HMRC have issued the Agent Update for August/September 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 are also included in the Employer Bulletin August 2020, rather than duplicate these we have linked to those updates where appropriate.
Claims portal opens for Eat Out to Help Out Scheme
The Government’s Eat Out to Help Out Scheme allows restaurants, bars, cafés etc to provide 50% off food and non-alcoholic drinks, up to £10 per head Monday to Wednesday throughout August.
- If your clients have registered they can claim for discounts offered on the scheme, using the new online claims portal.
- Agents and intermediaries cannot register or make claims for clients but can help them prepare by making sure they have all the necessary documents ready to make a claim as detailed in the claims' guidance here.
End of VAT payment deferrals period
Corporate Interest Restriction, minor amendments to legislation
The Corporate Interest Restriction (CIR) rules apply from 1 April 2017 to restrict a group’s deductions for interest expense and other financing costs to an amount commensurate with UK-taxed activities taking account of how much the group borrows from third parties.
Two amendments to the CIR rules are included in Draft Finance Bill 2021 to ensure the regime works as intended:
1. To clarify the way special provisions apply in the context of a Real Estate Investment Trust (REIT).
2. To ensure no late filing penalties apply to Interest Restriction Returns if there is a reasonable excuse for the failure.
Guidance on how CIR applies to REITs can be found at CFM97700 and on late filing penalties for Interest Restriction Returns at CFM99000.
Confirmation of Payee process
Some banks have introduced Confirmation of Payee (COP) as a way of giving individuals or businesses greater assurance that they are sending payments to the intended recipient.
- When a new CHAPS, Faster Payment or Standing Order is set up, COP checks the account name to avoid payments being sent to the wrong account.
- When you request a repayment from HMRC make sure the details you provide match the details of the recipients account so that payments meet COP checks and reach the recipient.
- The simplest way is to provide HMRC with the full name, account number and sort code exactly as it appears on the bank statement of the person/organisation where you wish the money to be paid. Failing to provide correct details may delay the payment.
Self Assessment and Corporation Tax repayments by BACS, a quicker way
- Ensure your clients receive their Self Assessment (SA) or Corporation Tax (CT) repayment quickly and securely through BACS by entering their bank details on the SA100 or on the CT600 .
- HMRC will automatically make a repayment by BACS if the customer’s banking details are included on their SA or CT return. If they do not have your client’s bank details, HMRC will issue a payable order which can take longer to clear.
What’s changed on Top-Slicing Relief (TSR) on life insurance policy gains?
Finance Act 2020 sets out a change to how reduced personal allowances interact with the calculation for top-slicing relief which, with effect from 11 March 2020:
- Will provide additional relief for taxpayers whose entitlement to the personal allowance has reduced because a gain is included as part of their income.
- Clarifies the treatment of allowances and reliefs within the TSR calculation by confirming that these must be set as far as possible against other income in preference to the gain.
Why have HMRC’s changed their view on reduced personal allowances?
- The original policy intent of TSR was to provide relief to taxpayers who have become subject to a higher rate of tax due to a gain being included in their income but some taxpayers were being taxed on gains solely due to losing their entitlement to the personal allowance.
- Allowing reduced personal allowances to be recalculated mitigates this and is in line with the original policy intent.
What about earlier years where the personal allowance was reduced?
- Taxpayers reporting gains for 2018/19 under Self Assessment where the claim is within the nine-month window from date of receipt, and where the liability has decreased, will have TSR corrected by a SA auto-recovery process and will be receiving a revised SA302 soon.
Why are HMRC not allowing beneficial ordering in the TSR calculation?
- Beneficial ordering of reliefs and allowances applies in the main Income Tax calculation, but not to the calculation of TSR.
- Allowing beneficial ordering in the TSR calculation could result in taxpayers claiming excessive relief as it would effectively give the taxpayer the benefit of personal allowances in each year over which the gain accrued when these allowances would have already been set against other income in those years.
Will other allowances and reliefs be recalculated in the TSR calculation?
No. Only the reduced personal allowance will be recalculated. There will be no change to other reliefs, allowances, or rate bands such as the Savings Starting Rate and Personal Savings Allowance.
How will the changes be implemented? What do I, or my customers, have to do?
- See above for tax year 2018/19.
- Taxpayers reporting gains in their 2019/20 Self Assessments will have the correct level of relief calculated manually for them. They must make a paper return for 2020/21 onwards, the TSR calculation will be performed automatically through the Self Assessment system.
Will any taxpayers be worse off as a result of these changes?
- No taxpayer should receive less relief than was previously calculated by HMRC.
More information can be found in the Insurance Policyholder Taxation Manual at chapters 3820-3850.
Deadline to report the Disguised Remuneration Loan Charge 30 September 2020
The deadline for reporting loans and paying the loan charge is now 30 September 2020. HMRC have updated their policy paper to make it clear that no further changes will be made to the loan charge.
Stamp Duty Land Tax: Temporary reduction in residential rates
- On 8 July 2020, the Chancellor announced a temporary reduction in the amount of Stamp Duty Land Tax (SDLT) payable on purchases of residential property in England and Northern Ireland with immediate effect, to apply until 31 March 2021.
- The nil rate band threshold for residential SDLT is increased from £125,000 to £500,000.
- The NRB applying to the ‘net present value’ of rents payable for residential property is also increased to £500,000.
- For purchases liable to Higher Rates for Additional Dwellings, the 3% rate band is increased from £125,000 to £500,000.
- The temporary rates do not apply where the transaction was substantially performed before 8 July 2020. Use the SDLT calculator to work out how much SDLT is due.
Stamp Duty Land Tax (SDLT), Higher Rates for Additional Dwellings (HRAD)
- Where an individual buys a dwelling in England and Northern Ireland as a replacement main residence whilst still owning the previous main residence, they must pay an additional rate of SDLT of 3% on top of the standard rates.
- A refund of the additional 3% can be claimed if the previous main residence is sold within three years of buying the new one.
- The COVID-19 situation has highlighted that there can be exceptional circumstances (including but not limited to COVID-19) which might prevent individuals from selling their previous main residence within the three-year time limit.
- A refund can now be granted where HMRC is satisfied that the sale was prevented by exceptional circumstances, and where the previous main residence is then sold as soon as is reasonably practicable once the exceptional circumstances ceased to apply.
- The change applies where the three-year period ended on or after 1 January 2020.
Capital Gains Tax (CGT) payment for property disposals, penalties reminder
- From 6 April 2020 UK residents disposing of UK residential property which is not their main private residence, and non-UK residents disposing of UK residential and non-residential property must notify HMRC about the disposal or pay the tax due within 30 days from the date of completion.
- For disposals that were notified between 6 April and 30 June 2020, there is no late filing penalty, provided the return and payment due, was made by 31 July 2020.
- For transactions completed from 1 July 2020, late filing penalties will apply if the details of the gain and payment is not made within 30 calendar days from completion.
VAT Reverse Charge on building and construction services: Introduction delayed to 1 March 2021
Student Loan repayments
New Scottish Student Loan Plan type
Student and Postgraduate Loans on the Self Assessment Tax Return
The Self Assessment tax return has been updated to include the following Income Contingent Student Loans. It is important that you confirm the correct loan type with your client before selecting this on the return, or your client may be overcharged:
- Plan 1
- Plan 2
- Postgraduate Loan.
Cyber fraud update
HMRC recently warned students about a new wave of cyber frauds offering them bogus tax refunds, advising them to take a moment to think before parting with personal information, downloading attachments and clicking on links in unexpected texts or emails.
- The Customer Protection Team has asked internet service providers to take down malicious web pages associated with the scam alerting universities and the National Union of Students.
- Individuals are advised to forward suspicious emails claiming to be from HMRC to
- More than 203,000 people reported phone scams to HMRC during the period April 2019 to March 2020, an increase of 95% on the previous year. During April 2020 HMRC received 43,333 reports from the public about phishing scams, an increase of 34%
COVID-19 scams latest
HMRC has detected 112 COVID-related financial scams since March, most by text message and have asked internet service providers to take down more than 126 web pages associated with these scam campaigns.
PAYE Off-Payroll Working rules (IR35)
- The delayed Off-Payroll Working rules (IR35) legislation for changes to non-public sector organisations is included in Finance Act 2020 and takes effect from 6 April 2021.
Making Tax Digital Update
- Since April 2019, most VAT-registered taxpayers with a taxable turnover above the VAT threshold of £85,000 have been required to operate Making Tax Digital (MTD) for VAT.
- Over 1.4 million taxpayers have signed up including 30% of VAT-registered businesses with turnover below the VAT threshold who have joined voluntarily.
- The evidence so far indicates the anticipated benefits of MTD are being realised, e.g. fewer errors.
In July 2020, the Government announced a series of reforms to Making Tax Digital.
Making Tax Digital for VAT
- If your client is a VAT-registered business with a taxable turnover above £85,000, you must follow the rules for Making Tax Digital for VAT unless:
- Your business uses the VAT GIANT service. HMRC will contact you to tell you when the deadline is.
- You apply for (or already have) an exemption.
- All VAT-registered businesses must follow the rules regardless of turnover for their first return on or after 1 April 2022.
Making Tax Digital for Income Tax Self Assessment (ITSA)
- If taxable turnover from your client’s self-employed business or income from property is above £10,000 PA, they must follow the rules for MTD for the next accounting period starting on or after 6 April 2023.
- HMRC are expanding the pilot service for Income Tax from April 2021.
Making Tax Digital for Corporation Tax:
- HMRC will be consulting in autumn 2020 on the detail of this plan.
EU Exit: Applications open for £50m customs grant scheme
Building a trusted, modern tax administration system
The Government has published ‘Building a trusted, modern tax administration system’ which sets out a 10-year vision for the future of tax administration to:
- Ensure they create a modernised digital tax system.
- Use closer to Real-Time Information to provide better-targeted support.
- Make it easier for all taxpayers to pay tax and reduce avoidable errors and fraud.
The vision has three elements:
- For policy, it means a progressive extension of the Making Tax Digital work
- For systems, it means exploring appropriate timing and frequency for the payment of different taxes, and the technology infrastructure needed to support that
- For law and practice, it means a reform of the tax administration framework.
HMRC wish to hear views from everyone with an interest. There will be a dedicated consultation on elements of the reforms, with more detail set out at future fiscal events.
Trust Registration Service (TRS) Registrations
You can now register most types of taxable trusts using the TRS microservice with two exceptions:
- Trusts where the individual beneficiary/lead trustee has an International address and passport/ID card.
- Trusts where the Trustee is a company.
A new ‘micro-service’ version of the TRS will be available at the beginning of September 2020.
- From 23 September 2020, it will not be possible to register a Trust or an Estate using the original service.
- You should start to use the new version to register any trusts or estates and conclude outstanding activity on partially completed registrations of a trust or an estate within the original service before 23 September.
Updating trust details:
- You can now update TRS if any of the information about the trust you gave at registration changes.
- You can now complete the annual declaration on TRS to confirm that the details of the persons associated with the trust are accurate and up to date.
- You must do this whether you have made any changes or not. This means you must also complete box 20 on the SA900.
Closing a trust:
- It is now possible to note on TRS that a trust has ended.
- If you are an agent acting on behalf of a client, before you can view or change the details about the trust you gave at registration, you must have authorisation from your client which you and your client must set up online.
- Clients who genuinely cannot carry out this process digitally should contact HMRC.
- The facility to update information provided at registration for complex estates will be available at the end of August 2020.
- This includes changes to the personal representative’s name, address and to close the estate record on TRS.
See UK Trusts
Alternative Dispute Resolution (ADR)
HMRC have made two changes to the way they operate the ADR process.
- Recent changes to the tribunal rules mean ADR applications can be considered at any stage of the tribunal process all the way up to the date of the tribunal.
- For mediations, HMRC will be offering telephone and video conferencing due to the COVID-19 pandemic. In future, face-to-face meetings will be offered again but will be only one of several options available to the mediator in considering how to help resolve your dispute and will no longer be offered routinely.
Last chance to have your say on raising standards in the tax advice market
The closing date of the call for evidence on raising standards in the market for tax advice is 11.45pm on 28 August. Send responses to our dedicated mailbox:
Government support for businesses
Government has recently launched a new business support campaign which brings a range of business advice and support into one place, from help with finance and business planning, to export advice. For more information, visit www.businesssupport.gov.uk.
‘National Insurance Contributions holiday for employers that hire former members of the armed forces’.
The Government is seeking views from employers of veterans, software providers and accountants about a National Insurance Contributions (NIC) holiday for employers who hire former members of the UK regular armed forces.
- The measure will exempt employers for any NIC liability on veteran’s salary up to the Upper Secondary Threshold in their first year of civilian employment.
- The relief will be available to employers from April 2021. From April 2022, employers will claim through PAYE in real-time with transitional arrangements for the 2021/22 tax year.
Check the status of tax policy consultations.
Find out about ongoing and closed tax policy consultations here.
Tax Agent Toolkits
The complete catalogue of HMRC toolkits has been updated to assist you with completion of:
- 2019 to 2020 Company Tax Returns.
- 2019 to 2020 Self Assessment Tax Returns including Capital Gains Tax toolkits.
- 2019/20 National Insurance Contributions and Statutory Payments, employers’ end of year forms and 2020/21 recordkeeping.
- 2019 to 2020 Property Rental Income.
- 2020 VAT toolkits.
The Pensions Regulator: Make sure your clients are paying the correct workplace pension contributions
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.
- 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 an 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.
A dedicated section has been created on the Agent Forum for COVID-19 providing updates and links to information on GOV.UK including the Job Retention Scheme and Self-Employed Income Support Scheme. Agents may raise possible systemic issues and post queries on COVID-19 for clarification.
- Agent Forum staff give priority to COVID-19 responses and will liaise with Professional Bodies on the escalation of these and other high priority non-COVID-19 issues impacting agents.
How do I join the Agent Forum?
Agents who are members of Professional Bodies who wish to join the Agent Forum may do so by accessing HMRC Community Forums on GOV.UK.
- Once registered Agents should request access to the Agent Forum by confirming the professional body that they are members of and providing their registration number.
Current Issues Trending on Agent Forum:
- SA2020-6173: HMRC response – Self Assessment POA – will HMRC refund automatically?
- SA2020-6159: When will HMRC resume normal phone hours?
- MTDVAT-6163: HMRC response – MTD API down?
- CGT-5978: HMRC response – CGT reporting and non-UK residents
- SA2020-5861: HMRC response – Employers Allowance and CJRS
- TRS-5622: HMRC response – Authorising Agent for Trust Registration Updates.
Other recent publications
- Employer Bulletins
- Trust and Estates newsletters
- National Insurance Services to Pensions Industry: countdown bulletins
- Pension schemes newsletter
- Revenue and Customs briefs