Agent update June/July 2018

HMRC have issued the Agent Update for June/July 2018. We have summarised the key content for you with links to our detailed guidance on the topics covered.

Making tax digital (MTD)

  • Under MTD HMRC aims to join up its internal systems and so create one account for each taxpayer, for all their different taxes within HMRC.
  • You can sign up a client to MTD for Income Tax now; the service is voluntary until 2020 at the earliest. The client will need to be a sole trader with income from one business and/or have income from property (excluding furnished holiday lettings).
  • From April 2019, MTD for VAT is mandatory for businesses whose turnover is above the VAT registration threshold (currently £85,000). Those businesses will have to keep records digitally and use MTD-compatible software to submit their VAT Returns to HMRC. It will remain voluntary for VAT-registered businesses below the VAT threshold until at least 2020.
  • When you sign up clients to MTD you will need MTD-compatible software that allows you to send regular Income Tax updates and submit VAT Returns to HMRC.
  • Before your agent firm can access Making Tax Digital services, you need to set up your new agent services account (ASA).
  • Any UK-based accountancy service provider who has an Anti-Money Laundering supervisor can set up an agent services account. Non UK-based agent firms/ agent firms without a UK address, cannot set up an ASA.
  • The ASA does not replace any of the existing HMRC online services. You only need one new ASA for your organisation.
  • Currently you will only be able to access tax services for your clients through your software or through GOV.UK, not from your agent services account.
  • You can set up your ASA now. Go to Get an HMRC agent services account. You need to be the person responsible for your agent firm’s tax or administrative matters to set up the account.
  • You will get a new agent Government Gateway ID when you set up an ASA. You will need this ID to access MTD services even if you already use a different one for other activities.
  • You will need your existing Government Gateway IDs and continue to use them for clients in the way you do now. When signing in to HMRC to act as a business, you should use your existing business Government Gateway ID, not your new ASA one.
  • Before representing a client in MTD you have an existing relationship with, you must add them to your new account.
    • Add each of your agent Government Gateway IDs to the account; these are the Government Gateway IDs which you use to access HMRC online services for your clients and are linked to your agent.
    • By linking your existing clients to your account, you will not have to request authorisation from these clients when they join MTD.
  • Before you can send Income Tax updates/VAT returns on behalf of your clients in MTD, you must link your MTD-compatible software to send updates and reports to HMRC. You cannot do this until you have set up your ASA, as you will need to use the Government Gateway ID and password you received when you set up your ASA.
  • You can currently sign a client up for MTD at Agents: use software to send Income Tax updates , or your software provider may have added a link in their software.
  • By signing up your clients to MTD, you are agreeing for them to get emails from HMRC instead of letters. For General Data Protection Regulation (GDPR) reasons, make sure that you use your clients email address when asked to do so, and not your own.
  • By signing your client up to MTD, you are agreeing to the Terms of Participation on their behalf. This means their tax obligations will change, including a deadline for the first quarterly update.
  • See Making Tax Digital: Index 

Compliance

Fulfilment House Due Diligence scheme

  • Under the scheme UK businesses that store goods imported from outside EU for non-EU suppliers need HMRC approval and from 1 April 2019 must carry out certain checks.
  • Deadline for applications for existing fulfilment businesses is 30 June 2018.
  • Businesses starting to trade on or after 1 April 2018 need to apply by 30 September 2018.
  • See HMRC’s guidance and the EUs other proposed VAT Legislation affecting cross border supplies of goods and services.

Corporate Interest Restrictions (CIR)

  • Groups within the scope of the CIR rules are required to appoint a reporting company and submit an Interest Restriction Return (IRR).
  • The normal deadline for appointing a reporting company is 6 months after the end of the period of account.
  • Once a group or HMRC has appointed a reporting company, it is required to submit IRRs. An IRR is not valid unless the reporting company has been properly appointed.
  • The normal time limit for filing an IRR is 12 months after the end of the period of account or if later 3 months after the appointment of the reporting company. There is an extended filing deadline on commencement: any IRR submitted by 30 June 2018 is on time.
  • There are penalties for late returns.
  • See Corporate interest restriction 

Digitalisation of Venture Capital Trust (VCT) return

  • From 31 March 2018, paper VCT returns are no longer accepted by HMRC. If your client needs to complete the VCT regulation 22/22A return, they will have been sent a new template spreadsheet and user guide.

Guidance published for £1,000 trading and property income allowances

  • The trading and property income allowances, which were introduced retrospectively from 6 April 2017, are two new allowances of up to £1,000 each for individuals with trading or property income.
  • New technical guidance has been published in HMRC’s Business and Property Income Manuals.
  • HMRC are working with the ATT and LITRG among others to make sure these allowances and the complications surrounding them are well publicised.

Auto-enrolment

  • Under statutory 'Auto-enrolment'  all employers must enrol eligible workers into a workplace pension scheme if they are not already in one. From 1 October 2017, if you employ someone for the first time, your automatic enrolment duties will begin on the day their first member of staff starts work.
  • In January to March 2018 HMRC issued nearly 20,000 Compliance Notices, over 11,000 £400 Fixed Penalty Notices and over 2,500 Escalating Penalty Notices for those who persistently failed to meet their duties.
  • HMRC also successfully prosecuted a company and its managing director for falsely claiming they had put their staff into a pension.
  • See Penalties: Auto enrolment (pensions) Employer Briefing

Company Tax Unique Tax Reference (UTR)

  • For security reasons HMRC cannot provide company tax UTRs over the telephone.
  • In future, if your clients register at Companies House using ‘Register your company, Register online, Register Now’, they will also be able to see their UTR online once the registration details have been passed to HMRC.
  • If clients lose their UTR and have registered for our online services, they can find it in their Business Tax Account.

The Trusts Registration Service

  • The Trusts Registration Service (TRS) enables agents to register their client’s trust and complex estates online.
  • Paper registration forms can no longer be used and will be rejected by HMRC unless you have an agreement with HMRC to use paper forms. Trusts and agents have 6 weeks to register online following the rejection of a paper form.
  • HMRC will not automatically issue penalties for late TRS returns and will take a risk based approach instead taking into account the efforts made by trustees or their agents to meet their obligations.
  • See UK Trusts

Volunteers wanted

  • HMRC are holding research sessions to improve their Trust and Estates service and to help understand agent’s requirements.
  • They would like to hear from agents interested in participating in the following research:
    • updating or amending client’s Trusts/Estates 
    • experiences of Trusts/Estates online registrations, focussing on common issues and problems 
    • observation of agents registering new Trusts/Estates for their clients.
  • If you are interested in taking part in any of these sessions or you have any questions, contact This email address is being protected from spambots. You need JavaScript enabled to view it..

Spotlight

  • ‘Spotlight’, is about Tax avoidance schemes currently in the spotlight. To find out about identifying avoidance schemes, disclosing avoidance schemes and much more, go to GOV.UK - Tax avoidance.
  • See the list of Spotlights and our summaries.

Corporation Tax

Repayments made easier

  • HMRC is phasing out payable orders and replacing them with Bacs.
  • Clients need to provide HMRC with their bank account and sort code each time they submit a return or amended return. It must be a UK bank account in the individuals name or authorised nominee

Expenses and Benefits

Devolved taxes: Income Tax

  • From 6 April 2019, the Welsh Government will be able to set and vary the rate of Income Tax paid by Taxpayers who live in Wales.
  • This means that some of the income tax will be paid to the Welsh Government, unlike the current system, where all income tax is paid to the UK Government to fund spending across the UK. HMRC will still be responsible for collecting the tax.
  • Taxpayers resident in Wales employed or in receipt of a taxable pension will have the letter ‘C’ as a pre-fix to their tax code.
  • Those that complete an online Self Assessment tax return will be asked to confirm their country of residence on the return.
  • See Welsh Income tax: Welsh taxpayers

PAYE Apprenticeship levy

  • As an employer, you will have to pay the apprenticeship levy each month if you have an annual pay bill of more than £3 million, are connected to other companies or charities for Employment Allowance, which in total have an annual pay bill of more than £3 million
  • If an employer who pays the apprenticeship levy does not plan to use all of the funds in their apprenticeship service account, they can now make a transfer to another employer to support them in taking on apprentices.
  • See Apprenticeship levy

Social Care Compliance Scheme (SCCS)

  • The SCCS delivers an interim approach to HMRC’s enforcement of NMW in the social care sector while the government explores options to minimise the impact of financial liabilities associated with sleep-in shifts.
  • Eligible social care employers can apply to join the SCCS up until 31 December 2018, subject to HMRC’s discretion.
  • If an employer is accepted into the SCCS they will be required to declare any arrears identified by 31 December 2018, and repay any arrears due to workers by 31 March 2019.
  • Employers who enter the SCCS will need to self-review their records as far back as any NMW risk existed, up to 6 years.

Student Loans

  • There is an upcoming change to the student loan system which means that for all new employments an SL1 will be sent to the employer even if they send in a Full Payment Submission showing they have already started taking deductions.
  • If an employer receives an SL1 for an employee who is already having deductions taken they should:
    • check the student loan plan type to ensure there has been no changes
    • update their payroll software, if there has been a change to the plan type
    • file the SL1 away. They do not need to inform or return the SL1 to HMRC.

First Soft Drinks Industry Levy return due in July

  • If your client is a packager of drinks that are liable for the Soft Drinks Industry Levy (SDIL), or they need to report drinks that have been brought into the UK, they need to send a return to HMRC every quarter, and pay any levy due.
  • The returns will be for fixed reporting periods ending June, September, December and March and must be submitted any levy due paid within 30 days of the end of each reporting period.
  • If your client is registered for the levy and has nothing to report for a period, they should submit a nil return, unless they are only registered as a small producer, producing less than one million litres of liable drinks.
  • Your client needs to be registered for the levy before they can submit a return. If they are liable and fail to register, it is a criminal offence.
  • If your client doesn’t file their return on time, HMRC can charge them an estimate of what they owe.

Open Consultations

HMRC contact and service

  • HMRC working with Tax Agents Blog.  This provides another channel to communicate about consultations, news and updates, and the rollout of new digital services for agents.
  • HMRC twitter account Twitter@HMRCgovuk.
  • Complain to HMRC: to make a complaint against HMRC on behalf of your client you must be appointed as their tax advisor. You can also make use of the Agent Account Managers (AAMs) where normal communication channels have broken down as an alternative to formal complaints.
  • Email alerts for employers. Agents should encourage employers to register for email alerts to be notified about coding changes and information published on Government Web pages.
  • Where’s my reply? This service provides an estimated date that HMRC will respond to queries.
  • Future online downtime. HMRC provide information about planned downtime which will affect the availability of online services.
  • Staying 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.
  • 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
  • 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.

Other content

A link to the full Agent Update can be found here or accessed via HMRC’s website, www.gov.uk.

 

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