HMRC have issued their Agent Update for March 2023. We have summarised the key content for you with links to our detailed guidance on the topics covered.
There have been the following developments and changes to legislation and allowances:
Spring Budget 2023
- The Chancellor gave his budget announcements on 15 March 2023.
- One key measure for agents to note is the move to Void assignments of Income Tax repayments. This does not prevent taxpayers from nominating a repayment to their agent or elsewhere
- See: Budget 2023: At a glance
Voluntary National Insurance Contributions
- The deadline for making voluntary Class 3 National Insurance Contributions has been extended from 5 April to 31 July 2023.
- Taxpayers can make top-up contributions in order to boost their State Pension.
- If you are running a very small business, it's possible to make voluntary payments of Class 2 NICs.
Research & Development reform
- From 1 April 2023, there will be a number of changes to the R&D reliefs:
- The SME Scheme enhanced deduction rate reduces from 130% to 86%.
- The SME credit rate will reduce from 14.5% to 10% unless the company is engaged in R&D-intensive activities.
- The RDEC rate will increase from 13% to 20%.
- Qualifying expenditure is expanded to include pure mathematics, cloud computing and data licences.
- New claimants now need to complete a pre-claim form, effectively giving HMRC notice of an intending claim.
- See: R&D Tax Relief: Overview
Reporting expenses and benefits for 2022-23
- From 6 April 2023, original or amended P11D and P11D(b) returns must be submitted online via PAYE for Employers or Agents or through HMRC recognised 3rd party software.
- Employer or agents needing to submit up to 500 returns can use the HMRC PAYE online services. For any more returns, third-party software will be required.
- See: P11D: Reporting benefits and expenses
Official Rate of Interest (ORI)
- The ORI has increased from 2% to 2.25%. It is the rate of interest used to calculate taxable benefits for employment-related loans and living accommodation.
Accelerated Payment Notices (APNs) - late payment penalties
- Where APNs have been issued in instances of tax avoidance schemes, failure to pay by the due date can result in late payment penalties.
- Where customers were going through litigation, HMRC were not able to pursue payment. If that litigation ended in HMRC's favour, those payments are now due. Customers may not be aware that settlements may not include the penalties.
- Correspondence will be sent to clients if action is due.
- See: Accelerate Payments & Follower Notices
Qualifying Asset Holding Companies (QAHC) - new boxes on Self Assessment returns
- Where UK investors have returns from a QAHC, new boxes have been added to SA108, Sa109 and S905 to report these gains or losses.
- SA108 and SA109 will also have new boxes for disposals of excluded indexed securities from any entity.
Plastic Packaging Tax (PPT) - check if you need to register and pay
- Businesses registered or liable to register for PPT from 1 April 2023 must submit the PPT return and pay the tax by 28 April 2023.
- Whilst HMRC are committed to making it clear where PPT has been paid, showing this on invoices is no longer going to be a legal requirement.
- See: Plastic Packaging Tax
VAT apportionment of consideration - guidance for compliance
- The Guidelines provide assistance on how to apportion items with different VAT liabilities when they are sold for a single price.
- The Guidelines for Compliance set out practical steps for taxpayers to follow. They sit alongside other guidance and technical manuals to allow taxpayers to understand what HMRC considers to be a tax risk.
- A Revenue & Customs brief on VAT and value shifting gives further information
Void assignments of Income Tax repayments
- Following the consultation 'Raising standards in tax advice: protecting customers claiming tax repayments', it was announced that assignments of Income Tax repayments to third parties will be rendered void.
Tax Administration Framework review
- The government has published a document on how HMRC can simplify and modernise its Income Tax services.
Capital Gains Tax on UK property paper return
- Following feedback, HMRC has made the Capital Gains Tax Property Return and accompanying notes available to download on a trial basis from 28 February 2023.
- The availability of the forms is not meant to replace the online account but is only intended for those who cannot report and pay tax using the online service.
- There are two versions of the form released. The form ‘Capital Gains Tax on UK property for an Estate (2023)’ is only to be used by personal representatives reporting on a deceased person's estate.
- See: CGT: reporting when & how?
Income Tax Self Assessment change to tax year basis
- For 2023-24, the basis on which businesses calculate their taxable profits is changing. This will affect the tax returns to be submitted by 31 January 2025.
- The changes are not affected by the delay to Making Tax Digital for Income Tax.
- The changes only apply to taxable persons with accounting dates that end on dates other than 31 March through to 5 April.
- 2023-24 will be the transition year and from 6 April 2024, the assessment will move from the Current Year Basis (CYB) to an Actual Year Basis. The transition may lead to additional tax in the year but overlap relief may be available to mitigate this.
- See: Basis Period Reform
Making Tax Digital
Update to the digital handshake consent for VAT
- A new penalty regime was introduced for VAT from 1 January 2023. As part of the changes, agents will able to appeal the penalties on behalf of their clients.
- To reflect the changes, the digital handshake (that enables clients to authorise their agents) will include a bullet point giving this consent. Once authorised, agents will then be able to appeal VAT penalties on their clients' behalf.
- See: Penalties (VAT)
HMRC Agent Services
Update on employer Direct Debits and time-to-pay arrangements
- Direct Debits - To ensure payments can be made on the 22nd of each month, the Direct Debit will need to be set up by the 10th of the month. HMRC are looking to shorten this lead time.
- Where payments are collected after the 22nd of the month, the client may receive a notice that the payment was made late. These are advisory notices, not penalty notices and may even be sent when a payment was made in time. HMRC are looking at how to stop this happening.
- See: HMRC advise longer lead times for PAYE direct debits and PAYE direct debit interest charge anomaly confirmed by HMRC
- If clients are struggling to pay PAYE liabilities, they may be able to set up time-to-pay arrangements online where the debt is less than £15,000.
- Agents cannot set up Direct Debits or time-to-pay arrangements. These have to be set up by the client using their business tax accounts (provided that they are enrolled for PAYE for employers).
- HMRC are looking to update the navigation menu so agents can track these easier.
HMRC's approach to working with agents
- HMRC has published their 'approach to how we work with agents' and have updated the 'standard for agents'. Agents are advised to read the standard and ensure they meet the standards expected.
The roles of the Agent Maintainer Team and Central Agent Authorisation Team
- There is currently some confusion over the roles of the two teams, which is causing delays in progressing communications with agents. HMRC have clarified the roles:
- Agent Maintainer Team: This is part of the Customer Compliance Group - Agent Compliance Team and deals with agent codes and Agent Services Accounts for Self Assessment and Corporation Tax only.
- Central Agent Authorisation Team: This is part of the Customer Services Group and deals with authorisations (64-8s only) and deauthorisations.
- Instead of contacting HMRC directly, agents are encouraged to use the 'where's my reply' service for 64-8s, registering for Online Services and amending agent details.
HMRC publishes new Alternative Dispute Resolution (ADR) guidance
- HMRC have published a new ADR process manual. It provides greater transparency into the process which can be asked for at any stage of a compliance check.
- See: Alternative Dispute Resolution for SMEs
Support for customers who need extra help
Following the principles of support for customers who need extra support, you can find out how to get extra if here.
Tax agent toolkits
HMRC have many tax agent toolkits available for you to download and use designed to address the most common errors seen from previous years.
Contact
Complain about HMRC: To make a complaint to HMRC on behalf of your client you must be appointed as their tax advisor.
Where’s My Reply? for tax agents: Find out when you can expect to get a reply from HMRC to a query or request you have made. There is also a dedicated service for tax agents to:
- Register as an agent to use HMRC Online Services.
- Process an application for authority to act on behalf of a client.
Manuals
Check the latest updates to HMRC manuals or subscribe to the automatic notification of changes.
Online
Online training material and useful resources for tax agents and advisers.
HMRC Publications
- Employer bulletins
- Countdown bulletins for pension scheme administrators
- Pension schemes newsletter
- Revenue and Customs briefs
Agent Forum & Engagement
Annual Stakeholder conference
- The 'Creating Solutions Together' themed conference took place on 16 February 2023 with over 250 of the most influential tax and customs stakeholders, alongside senior HMRC figures.
- The feedback will be used to shape HMRC's future engagement with other bodies.
Issues Overview Group (IOG)
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SA-11680 — IOG — HMRC emails that cannot be linked to a client - this was an issue raised at the above conference.
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Agents are asked to send examples that are less than 14 days old to:
This email address is being protected from spambots. You need JavaScript enabled to view it. . - Examples are to include:
- the service being used,
- whether the agent was registering or submitting something,
- what the HMRC response was, a screenshot showing the page and URL
- any information the agent has, e.g. Unique Tax Reference or client name.
Income Record Viewer
- A recent review considered improving functionality, as the IOG considered the authorisations to be an added burden on small practices.
Marriage Allowance
- The IOG raised concerns over the difficulties being encountered in submitting Marriage Allowance claims.
- A meeting is to take place in March with experts on the matter and a new proposed form was shared and discussed for feedback and input.
Representative Bodies Steering Group
- The HMRC group met with agent professional bodies on 8 February 2023, where one of the main topics was performance.
- The SMS texting trial and the Agent Dedicated Line Self Assessment only approach in January 2023 were reviewed.
- An overview of how HMRC handles post was also undertaken. Actions were identified, including an article in Agent Update on how agents may assist in the smooth flow of post.
Contact Information for professional and representative bodies
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