HMRC have issued their Agent Update for April 2022. We have summarised the key content for you with links to our detailed guidance on the topics covered.
Technical updates and reminders
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. The following needs to be included 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.
- CJRS and EOHO grants also need to be included in specific boxes provided on the CT600 which were added on 6 April 2021.
- If your client has already filed their Company Tax Return and has not populated these boxes, 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.
Save As You Earn: COVID-19 easement ending
Authorisation to discuss Self-Employment Income Support Scheme (SEISS) grants on behalf of your clients
- Additional consent needs to be provided by clients, to HMRC, when agents seek to discuss SEISS grants with HMRC before a Self Assessment tax return is filed.
- The 64-8 agent authorisation process doesn’t cover COVID-19 support.
- If contacting HMRC after a return is filed, there’s no need to do anything. The agent's usual authorisation will apply.
- To ensure authorisation is in place before a Self Assessment tax return is filed:
- The client should write to HMRC (National Insurance Contributions and Employers Office, HM Revenue and Customs, BX9 1AN) with their name, address, tax reference number and signature, as well as the name and address of the agent they wish to authorise.
- Alternatively, clients can call HMRC on 0300 200 3310.
Enterprise Management Incentive: COVID-19 easement ending
Freeports Employer National Insurance Contributions (NICs) relief
- A relief from employer NICs is available in respect of the earnings of all new Freeports employees, up to £25,000 per annum.
- It is available from 6 April 2022 until April 2026, for 36 months per employee.
- To qualify for this relief, employees need to spend 60% of their working time in a designated Freeport tax site. The government has legislated for an exemption to this rule, where an employer has made an adjustment to their employees' working pattern to accommodate the following protected characteristics: disability, pregnancy and maternity.
Notification of Uncertain Tax Treatment by large businesses
The notification of Uncertain Tax Treatment measure took 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.
Off-Payroll Working rules (IR35)
- The Off-Payroll Working rules (IR35) changed in the private and voluntary sectors in April 2022.
- Organisations who engage contractors in those sectors and that didn’t need to apply the rules for 2021-22 as they didn’t meet the size conditions should check if they do now meet those conditions.
- This is particularly important if they have become a newly formed business, been bought by another organisation or grown in size over the last few years.
- HMRC's published compliance approach states that taxpayers won’t have to pay penalties as a result of mistakes made when applying the rules in the first 12 months after the rules took effect (April 2021), unless there’s evidence of deliberate non-compliance, regardless of when the inaccuracies are identified.
- As the first 12 months have passed, penalties may now be charged on any inaccuracies relating to the operation of the rules after April 2022.
IR35: payroll software indicator
- Clients’ payroll software should include an indicator to inform HMRC about any engagements being paid which are subject to the Off-Payroll Working rules (IR35).
- This may be named the ‘off-payroll worker subject to the rules’ indicator.
- It is mandatory to use this indicator for engagements determined to be inside the Off-Payroll Working rules.
- It is only to be used by the deemed employer responsible for deducting Income Tax and National Insurance Contributions on payments being made to the contractors own limited company or other intermediary.
- The indicator is not to be used for any payments made which are not subject to the Off-Payroll Working rules, such as payments made to contractors working as sole traders.
- It is not to be used by a contractor’s own limited company (or Personal Service Company).
- If you know that your client has used this indicator incorrectly, please make sure they rectify this urgently on a corrective Full Payment Submission for the relevant period.
Naming tax avoidance promoters
- HMRC has, for the first time, published the names of those involved in the promotion and supply of tax avoidance schemes, along with details of the schemes they are selling.
- This list will be updated regularly.
- This is not a complete list of all tax avoidance schemes currently being marketed nor is it a complete list of all promoters, enablers and suppliers of tax avoidance.
Amendments to the hybrid and other mismatches regime for Corporation Tax
- On 6 April 2022 ten new boxes were added to form CT600B, a supplementary page to the Company Tax return. These were introduced following changes made to the hybrid and other mismatches legislation in Finance Act 2021.
- Further guidance is available on GOV.UK and in the HMRC International Manual.
Changes to the Construction Industry Scheme (CIS)
- From April 2022 HMRC introduced 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.
Residential Property Developer Tax (RPDT)
- The RPDT is a 4% tax on company profits derived from UK residential property development in excess of a £25 million annual allowance. It applies from 1 April 2022.
R&D: change in the CT600 supplementary page CT600L from 1 April 2022
- Form CT600L was introduced last year for companies claiming either:
- Small and Medium Enterprise (SME) Research and Development (R&D) Payable Tax Credit.
- R&D Expenditure Credit
- Companies only claiming SME R&D Enhanced Expenditure aren’t required to complete this supplementary form and should use Box 660 on the CT600 to report their claim.
- Following a recent update to forms CT600 and CT600L, some taxpayers may have online filing issues:
1) Companies claiming SME R&D Enhanced Expenditure but not SME Payable Tax Credit or R&D Expenditure Credit
Taxpayers will be affected where:
- Their accounting period starts on or after 1 April 2022.
- They are only claiming SME R&D Enhanced Expenditure (included in box 660) but no other R&D tax relief so wouldn’t complete CT600L.
2) Companies claiming R&D Expenditure Credit and reporting Income Tax deducted from profits
Taxpayers will only be affected if they are reporting:
- An amount carried forward under section 104N(2), step 2 of the Corporation Tax Act 2009, from a previous accounting period (included in box L5).
- Income Tax deducted from profits (included in box L35).
These services will be updated by 31 May 2022.
- Affected taxpayers should wait until then to file their returns.
- If a taxpayer has a deadline or an urgent requirement to file their return before 31 May 2022, HMRC will accept paper returns. See Agent Update 95 for details of the filing requirements.
R&D: companies claiming R&D Expenditure Credit and reporting an amount of brought forward Step 2 restriction to be carried forward to the next Accounting Period
- A new Pre-step 1 section has been added to the CT600L for customers to report the amount of Step 2 restriction brought forward from previous accounting periods.
- This will result in taxpayers' software reporting an incorrect figure in Box L150. This is used by HMRC for statistical purposes only and no action is needed.
Student and Postgraduate Loans: Thresholds and rates from 6 April 2022
- Newly updated thresholds and rates for Student and Postgraduate Loans for 2022-23 are available on GOV.UK.
Plastic Packaging Tax (PPT)
- PPT came into force on 1 April 2022.
- Taxpayers who manufacture or import plastic packaging must check if they are liable for PPT. They have 30 days to register for the tax from the date they become liable.
- Taxpayers must register if they:
- Have manufactured or imported 10 or more tonnes of plastic packaging since 1 April 2022.
- Expect to manufacture or import 10 or more tonnes in the next 30 days.
- Plastic packaging already containing 30% or more recycled plastic must be included when considering whether the 10 tonne registration threshold is met.
Capital Gains Tax on UK Property Account
- Detailed guidance on the Capital Gains Tax (CGT) on UK Property Account to report and pay CGT due on disposals of UK Property is in Appendix 18 of HMRC's CGT Manual.
- Where a taxpayer comes to make a Self Assessment return and realises they should have made a CGT on UK Property Return during the tax year (30/60 days from the date of completion), they should first submit a CGT on UK Property Return before submitting an SA return.
Employment Allowance from April 2022
- The Employment Allowance (EA) increased to £5,000 from April 2022.
- This is claimed through employers' payroll using the Employer Payment Summary. Where payroll software is up-to-date, the increased EA should automatically be given.
- For 2020-21 onwards, employers can only claim the EA if their total secondary Class 1 National Insurance contributions liability is below £100,000 in the tax year before the year of claim.
New 64-8 agent authorisation form
- From 31 March 2022, new clients must use a new 64-8 form to give authorisation for agents to deal directly with HMRC.
- Existing clients don’t need to re-authorise their current relationship.
- From Autumn 2022 HMRC will only accept the new version of the 64-8 and any older versions received will be rejected.
Administrative Burden Advisory Board (ABAB) survey
- The ABAB is inviting small businesses to share their views on the tax system by completing the Tell ABAB Survey 2022 on GOV.UK.
- The survey takes five to 10 minutes to complete and is open until 4 May 2022.
- Results from the survey will be published in the Tell ABAB Report on GOV.UK this summer.
Machine Games Duty (MGD)
- Clients that run pubs or clubs may be required to pay Machine Games Duty (MGD).
- MGD is paid for gaming machines such as slot and fruit machines, quiz machines and other ‘skill with prize’ machines.
- Machines where the prize is less than the cost to play, or on takings from charity events, tournaments, lottery machines or, if the machine is for domestic use, are exempt from MGD.
- HMRC have published a new guide designed to help meet MGD obligations. It gives details on who has responsibility for MGD, how to register, send returns, pay duty and keep records.
Making Tax Digital (MTD) update
- All VAT-registered businesses must use MTD for VAT for their first VAT return starting on or after 1 April 2022.
- Businesses that join MTD on 1 April 2022 and file VAT returns quarterly should:
- Keep digital records from 1 April.
- Complete, finalise, submit and pay their January to March return under existing practices by 7 May.
- Sign up for MTD after their January to March return has been paid (if they have not signed up already).
- For those paying by Direct Debit, this will be 13 May.
- For those paying by BACS, this will be two days after the payment has been made
National Insurance holiday for employers of veterans: claims process now live
- From 6 April 2022, employers of veterans can claim relief:
- Retrospectively for the period April 2021 to April 2022.
- Through Real-Time Information submissions going forward.
Review on how HMRC upholds its Standard for Agents
- The review on how HMRC upholds its Standard for Agents is published on GOV.UK.
Help shape UK central government complaint handling
- The Parliamentary and Health Service Ombudsman would like your views about improving complaint handling.
- Views will be gathered using a short survey, which is now open and closes on 31 May.
Advisers: make sure your client’s contact details are up to date
- The Pensions Regulator (TPR) writes to employers to keep them up to date with the automatic enrolment tasks they need to complete and when.
- Working situations may have changed due to the pandemic e.g. changing offices or mainly working from home.
- It is essential that TPR has the most up to date contact information for employers.
- Employers should provide an ‘employer contact’ and an ‘additional contact’, who will receive TPR’s task-specific emails.
- Automatic enrolment duties are a legal responsibility. Employers could risk a fine if they do not comply.
Tax Agent Toolkits
- HMRC have a number of agent toolkits available for you to download and use here.
- The Alternative Dispute Resolution 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.
- 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.
- Check for new additions
- Latest Employer Bulletin: April 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.