HMRC have issued the Agent Update for February 2021. We have summarised the key content for you with links to our detailed guidance on the topics covered.

Some of the following items have been duplicated in this month's Employer Bulletin and rather than reproduce these we have linked to those updates where appropriate, see: Employer Bulletin February 2021

Updates & reminders

COVID-19

See COVID-19 Zone

Coronavirus Job Retention Scheme

See Employer Bulletin: February 2021

VAT deferral new payment scheme: opt-in from the end of February 2021

See Employer Bulletin: February 2021

UK Transition

Mandatory Disclosure Rules and DAC 6

  • The DAC 6 reporting regime requires taxpayers and their advisers to disclose information on certain types of cross-border arrangements to HMRC. Following the end of the EU transition period, the UK will move to global tax standards rather than EU ones (like DAC 6).
  • As part of that move to global tax standards, the government has made changes to the DAC 6 regime, following the end of the EU Transition Period:
    • In the coming year, the UK will consult on and implement the OECD’s Mandatory Disclosure Rules (MDR) as soon as practicable, to replace DAC 6 and transition from EU to international rules.
    • Reporting under DAC 6 will still be required for a limited time until MDR is implemented. However, reporting will only be required for arrangements which meet hallmarks under category D. This is in line with the Free Trade Agreement with the EU.
  • You can find out more details about the hallmarks, and the reporting regime in HMRC’s International Exchange of Information Manual.
  • Legislation to amend the scope of the DAC 6 regime came into force on 31 December 2020. The changes mean that only arrangements which meet category D hallmarks have to be reported.
    • This applies regardless of when the arrangement became reportable.
  • In the coming year, the government will repeal the legislation implementing DAC 6 in the UK and implement the OECD’s MDR. The government will consult on draft legislation to introduce MDR in due course.
  • If you need to report an arrangement to HMRC under these rules you can do so by accessing the portal.

See DAC6: Do you need to make a report?

Tax

Off-Payroll Working rules: are your clients ready?

  • If your clients are contractors or engage or supply contractors, they may be affected by the Off-Payroll Working rules (IR35).
    • These come into effect on 6 April 2021 so your clients need to take action and prepare now.
    • HMRC's education and support is helping agents to understand the changes.
  • HMRC's briefing: supporting organisations on Off_Payroll Working shows how they intend to ensure customers comply with the rules, expanding and updating their previous statement about their intended compliance approach.
  • HMRC have also committed that customers will not have to pay penalties for inaccuracies relating to the Off-Payroll Working rules in the first 12 months unless there is evidence of deliberate non-compliance. This intent has not changed.

See Off-Payroll Working: PSCs & Private Sector Engagers

VAT reverse charge for construction and building services 

See Employer Bulletin: February 2021 

Postponed VAT accounting: account for import VAT on the VAT Return

  • Your clients should act now so that they can benefit from Postponed VAT Accounting (PVA) if they are VAT-registered and import goods into:
    • Great Britain (England, Scotland and Wales) from anywhere outside the UK. 
    • Northern Ireland from outside the UK and EU.
  • PVA allows them to declare and recover import VAT on the same VAT return, rather than having to pay it upfront and recover it later.
  • There is more guidance on how to:
  • Your clients will not need approval to benefit from PVA, but they will need to make the appropriate entries on the customs declaration (see below) and get access to the Customs Declaration Service (CDS) to view and download their monthly statements in PDF format.
  • They need these statements to complete their VAT Returns or to send them to whoever completes the VAT Return on their behalf.
  • Businesses should ensure they can access the service to access their postponed import VAT statements as soon as possible.
  • Importers that already have access to CDS will go straight from the start page, to their CDS financial dashboard where they can view and download their statements.
  • Businesses without access to CDS will be automatically directed to subscribe to CDS first.
  • Customs Handling of Import and Export Freight (CHIEF) users who access CDS for their statements can continue to use CHIEF to make customs declarations.
  • Accessing CDS for the first time is straightforward and takes only a few minutes. Businesses will need details of their:
    • Government Gateway user ID and password.
    • Economic Operator Registration and Identification (EORI) number that starts with GB.
    • Unique Taxpayer Reference (UTR).
      • Note that Non-established taxable persons (NETPs) don’t need a UTR to get access to CDS. They should follow the on-screen instructions to identify they are not UK-based, otherwise they will not be able to complete the process
    • Address.
    • National Insurance number (if they are an individual or sole trader).
    • The date they started their business.
  • A common error is inputting the address incorrectly. If the address on the application is not identical to the address that HMRC hold, there will be delays in the processing.
  • To avoid this, businesses should check all the details they plan to input and make sure the address HMRC hold is correct and up to date.
  • Once the process is complete, they will receive an email confirming they have access to CDS.
    • They can then return to access their postponed import VAT statements.
  • Importers should tell the person who completes the customs declaration on their behalf that they wish to use PVA so that the person can complete the customs declaration accordingly.
  • Customs Handling of Import and Export Freight (CHIEF) users will need to enter:
    • Their Economic Operator Registration and Identification (EORI) number starting with ‘GB’ which includes your VAT registration number into box 8 (Header Consignee), or, if applicable, your VAT registration number in box 44h (Registered Consignee).
    • ‘G’ as the method of payment in box 47e.
  • CDS users need to enter their VAT registration number at header level in data element 3/40: VAT will be recorded against the EORI and will be at declaration level only.
  • When a customs declaration indicates that the importer will be using PVA, the amount of postponed import VAT will be shown on their monthly statement.
  • The first monthly PVA statements are available now showing the total import VAT postponed in January.
    • Subsequent statements will usually be available by the 6th working day of each month.
  • Your clients should ’Get Access to CDS’ now so that they are ready to complete their first VAT Return under the new rules.
  • Each member of a VAT group that imports goods will have their own EORI and should access their own statement.
    • They should download the statement and send it to the representative group member who needs all the statements in order to complete the VAT return for the whole group.
  • Until the end of June, importers bringing non-controlled goods into Great Britain from the EU must account for import VAT on their VAT Return if they choose to either:
    • Delay their customs declaration.
    • Use a simplified customs declaration to make a declaration in their own records.
  • The important messages for your clients are:
    • Make sure whoever completes your customs declaration selects PVA.
    • Make sure you can access your statement on CDS now to avoid any delays.

See Importing goods into GB from 1 January 2021

Disguised Remuneration 

See Employer Bulletin: February 2021 

Changes to the Construction Industry Scheme 

See Employer Bulletin: February 2021 

HMRC focus on reducing Research and Development fraud and error

  • Each year, HMRC receive tens of thousands of claims for Research and Development tax relief from companies.
  • They review these and aim to provide payment within 28 days in the majority of cases unless they raise an enquiry.
  • HMRC have increased their focus on tackling error and fraud within the Research and Development tax relief scheme and understand that errors can occur when submitting a claim.
  • However, where HMRC discover fraudulent activity, they take decisive action. In:
    • November 2020, three individuals, who wrongfully claimed £29.5m in Research and Development tax relief, were sentenced to between five and nine years in jail.
    • December 2020, six individuals were arrested on suspicion of committing multi-million-pound Research and Development tax fraud.
  • These examples exemplify the serious consequences of Research and Development tax relief fraud.
  • Please help to reduce the number of incorrect claims we receive by familiarising yourself with the common errors listed.

See R&D & Patent Box

Company car changes for P11D: ULEV and WLTP

See Employer Bulletin: February 2021  

Sending your client’s 2021 to 2022 Annual Tax on Enveloped Dwellings (ATED) return 

  • If you have not yet registered with HMRC to use the online service, you need to do so before the 1 April 2021.
    • This should mean you have the right access so you can file on time by 30 April 2021. 
  • The ATED period is 1 April 2021 to 31 March 2022 and returns for that period must be filed by 30 April 2021 where your client owns a property on 1 April 2021. 
    • Although you can begin populating your 2021 to 2022 return from around mid-March, you cannot file it before 1 April 2021. 
  • Please note when preparing to send your client’s 2021 to 2022 ATED return, you must use the correct credentials that were used to set up the ATED record. 
  • If your client has disposed of a property, please send an amended return or contact HMRC to notify of this change.
    • This will avoid unnecessary contact in future years for a return that is no longer due. 
  • If your client has changed relief code for a property or had a change in their circumstances, please contact HMRC to avoid unnecessary contact in future years.

See Annual Tax on Enveloped Dwellings (ATED)

Student and postgraduate loans thresholds and rates 

See Employer Bulletin: February 2021  

Student and postgraduate loan start notice (SL1/PGL1)

See Employer Bulletin: February 2021  

Student and postgraduate loans and Off-Payroll Working rules

See Employer Bulletin: February 2021  

Scottish student loans

See Employer Bulletin: February 2021  

Changes to the treatment of termination payments and post-employment notice pay for Income Tax

See Employer Bulletin: February 2021  

Business Visitors Appendix 8: formerly special arrangement made under Regulation 141

See Employer Bulletin: February 2021  

Income Tax budget announcements

  • Rates and threshold changes announced by the UK, Wales and Scotland are now available to view online.
  • Tax codes calculated for 6 April 2021 will include these changes. 
  • Income Tax rates and thresholds are subject to parliamentary approval. 
  • Once all rates and thresholds have been approved by respective administrations, HMRC may need to carry out a later recoding exercise to include any relevant changes. Further information will be provided in due course. 

See What is the 2021/22 PAYE tax code?

Digital or electronic signatures

  • HMRC can now accept digital or electronic signatures on 64-8s, P87 and Marriage Allowance (MA) claims.
  • Signatures signed on the screen of a digital device or displayed in a keyboard-typed font now will now be accepted for P87 and MA claims (including those with deeds of assignment) and 64-8s (standalone and those included on P87 and MA claims).
    • To be valid, the taxpayer must have provided the signature themselves.
  • Electronic signatures are only accepted for the types of claims listed above, all other claims and paper tax returns will still require an original signature on them.
  • In some cases, there may be legitimate reasons to doubt that the taxpayer has provided the signature themselves.
    • In such cases, HMRC will seek assurances from the agent or request further information about the processes that the agent uses.
  • If the taxpayer did not place the signature themselves then the document will be invalid.

Encourage your clients to apply for Marriage Allowance

  • HMRC is reminding couples, including eligible civil partners that they may be eligible for Marriage Allowance. 
  • Marriage Allowance is an easy way to save up to £250 each tax year as it lets you transfer ten per cent of your Personal Allowance, currently £1,250, to your husband, wife or civil partner, if they earn more than you. 
  • You can benefit from Marriage Allowance if: 
    • You are married or in a civil partnership.
    • You do not pay Income Tax (for example, if your income is below your Personal Allowance: currently £12,500).
    • Your partner pays Income Tax at the basic rate, which usually means their income is between £12,501 and £50,000 (£43,430 in Scotland).
  • You may also be able to backdate your claim by up to four years, currently to include any tax year since 5 April 2016 in which you met the criteria above. The deadline for this is 5 April this year. 

See Marriage Allowance (Transferable married couples allowance)

Payment of 2019 to 2020 Class 2 National Insurance Contributions (NICs)

  • Self Assessment clients who need to claim a contributory benefit soon after 31 January 2021, must make sure Class 2 National Insurance Contributions payments are paid.
  • This is to make sure their claims are unaffected, which could happen if:
    • They cannot pay all of their 2019 to 2020 Self Assessment (SA) liabilities by 31 January 2021.
    • They’ve entered into a Time to Pay arrangement to repay those liabilities through instalments.
  • As Class 2 National Insurance contributions are included in their 2019 to 2020 Balancing Payment, these two options may mean they won’t have paid the necessary Class 2 National Insurance contributions payments by 31 January 2021.
    • If this applies to your client, they should contact HMRC on 0300 200 3822 for help as soon as possible.
  • HMRC may be able to allocate funds from any 2019 to 2020 SA liabilities already paid to clear the Class 2 National Insurance Contributions and note their record that their Class 2 National Insurance Contributions were paid on time.
    • Your client may incur a small amount of interest as a result, but their contributory benefit claim should be protected.

See Time to Pay arrangements and Class 2 NI warning

Register as an employer

  • HMRC have published an article in the February 2021 Employer Bulletin advising employers what to do when registering as a PAYE employer.
  • The article explains possible delays in receiving a new PAYE reference number if the scheme start date is after 5 April 2021.
  • It also provides details that the scheme may be automatically closed if no information or submission data has been received on the PAYE record.

Making Tax Digital

Client email addresses required for VAT Direct Debit payments to continue

  • In Agent Update 81, HMRC provided an update on the transformation of VAT services.
  • HMRC are now providing further information of what businesses will need to do if they wish to continue paying by direct debit after migration to the new tax platform.
  • This change affects VAT businesses who are not already signed up to MTD VAT and a small number of those who already have.
  • HMRC will decommission their VAT mainframe in 2022.
    • In order to do this, they will move all the remaining customer accounts onto a new IT platform.  
    • HMRC intend to start this work in April 2021 and hope to finish by September 2021.  
  • UK banking regulations require HMRC to hold a valid contact point for customers using direct debit.
    • This is so HMRC can notify them in advance of the date debits will be taken from their account and the amount.
  • Any customers who wish to continue paying their VAT by direct debit will need to supply their (not their agent’s) email address prior to their account being migrated to the new platform.
  • If they do not supply an email address, HMRC will have to cancel their direct debit and they will be required to pay their VAT via an alternative method. 
    • HMRC are keen to avoid this and will be writing to all affected customers soon advising them of this change, including instructions on how they can provide an email address via their Business Tax Account (BTA). 
  • HMRC would appreciate your help in alerting any clients affected by this HMRC would be grateful if you could ask clients already familiar with their BTA to access it and input their email address, (using the ‘Add, view or change VAT registration details’ link within the VAT ‘card’). 
  • Unfortunately, HMRC cannot advise agents exactly when their client’s accounts will be migrated to the new IT platform.
  • When submitting returns on behalf of their clients, agents will sign into the ‘old’ agent portal as normal.
    • If the obligation to file their VAT return is showing, the return can be submitted.
    • If the obligation is not showing, the client’s VAT record has been migrated and the agent should login to their Agent’s Services Account (ASA) and submit the VAT return using the non-MTD filing service that is available from within the ASA. 

See Making Tax Digital and Changes to VAT return filing from March 2021

National Insurance holiday for employers of veterans 

See Employer Bulletin: February 2021   

Agent Online Self-Serve (AOSS)

  • Work to upgrade the service is progressing well.
  • HMRC expect to deliver the upgrade in February with a gradual roll out over a period of three months.
    • The upgrade will provide a view of clients’ PAYE Liabilities and Payments (L&P) data that is exactly as seen by their employer.
  • Initially, the service will only be available to those agents who either currently use AOSS or have been presented with an advert to use AOSS but declined.

HMRC pension scam webinar for agents and employers

New National Minimum Wage rates and changes to the National Living Wage qualifying age 

See Employer Bulletin: February 2021    

Corporate Interest Restriction Return Application Programming Interface (API)

See Corporate interest restriction

Trust Registration Service

  • Following a number of queries, HMRC would like to clarify when the process for claiming a trust needs to be completed. 
  • An agent registered the trust and the trustees want the agent to view or make changes to its details.
    • The trustee must complete the ‘claim a trust’ process. This allows the trustee to authorise the agent through the online process.
    • Once the trustee has given online authorisation, the agent does not need to answer any questions about the trust or the people associated with it, as that has been completed by the trustee(s) during the authorisation process.
    • The agent can view and make changes to the trust information with that authority in place. 
  • A trustee(s) registered the trust (including corporate trustees).
    • If they want an agent to view or change the trust details, they will have to give authorisation. Trustees do not need to go through the ‘claim a trust’ process but do need to answer some questions about the trust and the people associated with it. This is for security purposes and forms part of the agent authorisation process. 
  • Trustees (including corporate trustees) will also need to answer some questions about the trust and the people associated with it for security purposes to view or make changes to the trust details.
  • If clients are experiencing difficulties or struggling to carry out the necessary steps in the ‘claim a trust’ process, please direct them to HMRC's guidance.  

See UK Trusts

Trust Registration Service (TRS) extension  

See UK Trusts  

HMRC Agent Services

New HMRC Charter

  • The new HMRC Charter can ve viewed here.

 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 toolkits.

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 & Engagement

Cyber Aware campaign for sole traders and micro-businesses

  • Cyber risk affects everyone who uses online devices and COVID-19 has seen more people spending more time online, and more businesses transition from the physical to the digital world.
  • The National Cyber Security Centre (NCSC) launched a Cyber Aware campaign on 4 December 2020.
    • This is a national advertising campaign that aims to help individuals and businesses protect themselves online.
  • The second phase of the campaign is due to launch at the end of February 2021.
    • This will target sole traders and micro-businesses in the UK (those with between one and nine employees).
  • The campaign is being delivered by the NCSC in partnership with the Cabinet Office, Department for Culture Media and Sport and the Home Office.
  • At the heart of the Cyber Aware campaign are six practical steps developed by NCSC experts, which will help to protect you from the majority of common cyber-attacks. These are: 
    • Use a strong and separate password for your email and your business-critical accounts.
    • Create strong passwords using three random words.
    • Save your passwords in your browser.
    • Turn on two-factor authentication.
    • Update your devices, including business devices.
    • Back up your data, including important business data and key contacts.
  • For more information visit cyberaware.gov.uk.

Agent Forum update  

  • The Agent Forum is a platform where agents raise potential widespread systemic operational issues which may have significant impacts to the agent community. 
  • Agents can highlight issues they are experiencing and share this with members on the forum.
  • The forum can also be used to communicate important changes within HMRC legislation or processes and is a quick and effective way to get messages out. 
  • HMRC are currently planning to improve the design of the landing and forum pages to make it easier to navigate and place important articles in a prominent place.  
  • Recent issues trending on the forum include:
    • SA-9232 - Delays in processing SA1s and UTRs.
  • Recent successful results on the Agent Forum include:
    • SA2021-9237 Self Assessment late filing penalty update
    • TRS-8250 - Updating the register - 15 minute time out and one person limit  
  • Professional Bodies identified the following issues for prioritisation: 
    • SA-5803 - HMRC response - API’s 
    • TRS-7689 - TRS Update service loses the information
    • SA2020-9041 - HMRC Response - Electronic Signatures for SA700’s 

Issues Overview Group (IOG) Update  

  • The purpose of the Issues Overview Group (IOG) forum is to identify and progress resolution of issues impacting agents.
  • Professional bodies raise and highlight priority issues on the Agent Forum which they have identified as having a significant impact on their members and the wider agent community.
  • Professional bodies have raised the need for HMRC to link systems to improve automation between National Payment System (NPS) and Self Assessment (SA) and for progress on Self Assessment (SA) Application Programme Interfaces (APIs).
  • HMRC have advised that the current spending review and funding will impact plans and development of IT systems but will ensure professional bodies are involved in prioritisation and planning. 
  • The IOG highlighted Trusts Registration Service (TRS), save and retrieve functionality and have met with HMRC Subject Matter Experts in seeking closer engagement and understanding in development of options important to agents. 
  • IOG members raised concerns about the accuracy of debt management data information shared with debt collection agencies.
    • HMRC are currently considering the feedback received. 
  • The next IOG forum meeting is scheduled for 2 March 2021. 
  • The latest updates on these topics are published on the Agent Forum together with information on Coronavirus Support Schemes.
  • 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.     


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