HMRC have issued their Agent Update for December 2021. We have summarised the key content for you with links to our detailed guidance on the topics covered.
Income Record Viewer (IRV) service
- HMRC have been developing a new IRV service available to agents to provide details of their clients' pay, tax, employment history and tax code via the firm's agent services account.
- This was announced in the June 2021 Agent Update.
- Information will be available for the current and four previous tax years.
- A one-off digital handshake will be required to authorise the agent to use the service for a particular client.
- The IRV service is still in the private beta trial stage. HMRC are seeking volunteers to use the IRV service and provide feedback.
Reporting Self-Employment Income Support Scheme (SEISS) grants on your clients’ tax returns
- Grants received on or before 5 April 2021 must be included in the 2020-21 tax return regardless of the accounting period.
- Where SEISS grants have been paid to partnerships, treated as partnership income, included in the accounts and distributed under the partnership agreement, this changes how they are reported.
- Such grants should be included in turnover on the partnership tax return and not on the partners' personal tax returns.
- HMRC have noted that SEISS grants reported on some returns are not being reported as expected or do not match amounts paid. Agents should ensure that clients have told them about all SEISS grants received.
- HMRC must be informed where a taxpayer has:
- Received the fourth or fifth SEISS grant.
- Amended their tax return on or after 3 March 2021.
And as a result, is no longer eligible for the SEISS grant(s), or received more than they were entitled to. Differences of £100 or less do not need to be reported.
See COVID-19: Taxation of Coronavirus support payments and COVID-19: Self-Employment Income Support Scheme (SEISS) (now ended)
Late claims and reviews of SEISS applications
- HMRC will not usually accept applications after the claims period has closed but will consider exceptional circumstances (e.g. where HMRC have made an error impacting a client’s ability to claim).
- Where it is thought HMRC have made an error, it should be checked against the claim rules.
- Clients can contact HMRC for a review using either the web chat service or by calling the helpline on 0800 024 1222.
Declaring Coronavirus grants on company tax returns
- Coronavirus Job Retention Scheme (CJRS) grants, Eat Out to Help Out (EOHO) payments and any support payments made by local authorities and devolved administration must be reported as income.
- CJRS grants and EOHO payments must also be reported separately on the CT600 in the boxes which were added on 6 April 2021.
- Returns should be amended where those boxes have not been completed or the CT600 was filed before they were added.
See COVID-19: Taxation of Coronavirus support payments
Naming tax avoidance promoters
- HMRC plans to publish details of those involved in the supply of mass-marketed tax avoidance schemes and details of the schemes they are selling.
- Finance Act 2021 made changes to the Promoters of Tax Avoidance Schemes (POTAS), Disclosure of Tax Avoidance Schemes (DOTAS) and the Enablers Penalty regimes which allow HMRC to take action more quickly against promoters.
See Promoters of Tax Avoidance Schemes (POTAS) and Finance Act 2021: tax update & rolling planner 2021-22
Tax avoidance, don’t get caught out (update)
- HMRC’s refreshed ‘Tax avoidance – don’t get caught out’ campaign helps contractors employed through an umbrella company or agency, or are self-employed, to understand their pay arrangements,
- HMRC are asking employers to share the campaign page with contractors to help them recognise and understand the financial risks of tax avoidance.
- Contractors can check if they are caught up in tax avoidance by understanding how they’re being paid and making sure they are paying the right amount of tax and NICs.
- HMRC’s new payslip guide explains what their payslip should look like. The new interactive risk checker helps contractors see if their current contract could involve tax avoidance.
See Starting Work 5. Agency or umbrella tax-avoidance risk
Health and Social Care: National Insurance contribution increase
- National Insurance (NI) will increase by 1.25% from April 2022 for working-age employees, self-employed people and employers to fund health and social care.
- From April 2023 the Health and Social Care Levy will be formally separated from NI contributions and also apply to the earnings of individuals working above State Pension age. NI rates will return to 2021-22 levels.
- To ensure taxpayers understand what their increased contribution is for, HMRC are asking employers to include a message on all payslips between 6 April 2022 and 5 April 2023 which should read ‘1.25% uplift in National Insurance funds NHS, health & social care’.
- HMRC have asked payroll software providers to include this messaging in their software. Some employers will need to make the change directly. HMRC will email employers in early 2022 repeating the message.
See Build Back Better: the government's tax plans for Health & Social Care
Plastic Packaging Tax (PPT)
- PPT applies in the UK from April 2022.
- HMRC have been updating their guidance and recorded webinars are available to view.
Tax Administration and Maintenance update
- On 30 November 2021 the government announced various measures, consultations and consultation outcomes as part of a Tax Administration and Maintenance update.
- These included:
- Responses on the future structure of the tax system
- Hidden economy conditionality in Northern Ireland and Scotland: Summary of responses
- Consultation: Stamp Duty Land Tax, Mixed-Property Purchases and Multiple Dwellings Relief
- Making Tax Digital for Corporation Tax: Summary of responses
- Call for Evidence: Umbrella Company Market
- Call for Evidence: Self Assessment registration
Notification of uncertain tax treatments by large businesses
- Legislation for the ‘Notification of uncertain tax treatment by large businesses’ regime was introduced into the 2022 Finance Bill at Autumn Budget 2021.
- The measure affects businesses with either or both:
- A UK turnover above £200 million.
- A UK balance sheet total above £2 billion.
- HMRC is working on plans to implement the measure and will be seeking input from consultees, including taxpayers, their representatives and trade bodies, to ensure it operates as intended.
- More details of HMRC’s support for taxpayers will be included in the January 2022 Agent Update.
See Finance Bill 2022: tax update and rolling planner 2022-23
Intangible Fixed Assets: common errors
- Since its introduction in April 2002, the intangibles regime has seen a number of complex changes. HMRC have now published five common mistakes:
- Asset identification: a detailed analysis to support asset identification is important. This could include legal advice and referring to the statute.
- No business acquisition: purchased goodwill can only be recognised in accordance with accounting principles, for instance, where a business has been acquired. Goodwill should not be recognised where the company has not acquired a business.
- Date of acquisition: to apply the correct tax treatment, the date of acquisition of each asset must be identified. There are a number of key dates where the rules changed resulting in different treatments applying.
- Valuation: where acquisitions are made from related parties or apportionments are made, companies are recommended to obtain at least one professional independent valuation to ensure assets are valued on the correct basis.
- Documentary evidence: HMRC expect related parties to document transactions and agreements as if they were with an unrelated third party. Records should be kept for six years from the end of the financial year to which they relate.
See Goodwill and the intangibles regime
Inheritance Tax (IHT) reporting requirements
- IHT reporting requirements are due to be eased meaning that most non-taxpaying estates will no longer have to complete IHT forms for deaths where probate or confirmation is required.
- The regulations come into force on 1 January 2022 and have effect for deaths occurring on and after that date.
- The regulations also clarify the requirement for estates to submit an IHT account where the deceased was never domiciled in the UK but owned indirect interests in UK residential property.
- For deaths after 31 December 2021, personal representatives will be required to:
- Declare that the estate is an excepted estate.
- Declare whether they are claiming the transfer of unused nil-rate band.
- Provide three estate values for IHT purposes on the probate and, or confirmation application.
- These values can be obtained by using the Inheritance Tax Checker tool on GOV.UK.
See IHT reporting requirements to be eased
Trust Registration Service (TRS): viewing customer data
- In the October 2021 Agent Update an issue was highlighted where if two users accessed the TRS at the same time using the same user ID and password, they may see a different authorised customer account to the one they intended to access.
- HMRC will soon implement changes to resolve this issue.
- Agents are reminded to not share user IDs and passwords. Additional user IDs and passwords should be created for each member of staff, via the Government gateway.
See Trust Registration Service
Making Tax Digital (MTD)
MTD for VAT
- From 1 April 2022, all VAT registered businesses will have to follow Making VAT Digital (MVD) rules, regardless of turnover.
- HMRC will be writing to businesses under the VAT registration threshold between now and February 2022, encouraging them to prepare.
MTD for Income Tax
- MTD for Income Tax is now being introduced a year later, in the tax year beginning on 6 April 2024.
- In September, the MTD for Income Tax regulations were laid in Parliament.
See MTD: Toolkit for accountants
Changes to Direct Debit in VAT Agent Viewer
- HMRC made a small change to the Agent Viewer at the start of November as many agents were unsure if a Direct Debit had been set up, especially after the migration of some non-MTD customers from the VAT Mainframe to the new Enterprise Tax Management Platform.
- Two new tiles have been put into the viewer, which will show whether the client has a Direct Debit set up or not.
- One will say ‘Next payment due' and provide a date, for example, 7 January 2022 and confirm that a direct debit is set up. The other tile will say ‘Next payment due', give the date and state that no Direct Debit is set up.
Self Assessment repayments
- Some taxpayers may have experienced a delay in processing their Self Assessment repayment claim. This is due to HMRC undertaking an increased level of checks to prevent criminals from abusing their systems.
- HMRC have increased resources to minimise any delays incurred and have returned to expected levels of customer service.
- Agents are reminded of the confidential Tax Evasion Hotline: 0800 788 887. This is open from 8 am to 6 pm (weekdays) and takes information relating to all direct tax offences.
- Follow HMRC's guidance to report HMRC-related fraud confidentially.
National Insurance holiday for employers of veterans
- From 6 April 2021, employers hiring former members of the UK regular armed forces will be eligible for a zero rate of secondary NICs for up to 12 months during their first year of civilian employment.
- Employers should pay NICs as normal until April 2022 when they will be able to claim back any NICs qualifying for relief through a revised Full Payment Submission (FPS) using a new National Insurance category letter, ‘V’.
- Employers whose software does not support this can write to HMRC to request the relief.
- From 2022-23 onwards, employers will be able to apply the relief through Real-Time Information (RTI) as normal using National Insurance category letter ‘V’.
- Employers must keep records showing that they have hired a qualifying veteran.
See Employer NICs relief for veterans
Research on understanding the characteristics of unaffiliated Tax Agents
- HMRC have published research on Understanding the characteristics of unaffiliated tax agents on GOV.UK.
See Unaffiliated tax agents: what type are you?
Raising standards in the Tax Advice Market
- HMRC have published the Summary of responses and next steps to their consultation on Professional Indemnity Insurance (PII) and defining tax advice.
See Tax Agents: Raising standards in the tax market
The Pensions Regulator (TPR) automatic enrolment webinar
- On 3 February 2022 at 2:30 pm, TPR is running an automatic enrolment webinar for advisers. It is free and will cover duties for new employers, ongoing duties, and re-enrolment and redeclaration.
- Sign up here.
Feedback on HMRC manuals
- HMRC is inviting feedback on their manuals via three routes:
- ‘Report a problem with this page’ to provide anonymous feedback comments.
- ‘Is this page useful? Yes or No’ to anonymously rate the page.
- ‘Contact’ link to use the gov.uk form to provide feedback and get a reply.
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.
- You can make a Complaint to HMRC on behalf of a client.
- 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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