Agent update December 2019/January 2020

HMRC have issued the Agent Update for December 2019/January 2020. We have summarised the key content for you with links to our detailed guidance on the topics covered.

Some of the items included in this update were also included in the Employer Bulletin December 2019, rather than duplicate these we have linked to those updates accordingly where appropriate.

Be prepared to send your client’s 2020-21 Annual Tax on Enveloped Dwellings (ATED) return online

Please note when preparing to file your client’s 2020-21 ATED return:

You have the correct login details.
The ATED period is 1 April 2020 to 31 March 2021 and returns for that period must be filed by 30 April 2020 where your client owns a property on 1 April 2020.
You are not able to submit a return for the 2020-21 before the start of the tax period, though you can begin populating an online ATED return from around mid-March.
If you have not yet registered with HMRC to use the online service, do so before 1 April 2020.

See Annual Tax on Enveloped Dwellings (ATED)

How to check that an investor correctly declares money received from offshore investment funds

Offshore Investment Funds are funds that are not based in the UK.

HMRC receive information showing customers that may have invested in Offshore Investment Funds.
How to treat amounts gained from an investment fund can be complex.
The HMRC guidance to Offshore Investment Funds, can be found here.

Check the status of the Offshore Investment Funds

HMRC have approved some Offshore Investment Funds and given them a status called a ‘reporting fund’.

To check if a fund is in a Reporting Fund, go to GOV.UK and search for ‘approved offshore reporting fund’.
If you have clients with these types of investments you must check the status of their fund to help them declare the right amounts on their tax return.

How we tax Offshore Investment Funds

Reporting funds

UK Income Tax is due on all distributions made from a fund to an investor, or distributions they are deemed to have been received.
When disposing of an investment in a reporting fund, Capital Gains tax is due on any gain.

Non reporting funds

UK Income Tax is only due on distributions made from a fund to an investor.
When disposing of an investment in a non-reporting fund, any gain on the disposal is treated as income and taxed as an Offshore Income Gain.

See Offshore income toolkit

What an investor needs to do:

When completing their 2018/19 tax return the investor or their agent should check that they have correctly declared all interest and dividends from any Offshore Investment Funds.
If they have already submitted their 2018/19 tax return, they can amend it if they think it is incorrect.
Check they have correctly declared interest and dividends from Offshore Investment Funds in prior year returns.

If an amendment is needed to a tax return, the investor/their agent can:

Amend their tax return within 12 months of the filing deadline.
Make a disclosure using the digital disclosure service if it has been more than 12 months since the filing deadline date.

See Making a tax disclosure (Digital Disclosure Service) and Requirement to correct

What to expect from a statutory review

If HMRC makes an appealable decision and your client disagrees with it, they can have it reviewed.

An individual from a specialist independent team of review officers will carry out the review who will take into account wider HMRC policy in reaching their decision.

If your client wishes to challenge HMRC’s interpretation of the law, guidance or policy, they can do so at Tribunal.

Purpose of a review:

The purpose of the review is to look at the decision again, not to assess new facts or evidence however, the review officer will give the client the opportunity to send in further information.
If substantial amounts of new information are provided, the review officer may return the information to the caseworker as this may settle the dispute. If not, the review officer will look at it.

Starting a review:

When an officer makes an offer of a review, your client will have 30 days to accept that offer.
It is only possible to extend the period for indirect taxes and if the request is made before the 30 day period ends.
If your client requests a review after the 30 day period ends, HMRC may accept the request if the client has a reasonable excuse for the delay.

Review procedure:

Once the case is allocated case, the caseworker provides the review officer with their case papers and any information they relied on in making their decision. The review officer will write to your client to introduce themselves, explain when they will conclude the review and give your client the opportunity to send in any further information or arguments for consideration.

The review officer will decide if the decision is:

legally and technically correct,
consistent with HMRC’s policy, and Litigation and Settlement Strategy.

The review officer will not normally contact the caseworker or discuss the case with them unless they need to do so to understand the decision better, to locate documents or to clarify evidence.

Outcomes of a review:

At the end of the review, the review officer will conclude if the decision is:

Upheld; that is, the decision your client disagreed with should stand.
Varied; that is, the decision is changed in some way, or
cancelled; that is, the decision is not appropriate.

The review conclusion letter:

Whatever the outcome of the review, the review officer will write to your client to explain their conclusion, their reasons and what the next options are.
If the review officer upholds or varies the decision, the review conclusion letter will include details of the facts and issues, an explanation of the review officer's conclusions, including any relevant legislation or case law they relied on, and information on what happens next.
If the review officer cancels a decision the letter will normally be shorter but it will still explain what they have reviewed and the reasons for cancellation.

Review deadline:

The review officer will aim to complete the review as quickly as possible; the statutory period is 45 days but this can be extended by agreement. If a review is not concluded in 45 days, or a longer agreed period, the decision is deemed to be upheld.

What should you do?

Generally it is more cost effective to resolve disputes before they reach tribunal stage. It is important that your client provides all the information that the review officer needs to carry out their re-evaluation.
Your client can only have a decision or assessment reviewed once.
If they are not satisfied with the review officer’s conclusion they may appeal to the Tribunal within 30 days.

See How to appeal an HMRC decision and Statutory Review (by HMRC)

High Income Child Benefit Charge deadline 31 January

See Employer Bulletin: December 2019

Updates to 2019-20 Self Assessment Tax Returns for Student and Postgraduate Loan Borrowers

Taxpayers who complete a Self Assessment tax return should record any PGL deductions from PAYE employments on their 2019-20 SA tax return.
HMRC are working with developers to ensure that software includes a new box for PGL in the SA tax return. It will replace the existing box 3 which states, “If you think your loan may be fully repaid within the next 2 years” and will ask taxpayers to “Put the total amount of all Postgraduate Loan deductions taken from all PAYE employments”.

2018-19 Self Assessment (SA) Exclusions and Specials Documents

On 4 October 2019 HMRC published on GOV.UK updated versions of both the 2018-19 Exclusions and Specials documents. The latest version of the Exclusions document can be found here and the latest version of the specials document is here.

Structures and Buildings Allowances (SBA)

The SBA is a new capital allowance on construction costs for new structures and buildings used for qualifying purposes and on the improvement of existing structures and buildings.
It is a flat rate of 2% a year, for up to 50 years, on the eligible costs of building, converting or renovating non-residential structures or buildings that have been brought into qualifying use.
Certain costs are specifically excluded such as those costs that qualify for plant and machinery allowances, planning permission, landscaping, cost of land and integral features and fixtures.
For a claim to be valid, the date of the earliest contract for construction of the structure or building must be on or after 29 October 2018.
There are specific rules where a lease has been granted.
Subsequent purchasers of the structure or building may be able to claim the SBA as long as it is put to non-residential use for a qualifying activity and the purchaser holds an allowance statement. This must be brought into existence before any claim to SBA is made.
Claims for the allowance must be made on a tax return.
For tax returns up to April 2020 there is no specific box for SBA claims. To make a claim you must follow the guidance contained in the notes to the returns. After April 2020, the relevant boxes should be completed.

See Structures and Buildings Allowance (SBA)

Non-resident company landlords and Corporation Tax

Corporation Tax Unique Tax Reference Number (CT UTR):

Non-resident company landlords (“NRCLs”) are currently chargeable for Income Tax on the profits of their UK property businesses and file a paper Non-resident Company Income Tax Return (SA700). This will change from 6 April 2020 when they become chargeable to Corporation Tax.

In late January to early February 2020 HMRC will write to each NRCL (through an automatic process based on the information provided in the 2017-18 Non-resident Company Income Tax Return) to let them know their CT UTR and set out what they need to do and when.

Action required when the CT UTR is provided:

tell HMRC if the NRCL already has a CT UTR, no longer lets out UK property or completes a different Tax Return other than a Non-resident Company Income Tax Return.
Tell HMRC in writing (required by law) if the NRCL prepares its accounts to a date that is not 5 April to help them issue the notice to file a Company Tax Return at the right time and avoid possible late filing penalties and interest charged on the late payment of tax.
Register with HMRC Online Services as the Company Tax Return can only be filed online.
Update any agent authority in place to include Corporation Tax matters.

See Non-resident CGT: UK property

Ultra Low Emission Vehicles

See Employer Bulletin December 2019.

Tax Disputes

If your client is in dispute with HMRC over an appealable tax decision HMRC offer an Alternative Dispute Resolution (ADR) service. This involves an impartial HMRC mediator working with all parties to prevent unnecessary litigation. For more information visit: https://www.gov.uk/guidance/tax-disputes-alternative-dispute-resolution-adr

See How to appeal an HMRC decision

Consultations

You can check the status of tax policy consultations on gov.uk or see Finance Act 2019: tax update & rolling planner 2019-20

Agent Toolkits – supporting you through the Self Assessment (SA) period

The following toolkits may help minimise errors on 2018-19 SA tax returns:

Contacts & HMRC services

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.
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? Find out when you can expect to get a reply from HMRC to a query or request you have made.
You can check the latest updates to HMRC manuals or subscribe to automatic notification of change.
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 they are aware of.
Phishing emails and bogus contact. A new type of phishing scam regarding ‘Tax Returns’, which is being circulated in high volumes, has been added.
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.

Other content

Other recent publications

The Pensions Regulator – Workplace pensions – remind your clients to keep paying in

See Employer Bulletin December 2019

External link:

Agent update December 2019/January 2020