Feb 28, 2018 - the GOV.UK webpage Worldwide Disclosure Facility: make a disclosure. ..... 30 December 2018, can pay thei
Agent Update
Agents and HMRC working together February - March 2018 - Issue 64
Welcome
Tax
HMRC service
Keeping you informed Introduction Welcome to Agent Update 64. In this edition, you can read about action required by taxpayers with overseas interests, the new guidance on the Serial Tax Avoidance Regime and tackling the supply chain of tax avoidance. I am keen to research areas outside of HMRC but still of relevance and interest. So, I have been working with my colleagues in Companies House to produce an article on strike off, dissolution and restoration of companies from the Companies House register, which I hope you find useful. There are also articles on the new rules for termination payments made on or after 6 April 2018, Research & Development tax relief and the issue of 2017-18 SA tax returns. The Working Together section includes updates about the Agent Forum and Cyber Security. You can also read about changes to the way you raise an issue with the Agent Account Managers. I do hope you find something of interest in this edition and I am always keen to hear your thoughts and suggestions for how we develop Agent Update. If you would like an email reminder when each edition of Agent Update is published, use the link below. Sign up to receive email reminders of future issues of Agent Update If you have any comments about Agent Update please contact the editor Peter Smith.
Talking Points
Working Together
Tax Developments and changes to legislation and allowances relating to UK tax.
HMRC service Details of live consultations and links to responses, changes to HMRC service and guidance.
Talking Points The latest news and details of how to register for future meetings.
Working Together Latest updates from the partnership between HMRC and the six main agent representative bodies.
This month’s top articles Fulfilment House Due Diligence Scheme From 1 April 2018 the scheme will open for online applications.
Research and Development tax relief Claims can now be made up until 30 April 2018.
Managed Service Companies (MSC): Upper Tribunal decision On 19 January 2018 the Upper Tribunal released their decision about the application of the MSC legislation to appellants who were MSC.
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Agent Update
Agents and HMRC working together February - March 2018 - Issue 64
Welcome
Tax
HMRC service
Compliance Action needed now by taxpayers with overseas interests Taxpayers who know or suspect that they have unpaid tax relating to overseas assets, income or activities need to act before 30 September 2018 to avoid incurring much higher penalties for their non-compliance. HMRC’s “Requirement to Correct” (RTC) obliges taxpayers to make a disclosure of unpaid tax on assets, income and activities in other countries and transfers from the UK to other countries. With the 30 September deadline on the horizon, we urge you to check now whether any of your clients need to make a correction under the RTC and, if so, to help them to come forward. From 1 October 2018, the minimum penalty will be 100% of the tax owed and could be much higher depending on circumstances. The RTC has no minimum level cut-off point so all those with any unpaid offshore tax will need to make a disclosure. This means, for example, that taxpayers who have simply rented out a holiday home in another country and failed to declare the income should check their position. In addition, those who have moved to the UK from abroad but who have, for example, assets or income, perhaps from family holdings or businesses, in their country of origin may need to make sure that they have properly declared their tax position. The RTC applies to Income Tax, Capital Gains Tax and Inheritance Tax and we therefore expect it to apply in the main to individual taxpayers. However, companies that pay Income Tax, for example, as non-resident landlords, will also need to ensure they have paid the correct tax and if necessary make a disclosure. Trustees, settlors and beneficiaries of trusts with overseas interests may also need to check whether they have unpaid UK tax liabilities.
Further information You can read the GOV.UK webpage Requirement to Correct tax due on offshore assets. In addition, you can watch a recording of the recent Talking Points meeting The Requirement to Correct and other offshore tax developments.
Talking Points
Working Together
The route for disclosures is the Worldwide Disclosure Facility (WDF) through the Digital Disclosure Service. For further information, you can watch a recording of the Talking Points meeting What is the Worldwide Disclosure Facility (WDF)? and read the GOV.UK webpage Worldwide Disclosure Facility: make a disclosure.
Fulfilment House Due Diligence Scheme From 1 April 2018, the Fulfilment House Due Diligence Scheme will open for online applications. Businesses in the United Kingdom (UK) that store any goods imported from outside the European Union (EU) that are owned by, or on behalf of, someone established outside the EU, will need to apply for approval by HMRC if those goods are offered for sale in the UK. The deadline for applications from existing fulfilment businesses falling within the scope of the scheme is 30 June 2018. Businesses that start trading on or after 1 April 2018 need to apply on or before 30 September 2018. There are penalties for late applications. Businesses that only store or fulfil goods that they own, or only store or fulfil goods that are not imported from outside the EU, are not required to register. Registered businesses must carry out certain checks and keep records from 1 April 2019. Businesses who meet the criteria of this scheme will not be allowed to trade as a fulfilment business from 1 April 2019 if they do not have approval from HMRC. Those that do, risk a £10,000 penalty and a criminal conviction. To find out if you need to be registered please see the GOV.UK webpage, Fulfilment House Due Diligence Scheme.
VAT Notes 2017 Issue 4 This note explains what to do about paying your VAT, the Fulfilment House Due Diligence Scheme and the new rules on the disclosure of avoidance schemes. section continues> page 2 of 22
Agent Update
Agents and HMRC working together February - March 2018 - Issue 64
Welcome
Tax
HMRC service
Talking Points
Working Together
Serial Tax Avoidance Regime (STAR)
Tax avoidance - tackling the supply chain
HMRC has published new guidance on the Serial Tax Avoidance Regime, which is designed to deter people from using avoidance schemes and to encourage those already involved in avoidance to bring their scheme use to a close.
New guidance has been published setting out the rules and risks for people involved in designing, marketing and facilitating tax avoidance schemes.
The guidance explains the STAR legislation in Finance Act 2016 Schedule 18, which imposes a range of sanctions on users of tax avoidance schemes that are defeated. The sanctions include: • a penalty of 20% of the understated tax, rising to a maximum of 60% for further defeats of schemes used in the same warning period • being named as a serial avoider after the third defeat • access to direct tax reliefs denied after using three defeated schemes, which misuse reliefs. The legislation does not just apply to persistent avoiders. It can apply to taxpayers who have used only one avoidance arrangement that has been defeated. It will affect all avoidance arrangements entered into on or after 15 September 2016 and defeated after that date and may affect avoidance arrangements entered into before 15 September 2016 but defeated after 5 April 2017.
Spotlights These warn agents about certain tax avoidance schemes to be aware of. Managed Service Companies (MSC): Upper Tribunal decision (update to Spotlight 32) On 19 January 2018 the Upper Tribunal released their decision about the application of the MSC legislation to appellants who were MSC. This is an important decision because it is the first Upper Tribunal decision about MSC. Spotlight 32 has been updated.
Legislation passed in the Finance Act 2017 means anybody involved in supplying a tax avoidance scheme that has been defeated by HMRC will face a penalty of 100% of their fees. They also risk being publically named as an enabler of tax avoidance. The vast majority of people provide legitimate and genuine advice and services, but there remains a persistent minority who help others enter into abusive tax arrangements. The legislation aims to tackle this minority by taking the financial incentives out of supplying highly contrived tax avoidance schemes. It will make scheme suppliers accountable for their actions and will safeguard professionals who provide genuine commercial arrangements. Agents are advised to read the GOV.UK webpage Penalties for enablers of tax avoidance schemes guidance to find out more about the legislation and how it will apply to arrangements entered into after 16 November 2017.
Working to tackle tax avoidance HMRC endeavours at all times to treat all customers fairly and even-handedly. Find out about HMRC’s approach to tackling tax avoidance, how to report a tax avoidance scheme and other relevant information. section continues>
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Agent Update
Agents and HMRC working together February - March 2018 - Issue 64
Welcome
Tax
HMRC service
Corporation Tax Notifying HMRC when your client company becomes active Companies must notify HMRC within three months of becoming active, which means, carrying on any business activity, trading or receiving income. This includes, buying, selling, advertising, renting a property and employing someone. You can check the guidance Corporation Tax: trading and non-trading to clarify what counts as business activity and starting to do business. HMRC will need the date the company became active and the date to which the annual accounts will be made up, and we will use this information to update your clients’ records. This will ensure the correct notice to file is issued and minimises delays when returns are received. It will also prevent incorrect late filing penalties being issued. Agents can send us the client information we need online. You can access the tax registration online service from the “Your HMRC services” pages once logged in to the HMRC Online service for agents. You should select the ‘Register for taxes’ link and follow the on-screen instructions. To use this online service you will need your client’s 10 digit UTR and Companies House CRN, plus your client’s 3 digit office number; if you do not know what this is please use “623”.
Talking Points
Working Together
The benefits of paying this way are: • it is more secure • you can be confident the payment will reach us quicker - no postal delays. For further information please visit the GOV.UK webpage Pay your Corporation Tax bill.
Improvements to the way repayments are received HMRC intends to phase out issuing repayments by payable order, replacing them with a faster and more secure electronic payment method called Bacs Direct Credit. There are a number of benefits to receiving repayments by Bacs Direct Credit: • simple and convenient - unlike payable orders the funds are paid straight into your clients account. The need for your clients to take or send a payable order to their bank is eliminated. • safer and more secure - unlike payable orders Bacs payments cannot be lost, stolen or delayed in the post. Your clients’ money arrives automatically into their bank account giving them cleared funds on arrival. In order for your clients to receive repayments this way they need to provide us with their bank sort code and account number each time they submit their online return or amended online return CT600.
Payments
The bank account must be in the name of the company or its authorised nominee.
Corporation Tax cannot be paid through the post
Payments made to HMRC by Direct Debit are unaffected.
Legislation requires Corporation Tax to be paid electronically, and there are various methods available: • Direct Debit
If your clients do not have a UK bank account we will continue to issue their repayments in the same way as we do currently. section continues>
• going online or by telephone banking - Faster Payment, Bacs, CHAPS • debit or corporate credit card online. page 4 of 22
Agent Update
Agents and HMRC working together February - March 2018 - Issue 64
Welcome
Tax
HMRC service
Reform of Corporation Tax loss relief The reform of Corporation Tax loss relief was introduced in Finance (No. 2) Act 2017 and took effect from 1 April 2017. It provides for a more flexible loss relief regime by allowing most carried-forward losses arising from 1 April 2017 to be set against total profits of a company and against profits across a group. It also restricts the amount of profit that can be offset through carried-forward losses to 50%, subject to a group-wide deductions allowance of £5 million.
Talking Points
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To ensure that reminders are received the company record must be kept up-to-date by filing relevant forms when details change. By far the most effective way of being reminded is through Companies House email reminder service. Email reminders can be set to up to four different email addresses.
• a first tranche, providing a general overview along with detailed guidance on the loss restriction, the relaxation for trade losses and anti-avoidance rules
If a company has been struck off for non-compliance a former director or former member can apply for administrative restoration. It is not possible to administratively restore if the company applied to be struck off by filing form DS01- it must be restored by court order. To apply for administrative restoration, form RT01 must be submitted with: a £100 fee, any outstanding statutory documents (including accounts and confirmation statements) and filing fees if applicable, “bona vacantia waiver letter” and payment of all appropriate late filing penalties.
• a second tranche, providing detailed guidance on the relaxation for non-trade losses and on group relief for carried-forward losses
For information on applying for the waiver letter please visit the GOV.UK webpage Apply for a waiver letter (WA1).
• draft guidance on the application of commencement provisions, showing how amounts may be apportioned where a company has an accounting period that straddles 1 April 2017.
Rejection of documents will lead to delays in the restoration. To prevent this please remember the following:
The following guidance relating to the reform has now been published in draft:
Strike off, dissolution and restoration of companies from Companies House register Companies apply for administrative restoration because they have not filed statutory documents and have been struck off as a result. To avoid being struck off, directors must file accounts and confirmation statements on time. Filing documents online is of course the quick and easy way of doing this and directors should respond to reminders sent by Companies House that statutory documents are due for filing.
• use up-to-date version of forms which are available on the GOV.UK webpage Companies House forms • where possible, submit all documents required for the restoration together, marked for the attention of the ‘Restoration Section’ • complete all forms in full. The confirmation statement (Form CS01) is often rejected as required parts are missing. section continues>
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Agent Update
Agents and HMRC working together February - March 2018 - Issue 64
Welcome
Tax
HMRC service
Income Tax PAYE Make full use of the Apprenticeship Levy As an employer, you will have to pay Apprenticeship Levy each month from 6 April 2017 if you:
Talking Points
Working Together
Given apprenticeships are a devolved policy, this means that authorities in each of the UK nations manage their own apprenticeship programs, including how funding is spent on apprenticeship training. If you are an employer with operations in Scotland, Wales or Northern Ireland, you may also want to contact your apprenticeship authority: • Scotland • Wales
• have an annual pay bill of more than £3 million
• Northern Ireland.
• are connected to other companies or charities for Employment Allowance which in total have an annual pay bill of more than £3 million.
Earlier Year Updates (EYU) for tax equalised employees in modified PAYE and National Insurance agreements
You can find information on the GOV.UK webpage, How to register and use the apprenticeship service as an employer.
Transferring levy funds to another employer From April 2018, the Department for Education plan to allow levy-paying employers to transfer up to 10% of their funds to other employers using the apprenticeship service.
HMRC have amended the EP appendix 6 and EP appendix 7A agreements that cover employees working in the United Kingdom under a tax equalisation arrangement. The amendment explains that submitting an EYU to correct the Income Tax and/or National Insurance amounts is not appropriate for employees included in these arrangements.
Employers will be able to transfer funds to any employer. They will have to agree the apprenticeships that are being funded by a transfer with the employer receiving funds. Employers receiving transferred funds will only be able to use them to pay for training and assessment for apprenticeship standards.
In future if, following the end of the tax year, the amounts need amending the employer should:
For more information, visit the Transferring apprenticeship service funds page on GOV.UK.
• write to HMRC to make an overpayment relief claim, or
If you have any queries about the apprenticeship service, please call the National Apprenticeship Contact Centre helpline on 08000 150 600 or email,
[email protected].
• amend the individuals SA return if they are still within the 12 months amendment time limit, or • write to HMRC to make a disclosure of any further Income Tax and/or National Insurance due. section continues>
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Agent Update
Agents and HMRC working together February - March 2018 - Issue 64
Welcome
Tax
HMRC service
Dynamic Coding - Further Improvements Since July 2017, HMRC has been using real time information from employers to automatically adjust employees’ tax codes. As a result, more customers are paying the correct amount of tax each year. In response to stakeholder feedback, we have made further changes. If a customer’s circumstances change between 6 January 2018 and 5 April 2018, and the amount of tax due in the current year is affected, HMRC will adjust their tax code but only start collecting the tax from 6 April 2018. This means customers will not pay back too much tax in a short space of time. We will put in similar arrangements for future years too. We will continue to improve the system further and will provide more information within future Agents Updates. The Issue briefing on GOV.UK Changes to the PAYE tax system explains the changes that were introduced from 2 July 2017.
Get ready for the increase in the National Minimum and National Living Wage on 1 April 2018 The minimum wage that your staff are entitled to depends on their age and whether they are an apprentice. National Minimum Wage rates for all ages and apprentices will be going up on 1 April 2018, including the largest increases in a decade for the rates that apply to 18-20 and 21-24 year olds. As the minimum wage increases more employers than ever will be directly affected, including some of those who currently pay above the minimum. Check out the new rates and see if they impact you or your clients. You also need to be aware that the accommodation offset rate is changing too. Did you know that unlike any other kind of company benefit (such as food, a car, childcare vouchers), accommodation provided by an employer can be taken into account and counted when calculating the National Minimum Wage?
Talking Points
Working Together
For further information on National Minimum Wage and how to comply see Calculating the minimum wage on GOV.UK.
New from April 2018 - Mandatory box for Student Loan plan types From 6 April 2018, the payroll software that you use to send an employer’s Full Payment Submission to HMRC will be updated to include a new box for an employee’s Student Loan plan types. This box will be mandatory for all employees who are in repayment of a Student Loan. You will find the plan type information on form SL1, the starter checklist or by asking the employee. If the employee does not know their plan type, help can be found on the Student Loan Company webpages.
New rules for termination payments made on, or after 6 April 2018 Payments in Lieu of Notice (PILON) With effect from 6 April 2018, all PILONs will be chargeable to Income Tax and Class 1 National Insurance Contributions (NICs), whether or not they are contractual payments. Payments or benefits paid in connection with the termination of a person’s employment will be split into two elements. The first element, post-employment notice pay (PENP) received is taxable as general earnings and will be subject to Class 1 NICs from 6 April 2018. The PENP represents the earnings that the employee would have received had they been given and worked their full and proper notice and on which they would ordinarily have paid tax and Class 1 NICs. section continues>
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Agent Update
Agents and HMRC working together February - March 2018 - Issue 64
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PENP is calculated by applying a formula to the total amount of the payment or benefits paid in connection with the termination of an employment. The second element is the remaining balance of the termination payment, or benefit, is not a PENP. This is taxable as specific employment income to the extent that it exceeds £30,000 and is treated in the same way as other payments and benefits taxable under section 403 Income Tax (Earnings and Pensions) Act 2003. PENP calculations should not be applied to statutory redundancy payments. These payments are always taxable as specific employment income and subject to the £30,000 exemption where appropriate. As an employer, you will be required to apply the PENP formula to the total amount of relevant termination payments, or benefits. You should operate PAYE to deduct income tax and Class 1 NICs from the amount of PENP from 6 April 2018. You should then apply the £30,000 exemption, where applicable, to the second element of the relevant termination payment and deduct income tax (but not NICs) accordingly.
Talking Points
Working Together
Preparing the last Full Payment Submission or Employer Payment Summary of the year HMRC have published an article in the February 2018 Employer Bulletin advising employers about reporting their final PAYE submissions and their employee’s expenses and benefits for the tax year 2017-18 which ends on 5 April 2018.
Scottish Income Tax changes The Scotland Act 2016 gave the Scottish Government power to set income tax rates and thresholds for Scottish taxpayers for 2017-18 onwards. The draft Scottish Budget announcement on 14 December 2017 introduced a range of changes for 2018 to 2019 including: • a new starter rate of income tax of 19% on the first £2,000 of income above the Personal Allowance
Detailed guidance on how and to what payments you should apply the PENP formula to will be published in the Employment Income Manual in due course.
• changing the Scottish basic rate threshold so that applies to income from £13,851 to £24,000 only (20%)
Foreign Service relief
• introducing a new intermediate tax band of £24,001 to £43,430 which will be liable to income tax at 21%
Foreign Service relief on termination payments is being removed for UK residents. Employees whose employment is terminated on, or after, 6 April 2018 and who receive a payment or benefit in connection with that termination will not be eligible for tax relief in respect of any period of foreign service undertaken as part of their office or employment if they are UK resident for the tax year in which their employment is terminated. This change is subject to parliamentary approval. Foreign Service relief will be retained for seafarers.
• increasing the Scottish higher and top rates to 41% and 46% respectively. Further details on the Scottish Budget can be found on the GOV.SCOT webpage Scottish Budget: Draft Budget 2018-19. These rates will be ratified in February 2018, once passed by the Scottish Parliament. If you have any clients who live in Scotland for most of the year, they need to make sure HMRC have their correct address details on record so they pay the correct amount of income tax. Please ask them to ensure their address details are up to date by accessing either their Personal Tax Account or online at GOV.UK webpage, Tell HMRC when you change your address. section continues> page 8 of 22
Agent Update
Agents and HMRC working together February - March 2018 - Issue 64
Welcome
Tax
HMRC service
Talking Points
Working Together
Simplifying PAYE Settlement Agreements (PSA)
Statutory Maternity Pay Calculator Amendments
The current process for administering and agreeing PSA is burdensome for employers. Government had proposed to digitise the process and remove the requirement for an annual agreement, in advance, from 6 April 2018.
Amendments have been made to the Statutory Maternity Pay Calculators on GOV.UK to allow employers to input the number of monthly earnings the employee has received in the relevant eight week period. This will benefit employers when bank holidays etc. generate an extra (mistimed) payment in the relevant period. The calculator recognise that there are three months’ earnings instead of the usual two months’ earnings and divide by the correct amount to calculate average weekly earnings. In the case of weekly earnings, it will ask how many weekly earnings are there in the relevant period. The change has been live for a few weeks now with no reported issues.
HMRC has since explored alternative options to reduce administrative burdens for employers, and will delay the issue of P626’s for the tax year 2018-19 until April 2018. This will allow for the outcome of the consultation Draft legislation: Simplification of PAYE Settlement Agreements to be considered.
Proposed changes from April 2018 Under these the proposals, the administrative burden on employers operating PSAs will benefit from: • removal of the requirement for employers to renew their PSAs annually, and instead creating an enduring agreement. Agreements will remain in place for subsequent tax years unless varied or cancelled by the employer or HMRC • future-proofing the regulations to allow for a digitised process if, and when, this can be introduced. Employers will still be required to provide an annual calculation. These changes are to take effect from 6 April 2018 for the tax year 2018-19.
Pensions Automatic Enrolment Update From April 2018 the minimum pensions contributions for employers and their staff will increase from 2% to 5% and then to 8% in April 2019. Increasing minimum contributions should be a straight forward task for employers but there are a number of checks they will need to make and we encourage them to start in good time. The Pensions Regulator GOV.UK webpage What do I need to do to set up these increases? has further guidance, and pension providers are also providing employers and staff with information. section continues>
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Agent Update
Agents and HMRC working together February - March 2018 - Issue 64
Welcome
Tax
HMRC service
Tax Annual Tax on Enveloped Dwellings (ATED) returns for 2018-19 to be filed using the digital service from 1 April 2018 From 1 April 2018, all online ATED returns must be filed using the ATED digital service. Register now with HMRC to use this service before 1 April 2018. The old-style online forms will be withdrawn on 31 March 2018, so can no longer be used. There are many benefits to the online service. It enables your clients to: • receive instant access to registration details, rather than wait for them to be delivered in the post • file all ATED returns • get immediate confirmation of submission of a return • save and retrieve return information before submitting to HMRC • view or amend returns already submitted • print a copy of a return already submitted • get instant access to a payment reference number • monitor their account, including any outstanding balance • save information previously submitted, reducing the need to key in duplicate information in later years • complete client/agent authorisation requests online. In addition, you as agents will be able to: • see a list of all ATED clients in one place • file returns on behalf of your clients and manage their online account
Talking Points
Working Together
Taxpayers can prepare for the annual reporting period and appoint their agent if they have not already done so. Go to ATED online for more information. Please note that you will not be able to submit a return for the 2018-19 chargeable period until 1 April 2018. The ATED charge for the 2018-19 period is based on the property’s value as at 1 April 2017, or the date the property was acquired if that is later. The online service can be used to submit relief and chargeable returns. For further information, you can view a recording of the Talking Points ATED meeting.
Construction Industry Scheme (CIS) Payments for construction work undertaken on your place of business Section 59 (1) (l) of the Finance Act 2004 provides that some businesses, public bodies and other concerns whose business activities fall outside of the scope of the construction industry scheme, are still “deemed” contractors” if they spend above a certain amount on construction operations. See section CISR12050-Deemed Contractors, of the Construction Industry Reform Manual for information about “deemed” contractors. Regulation 22 (1) of The Income Tax (Construction Industry Scheme) Regulations 2005 (S.I.2005/2045) provides that where deemed contractors make a payment under a construction contract, for construction work on a property they use for the purposes of their business, then that payment will not fall within the provisions of the CIS. However, Regulation 22 (2) then provides that a property is not being used for the purposes of the business if it is for sale, or to let, or is held by them as an investment. It also states that in determining if a property is used for the purposes of the business, any incidental use of the property by any other person can be disregarded. section continues>
• manage your own list of clients within your agent organisation. page 10 of 22
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Agents and HMRC working together February - March 2018 - Issue 64
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Having received queries from our customers on this subject, we are now providing further clarification below as to what we consider to be “incidental use of the property by any other person” in the context of applying Regulation 22. In determining “incidental use by any other person,” we will not consider the monetary value of any lets and then apply a quantitative test. Nor will we simply compare what percentage of the customer’s total income derives from (a) the businesses annual turnover and (b) the property letting. We also do not consider it appropriate to compare the size of the space, which is being let against the overall size of the property. HMRC consider the correct principle to apply is whether or not the customer had made a conscious business decision to rent a part of their property (such as a flat above a shop). If so, then once that decision is made, HMRC consider the letting income then becomes part of the customer’s overall business portfolio. Therefore, any construction work the deemed contractor undertakes on the let property will fall within the scope of the CIS. We are in the process of amending our guidance to make the position clearer for our customers.
Research & Development (R&D) tax relief Agents involved in making claims for R&D tax relief should note that the time during which claims can be made within the procedure mentioned in Agent Update 62 page 6, has been extended. Claims can now be made up until 30 April. The HMRC internal manual Corporate Intangibles Research and Development Manual 83320 has been updated.
Talking Points
Working Together
SA returns for 2017-18 tax year SA paper returns will be posted to your clients by the end of April 2018. For customers who file online we will be sending a notice to complete a tax return letter (SA316) between now and the end of May 2018. This year we expect to send around two million of these letters digitally to those who have chosen to go paperless with SA. All SA paper returns must be filed by 31 October 2018, and online SA returns need to be filed by 31 January 2019. Customers can access much of the tax information they need online through their Personal Tax Account. Customers who submit a paper SA return by 31 October 2018, or online by 30 December 2018, can pay their SA bill though their PAYE tax code as long as: • they owe less than £3,000 on their tax bill, and • they already pay tax through PAYE. Most agents now file SA returns online. You may want to look at the GOV.UK webpage Self Assessment for Agents: HMRC Online Services to find out about the online help and support you receive once you register for the SA for agents online services.
YouTube support A new video has been added. Appealing against late filing penalties, explains what is accepted as a reasonable excuse and what you need to do next. This is just one of many help and support videos available. Why not subscribe to the HMRC YouTube channel for more? section continues>
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Agent Update
Agents and HMRC working together February - March 2018 - Issue 64
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VAT Update - Digitisation of the VAT Retail Export Scheme (RES) The paper based VAT RES system is being digitised to improve the efficiency for both retailers and travellers and to reduce fraud. So far, we have:
Talking Points
Working Together
• how the traveller can start the validation process at the port of exit, and • how the validation endorsement and instructions can be transmitted back to the retailer and the traveller. Given your feedback informs the development of policy and provides us with a clearer understanding of the needs of our customers, we hope you will take the time to provide feedback or ask questions by emailing;
[email protected]
• met with a wide range of stakeholders including ports and airports, refund providers, retailers, enabling companies, industry forums and software developers to discuss any issues, concerns or proposals they may have regarding VAT RES
VAT Notices
• looked at what is needed within the current design to make the new system operate effectively, and to improve the customer experience.
VAT Notice 700/8: disclosure of VAT avoidance schemes
Following the meetings with stakeholders, we recognised that the industry wanted clarification of whether there are likely to be any changes to HMRC’s policy and the essential scheme requirements when the process is digitised. We can confirm: • the general principles set out in current VAT law and policy (as outlined in VAT Notice 704) are not expected to change significantly • the digital system will still require the traveller’s details to be recorded and the eligibility of the traveller to be verified by the retailer • the digital claim form will still require a customs endorsement - albeit electronically applied. The most significant change to the process will be, HMRC and UK Border Force, being jointly responsible for risk scoring the passenger data before endorsing the claim.
The following notices have been issued since issued since Agent Update 63 was published: This notice explains the rules on disclosing schemes and arrangements that are intended to provide a VAT saving or deferral.
VAT Notice 700/56: insolvency This notice informs insolvency practitioners appointed over insolvent VAT-registered businesses who to contact and how to account for VAT.
VAT Notice 700/60: payments on account This notice explains how payments on account work and what you must do if you are told that you are liable to make payments on account. See all the VAT Notices listed numerically. section ends
HMRC is seeking a solution from the RES industry to address: • how the traveller’s eligibility can be verified electronically • how data is captured and transmitted to us page 12 of 22
Agent Update
Agents and HMRC working together February - March 2018 - Issue 64
Welcome
Tax
HMRC service
Talking Points
Working Together
Consultations open
Consultation outcomes
Corporate interest restriction - consultation on leases
Aggregates Levy - whether to exempt aggregate extracted when laying underground utility pipes.
A consultation on the options for amendments to the Corporate Interest Restriction rules. This consultation closes 28 February 2018.
Consultation on abolishing Class 2 National Insurance and introducing a contributory benefit test to Class 4 National Insurance for the self-employed.
Plant and machinery lease accounting changes
Draft legislation: Help to Save accounts.
Consultation on the legislative changes required to ensure leasing rules continue to work as originally intended for the new lease accounting standard IFRS16.
Extra-statutory concessions - technical consultation on draft legislation.
This consultation closes 28 February 2018.
Fraud on provision of labour in construction sector: consultation on VAT and other policy options.
Making Tax Digital: interest harmonisation and sanctions for late payment
Making Tax Digital: sanctions for late submission and late payment.
The government is seeking comments on the proposed way forward in relation to interest and late payment penalties.
Scope of VAT Grouping.
Non-resident companies chargeable to income tax and non-resident capital gains tax.
This consultation closes 2 March 2018.
Simplifying the administration of Alcohol Duty.
Tackling the hidden economy: public sector licensing
Simplifying the Gift Aid donor benefits rules: further consultation.
A consultation on ‘conditionality’ measures to tackle the hidden economy.
Tackling offshore tax evasion: A requirement to notify HMRC of offshore structures.
This consultation closes 2 March 2018.
Tax-advantaged venture capital schemes - streamlining the advance assurance service.
Draft legislation: The Qualifying Care Relief (Specified Social Care Schemes) (Amendment) Order 2018
Tobacco Illicit Trade Protocol - licensing of equipment and the supply chain.
A consultation on extending Qualifying Care Relief to payments for care made by Shared Lives schemes that are not funded by local authorities.
Agent Update 64 contains all new open and a summary of responses available when this issue was being published, but please check for any that have subsequently been issued.
This consultation closes 5 March 2018.
VAT: Tackling fraud on goods sold online - update on split payment.
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Agent Update
Agents and HMRC working together February - March 2018 - Issue 64
Welcome
Tax
HMRC service
Talking Points
Working Together
Contact
Where’s My Reply?
HMRC working with Tax Agents Blog
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:
The blog provides another channel to communicate about: • joint HMRC and agent consultations • improvements to HMRC services by working together • news and updates that are agent specific • HMRC’s Agent Strategy and the rollout of new digital services available for agents.
• register you as an agent to use HMRC Online Services • process an application for authority to act on behalf of a client • amend your agent details. Start using, Where’s My Reply? for tax agents.
Twitter
Manuals
Tweets cover information about HMRC and tax including; news, publications, information, consultations, speeches and publicity campaigns. Follow us on Twitter@HMRCgovuk
Recent Manual updates
HMRC service
Online
Complain to HM Revenue and Customs To make a complaint against HMRC on behalf of your client you must be appointed as their Tax Advisor.
Employers need to register for email alerts As the Department moves rapidly down the digital road it is becoming more apparent that the days of paper mailings are numbered. It is important agents encourage employers to register to receive email alerts so they are aware of the latest coding changes and important information that is published on GOV.UK.
You can check the latest updates to HMRC manuals or subscribe to automatic notification of changes.
Future online services downtime Information is available on any downtime that may affect the availability of HMRC’s online services. Please note this is subject to change and confirmation by HMRC’s IT provider.
Online security - stay safe online HMRC continuously monitors systems and customer records to guard against fraudulent activity, providing regular updates on scams we are aware of. If you have any concerns regarding the authenticity of any emails received from HMRC, see the online security pages for agents. section continues> page 14 of 22
Agent Update
Agents and HMRC working together February - March 2018 - Issue 64
Welcome
Tax
HMRC service
Talking Points
Online training material and useful resources for tax agents and advisers
Publications
HMRC videos on YouTube, online learning modules and both live and pre-recorded webinars are available for tax agents and advisers providing you with free help, learning and support on topical subjects.
Employer Bulletin
Phishing emails and bogus contact: HMRC examples A new type of phishing scam regarding ‘Tax Returns’, which is being circulated in high volumes, has been added.
Paying HMRC Using the correct HMRC payslip HMRC changed their banking supplier in 2016 to Barclays Bank. If you, or your clients, need to pay at the bank, please use an up to date payslip showing the new bank details. We have been writing to customers who have recently made a VAT payment into an old HMRC Royal Bank of Scotland account using the Bank Giro payment method. Bank Giro books with the new supplier details have also been issued. It is important the correct Bank Giro books are used. Payments may be rejected. All new payslips show Barclays Bank. Why not consider switching to paying electronically? You can let HMRC know that you no longer need a booklet by visiting the GOV.UK webpage Stop HMRC sending a payment booklet.
Working Together
The February 2018 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 register to receive the email alerts.
HMRC: Trusts and Estate newsletters These provide updates and guidance on Inheritance Tax and trusts.
National Insurance Services to Pensions Industry: countdown bulletins Countdown Bulletin 31: January 2018 has been added to this collection. This edition has information about the ending of contracting-out and important events from now until October 2018. This includes, Type 7 queries, scheme cessation guidelines, refunds, Contribution Equivalent Premiums, member types as well as useful links and contact details.
Pension schemes newsletter 95: January 2018 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 bulletins 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. section continues>
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Agent Update
Agents and HMRC working together February - March 2018 - Issue 64
Welcome
Tax
HMRC service
Talking Points
Working Together
Tax-Free Childcare Opens to Parents of Under 12’s
Role of employers in Tax-Free Childcare
Parents whose youngest child is under 12 can now get up to £2,000 a year towards their childcare costs through Tax-Free Childcare.
When a parent in receipt of Employer-Supported Childcare (childcare vouchers) chooses to join Tax-Free Childcare, they will need to provide their employer with a written document (which can be an email) stating that they wish to leave their employer’s voucher scheme and use Tax-Free Childcare. A parent will have 90 days from opening their Tax-Free Childcare account to give their notification to their employer. At this point, the employer will need to terminate their access to Employer-Supported Childcare. Information to help explain the new offers are available on the GOV.UK webpage What do childcare providers need to know?.
Tax-Free Childcare is a new government scheme to help parents with the cost of childcare, allowing parents to work or work more, if they want to. Parents can apply for Tax-Free Childcare online - reducing their childcare costs by up to £2,000 per child per year, or £4,000 for disabled children. The scheme, launched in April 2017, has been gradually rolled out to parents, with all eligible parents now able to apply across the UK. The money can go towards a whole range of regulated childcare, whether nurseries, childminders, after-school clubs or holiday clubs. You can find out what help is available on the GOV.UK webpages Childcare Choices. This website includes a Childcare Calculator that compares all the government’s childcare offers to check what works best for individual families. Parents in England can also apply for 30 hours free childcare through the same online application, and are encouraged to apply now for the April term. Since the launch of Tax-Free Childcare and 30 hours free childcare over 325,000 parents have successfully applied through the joint application service.
Tobacco Products Manufacturing Machine Licensing Scheme Tobacco Products Manufacturing Machine Licensing Scheme is being introduced on 1 April 2018, and going live on 1 August 2018. This means that all businesses and individuals who are performing a regulated activity involving a tobacco product manufacturing machine must have a licence from 1 August 2018, unless they are exempt. If a licence is not in place, you risk having the tobacco product manufacturing machine seized and a penalty issued, as detailed in Excise Notice 2004. section continues>
Employer-Supported Childcare Tax-Free Childcare will eventually replace the existing ‘childcare voucher’ scheme, Employer-Supported Childcare. Parents can still join an Employer Supported Childcare scheme providing they receive a childcare voucher before 5 April 2018. Parents who want to continue using childcare vouchers after April 2018 will be able to, while their current employer continues to offer the voucher scheme. Guidance is available on the GOV.UK webpage Help paying for childcare.
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Agent Update
Agents and HMRC working together February - March 2018 - Issue 64
Welcome
Tax
HMRC service
Toolkits As you start to prepare Corporation Tax returns (CT600) did you know there are a number of tailored toolkits available to help you? Each toolkit includes a checklist and provides mitigating steps to help avoid the most common errors seen in filed returns.
Talking Points
Working Together
The 20 agent toolkits HMRC compliance teams developed, with the professional bodies, are annually refreshed. This year’s refresh is already under way, so make sure you download the toolkits each time you need them so as not to miss out on any updates. section ends
Why not take a look at the following toolkits:
Business Profits toolkit Contains comprehensive sections that address business income, expenditure, stock and work in progress and additional miscellaneous elements to ensure the correct level of profit or loss is established.
Capital allowances for plant and machinery toolkit Contains comprehensive sections that address acquisitions and disposals and non-business use and cars; a significant area of error in some returns.
Chargeable gains for companies toolkit Contains comprehensive sections that address disposals, valuations, expenditure and reliefs.
Company losses toolkit Contains comprehensive sections that address availability and use of losses, trade losses, loan relationships, management expenses in companies with investment business, property business losses and group relief.
Directors’ loan accounts toolkit Contains comprehensive sections that address accounting framework, review of accounts, Section 455 tax - Loans to Participators and review of benefits and expenses. page 17 of 23 22
Agent Update
Agents and HMRC working together February - March 2018 - Issue 64
Welcome
Tax
HMRC service
Talking Points
Working Together
Talking Points Over 6,000 agents joined our live Talking Points meetings during the busy self assessment period leading up to 31 January filing date. We covered several subjects including Income from Property, Basis Periods, Loss Relief and Capital Allowances and Vehicles. These are hot topics during self assessment and we offered a number of opportunities for each subject to give you the chances to join. We also covered other topics including, Capital Gains tax treatment of compensation and The Requirement to Correct and other offshore developments. Here is what you said about the meetings: “The session was comprehensive and delivered with clarity; and the time management was spot on, which I consider particularly impressive given the amount of material to be covered. Thanks.” “The team who answered the questions were very knowledgeable but also answered the questions in language I could understand.” Did you want to join our Talking Points meetings, but the times did not suit your busy schedule? We record our digital meetings and share the link to register and view as soon as it becomes available, with anyone who registers for the live meeting. You can find a list of our recordings on our GOV.UK webpage Help and support for tax agents and advisers. During February and March, we will be delivering Talking Points meetings on various topics including Demystifying Certificates of Residence for Limited Companies and Understanding Cyber Hygiene and How It Benefits Your Business. If you are interested in any of our meetings, please remember to reserve your place. Did you know you can find out about the latest Talking Points meetings by signing up to our email alerts or by visiting the Tax Agent blog? section ends
page 18 of 22
Agent Update
Agents and HMRC working together February - March 2018 - Issue 64
Welcome
Tax
HMRC service
Agent Forum (AF) The new AF launched in July 2017 and is continuously increasing its reach. It provides an opportunity for agents to: • raise potential widespread issues • provide evidence to support an issue • receive updates on current issues • suggest solutions or disagree with an item being referred to as an issue • view recently cleared issues • suggest ideas for operational improvements • help each other with any possible solutions. The success of the AF is evidenced by the following measures up to and including January 2018: • 286 registered agents
Talking Points
Working Together
Upon registration, HMRC will send you an email confirming access has been granted. This will include terms of reference. Issues raised on the AF are monitored and prioritised by the Issues Overview Group (IOG) who progress responses with HMRC. You can watch a recording of the Talking Points webinar on the operation of the IOG and the AF that took place on 21 November 2017. We created an area within the AF to enable agents to post issues, which were affecting online submission of 2016-17 SA returns or needed clarification.
Key issues resolved and messaged on the AF since the publication of AU63 1. Issue example 1 - Issues around submission of returns on the 4 January 2018. Full responses were posted that day and subsequently advising of corrective action being taken by HMRC. Link to updated Service Availability page and messages also provided. Later, suggested resolution to saved returns was provided
• 2,050 newly created “Self Assessment 31 January 2018 deadline - need help” views.
2. Issue example 2 - Issues related to Application Programming Interface (API) was reported by a number of Agents. An HMRC response was provided and advice given to ensure that the API was reinstalled on software used. Updated promptly that a system fix was in progress and monitored concerns raised by agents experiencing the same issue. Further advice was given if any of the suggested actions did not result in restoration of the API.
The AF is hosted within the HMRC online forum in an area dedicated to agents. As we are in the private beta Test and Learn stage, membership is currently restricted to members of Professional Bodies (PB)
3. Messaging Example 3 - on our AF Announcements page, we also had messages to clarify the instructions on how to set up an Agent Services Account and the interaction with setting up a new trust on the Trust Registration Service.
• 243 issues (topics) raised - live and cleared • 1,472 associated posted messages - live and cleared • 23,370 total AF views
To join please contact your PB, details can be found at page 22, who will issue an invitation. This will include details of how to register and request access to the new service.
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Agent Update
Agents and HMRC working together February - March 2018 - Issue 64
Welcome
Tax
HMRC service
Talking Points
Working Together
AF Priority Issues for resolution
• SA UTR - progress chasing/requesting UTR in order to file SA returns
The IOG is made up of both HMRC and PB representatives, who currently agree the widespread issues are:
• SA Correspondence - progress chasing letters/forms not processed/SA302, Child Trust R40’s complaints, compliance, penalties
• PAYE: P800 issued allowing incorrect refunds where a client has a pension source and is also self-employed
• SA Returns - progress chasing returns being made by return/online/post
• Priority 1: Topic closed/not cleared - Reply received - estimated bank interest with refund - P800. We are collaboratively working with IOG to resolve these issues and will provide progress updates. If you want to know more about the issues being discussed at the IOG or you want to have your say, please contact your PB. If you are not a member of a PB, please contact the Agent Engagement Mailbox.
• PAYE Correspondence - Disputed Charge, underpayments, Real Time Information, penalties, duplicate records.
Raising an issue The way in which you raise an issue is about to change. A new iform will replace the current system and will offer a more effective and convenient way to submit your issues. The newly developed iform will allow you to: • register as an agent
Agent Account Managers (AAMs)
• submit an issue, and
The AAMs provide a service to help resolve client-specific issues. The AAMs act as an intermediary between agents and HMRC where the normal communication channels have broken down.
• deregister from the AAM service.
This facility is an alternative to a formal complaint being raised To use this service you need to: • complete the online registration form • hold 64-8 authority to act on behalf of your client • demonstrate you have attempted to resolve the issue through normal HMRC channels. AAMs do not give advice on technical matters, or the interpretation of tax legislation and guidance. During January 2018 the most common issues were:
You will need to confirm you hold a valid 64-8 to order to submit an issue. Mandatory fields that require completion are: • your email address and telephone number • your client’s name and address and • HMRC reference. You will also have to provide details of previous contact with HMRC regarding the issue. For more information about the AAM service, please visit the GOV.UK webpage Agent Account Managers in HMRC. section continues>
• SA Repayment - progress chasing repayment requests made by return/online/post page 20 of 22
Agent Update
Agents and HMRC working together February - March 2018 - Issue 64
Welcome
Tax
HMRC service
Agent Services Account Agents who want to register will need to create an Agent Services Account if they: • want to register a trust using the Trust Registration Service • want to voluntarily participate in Making Tax Digital for Business (MTDfB) • are amongst the small number of agents taking part in the whitelisted “Agents for Individuals” pilot service. In addition to creating an Agent Services Account, those agents volunteering to participate in MTDfB can also test the following services: • linking existing SA clients to the agent services account - this involves linking existing agent codes to the Agent Services Account, so an agency can act on behalf of their client without needing to be re-authorised by that client • subscribing a client to the service - an agency can initially subscribe any existing SA client who has previously authorised the agency to act for them in SA e.g. 64-8 authorisation is in place • completing a quarterly update for a client - an agent must have HMRC compatible commercial software to do this. A recording of the Talking Points meeting on the Agent Services Account is now available.
Cyber Security Beware of malicious Microsoft Office attachments
Talking Points
Working Together
One deployment method that continues to be effective uses Microsoft Office documents attached to emails. A current example uses a fake HMRC letter to inform the recipient about a tax debt, in which many parts appear redacted with [Enable Content]. This is a ruse to get the reader to disable security features. More recent versions of Microsoft Office will open documents received from the internet in a Protected View, which prevents a lot of features from running unless the user chooses to Enable Editing and/or Enable Content. These features include macros and Dynamic Data Exchange (DDE), which provide advanced functions to users, but criminals also use these features to download and run malicious programs from the internet. These documents often have a pretext within to trick the user into clicking the Enable button, suggesting certain detail in the document is protected or hidden until the user clicks Enable, and unwittingly disables the security feature. Files using the DDE feature will trigger a prompt stating, “This document contains links that may refer to other files. Do you want to update this document with the data from the linked files?”. A second prompt will typically authorise an application to download and run a malicious program. This DDE ‘exploit’ was restricted in Word with an Office update in December 2017, but cybercriminals continue to target users who have yet to update their software. If you receive an unexpected email with an office document attachment, be especially vigilant. If a document is genuinely protected using the built-in encryption feature, it will not open until a password is provided. Keep your software secure by applying the latest security updates. section continues>
Cybercriminals use a variety of methods to try to install malicious software (malware) on computers. Once infected, malware will often steal usernames and passwords, enabling the criminals to access email accounts, social media, HMRC tax accounts, etc. For tax agents, this also means the criminals can gain access to their client’s confidential information. page 21 of 22
Agent Update
Agents and HMRC working together February - March 2018 - Issue 64
Welcome
Tax
HMRC service
Understanding cyber hygiene and how it benefits your business The changing cyber landscape means businesses need to stay one step ahead. Having good cyber hygiene, will go a long way to help to protect your business and that of your clients. In a forthcoming Talking Points meeting we will introduce what cyber hygiene is, how it can benefit you and how it helps towards protecting you against the latest emerging cyber threats.
AAT Jeremy Nottingham ACCA Jason Piper AIA Tim Pinkney ATT Jon Stride CIMA
SA Pre-Population API
IAB Kelly Pike
SA Peak has given us a much better understanding of the demand for the service, and we are now at a point where we can move from private beta to public beta - meaning the service will be available to all software developers. The service will, however, remain in beta until we are happy with the identity check process and until we are sure we have the capacity to handle next year’s SA Peak. We would like to extend our appreciation to the agents and software developers who participated in the private beta trial, especially those who worked with us to iron out glitches and improve the service.
Working Together
Working Together Contact information for Professional and Representative Bodies
Why not register for the Talking Points meeting “Cyber Security Talking Points” 1pm - 2pm 9 March 2018 or listen to a recording of the previous meeting on Cyber Security.
The SA Pre-Population APIs were extremely well-used during the SA peak by our private beta trial participants. We handled a total of 16.4 million API requests, serving data for 950,000 taxpayers to 10,500 agents.
Talking Points
CIOT Nigel Clarke CIPP Samantha Mann ICAEW Caroline Miskin ICAS Charlotte Barbour ICPA Tony Margaritelli IFA VATPG Ruth Corkin If you are not a member of a professional body, please contact the Agent Engagement Mailbox. section ends
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