Agent update: March 2022

HMRC have issued their Agent Update for March 2022. We have summarised the key content for you with links to our detailed guidance on the topics covered. 

Technical updates and reminders

COVID-19

Final claims for the Statutory Sick Pay Rebate Scheme

The Statutory Sick Pay (SSP)  Rebate Scheme closes on 17 March 2022

• Clients cannot claim back SSP for employees’ Coronavirus-related absences or self-isolation occurring after that date.
• You have until 24 March 2022 to submit any new claims for your clients for absence periods up to 17 March 2022 or to amend claims you have already submitted.
• From 25 March, normal SSP rules apply and employers can revert to paying SSP from the fourth qualifying day their employee is off work for any sickness absence.

Employees’ home-office expenses end of temporary easement

On 5 April 2022, the temporary easement which allowed Income Tax and National Insurance Contribution (NIC) exemption for Coronavirus related home-office expenses (where costs are reimbursed by the employer) will end.

See Working from home (employer/ee)

Extended Loss Carry Back

• Under Extended Loss Carry Back rules companies can carry back losses of accounting periods ending between 1 April 2020 and 31 March 2022 by a further two years.
• Claims that exceed the £200,000 de minimis must be made in a Company Tax Return using Box 45 with details of the claims included in the computations accompanying the CT600.
• Amended returns do not have to be submitted for the periods the losses are carried back to.
• Claims below £200,000 can be made online.

See Losses: Trading and other losses

Overpaid Self-Employment Income Support Scheme (SEISS) grants

If a taxpayer amends their return for any of the years 2016-17 to 2019-20 after 3 March 2021 and they are no longer entitled to the amount they originally claimed for their fourth or fifth (or both) SEISS grant, they must repay the amount overpaid.

• HMRC are writing to customers whose entitlement to those grants has been reduced by more than £100, asking them to repay the overpaid amount.

Will I be able to act on behalf of my client?

Yes, if you have the relevant form 64-8 in place.

What if my client cannot pay straight away?

If your client is unable to pay in full, they may be able to set up a Time to Pay arrangement by contacting HMRC on 0300 322 9497.

Can my client appeal the Assessment?

HMRC calculate your client’s grant based on information from their amended tax return. If they disagree with the figures provided, they should appeal in writing within 30 days of the date of the Assessment.

Will my client receive penalties if they do not pay?

• A late payment penalty of 5% of the unpaid tax will be applied if the payment is over 30 days late with further penalties after 6 and 12 months if any amount remains outstanding.
• There will also be late payment interest charges on amounts unpaid after 31 January 2023.

How can my client pay?

They will need to use the payment reference starting with X on the letter they receive.

See COVID-19: Self-Employment Income Support Scheme (SEISS) (now ended)

Reminder to declare Coronavirus grants on company tax returns

When completing a Company Tax Return on your client’s behalf, check what coronavirus support payments they have received.  If they have claimed any of the following, you will need to include them as income when calculating their taxable profits.:

• Coronavirus Job Retention Scheme (CJRS) grants.
• Eat Out to Help Out (EOHO) payments.
• Coronavirus support payments made by local authorities, devolved administrations or other public authorities.

This is particularly important if another agent made a CJRS claim on their behalf, or they claimed a grant themselves.

If your client has already filed their Company Tax Return, they will only need to submit an amended return if:

• They did not declare all of their Coronavirus support payments as taxable income.
• They filed before 6 April 2021 (or after that date but did not fill in the relevant boxes) and did not include all their grants as taxable income/have a CJRS and/or EOHO overpayment.

See COVID-19: Taxation of Coronavirus support payments

Tax on UK income if you live abroad: easement ends on 5 April 2022

In 2020, HMRC announced that non-UK resident employees stuck in the UK because of Coronavirus travel restrictions would not be taxed on earnings for duties performed in the UK after their planned departure date provided they were taxed in their home state.

• This easement will end on 5 April 2022.
• If your client is non-UK resident, any days they spend working in the UK from 6 April 2022 will be treated as days on which they performed duties in the UK for the purposes of the statutory residence test.

See SRT: Statutory Residence Test

Cycle to work

In December 2020, the UK government announced a concession for employees who had joined an employer-provided cycling scheme and received a cycle or cycling safety equipment on or before 20 December 2020 such that eligible employees would not have to meet the ’qualifying journeys’ condition until after 5 April 2022.

• From 5 April 2022, all employees on an existing cycling scheme must meet the normal scheme conditions, including the ’qualifying journeys’ condition.

See Cycle to Work Scheme

Self Assessment tax returns for 2021-22 tax year

• Clients will receive Self Assessment paper returns for 2021-22 in the post by the end of April 2022. Self Assessment paper returns must be filed by 31 October 2022.
• Online Self Assessment returns need to be filed by 31 January 2023.
• Taxpayers who submit a paper return by 31 October 2022, or online return by 30 December 2022, can elect to pay any tax they owe through their PAYE tax code as long as:
  • They owe less than £3,000 on their tax bill.
  • They already pay sufficient tax through PAYE.

Notification of Uncertain Tax Treatments by large businesses

The notification of Uncertain Tax Treatment measure takes effect from 1 April 2022.

• It affects large businesses and is designed to reduce the legal interpretation portion of the tax gap, by helping HMRC identify more legal interpretation issues at an earlier stage.

See Finance Act 2022: tax update and rolling planner 2022-23

VAT reverse charge on construction and building services

Another reminder from HMRC that the reverse charge came in on 1 March 2021.

See CIS: Construction Industry reverse charge for details of when it applies and how it works.

Changes to the Construction Industry Scheme (CIS)

From April 2022 HMRC are introducing an additional field on the Employer Payment Summary EPS.

• Companies must use this to enter their Corporation Tax Unique Taxpayer Reference (UTR) or COTAX reference number to claim credit for subcontractor deductions.
• HMRC will reject any EPS submissions including a claim for CIS deductions that do not include the Corporation Tax UTR.
• If your client is not a limited company they should not claim these deductions on the EPS and should report the deductions on a Self Assessment Tax Return.

See CIS: Contractors and Subcontractors

Corporate Interest Restriction: mandation of electronic filing

Corporate Interest Restriction (CIR) legislation applies to corporate entities and aims to restrict a group’s deductions for interest expense and other financing costs to an amount that is commensurate with taxed UK activities.

• In 2018, HMRC introduced an online submission form (‘the G-form’), and from July 2021, an Application Programming Interface (API) for submitting Interest Restriction Returns (IRRs) and making reporting company appointments and revocations.
• HMRC intends to mandate that all reporting of company appointments or revocations and IRRs must be submitted using either the G-form or the API for all submissions on or after 1 September 2022.

See Corporate interest restriction

New tax regime for qualifying asset holding companies

Finance Act 2022 introduces a new regime for the taxation of qualifying asset holding companies (QAHCs) and certain payments they make.

• Companies that wish to join the QAHC regime must send an entry notification to HMRC in advance of the joining date using HMRC’s online form.

See Finance Act 2022: tax update and rolling planner 2022-23

Extension to Capital Allowances: Self-Assessment changes for zero-emission car allowance

For business cars, the capital allowances section of the following Tax Return forms have been changed to include a new ‘zero-emission car allowance’ field:

• Individual.
• Partnership.
• Trust and Estate.
• Trustee Registered Pension Scheme.

From 6 April 2022, and for Tax Returns for 2021-22 onwards, you can use this new field to claim the 100% first-year allowance for any qualifying expenditure incurred in relation to the purchase of new and unused zero-emission or electric cars.

See Vehicles (4 wheels): Allowances

The Official Rate of Interest (ORI) for the 2022-23 tax year

The Official Rate of Interest (ORI), which is used to calculate the Income Tax charge on the benefit of employment-related loans and the taxable benefit of some employer-provided living accommodation, will remain at 2%.

See Official rate of interest

Statutory reviews

Who carries out a review?

There is a different process for indirect tax (eg. VAT, excise or customs duty), and direct tax (e.g. Corporation Tax or Income Tax) but in all cases, once an appealable decision is made, the HMRC caseworker will explain what your client needs to do if they disagree with the decision.

• They can appeal to the Tribunal, or request a statutory review.

HMRC’s Solicitor’s Office and Legal Services (SOLS) carry out statutory reviews. They are conducted by officers who are entirely outside the management chain of those making the disputed decisions.

• If your client does not agree with the outcome of a statutory review, they can still take their appeal to the Tribunal.

Outcomes of a review

At the end of the review, the review officer will conclude if the decision is:

• Upheld that is, the disputed decision should stand.
• Varied that is, the decision is changed in some way.
• Cancelled that is, the decision is not appropriate.

The benefits of a statutory review

From 2020 to 2021, SOLS carried out 10,026 reviews. Of these 6,551 decisions were cancelled or varied as a result of the review. 5,754 of these related to disputes such as automatic late filing and default surcharge penalties, where reasonable excuse was a consideration at review.

• HMRC say that following a review, 75% of cases do not proceed to Tribunal.
• The statutory time limit for reviews is 45 days (or a longer agreed time period) whereas having the Tribunal determine an appeal can be time-consuming.

Purpose of a review

The review looks at the decision again, not to assess new facts or evidence that have not been considered by the caseworker. The review officer will give your client the opportunity to send in further information during the review period.

The review officer will then decide if the appealable decision is:

• Legally and technically correct.
• Consistent with HMRC’s policy.
• Consistent with HMRC’s Litigation and Settlement Strategy.

Some disputes involving a direct challenge on HMRC’s interpretation of legislation may need to be determined by the courts.

The review conclusion letter

The review officer will write to your client explaining:

• Their conclusion.
• Their reasons.
• Your client’s next options.

If the decision is upheld or varied, and your client disagrees with the conclusion, they will have 30 days from the date of the review conclusion letter to appeal to the Tribunal.

See Statutory Review (by HMRC)

Scottish Student Loans Plan 4 ― Self Assessment

• Plan 4 deductions for Scottish Student Loan borrowers will be included on Self-Assessment tax returns from 6 April 2022.

Making Tax Digital update

• From April 2022, all VAT-registered businesses, regardless of taxable turnover, will be required to follow Making Tax Digital (MTD) rules.
• This means using MTD-compatible software to keep digital records and submitting VAT returns through MTD from the first VAT return period, starting on or after 1 April 2022, and signing up to MTD at least 72 hours before the first return is due.

See Making Tax Digital: VAT (subscriber guide).

Manage your Tax Agent link to be added to the Personal Tax Account (PTA)

In Making Tax Digital and legacy services, new links are being added to PTAs to allow clients to:

• Authorise an agent to represent them.
• Remove a tax agent they no longer want to act on their behalf.

Changes to VAT Registration Service (VRS): agents registering their clients for VAT

• Make sure you finalise any registrations in the current service before the switchover, so you do not lose any information from open applications.
• HMRC will communicate a date for the switchover in due course.

VAT 1 forms

• An updated version of the VAT1 Form, Register for VAT by post, came out in November 2020.
• Make sure you use this version of the form VAT1 as HMRC will soon stop accepting the previous version and any registrations using the old form won’t be processed.

HMRC Agent Services

Progress on equality in 2020 to 2021

HMRC’s Public sector equality duty report for 2020 to 2021 has been published on GOV.UK.

Anti-money laundering supervision detailed guidance

Businesses need to be registered with a supervisory authority if Money Laundering Regulations (MLR) apply.

• Check if you need to register under the regulations.
• You can register, renew and manage your anti-money laundering account with HMRC on gov.uk.

Fees and how to pay

• Businesses registering with HMRC must pay a registration fee for each premises plus either a fit and proper test fee or approval process fee, depending on the business type.
• The online service works out how much a business owes and lets them pay the total amount due for each type of fee. There is a payment reference of 12 digits and two letters starting with ‘X’. Businesses without a payment reference number can request by emailing: This email address is being protected from spambots. You need JavaScript enabled to view it..

Risk Assessments

Businesses supervised under the MLR must assess the risk that they could be used for money laundering and terrorist financing. They must also be aware of their day-to-day responsibilities.

Nominated officer, training staff and recognising suspicious activity

Businesses regulated by the MLR must:

• Appoint a nominated officer, this must be someone in the business.
• Make sure employees are aware of their money laundering procedures and provide regular training.
• Have anti money laundering policies, controls and procedures written down and all relevant staff should understand how these affect them.

How and when to report suspicious activity

• Businesses must tell HMRC about suspicious activity that may be linked to money laundering.
• Nominated officers can send online reports using the National Crime Agency website.

Changes to money laundering registration or deregistering

• HMRC may contact businesses to arrange a check to look at how anti-money laundering policies and procedures are being operated and make sure the right systems are in place.
• Businesses may disagree with a HMRC decision, ask for a review, or appeal to a tribunal
• As a supervisor of the Money Laundering, Terrorist Financing and Transfer of Funds (Information on the Payer) Regulations 2017, HMRC has a duty to publish details of businesses that do not comply with the regulations.

Help and support for money laundering supervision

More guidance on anti money laundering supervision is available from The Consultative Committee of Accountancy Bodies (CAAB) website.

See our Anti-Money Laundering Zone for more details

Creative Industry Tax Reliefs: New online tool to support claims

HMRC has launched an online form to assist claims to Creative Industry Tax Reliefs which form checks whether a company meets the basic requirements for relief.

See Creative Industries Tax Reliefs: At a glance

Reporting expenses and benefits for tax year ending 5 April 2022

For employers payrolling Benefits in Kind the deadline for reporting any P11D Expenses and Benefits in Kind is 6 July 2022.

• HMRC now considers paper submissions to be generally unacceptable but maintain a paper process for those who cannot yet file online and have not yet moved to Payrolling.
• You can use either commercial payroll software or HMRC’s PAYE Online service

Your client needs to submit a P11D(b) form if they:

• Have submitted any P11D forms.
• Have paid any employees’ expenses or benefits through their payroll.
• HMRC has asked them to, either by sending them a P11D(b) form or an email notification to file a P11D(b).

If HMRC has asked your client to submit a P11D(b) and they have nothing to declare, you can tell HMRC they do not owe any employers’ Class 1A National Insurance contributions by completing a declaration ‘No return of Class 1A National Insurance Contributions’.

In exceptional circumstances where your client must file P11Ds on paper and do so in list form they must use the following format:

• Arial font size 11 or larger (when printed).
• Sorted by employee, not benefit type.
• To include:
  • Your clients employer reference.
  • The employee’s correct name and National Insurance Number (NINO).
  • Each employee’s expenses and benefits on the same line.
  • The letter codes from the P11D next to each benefit — these are shown in the dark blue boxes to the left of each section on the P11D

Information provided in the wrong format may be returned and if it’s returned late, your client may receive a penalty.

See P11Ds: top tips tool kit

Paying your Class 1A National Insurance Contributions

• There is a specific reference your client must use to make their Class 1A payment. This is their normal Accounts Office reference plus the numerals 2113 at the end e.g: 123PA001234562113.
• If clients are paying at a bank or sending a cheque, they must use the correct pre-printed payment slip, or HMRC will not know they have paid their Class 1A charge and may send payment reminders and default notices until the payment is allocated correctly.

New form for P87 claims

There will be new regulations about the P87 form with effect from 6 May 2022. All P87 based information must be made in a standard prescribed format. HMRC will reject any claims received after 6 May which are not in the standard format.

The new standard form will be available on GOV.UK soon and will contain a nomination as this is the quickest way HMRC can process claims and make payments to the nominated payee.

Consultations

Check the status of tax policy consultations here 

Tax Agent Toolkits

HMRC have 19 agent toolkits available for you to download and use here.

Tax Disputes

• This service involves an impartial HMRC mediator working with all parties to prevent unnecessary litigation.
• HMRC hope to resolve tax disputes within 120 days; this does not affect your client’s right to appeal or review.

Agent Blog

• There is a regular Tax agent blog, highlighting the work HMRC do with tax agents, advisers and professional bodies.

Employers need to register for email alerts

• Agents should encourage employers to register to receive email alerts, so they are aware of the latest coding changes and important information published on the Government webpages.

Publications

Manual updates

• The domicile chapter within the RDRM has been updated to include the changes applicable from the introduction of deemed domicile.

See Non-domicile status, deemed domicile & tax

Spotlights

• Check for new additions
• Latest Employer Bulletin: February 2022
• National Insurance Services to Pensions Industry: countdown bulletins
• Pension schemes newsletter
• Revenue and Customs briefs

HMRC online Tax agent forum

• The agent forum enables agents to raise general queries about HMRC systems or processes impacting day-to-day practice.
• Agents can join the agent forum by registering and providing their professional body membership reference.

External link

Agent update: issue 94