HMRC have issued their Agent Update for January 2022. We have summarised the key content for you with links to our detailed guidance on the topics covered.
Reminder to declare 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 when calculating taxable profits.
- Companies that received a CJRS grant and/or an EOHO payment will also need to report this separately in the boxes on the CT600.
- These boxes were added on 6 April 2021. If using third-party software, the latest version will be needed.
- If the CT600 was filed before 6 April 2021, or later but the relevant boxes were not populated, the return must be amended unless all grants were included as taxable income and there are no CJRS or EOHO overpayments to declare.
Self Assessment penalty waiver
- On 6 January HMRC announced that they will not charge:
- Late filing penalties for those who file online by 28 February 2022.
- Late payment penalties for those who pay the tax due in full or set up a payment plan by 1 April 2022.
- The Time to Pay option is still available to assist taxpayers.
- After filing a 2020-21 tax return, taxpayers can set up an online payment plan to spread Self Assessment bills of up to £30,000 over up to 12 monthly instalments.
- Late filing penalties will not be charged for:
- SA700s and SA970s received in February 2022. These returns can only be filed on paper.
- SA800s and SA900s if taxpayers file online by the end of February 2022 (the deadline for filing on paper was 31 October 2021). Taxpayers who file late on paper will be charged a late filing penalty in the normal way (which can be appealed if there is a reasonable excuse).
- There are wider implications of delaying submission and/or payment. These include:
- Interest being charged on payment later than 31 January 2022.
- An extended enquiry window.
- Some Class 2 National Insurance taxpayers need to contact HMRC where they:
- Need to claim certain contributory benefits soon after 31 January 2022.
- Pay contributions voluntarily and will make payment after 31 January 2022 or will not file their return until after 31 January 2022.
UK transition: full customs controls are now in place
- Full customs declarations are now needed on all imports from the EU.
- Customs arrangements in place throughout 2021 for goods moving from Ireland to Great Britain (England, Scotland and Wales) will continue to apply while discussions on the Northern Ireland Protocol (NIP) are continuing.
- Further information explaining the changes to importing and exporting goods between Great Britain and the EU is Available on GOV.UK.
Derivatives used to hedge foreign exchange risks in share transactions
- HMRC has launched a technical consultation to extend the scope of existing regulations, which are designed to align the tax treatment of hedging instruments and hedged items.
- Under current rules, such derivatives are taken into account as income items during the lifetime of the contract.
- This gives rise to a mismatch with the tax treatment of the shares, which will not be taxed or relieved until the shares are disposed of. Often the gain or loss on disposal is exempt.
- Responses on the draft regulations can be submitted to HMRC by 24 January 2022
- The Draft regulations and further information can be found at GOV.UK.
Residential Property Developer Tax
- The Residential Property Developer Tax (RPDT) comes into effect from 1 April 2022.
- RPDT will be charged at 4% on the profits residential property developers make on UK residential property development.
- The tax is only likely to affect companies or groups of companies undertaking residential property development with annual profits exceeding £25 million.
- Guidance will be included within a new RPDT manual from 1 April 2022.
Tax gap and compliance yield
- The tax gap is the difference between the amount of tax that should in theory be paid to HMRC and what is actually paid.
- Compliance yield is the estimate of additional revenues that HMRC considers it has generated and the revenue losses it has prevented.
- HMRC have published an updated technical note explaining The tax gap and compliance yield: what they are and how they relate.
Changes to claiming subcontractor Construction Industry Scheme (CIS) deductions
- Limited companies operating within the construction industry can claim CIS deductions as a subcontractor on their Employer Payment Summary (EPS).
- From April 2022, HMRC is introducing an additional field on the EPS. Limited companies must enter their Corporation Tax Unique Taxpayer Reference (CT UTR) or COTAX reference number in that field to claim credit for these deductions.
- Any EPS submissions which include a claim for CIS deductions, but do not include the CT UTR will be rejected.
- If a taxpayer can not satisfy the new CT UTR validation but needs to report anything else, they must remove the claim for CIS deductions and resubmit the EPS.
- If you have lost or cannot find your CT UTR, you can Request your Corporation Tax UTR online. HMRC will send it to the business address registered with Companies House.
Preparation for notification on uncertain tax treatments by large businesses
- Agent Update 91 explained that legislation being introduced by Finance Bill 2022 includes a new requirement for large businesses to notify HMRC of uncertain tax treatments from 1 April 2022.
- A consultation has been published which invites responses in relation to newly drafted HMRC guidance.
- Webinars to explain the changes and processes in more detail will be available for taxpayers and agents. Dates and times of planned webinars will be published on GOV.UK. Recordings will also be available.
Student and postgraduate loans
Updated thresholds and rates from April 2022
- From 6 April 2022, repayment thresholds and interest rates for student loans will be as follows:
- Plan 1: £20,195 (up from £19,895)
- Plan 4: £25,375 (up from £25,000)
- Deductions for plan 1 and plan 4 remain at 9% for any earnings above the respective thresholds.
- The repayment thresholds and interest rates for plan 2 and postgraduate loans have not yet been announced.
Student and postgraduate loan start notice (SL1/PGL1)
- Agents should check their PAYE account for student loans (SL) or postgraduate loans (PGL) for start and stop notices from HMRC.
- If you receive an SL1 and or PGL1 start notice from HMRC you should:
- Use the correct loan and or plan type to calculate record the deductions on the employee’s full payment submission.
- Check the start date shown on the notice and take deductions from the next available payday.
- If an employee’s earnings are below the SL and or PGL thresholds, update the employee’s payroll record to show that they have an SL and or PGL loan and then file the start notice.
- Deductions should continue until HMRC tells you to stop.
Student loans: Off-Payroll Working rules
- Where employment is subject to Off-Payroll Working rules, Student Loan deductions should not be made. The worker will account for student loan obligations in their own tax return.
Making Tax Digital
Changes to VAT Registration Service (VRS): agents registering their clients for VAT
- Agent Update 90 gave details of changes to the VAT Registration Service.
- Plans to extend this functionality to the agent community are still on track for release early this year.
- Agents need to finalise any registrations using the current process before the switchover.
- HMRC will communicate a date for the switchover in due course.
Updates to Employer Helpline (EHL) processes
- When calling HMRC's Employer Helpline, customers must be able to confirm their Pay As You Earn (PAYE) or Accounts Office reference.
- Where these details are not given, HMRC will only provide general advice.
- If a taxpayer asks HMRC to tell them their references, HMRC will post these to the address held on their records.
- HMRC are unable to provide the PAYE or Accounts Office reference over the phone following a request for a PAYE registration. Details of the references will be sent by post within seven days.
Decommissioning of HMRC’s Online End of Year Expenses and Benefits service
- From 6 April 2022, the interactive PDF known as HMRC’s Online End of Year Expenses and Benefits service used to submit P11D and P11D(b) won’t be available.
- Instead, you should use HMRC's PAYE Online service.
- This allows:
- Submissions for up to 500 employees.
- Online submissions of P46(car).
- The PAYE Online Service can be accessed using the government gateway details you used to access the previous service.
Tax Agent Toolkits
- HMRC have a number of agent toolkits available for you to download and use here.
- 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.
- 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.
- 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.
If you have already registered and forgotten your username, a reminder can be obtained by emailing