Agent update October/November 2020

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

The following items have also been included in Employer Bulletin October 2020, rather than duplicate these we have linked to those updates where appropriate.

Coronavirus Job Retention Scheme (CJRS)

Job Retention Bonus (JRB)

Deferred July 2020 Self Assessment Payment on Account

Self Assessment additional support

The limit for HMRC’s online payment plan service has been increased to £30,000 for Self Assessment customers.

  • Once taxpayers have completed their tax return for the 2019-20 tax year, they may have the option of using the online self-serve ‘Time to Pay’ facility through GOV.UK to set up a direct debit and pay any tax that is owed in monthly instalments, up to a 12-month period.
  • If customers wish to set up their own self-serve ‘Time to Pay’ arrangements, they must have:
    • No outstanding tax returns.
    • No other tax debts.
    • No other HMRC payment plans set up.
  • The debt needs to be between £32 and £30,000 and the payment plan needs to be set up no later than 60 days after the due date of a debt.
  • Interest will be applied to any outstanding balance from 1 February 2021.

See COVID 19: Deferring Income Tax payments

SA paper statements

  • HMRC have confirmed that taxpayers will receive paper tax statements for 2019-20 in December/January unless they have specifically opted for paperless communications.
  • As part of HMRC’s ongoing initiative to encourage more people to file online, it remains their ambition to move to a fully digital service as soon as circumstances allow.

Does your client have employees working from home because of COVID-19?

See Employer Bulletin October 2020

See COVID-19: Working from home

The effect of furloughing staff on claims for R&D Tax Relief, RDEC, LRR and the Creative Industry Reliefs

HMRC guidance on staffing costs for Research and Development Tax Relief, Research and Development Expenditure Credit, Land Remediation Relief and the Creative Industry Reliefs has recently been updated to cover furloughed staff.

That updated guidance can be found in the following HMRC manuals:

  • CIRD83200
  • CIRD63130
  • MGETR60120
  • OTR60120
  • TTR50130
  • VGDC50130
  • APC50130
  • TPC50130
  • FPC50130

See Research & Development

See Creative Industries Tax Reliefs: At a glance

Corporate Criminal Offences: More than just a legislative tool and why you should care

See Employer Bulletin October 2020

See Corporate Criminal Offence: failure to prevent tax evasion

See Criminal investigations into UK tax evasion

Capital Gains Tax (CGT) payment for property disposal

The new digital service which went live on 6 April 2020 enabling people to report and pay CGT for property disposals has been further enhanced:

  • From 14 October 2020, agents and clients have the ability to amend an existing CGT property disposal return or confirm estimates.
    • Previously to submit an amendment it was necessary to contact HMRC and ask for a paper form to complete and submit.
  • In order to amend an existing return or confirm estimates the correct CGT reference number will be required.

See CGT: Reporting, How to report CGT?

Update on Top Slicing Relief (TSR) on life insurance policy gains

HMRC is working to ensure all affected customers from 2018-19 onwards receive the Top Slicing Relief that they are entitled to.

  • Finance Act 2020 provides clarification on beneficial ordering of the personal allowance within the TSR calculation.
  • It also confirms that allowances must be set, as far as possible, against other income in preference to the gain.
  • This ensures that the personal allowance cannot be used twice in the tax year, which would lead to too much relief being claimed.

HMRC state that:

  • This is not a change of policy.
  • The relief calculation has always applied this method.
  • There is no change to how they calculate any other relief, allowance or rate such as the savings nil rates.

HMRC estimate that 2,000 will enjoy these changes.

  • The 2018-19 automated process was run on the 28 August 2020 and included customer returns for 2019 which have been received by HMRC up to nine months prior to the run date (returns filed online 28 November 2019 and later).
  • 2018-19 returns submitted under an exclusion are being manually reviewed and include customer returns for 2019 which had been received by HMRC up to nine months prior (returns received on 28 November 2019 and later). If a change to the TSR is required they are being amended.
  • For returns received more than nine months before 28 August 2020, HMRC request that an amendment is filed to update the amount of TSR.
  • An exclusion has been added to the Known Self Assessment calculation errors list for 2019-20, Exclusion 116. Customers are required to complete paper returns to get the correct calculation. No customer will receive less relief than was before calculated by HMRC.
  • From 2020-21 onwards, the changes will be incorporated into the Self Assessment calculator.
  • For periods before 2018-19, returns should be filed on the basis of the legislation that applied at the time those returns were required to be made.
    • Guidance and/or examples to help answer queries can be found in the Insurance Policyholder Taxation Manual (IPTM) at chapters 3820-3850.

HMRC will be running TSR Talking Points webinars during October and November.

See Top Slicing Relief: Important update

See Investment bonds: A tax guide

Stamp Duty Land Tax (SDLT) additional 2% charge for non-UK residents

  • At Budget 2020, the Government announced that it would legislate in Finance Bill 2020-2021 for a 2% SDLT surcharge to take effect from 1 April 2021 on non-UK residents purchasing residential property in England and Northern Ireland.
  • This change will affect acquisitions of English and Northern Irish residential property by non-UK resident purchasers, be they individuals, companies (including certain UK resident companies controlled by non-UK resident persons), trusts and partnerships.
  • The surcharge will apply on top of existing SDLT rates, including the rates applicable to the rental element of leasehold property.
  • Individual purchasers may be able to claim a refund of the surcharge if they meet residency requirements within a 12-month period after the effective date of transaction. Crown employees and/or their spouse or civil partner will be able to claim an up-front relief from the surcharge.

See SDLT: Non-residents’ extra surcharge

DAC 6 reporting rules

  • The International Tax Enforcement (Disclosable Arrangements) Regulations came into force on 1 July 2020.
    • These regulations implement an EU Directive known as DAC 6.
  • Under the rules, taxpayers and their advisers are required to report to HMRC details of certain types of cross-border arrangements which meet one of a number of ‘hallmarks’. 
    • These hallmarks are features commonly seen in schemes that could be used to avoid or evade tax.
  • The first reports were due to be made from 1 July 2020, but due to COVID-19, the first reporting deadlines have been deferred by six months to January 2021.
  • The reporting obligation will normally fall on ‘intermediaries’.
    • The term ‘intermediary’ applies to any person who designs, markets, organises, makes available for implementation or manages the implementation of a reportable arrangement. It also includes anyone who provides aid, assistance or advice in respect of such an arrangement.
  • Where there is no reporting intermediary, the taxpayer implementing the arrangement must report. 
  • The reporting rules apply to new arrangements from 1 July 2020, but any arrangement where the first step was taken on or after 25 June 2018 (when the Directive came into force) must also be reported.
  • Penalties may be charged if a person fails to meet their obligations under these rules unless there is a reasonable excuse for the failure.

Disguised remuneration loan charge

See Employer Bulletin October 2020

See Disguised remuneration loan charge (subscriber guide)

New General Anti-Abuse Rule advisory panel opinion published

See Employer Bulletin October 2020

See Spotlight 56: Disguised remuneration

VAT reverse charge on building and construction services delayed introduction

  • The reverse charge measure will now come in on 1 March 2021.
  • A Revenue and Customs Brief, issued in June 2020, gives more detail. Further information on the scope of the reverse charge and how it will operate can be found in this guidance note.
  • In September, every VAT-registered construction business will have received an individual letter. This advised them to check if they might be liable for the reverse charge. If they are, they should start to prepare now.
  • The key aspects are:
    • It will apply to standard and reduced-rated supplies of building and construction services made to VAT registered businesses, who in turn also make onward supplies of those building and construction services.
    • The contractor will be responsible for paying the output VAT due rather than the sub-contractor but can continue to reclaim this amount as input tax.
    • The scope of supplies affected is closely aligned to the supplies required to be reported under the Construction Industry Scheme but does not include supplies of staff or workers for use by the customer.
    • The legislation introduces the concept of 'end-users' and 'intermediary suppliers'. This covers businesses or groups of associated businesses that do not make supplies of building and construction services to third parties and as such are excluded from the scope of the reverse charge if they receive such supplies, examples include landlords, tenants and property developers.

HMRC will be running a series of webinars for businesses and Talking Points webinars for agents.

See CIS: Construction Industry reverse charge

Applications are open for £50m customs grant scheme

See Employer Bulletin October 2020

UK Transition: Changes for the self-employed going to work in or from the European Union (EU), the European Economic Area (EEA) or Switzerland from 1 January 2021

If you have self-employed clients who work in the EU, EEA or Switzerland, or they are from one of these countries and working in the UK you should read the following.

There is a transition period until 31 December 2020 during which the current rules on social security coordination are continuing.

Starting self-employment in the EU, EEA or Switzerland before 1 January 2021

The current European social security coordination rules will be used to work out which country’s social security scheme self-employed people will have to pay contributions to.

  • This covers UK-based people who will start working in one or more of the EU, EEA countries and Switzerland before 1 January 2021 and those from the UK, EU, EEA or Switzerland working in one or more of those countries and Switzerland before 1 January 2021.

Applying for a Portable Document A1 (PDA1) or E101 Certificate for a period that starts before 1 January 2021

Provisions in the Withdrawal Agreement and related agreements with the EFTA countries and Switzerland ensure that the current EU social security coordination rules will continue to apply after 31 December 2020 to certain individuals, whether a future relationship agreement between the UK and the EU on social security coordination is agreed or not.

  • Self-employed people should continue to apply for PDA1s and E101s as normal if they are to start working before 1 January 2021 in a situation involving the UK and one or more of the EEA countries and Switzerland.
  • If a self-employed individual wants to apply for a PDA1 or E101 they should use form CA3837 if they are normally self-employed in the UK but will be working temporarily in the EU, EEA or Switzerland and form CA8421 if they work in two or more of any of the UK, EU, EEA countries or Switzerland.
  • When working in an EU, EEA country or Switzerland, the PDA1 or E101 can be used as evidence that HMRC has applied EU social security coordination rules and has determined that UK National Insurance contributions are due.
  • If HMRC have issued a PDA1 or E101 that started before 1 January 2021, the worker will pay UK National Insurance contributions for the period stated on the document. Please see the ‘Right to work in the EU, EEA and Switzerland after 1 January 2021’ part of this article if the certificate has an end date after 31 December 2020.

Starting self-employment in the EU, EEA or Switzerland after 1 January 2021

Applying for a PDA1or E101 Certificate for a period that starts after 1 January 2021

Self-employed people should continue to apply to HMRC for PDA1s and E101s if they are starting work after 31 December 2020 in a situation involving the UK and one or more of the EEA countries and Switzerland. For example, a self-employed person normally working in the UK who will temporarily work in France.

  • While negotiations with the EU are ongoing, HMRC will only be able to process applications for PDA1s or E101s for the self-employed in the scope of the Withdrawal Agreement, one of the related agreements with EFTA countries and Switzerland.

Self-employed individuals from the EU, EEA and Switzerland working in the UK

If a self-employed individual is from the EU, EEA or Switzerland and starts working in the UK before 1 January 2021 and they have a PDA1 which shows they are subject to an EU, EEA country or Swiss legislation, they will not have to pay UK National Insurance for the period stated on the PDA1 even if it ends after 31 December 2020, so long as their situation remains unchanged.

  • If they have a PDA1 which shows they are subject to UK legislation, they will have to pay UK National Insurance.
  • If the self-employed individual is an EU, EEA or Swiss national and they haven’t applied for settled or pre-settled status, they should consider registering with the EU Settlement Scheme by 30 June 2021.
  • If the self-employed individual is from the EU, EEA or Switzerland and they do not have a PDA1 and they work in two or more of any of the UK, EU, EEA countries or Switzerland, they should apply for a PDA1 to the social security institution of the country where they reside.
  • Normally, if an individual is from the EU, EEA or Switzerland and only works in the UK, they do not need a PDA1 because they will be liable to pay UK National Insurance.

UK’s future relationship with the EU

  • The Government has been clear that there will be changes to future social security coordination arrangements for those individuals not in the scope of the Withdrawal Agreement and the related agreements with EEA EFTA countries and Switzerland. The Government continues to work with the EU to establish practical, reciprocal provisions on social security coordination which includes preventing dual concurrent social security contribution liabilities.

Right to work in the EU, EEA and Switzerland from 1 January 2021

For periods after 31 December 2020, individuals should check the immigration rules in the country that they will be working in especially if they are a frontier worker.

  • A frontier worker is a person who resides in either the UK or the EU, EEA or Switzerland who works in one or more of those countries but not the one they reside. This could affect individuals resident in the UK who work in the EU, EEA or Switzerland.

The UK’s social security agreement with the Republic of Ireland

The UK has reached a reciprocal agreement with Ireland which ensures that social security coordination continues after 31 December 2020 when considering moves by UK or Irish nationals between the UK and Ireland. The UK and Ireland have ensured that social security coordination continues on the same terms that are currently in place.

Reporting Pay As You Earn (PAYE) in real-time

See Employer Bulletin October 2020

See RTI: Real-Time Information for PAYE

Student and Postgraduate Loans thresholds and rates from 6 April 2021 and refunds

See Employer Bulletin October 2020

Off-Payroll Working Rules (IR35)

See Employer Bulletin October 2020

See Off-Payroll Working: PSCs & Private Sector Engagers

Mid-sized Business (MSB) Construction sector looking for your views

  • HMRC are seeking to get a better understanding of the current state of mid-sized businesses in the construction industry and how they have been impacted by COVID-19, to support the sector. 
    • Mid-sized business are those which are not large, have a UK turnover of over £10million and/or 20 or more employees.
  • HMRC will be writing to mid-sized construction businesses to ask for insight on the following questions: 
    • How has your business been affected by COVID-19?
    • Have you been able to able to find the guidance you have needed?
    • What are the biggest changes you have had to make to your business?
    • Has your use of technology increased, for example, electronic invoicing?
    • Has social distancing impacted your ability to work?
    • Has project financing been affected, for example, lenders pulling out of contracts?
    • What does the future look like for your business?
  • HMRC will be liaising with joint engagement forums to share some of their ideas and ascertain collective views.
  • HMRC will also welcome suggestions from mid-sized construction businesses and their agents via the MSB Construction Team mailbox, This email address is being protected from spambots. You need JavaScript enabled to view it. by Monday 23 November 2020. 
  • HMRC appreciate that other sectors have also been affected by the impact of COVID-19 and would welcome views on how they can provide better support to those mid-sized business customers.
    • Any suggestions for more general improvements can be shared using HMRC’s Customer Engagement team mailbox which is accessible through the government gateway.

Self Assessment peak reminder campaign

  • Every year HMRC issues a series of targeted emails and SMS messages (texts) to remind customers of their obligation to file and pay by the Self Assessment deadline.
  • HMRC understands that circumstances will have changed for many due to the impact of Coronavirus. Because of this, emails and SMS will be slightly different from previous years:
    • They are emphasising the help and support available to customers who may find it difficult to either file or pay their Self Assessment.
    • They are sending reminders to all customers, including those represented by an agent. Previously these customers only received a generic Self Assessment help and support email.
  • HMRC are planning to send reminders on:
    • Tuesday 17 November 2020 and Wednesday 18 November 2020
    • Tuesday 8 December 2020 and Wednesday 9 December 2020
    • Tuesday 5 January 2021 and Wednesday 6 January 2021
    • Tuesday 19 January 2021 and Wednesday 20 January 2021.

Agent Online Self-Serve (AOSS)

  • Work is underway to upgrade the Agent Online Self-Serve service which will result in the view of clients’ PAYE Liabilities & Payments data being exactly that as seen by the client employer.
  • This will initially only be available to those agents who either currently use AOSS or have been presented with an invitation to use AOSS but declined.
  • HMRC expect to deliver this upgrade in early November.

Are you aware of HMRC’s Business Tax Account?

  • The HMRC Business Tax Account is an online account which brings together all a customer’s business taxes in one place.
    • This allows clients to manage certain business taxes by themselves.
  • HMRC have published new guidance on GOV.UK which gives more detail on who can use the Business Tax Account, what it can be used for and how to sign up.
  • Even if agents manage all tax affairs for their clients, those clients can still use the Business Tax Account to monitor what is happening in their account.

Changes to HMRC’s opening hours

  • HMRC are extending the opening hours for most of their helplines to 8am-6pm.
  • Webchat will no longer be available after 8pm or on Sundays.
  • There will be a few exceptions to this, so it is advised to check GOV.UK for more information about HMRC’s helplines and their opening hours.

Statutory Residence Test, clarifications due to Coronavirus Q&A

HMRC have published a series of questions and answers which explain the position about Coronavirus and the effect on individuals who rely on the Statutory Residence Test (SRT) to work out their residence status.

See SRT: Statutory Residence Test

See COVID-19: Statutory Residence Test

Customer Protection

  • In the last 12 months HMRC have:
    • Reported more than 10,870 malicious web pages for being taken down.
    • Responded to more than 651,600 referrals of suspicious HMRC contact from the public.
    • Initiated the removal of more than 2,634 phone numbers being used to perpetrate HMRC-related phone scams and responded to more than 215,000 reports of phone scams.
  • To complement this work, since 2017 HMRC have recovered hundreds of misleading HMRC-branded domains (website names) hosting low-value services such as call connection sites, saving the public an estimated £2.4m.
  • Through this work and with the help of national and international law enforcement co-operation, HMRC has dropped from 14th to 16th most-phished brand in the world over the last three years.

Government support to improve small business leadership and problem-solving skills

  • As the Coronavirus crisis spurs British businesses to adopt new ways of working, the government is investing £20 million to improve small businesses’ management, productivity and problem-solving skills through two training programmes.
  • There are 6,000 on the Peer Networks programme (with a possible further 4,000, subject to demand) and 2,000 places available on the Small Business Leadership Programme.
  • Interested small business leaders are encouraged to sign up now to secure a place.
  • Agents who are SMEs are encouraged to consider applying for these programmes and to publicise them among SMEs who they work with.

Paying HMRC

  • There are several ways to pay HMRC:
    • Direct Debit.
    • Faster Payment.
    • BACs.
    • CHAPs.
    • Personal debit card.
    • Corporate credit and debit card.
  • Payments made by corporate credit card incur a surcharge which goes direct to merchant acquirers, card schemes and card providers.
    • This will also apply to corporate debit cards from 1 November 2020. Taxpayers may want to consider another payment method if they do not wish to incur this surcharge. 

Government support for businesses

Government has recently launched a new Business Support campaign. This 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.

Tax Agent Toolkits

The complete catalogue of HMRC toolkits has been updated to assist with completion of:

  • 2019-20 Company Tax Returns.
  • 2019-20 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.
  • 2019-20 Property Rental Income.
  • 2020 VAT returns.

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. 

Other recent publications

Spotlights

Employer Bulletins

Trust and Estates newsletters

National Insurance Services to Pensions Industry: countdown bulletins

Pension schemes newsletters

Revenue and Customs briefs

Agent Forum: Working to support the agent community

  • The online Agent Forum is a platform designed to share information and resolve any issues with HMRC systems or processes that may have widespread impacts on the agent community and taxpayers.
  • Agents can access help, support and guidance on general tax matters as well as real time updates from agents and HMRC.
  • Agents can also post ideas and best practice to help the wider agent community and improve operation of the tax system.
  • Paid Tax Agents and legal representatives who are members of Professional Bodies, can join the forum by registering at HMRC Community Forums on GOV.UK.
  • HMRC aim to respond to potential issues raised on the forum in a timely manner, but there may be times when this isn’t always possible due to the nature of the issue.
  • When a potential issue is raised, HMRC may ask for other agents to post additional examples or approach firms directly for specific information that will assist an investigation.
  • Professional Bodies identify issues requiring prioritisation by advising the Agent Forum team and then review and action a solution through engagement forums with HMRC.
  • These include the Agent Support Group and Issues Overview Group.
  • Agents are invited to continue to contact their Professional Body if they are seeking prioritisation of issues posted on the online Agent Forum, or items to be raised in other HMRC forums.
  • Recent issues trending on the forum include:
    • PAYE-6357 P800 Reporting Bank Interest.
    • SA-6321 HMRC Issues P800 for SA client.
  • The Agent Forum Team are requesting information on the following topics to assist investigation:
    • SA-6675 Payments on account HMRC systems blind spot.
    • SA-6880 Debt Recovery errors.
  • Recent successful results on the Agent Forum include:
    • TRS-6688 Complex Estates updating the register.
    • Others-6659 Inconsistent treatment by TCO staff.
  • Issues recently prioritised include:
    • SA-4994 Phones not answering on Agent lines again.
    • Others-5504 HMRC Webchat.
    • Others-5425 Taxpayers can only revert to paper communications by accessing their PTA.

Make sure to stay on top of your workplace pension responsibilities and avoid legal action

See Employer Bulletin October 2020

See Auto-enrolment: Workplace pensions (subscriber guide) 

External link

Agent Update October/November 2020