HMRC have issued their Agent Update for November 2021. We have summarised the key content for you with links to our detailed guidance on the topics covered.
COVID-19
The update includes a summary of all international related COVID-19 Guidance published by HMRC.
Legislation was introduced in Finance Act 2020 applying from 1 March 2020 to 1 June 2020 to:
- Allow individuals present in the UK for work related to COVID-19, such as a medical/healthcare professional or in relation to the development or production of COVID-19 medical products, to disregard parts of the Statutory Residence Test (SRT).
Important things to remember:
- The 60-day upper limit to exclude days spent in the UK due to exceptional circumstances has not been increased.
- Where an individual works in the UK for more than three hours, it will be counted as a full UK workday.
- An individual can claim exceptional circumstances for days they were unable to leave the UK due to COVID-19 travel restrictions up to the maximum of 60 days when determining their UK residence position.
- The 183-day test when considering the income from employment article of a Double Taxation Agreement (DTA) is a separate test to the SRT. Days discounted for exceptional circumstances under the SRT due to COVID-19 travel restrictions should be counted as UK days for the 183-day test under the relevant DTA.
- Days for ‘sickness’ which prevent the individual from leaving the UK including self-isolation or whilst in quarantine, may be disregarded from the day count.
See SRT: Statutory Residence Test and COVID-19: Statutory Residence Test
Declaring Coronavirus grants on company tax returns
Grants from the Coronavirus Job Retention Scheme (CJRS), Eat Out to Help Out (EOHO), or any payments made by local authorities and devolved administrations must be reported as income when companies are calculating their taxable profits.
- If you are completing a company tax return on your client’s behalf, check the Coronavirus grants they have received. See COVID-19: Coronavirus Job Retention Scheme (CJRS) from 1 November 2020 to 30 September 2021 for which tax return boxes to use.
- Clients will need to complete box 474 if they received any Eat Out to Help Out (EOHO) overpayments.
- If you/your client submitted a CT600 return without boxes 471-474 and 526, or left them incomplete, and they have a CJRS or EOHO overpayment to report, they should resubmit the return.
- If all overpayments are already repaid/have been assessed before the tax return is filed they do not have to correct the return.
UK Transition
UK-Swiss Convention on Social Security Coordination
The UK and Switzerland: Convention on Social Security Coordination came into force, provisionally, on 1 November 2021.
- It ensures that all employed persons, their employers and self-employed persons are liable to pay social security contributions into only one country’s scheme at a time.
Self Assessment: COVID-19 support grants
Self Assessment customers must declare grants or payments from COVID-19 support schemes up to 5 April 2021 as these are taxable, including:
- Self-Employment Income Support Scheme (SEISS).
- Coronavirus Job Retention Scheme (CJRS).
- Other COVID-19 grants/support payments e.g self-isolation payments, local authority grants and Eat Out to Help Out.
See COVID-19: Taxation of Coronavirus support payments
Tax
Freeports tax sites announced
Autumn Budget 2021 announced that tax sites were being designated at the first group of Freeports. Freeports at Humber, Teesside and Thames have eight tax sites designated which go live on 19 November 2021.
From this date, eligible businesses in those tax sites will be able to benefit from tax reliefs including:
- An enhanced 10% rate of Structures and Buildings Allowance.
- 100% Capital allowances.
- Relief from Stamp Duty Land Tax.
- Rates relief..
- From April 2022 employer National Insurance Contributions relief.
Working Tax Credit: reporting changes to working hours
One of the measures introduced during the pandemic was that Working Tax Credit (WTC) customers did not need to tell HMRC about any temporary reductions to their working hours due to COVID-19. This ended on 30 September 2021.
- Clients claiming WTC have until 25 November 2021 to return to their normal working hours before the pandemic. If they are not then back to working enough hours to be entitled to WTC they have a month to tell HMRC.
- They can check their WTC claim details here and how many hours they need to work here.
Sending clients' 2022-23 Annual Tax on Enveloped Dwellings (ATED) returns
If you have not registered with HMRC to use the online service, you have until 1 April 2022 to register so that you can file on time by 30 April 2022.
- The ATED period is from 1 April 2022 to 31 March 2023. Returns for that period must be filed by 30 April 2022 but not before 1 April 2022 where your client owns a property on 1 April 2022.
- If your client has disposed of a property, changed relief code or had a change in circumstances send an amended return or contact HMRC to notify the change.
See Annual Tax on Enveloped Dwellings (ATED)
Capital Gains Tax (CGT) Payment for Property Disposals (PPD)
Changes to the Capital Gains Tax (CGT) Payment for Property Disposals (PPD) service rules were announced at Autumn Budget 2021.
1. Time limits
Taxpayers now have 60 days instead of 30 days to report and pay any tax due on residential UK land and property sales if the completion date for the disposal was on or after 27 October 2021.
- If the completion date was before 27 October 2021 the 30-day deadline still applies.
The HMRC IT system is currently being updated with the new time limit. Until this is complete, there is a message on the system, so customers are aware of the change when using the service.
2. Mixed-use property
The rules are clarified for UK residents so that, where a gain arises in relation to a mixed-use property, only the portion of the gain that is the residential property gain has to be reported and paid online under PPD.
- A mixed-use property is one that has residential and non-residential elements.
See CGT: Payment of tax and CGT: Reporting, how to report CGT?
Making Tax Digital (MTD)
Changes to the VAT Registration Service: agents registering clients for VAT
HMRC are moving to introduce the VAT Registration Service (VRS) to Agents. Current plans are for agents to start using the service during winter 2021-22.
- Registrations in the current process must be finalised before the switch over. HMRC will give agents time to finalise existing registrations and will make them aware of the date for migrating to the new service.
See Making Tax Digital: VAT (subscriber guide)
Agent authorisation by the client and MTD Income Tax Self Assessment (ITSA) sign up: four-month expiry period
Due to the deferral of mandatory MTD for ITSA, HMRC have temporarily suspended the four-month expiry period between a client accepting the authorisation from the agent and the agent signing them up to MTD.
- Once the authorisation has been accepted, it will not be cancelled after four months if you or the client does not sign up to MTD.
- The four-month period will be reinstated when ITSA is mandated in April 2024.
See MTD: Toolkit for accountants
Changes to the Agent Services Account (ASA) content: removing references to MTD
- HMRC will be removing Making Tax Digital references from the VAT service’s content in the ASA from 2022 as MTD for VAT is expected to become business as usual for both agents and their customers.
See Agent Service Account & VAT: Top Tips
Government Gateway: asking customers to confirm their email addresses
HMRC are asking some customers to take steps when they next log in to the Government Gateway to help keep their account secure. This involves:
- Confirming their email address belongs to them.
- Setting up a recovery word in case they forget their password.
HMRC Research and Development (R&D) SME Tax Credit claims processing (December 2021 to January 2022)
Between December 2021 and January 2022, HMRC expect to be dealing with higher volumes of R&D claims and are warning that they may take longer than the standard 28 days to process claims during this period.
The 28-day processing aim does not apply to claims:
- Not filed by the electronic portal.
- Where BACS details have been omitted or incorrectly supplied.
HMRC are asking agents not to contact them to chase claims advising them to check the company’s online account for an update on the status of any R&D claim.
New Service for reporting dormancy for Corporation Tax
- HMRC are launching a new online service allowing companies and their agents to inform them if they’ve never traded, are currently dormant or have now ceased to trade.
See Dormant company? Inform HMRC online
Upholding the standard for tax agents
- HMRC’s Agent standard sets out what they expect from anyone who provides tax advice and how they monitor compliance and deal with breaches.
- HMRC are currently reviewing their powers for upholding the standard and will publish the outcome of this review in due course.
Licence application tax check: information and communications resources
- Finance Act 2021 introduced new tax checks for certain licensed businesses from 4 April 2022.
Who will need to complete a tax check?
The tax check will be a new addition to the checks that licensing bodies already have in place. It will need to be completed when people are renewing their licences in England and Wales to:
- Drive taxis or private hire vehicles.
- Hire vehicle businesses.
- Deal in scrap metal.
Getting a new licence
- If people are applying for a licence for the first time, they will not need to complete the tax check.
Renewing a licence
- From 4 April 2022, if people renew their licence or they apply for a subsequent licence under a different licensing body, they will have to do an online tax check.
What is the role for agents?
The digital service is there to assist applicants in completing the tax check.
- Once they have completed the tax check, they will receive a tax check code, which they will need to give to their licensing authority to allow them to obtain confirmation from HMRC.
- Because of the simple nature of the check, the design of the service does not include an option for agents to complete the check on a client’s behalf.
- Agents may need to be involved in wider processes linked to the tax check e.g. supporting customers who need to register for the appropriate tax in order to complete the tax check.
See Conditionality: taxi, private hire vehicles and scrap licenses
Tax Agent Toolkits
- HMRC have 19 agent toolkits available for you to download and use here.
Tax Disputes
- If your client is in dispute with HMRC over an appealable tax decision, you may be interested in the Alternative Dispute Resolution (ADR) service. For more information visit the ADR webpage.
Contact
- 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.
Agent Forum
- 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.
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