Agent Update December 2018/January 2019

HMRC have issued the Agent Update for December 2018/January 2019. We have summarised the key content for you with links to our detailed guidance on the topics covered. We have kept to HMRC's order of contents, it is not quite all 'SME', but there are some interesting items.

Self-Assessment and Company Directors

  • HMRC have updated their guidance on Gov.co.uk to clarify that company directors with income taxed at source and with no further tax to pay do not need to complete a tax return.
  • Anyone chargeable to Income Tax or Capital Gains Tax must tell HMRC they are chargeable to tax if they have:
    • not received a notice to file a return or
    • received a notice and HMRC have agreed to withdraw the notice.
  • HMRC can choose to issue a Notice to file a Self-Assessment return (under s8 TMA 1970) to anyone and they must file a return by the required deadline, or they may be liable to a late filing and/or a late payment penalty.
  • If an individual has received a notice to file and has no other taxable income to report, they can ask for the notice to file to be withdrawn. HMRC may decide they still require a return; if so, the return must be submitted, or penalties may be incurred
  • See Do I need to file a tax return? (Directors)

Off Payroll working in the private sector

At Budget 2018, following consultation, the government announced reform to address non-compliance with the off-payroll working rules in the private sector.

  • From April 2020 where an individual is engaged by a medium or large-sized business and works through a company, the business will become responsible for assessing the individual’s employment status.
  • If the off payroll rules (IR35) apply, the business, agency or third party paying the individual’s company will be responsible for deducting Income Tax and NICs through PAYE as for employees, and for paying employer NICs.
  • Existing rules will continue to apply for engagements with small businesses.
  • HMRC will publish a further consultation in early 2019 to seek views on the detailed operation of rules in the private sector.
  • See Offpayroll working: PSCs & public sector engagements

Welsh rates of Income Tax (WRIT)

  • All people living in Wales subject to Income Tax should have received a letter from HMRC telling them about WRIT.
  • Employees and people who receive a pension will be given new tax codes beginning ‘C’.
  • People completing a Self Assessment tax return need to confirm their country of residence.
  • People do not need to do anything unless they move home. Visit the Tell HMRC about a change to your personal details webpage on GOV.UK to notify a change of address.
  • See Welsh Income Tax 

Postgraduate Loans (PGL)

  • The starter checklist will be updated to ask the employee if they have Plan 1 and Plan 2 student loans.
  • The earliest individuals can start repayment of PGL is April 2019.
  • The threshold for PGL for England and Wales will be £21,000, with deductions being taken at 6%.
  • See Employer Bulletin: December 2018 for more details 

Tax-Free Childcare

  • Those eligible for Tax-Free Childcare can get up to £2,000 per child, per year to spend on qualifying childcare.
  • Parents are usually eligible if they (and their partner) are:
    • in work, or getting parental leave, sick leave or annual leave
    • each earning at least the National Minimum Wage for 16 hours a week, currently £125.28 if they are 25 or over
    • self-employed and meet the minimum income requirement.
  • See Tax-Free childcare

Diesel Supplement Company Car Tax Changes to meet Euro standard 6d

  • Diesel company cars which meet the levels of Nitrogen Oxide (NOx) emissions, permitted by Euro standard 6d, qualify for exemption from the diesel supplement.
  • For 2019-20 information will be available from the DVLA. For cars manufactured after September 2018, the online Vehicle Enquiry Service will help identify whether a car meets Euro standard 6d.
  • See Employer Bulletin: December 2018  for full details

The Pensions Regulator - Research on employer awareness and understanding of automatic enrolment

  • The Pensions Regulator has published research on employer awareness and understanding of automatic enrolment responsibilities which shows that employees are continuing to save more into their work place pensions.
    • Less than 2% of staff asked to leave their pension following the increases to minimum pension contributions in April 2018.
    • Total minimum contributions increased from 2% to 5% and will increase again to 8% from April 2019.
    •  Employers find their ongoing automatic enrolment responsibilities easier than they expected, spending two hours a month completing them.
  • See Auto enrolment: workplace pensions (subscriber guide) 

Be prepared to send your client’s 2019-20 Annual Tax on Enveloped Dwellings (ATED) return online

  • The benefits of the online service include:
    • Instant access to registration details and a payment reference number.
    • Immediate confirmation of submission of a return.
    • Ability to view account information, including past returns, returns in draft and outstanding balances
  • If you have not yet registered with HMRC to use the online service, you should do so well before 1 April 2019.
  • Agents can:
    • See a list of all ATED clients in one place
    • File returns on behalf of your clients and manage their online account
    • Returns for the 2019-20 chargeable period cannot be filed until 1 April 2019.
  • See Annual Tax on Enveloped Dwellings (ATED)

Interest Restriction Return (IRR) deadline: 31 December 2018

  • Companies and groups with a 31 December year-end may need to submit an IRR by 31 December 2018 if the corporate interest restriction rules (CIR) apply.
  • The CIR rules apply to individual companies or groups of companies with over £2 million of net interest or other financing costs per annum.
  • A group reporting company should submit the IRR via the HMRC online form, using the Government Gateway.
    • It is possible for an agent to submit an IRR on behalf of a client.
    • A company or a group with a 31 December year-end should have appointed a reporting company by 30 June 2018; if they have not they cannot submit an IRR.
    • Groups who have missed the deadline should contact the group’s Customer Relationship Manager (CRM) or ask the HMRC CIR team to appoint a reporting company at: interest-restriction.mailbox@ hmrc.gsi.gov.uk.
  • See Corporate Interest Restriction

Supplies of digital services to consumers in the EU

  • The VAT rules if you supply digital services to private consumers in other member states will change on 1 January 2019.
  • The place of supply will be the UK where;
    • A UK business is not established in any other EU member state and
    • The total value of their annual cross-border digital sales is less than £8,818 in the current year and preceding year.
    • Businesses affected will no longer need to register for VAT in other EU countries where they have consumers or use the VAT Mini One Stop Shop scheme (VAT MOSS).
  • If you register your business for the scheme, you will send HMRC a VAT MOSS Return of qualifying sales and payment each calendar quarter. HMRC will send the relevant parts of the return and payment to the tax authority of the country where your consumers are based.
  • You may still need to send a separate VAT return if you have non-qualifying sales.
  • See Place of Supply: Mini One Stop Shop (MOSS)

Top 3 things you need to do now to prepare for the Customs Declaration Service (CDS)

  • HMRC has begun phasing in the new CDS to replace the existing Customs Handling of Import and Export Freight (CHIEF) system. Remaining importers are expected to move over to CDS early in the new year, and exporters from March 2019.

Checklist – what do you need to do now?

In preparation for CDS, you will need to:

  1. make sure you have an Economic Operator Registration and Identification (EORI) number and a Government Gateway user ID and password
  2. have read and understood the changes found in the CDS version of the Import Tariff, on GOV.UK.
  3. consider whether you need to provide any training for employees, for example, on the new data needed with your declarations

Repayments by Bankers’ Automated Clearing Services (BACS) straight into a bank account

  • HMRC can send a payment straight to a bank account if a client is due a VAT repayment.
  • To receive repayments into a bank account you must:
    • provide HMRC with details of a bank sort code and account number, in the name of the registered person or company, through the VAT online service. All future repayments will be made direct to that account unless HMRC is informed of a change.
    • If a client is unable to use the VAT online service, bank account details can be given using form VAT484 by an authorised representative of the business or in writing to the HMRC Grimsby VAT Registration Service.

 Using correct HMRC payslips - Making a payment at the bank

  • Business paying their VAT at the bank should ensure they are using the correct Barclays bank payslips as other payslips will no longer be accepted. HMRC have written to those taxpayers still using discontinued payslips to advise them of this.

Crypto assets - publication of guidance for individuals

  • Guidance is being published in the coming days on GOV.UK that primarily focuses on ‘exchange tokens’, which have characteristics similar to bitcoin and will include common topics such as mining and what to do in the case of forks and pooling for Capital Gains purposes.
  • Further guidance will be published in early 2019 for businesses (including corporations).
  • See How are Bitcoin, cryptocurrencies or crypto assets taxed in the UK? 

New entitlement to Parental Bereavement Leave and Pay

The Government is introducing a new workplace right to Parental Bereavement Leave and Pay for parents who lose a child under the age of 18 from 6 April 2020.               

Those who qualify will be entitled to:

  • 2 weeks of Parental Bereavement Leave
  • Parental Bereavement Pay, paid at the statutory flat weekly rate of £145.18 (or 90% of average earnings, where this is lower) where the parents has at least 26 weeks continuous service at the date of their child’s death and earnings above the Lower Earnings Limit .
  • The Agent Update and Employer Bulletin: December 2018  provide more details on entitlement and eligibility.

Corporation Tax (CT)

Corporation Tax loss relief:

The new restriction on CT loss relief applies from 1 April 2017and can create administrative requirements for companies of any size.

  • HMRC’s draft guidance summarises what companies need to do and includes a template of the group allowance allocation statement.
  • Groups of any size may need to submit this type of statement to HMRC.
  • Commencement provisions can apply when a company accounting period straddles 1 April 2017.
  • See Losses: trading and other losses

CT Payments:

  • Since April 2011 CT cannot be paid through the post and must be paid electronically.

CT Repayments:

  • HMRC is phasing out payable orders and replacing them with BACS.
  • Clients need to provide HMRC with a UK bank account and sort code in the company or authorised nominee’s name each time they submit a return or an amended return.
  • If your client has already provided HMRC with bank details to set up a direct debit, they still need to provide them on the return. If they do not have a UK bank account HMRC will continue to issue their repayments in the same way as they currently do.

Making Tax Digital Pilot now open

  • Since October, the MTD for VAT pilot has been open for VAT businesses whose affairs are up to date and straightforward. It will extend to most other business types over the coming months.
  • HMRC have announced that a small group of customers with more complex requirements will have a further 6 months to prepare and they will explain more about who can join, and when, in an updated stakeholder communications pack.
    • MTD will not be mandated for other taxes until at least April 2020, but businesses and their agents can get involved in the Income Tax pilot now on a voluntary basis.
    • See Making VAT Digital 

Contact & HMRC 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.
  • 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.
  • You can check the latest updates to HMRC manuals or subscribe to automatic notification of change here
  • 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.
  • 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

Other recent publications

External links:

Agent Update: issue 69: December 2018/January 2019