VAT-related payment if you buy second-hand motor vehicles in Great Britain and move them to Northern Ireland for resale on GOV.UK.

UK signs Convention on Social Security Coordination with Iceland, Liechtenstein and Norway

The UK and the European Economic Area (EEA) European Free Trade Association (EFTA) states of Iceland, Liechtenstein and Norway signed a Convention on Social Security Coordination on 30 June 2023.

The agreements benefit citizens of the UK and the EEA EFTA countries.  It supports business and trade by protecting the social security position of cross-border workers, ensuring that employees and their employers, as well as the self-employed, are only liable to pay social security contributions in one state at a time. It will also ensure access to an uprated UK state pension and to reciprocal healthcare arrangements.

The text of the Convention on social security coordination between Iceland, Liechtenstein, Norway and the UK is available on GOV.UK.

Different parliamentary procedures are required to give this Convention legal effect in each State, and each State needs to be ready to implement it. To allow time for this to happen, we anticipate the Convention will be first brought into force and apply between the UK, Iceland and Liechtenstein later this year, and then extend to Norway in 2024.

We will let you know when the start dates have been confirmed. In the meantime, individuals going to work in Iceland, Liechtenstein or Norway should follow the guidance on GOV.UK.

Making Tax Digital

Removal of functionality to copy across existing VAT clients to agent services account

When using their agent services account (ASA), agents can copy over existing client relationships for VAT and Income Tax Self Assessment (ITSA) customers from their old Government Gateway ID.

We will be removing the functionality to copy across existing VAT clients to ASA from October this year. Ensure that your existing VAT clients are copied across to your ASA before this date.

Once this functionality is removed you can authorise VAT clients using the digital handshake authorisation route available in your ASA.

The copy functionality will remain for ITSA customers.

HMRC Agent Services

Check if you need to complete a tax return

We’ve launched a campaign to encourage taxpayers to check if they need to complete a Self Assessment tax return.

Encourage your clients who need to submit a tax return for the first time, or who no longer need to because their circumstances have changed, to tell us by the 5 October 2023.

Customers can use the free online tool on GOV.UK to check if they need to complete a tax return for the 6 April 2022 to 5 April 2023 tax year.

Information is also available on GOV.UK on registering for Self Assessment and stopping Self Assessment for the self-employed.

National Minimum Wage

Welcome to the first update from the National Minimum Wage (NMW) Promote Team. Our job is to educate and support agents, employers and workers.

We are introducing a quarterly update, specifically aimed at agents. The purpose of which is to advise and signpost to key messages including any changes in policy and legislation as well as provide useful hints and tips regarding NMW compliance.

Join us for a live webinar on salaried hours work and the National Minimum Wage

We are delighted to be offering (for the first time) live webinars about salaried hours work and the National Minimum Wage.

This webinar will cover the key points around salaried hours work, the changes that were brought about by the amendments to the legislation in April 2020 as well as tackling some long-standing myths about salaried hours work.

We will look in detail at:

• the concept of salaried hours work covering the criteria that must be met for a worker to be performing salaried hours work for minimum wage purposes
• the importance of record keeping
• the calculation of the NMW for salaried hours workers
• how to put things right

We hope that this webinar will address any questions you have around applying the salaried hours work rules to help you to better support your clients. We will not be taking live questions during the webinar. Thank you for your understanding.

You can register for the salaried hours work and the National Minimum Wage webinars taking place in September 2023. We look forward to you joining us.

Geographical Compliance Approach (GCA) — support for employers and agents

As part of our compliance approach, we have a programme of geographical interventions that enables us to target multiple sectors in a specific location. We have visited 8 locations so far with many more planned.

Support for employers

As part of these interventions, we provide employers with education and guidance on common NMW issues and encourage them to review their pay arrangements to satisfy themselves they are complying with the law.

Some employers are also offered a free call with one of our NMW experts to talk about key issues that can lead to NMW underpayments. If any potential issues are identified, we will give them the opportunity to correct them with no sanctions being applied, for example penalties and naming.

Support for agents

We also provide agents with education and guidance on common NMW issues to enable them to support their clients. This includes the invitation to attend a NMW awareness session specifically tailored for agents which provides an opportunity to ask questions.

So far, our awareness sessions have been extremely successful with over 230 attendees and 100% of agents surveyed saying that they found the sessions useful and believed that they could help their clients identify NMW issues and resolve them.

If you do receive a letter or email from us, we strongly encourage you to take us up on the offer of a free session or watch our recording on common NMW issues.

NMW Naming — published by the Department for Business & Trade

In June, over 200 employers were named by government for failing to pay their lowest paid workers the minimum wage.

The 202 employers were found to have failed to pay their workers almost £5 million in a clear breach of NMW law, leaving around 63,000 workers out of pocket. In addition to this, these employers faced penalties of nearly £7 million.

The companies named range from major high street brands to small businesses and sole traders. The message from government was that no employer is exempt from paying their workers the statutory minimum wage. The investigations by His Majesty’s Revenue and Customs concluded between 2017 and 2019.

The employers previously underpaid workers in the following ways:

• 39% of employers deducted pay from workers’ wages
• 39% of employers failed to pay workers correctly for their working time
• 21% of employers paid the incorrect apprenticeship rate

Whilst not all minimum wage underpayments are intentional, there is no excuse for underpaying workers. You can find out more by reading the National Minimum Wage Naming Scheme R19 Educational Bulletin on this press release.

There is information and support available to help agents support their clients:

• a checklist for employers — this lists all of the common issues which can lead to workers being underpaid
• calculating the minimum wage — guidance on paying the NMW correctly
• National Minimum Wage webinars — we have a full suite of recorded webinars on various topics such as Elements of Pay, Working Time and Apprentices which are available to view at any time

Tell us what you’d like to know about NMW

We want to hear from you. Complete our short survey to tell us what you would like to see in future NMW updates. This will take you less than 5 minutes to complete.

Changes to GOV.UK navigation in the autumn

If you use pages like this Self Assessment ‘topic’ page, then you may notice they begin to look a little different over the next few months. They will still have all the same links to the information you need, but they will look more like this page recently created for Alcohol Duty.

If you use email subscriptions to stay up to date with topic changes, you’ll continue to get updates for the topics you’re subscribed to. This will happen automatically — you do not need to do anything.

These changes are part of a wider piece of work the Government Digital Service is doing to make it easier for everyone to navigate GOV.UK and find what they need. You can find out more about the Government Digital Service’s work to improve GOV.UK navigation on their blog.

Customs intermediaries voluntary standard consultation

HMRC would like to hear from customs intermediaries and organisations across the border industry as part of a consultation on introducing a voluntary standard for the customs intermediary sector.

The consultation aims to improve the quality of the service across the sector. This is in response to feedback from the 2022 Call for Evidence and as part of a package of measures announced at Spring Budget earlier this year.

The consultation launched on 5‌‌‌ ‌‌June 2023 and will close on 30‌‌‌ ‌‌August 2023.

Meeting the public sector equality duty in compliance activity

We know that some customers need extra help. We have developed a video to help compliance colleagues understand their obligations under the public sector equality duty. It helps colleagues to recognise if a customer has a protected characteristic that could make it difficult for them to work with us during a compliance check. This is part of our commitment to support customers according to their needs and underpins the HMRC Charter.

COVID-19 helpline

Due to the COVID-19 schemes now being closed, the COVID-19 helpline will be closing from 18 September 2023.  Customers can still get lots of help and advice. Search ‘contact HMRC’ on GOV.UK to see a full list of the support available for enquiries.

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.

Be aware that 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 ensure 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.

If you are a tax agent, check when you can expect a reply from HMRC.

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 providing you with free help, learning and support on topical subjects.

Publications

National Insurance Services to Pensions Industry: countdown bulletins

Countdown Bulletin 53 has been added to this collection.

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

Agent or client reference

Following investigations into the capturing and replaying of the agent or client reference within the Pay As You Earn (PAYE) and Self Assessment (SA) services, our transformation and digital colleagues are considering the feasibility and cost implications of any changes. If changes are required, these will be subject to prioritisation against existing digital deliveries.

Marriage Allowance

Where both the transferor and recipient of marriage allowance report their income via Self Assessment, it is recommended that the transferor’s return is filed 72 hours prior to the recipients’. This allows sufficient time for the marriage allowance relationship to be established on our systems and prevent cases from falling out of automation.

Marriage allowance elections made solely in Self Assessment do not become enduring and carry on into future years. Elections made solely via Self Assessment will need to be made each subsequent year by completing the relevant boxes on the transferor’s return.

Elections made outside of the Self Assessment return (online, telephone, post and so forth) will become enduring and carry forward each year until the customer cancels the election. Where an enduring election exists, and either spouse is a Self Assessment customer, no entries are required on the marriage allowance section of the return. The calculation will be updated automatically to show the transfer of allowance upon receipt of the return.

We are proposing to update the wording on the return and notes pages to make the election process clearer. The new wording will be present on returns for the 2024 to 2025 tax year.

There is a project underway to review cases that fall out of automation. Marriage allowance has been included in that review. The project team are seeking to identify potential solutions to prevent cases, including marriage allowance, from falling out of automation.

Contact Information for professional and representative bodies

• AAT: wt@aat.org.uk
• ACCA Jason Piper: jason.piper@accaglobal.com
• AIA David Potts: workingtogether@aiaworldwide.com
• ATT: atttechnical@att.org.uk
• CIMA: prof.standards@cimaglobal.com
• CIOT Technical: technical@ciot.org.uk
• CIPP Lora Murphy: Lora.Murphy@cipp.org.uk
• CPAA Alison Hale: ahale@cpaa.co.uk
• IAB: Compliance@iab.org.uk
• ICAEW Caroline Miskin: Caroline.miskin@icaew.com
• ICAS Tax Team: tax@icas.com
• ICB Jacquie Mount: jacquie.mount@bookkeepers.org.uk
• ICPA Tony Margaritelli: admin@icpa.org.uk
• IFA John Edwards: JohnE@ifa.org.uk
• VATPG Ruth Corkin: Ruth.corkin@hhlp.co.uk

If you are not a member of a professional body, contact the Agent Engagement Mailbox: team.agentengagement@hmrc.gov.uk