HMRC have issued their Agent Update for October 2021. We have summarised the key content for you with links to our detailed guidance on the topics covered.
Extended appeal window due to COVID-19
- Due to COVID-19, HMRC introduced a three-month extended window to appeal against tax decisions and penalties from February 2020, if the delay was due to COVID-19.
- This ended on 30 September 2021.
- For tax decisions and penalties dated up to and including 30 September 2021, the extended window to appeal remains available. In all other cases, the normal deadlines for appealing decisions apply.
- COVID-19 may still be a reasonable excuse for taxpayers not meeting their tax obligations in some cases.
Bulk appeals against Income Tax Self Assessment late filing penalties due to COVID-19
- A bulk appeals process was introduced for agents in respect of 2019-20 tax returns.
- This process ended on 30 September 2021.
Declaring COVID-19 support scheme overpayments on company tax returns
- HMRC are contacting taxpayers about their Company Tax Returns (CT600) to remind them they need to declare overpayments from:
- The Coronavirus Job Retention Scheme (CJRS).
- The Eat Out to Help Out (EOHO) scheme.
- Detailed guidance is available on correctly reporting overpayments.
Coronavirus Job Retention Scheme
- Final Coronavirus Job Retention Scheme (CJRS) claims for September must be submitted by Thursday 14 October 2021.
- Claims can be amended within 28 calendar days after the month the claim relates to.
- September 2021 claims must be amended by Thursday 28 October 2021.
- Where employers have claimed too much, they must notify and repay HMRC within 90 days.
UK Transition: UK-Swiss convention on social security coordination
- The UK and Switzerland signed a convention on social security coordination on 9 September 2021.
- This ensures that cross-border workers and their employers, are only liable to pay social security contributions in one state at a time.
- The start date has not been confirmed: individuals going to work in Switzerland should follow current guidance.
Employment status guidance for associate dentists to be withdrawn with effect from 6 April 2023
- HMRC will update their Employment Status Manual from 6 April 2023 to remove specific occupational guidance for associate dentists.
- For contracts which either run from or over 6 April 2023, associate dentists and their engagers will not be able to rely on ESM4030 to determine the employment status for tax of that contract.
- Associate dentists and those who engage with associate dentists will need to assess employment status in the same way as other taxpayers in the dental sector and elsewhere.
- Taxpayers can continue to use ESM4030 until it is withdrawn on 6 April 2023.
- HMRC will not be using the withdrawal of the guidance as a reason to open retrospective enquiries into periods prior to 6 April 2023.
- HMRC have launched a Tax avoidance: don’t get caught out campaign to help agency workers and contractors understand the risks of using tax avoidance schemes and how they could be sold to them.
Tax changes for health and social care
- Class 1, (employee and employer), Class 1A, Class 1B and Class 4 (self-employed) National Insurance Contributions (NICs) will increase by 1.25% from April 2022.
- From April 2023, a ringfenced Health and Social Care Levy of 1.25% will be introduced.
- This will apply to those who pay Class 1 (employee and employer), Class 1A, Class 1B and Class 4 NICs along with those over state pension age who are in work earning over £9,568.
- When this new levy comes into effect, National Insurance rates will revert back to current levels.
- The rate of Income Tax on dividends will also increase by 1.25% from April 2022.
Non-resident Capital Gains (NRCG) transparency election and partnership returns
- Collective Investment Vehicles that used HMRC's temporary process to allow the submission of 2019-20 partnership tax returns without a unique taxpayer reference for all partners will be contacted by HMRC for an update on the temporary process and to obtain further information.
Completing 2021-22 Self Assessment tax returns for student or postgraduate loan borrowers
- The Scottish Student Loan (Plan 4) was launched in April 2021 and applies to new and existing borrowers paying back loans from the Student Award Agency for Scotland.
- Borrowers due to make repayments should include the cumulative amount of deductions from all employments in their 2021-22 Self Assessment tax return.
- The system will then calculate the deductions using the correct plan or loan type threshold and rate supplied by the Student Loans Company.
- HMRC are working with software developers to finalise the technical specifications. Further updates will follow.
Plastic Packaging Tax: update to guidance
- HMRC's Plastic Packaging Tax guidance has been updated to give more information about:
- The definition of packaging, including examples of items in the scope of the tax.
- When packaging becomes taxable.
Extended loss carryback: claims information for companies
- An extended loss carryback measure was announced at Spring Budget 2021, enabling companies to make claims to carry back losses for a further two years.
- This temporary extension applies for losses arising in accounting periods ending between 1 April 2020 and 31 March 2022.
Off-Payroll Working rules (IR35)
The Off-Payroll Working rules changed in April 2021. HMRC are providing support in applying the new rules, including webinars.
VAT reverse charge on construction and building services
- The VAT reverse charge on construction and building services came in on 1 March 2021.
Trust Registration Service and viewing customer data
- Agents within the same business who share their user ID and password may experience issues when registering a trust.
- Where two different users access the Trust Registration Service (TRS) at the same time, using the same user ID and password, they may see a different customer account to the one they have authorised access to and not the one they want to register.
- HMRC confirm the fault is not with the TRS. The issue arises because of shared user IDs and passwords within a business.
- User IDs and passwords must not be shared.
- Functionality is available within the Government Gateway to allow additional user ID and passwords to be created for each member of staff.
Update on Making Tax Digital (MTD) for Income Tax Self Assessment (ITSA)
- MTD for ITSA will now be introduced a year later, in the tax year beginning April 2024.
- General partnerships will not be required to join MTD for ITSA until the tax year beginning in April 2025.
- It will be confirmed at a later date when all other types of partnerships will be required to join.
- The new penalty system for the late filing and late payment of tax for ITSA will now come into effect for those mandated for MTD for ITSA in the tax year beginning from April 2024.
- For all other ITSA customers, this penalty regime will come into effect in the tax year beginning April 2025.
Agent talking points and support for taxpayers
- Agents are reminded of HMRC's agent talking points webinars, for which most agents receive regular Monday morning updates.
- HMRC also provide help and support for taxpayers.
Tax Agent Toolkits
- HMRC have 19 agent toolkits available to download and use here.
- Agents are reminded of HMRC's Alternative Dispute Resolution (ADR) service which applies to disputes with HMRC over appealable tax decisions.
- An impartial HMRC mediator works with all parties to prevent unnecessary litigation.
- HMRC hope to resolve tax disputes within 120 days using a collaborative and flexible approach, which does not affect the client’s right to appeal or review.
Post Office card accounts
- HMRC will stop paying benefits into Post Office card accounts from 1 December 2021.
- Any tax credits and Child Benefit customers who receive their payments through Post Office card accounts will need to contact HMRC with their new bank account details:
- 0345 300 3900 for tax credits
- 0300 200 3100 for Child Benefit
Agent view of employer liabilities and payments for PAYE
- HMRC are trialling a pre-release (beta) version of their PAYE for agents online service. This allows agents to see employer liabilities and payments.
- This is being extended to more users on a rolling basis. Those eligible will be prompted to join the trial when logging in.
- Agents with up to 2,000 clients may be eligible to use the new service early in October 2021.
- By mid-October, agents may be eligible if they have fewer than 5,000 clients.
- When first using the service, it will be necessary to confirm you act for a client before you can see the liabilities and payments data. This confirmation requirement will be removed in late October.
Self Assessment registrations and client addresses
- HMRC are aware of an issue resulting in incorrect data on taxpayer records which occurs when agents register clients for Self Assessment.
- Agent business addresses are being entered in client residential address fields when completing the registration for Self Assessment. This incorrect address can then be used across other HMRC systems.
- This may result in being unable to pass verification checks, correspondence being sent to the wrong address and/or UK GDPR being breached.
- When prompted to enter a client’s residential address, do not enter an agent business address.
- HMRC will correct all affected taxpayer records.
- HMRC have a regular tax agent blog.
- Employers can register to receive email alerts.
- You can find out when you can expect to get a reply from HMRC to a query or request you have made.
- The domicile chapter within the Residence, Domicile and Remittance Basis manual now includes the changes applicable from the introduction of deemed domicile.
- The Agent Forum is a platform where agents raise potential widespread issues and ask questions about HMRC’s systems and processes.
- Agents can register for the Agent Forum here.