HMRC have issued their Agent Update for June 2023. We have summarised the key content for you with links to our detailed guidance on the topics covered.
Tax returns 2022-23
Over half of the tax returns received by HMRC by the January 2023 deadline were submitted through a tax agent. 54% of those were submitted in January, with 540,000 submitted on deadline day.
HMRC are encouraging agents and individuals to submit their tax returns well before the January 2024 deadline, as:
- The payment deadline of 31 January remains the same. Tax does not have to be paid early.
- Taxpayers will find out what they owe (if anything) in advance, this can aid planning, speed up refunds, or allow for a Budget Payment Plan to be set up.
- It might be possible for July payments on account to be reduced.
- The risk of late filing penalties is reduced.
Economic Crime Levy for AML regulated businesses: HMRC online service now open for registrations
The Economic Crime Levy (ECL) is an annual charge that will affect entities that are supervised under the Money Laundering Regulations (MLR) and whose UK revenue exceeds £10.2 million per year.
- Tax agents cannot register their clients for Economic Crime Levy. Affected HMRC-supervised entities must register themselves for it.
- Affected HMRC-supervised entities must register for the ECL, submit a return every year by 30 September and pay a fee every year (also by 30 September).
- The payment for the financial year from 1 April 2022 to 31 March 2023 is due on 30 September 2023.
- To pay the ECL to HMRC, affected HMRC-supervised entities will first need to register before declaring and paying their liability.
- Registration is achieved by using the HMRC online service, which is now open.
- Taxpayers can access the service and register for ECL here.
- They will be issued with an access code to enable them to complete the registration process.
- The HMRC online service will be updated in the coming months so that affected HMRC-supervised entities can submit a return and make their ECL payment.
- HMRC will issue a further message when these updates have been made.
Helping taxpayers steer clear of tax avoidance schemes
HMRC is reminding contractors and agency workers that they publish details of tax avoidance schemes and their promoters to help customers steer clear of or exit them.
- See the named tax avoidance schemes, promoters, enablers and suppliers.
- This is not a complete list of all tax avoidance schemes currently being marketed.
- There may be other schemes, promoters, enablers and suppliers that HMRC cannot publish information about at this time.
- HMRC also run a Tax avoidance — do not get caught out campaign to help contractors spot the warning signs of tax avoidance, report suspicious companies, and get support to leave tax avoidance schemes.
Employment status guidance for locum pharmacists withdrawn with effect from 30 June 2023
From 30 June 2023, HMRC will be updating their Employment Status Manual (ESM) to remove specific occupational guidance for Locum Pharmacists.
- As set out in ESM4270, a written document by itself cannot determine employment status.
- If a pharmacy business has made an employment status determination based solely on the written contract, they should immediately re-examine that determination based on the facts of the engagement using HMRC's CEST tool.
Payment increase to the Apprenticeships Care Leavers’ Bursary
The Department for Education (DfE) has announced that the bursary available to care leavers, aged 16 to 24, undertaking apprenticeships will increase from the current payment rate of £1,000 to £3,000 for new starters from 1 August 2023.
- The bursary is available to individuals who have been in the care of a local authority anywhere in the UK, as long as the apprenticeship they enter into is based in England. The payment will not affect the care leaver’s entitlement to claim tax credits.
- Employers and training providers will continue to receive an additional £1,000 in funding for every apprentice who is a care leaver aged 16 to 24.
- The existing and increased payments are exempt from Income Tax and National Insurance.
Overlap relief: preparing for the new tax year basis
This summer, HMRC is planning to launch an online form for submitting requests for details about overlap relief.
- Taxpayers with an accounting date other than 31 March or 5 April who are affected by the move to the new tax year basis may need to find out the details of their overlap relief ahead of submitting 2023-24 returns.
- Overlap relief information can only be provided if these figures are recorded in HMRC systems. This is taken from information submitted as part of previous tax returns.
- If you want to submit a request for information ahead of the launch of the online form, HMRC asks that you provide as much of the following information as possible:
- Taxpayer name.
- National Insurance Number or Unique Taxpayer Reference (UTR).
- Either name or description of business, or both.
- Whether the business is a sole trader or part of a partnership.
- If the business is part of a partnership, the partnership’s UTR.
- Date of commencement of the self-employed business, or date of commencement as a partner in a partnership (if not known, then the tax year of commencement).
- The most recent period end date up to which the business used to report its profit or loss.
Corporate Interest Restriction: appointment of reporting company by HMRC
HMRC want to clarify the situations in which they will appoint a reporting company for a Corporate Interest Restriction (CIR) group.
- The CIR legislation allows groups to appoint a reporting company. That reporting company must then submit group-level Interest Restriction returns going forward.
- Most groups that are potentially affected by CIR have appointed a reporting company and submitted Interest Restriction returns.
- This is because certain benefits can only be accessed through such a return.
- Having an Interest Restriction return also allows a group to carry forward certain group-level allowances and therefore it is generally beneficial for a group to appoint a reporting company and submit an Interest Restriction return even when there is no current CIR disallowance.
- HMRC will no longer appoint a reporting company for a group simply because the group has not made its own appointment by their deadline and later realises that it would be beneficial to have a reporting company.
- HMRC will continue to use its power to appoint a reporting company where there is a risk that tax is at stake.
- For example, where HMRC considers that a group should have a CIR disallowance that is not being reflected in the group companies’ company tax returns.
Spotlight 62: dividend diversion scheme used by owner-managed companies to fund education fees
HMRC is aware of a tax avoidance scheme currently being marketed to owner-managed companies designed to divert dividend income from themselves to their minor children. It is promoted as a tax-efficient way to fund school fees.
- HMRC’s view is that this scheme does not work as the arrangements are caught by specific anti-avoidance legislation.
New Code of Practice 9 (COP9) published
HMRC’s Fraud Investigation Service launched and published a new Code of Practice 9 (COP9) on 14 June 2023.
- COP9 is where, in appropriate cases, taxpayers have the opportunity to admit tax fraud, pay the tax they owe and significant penalties and HMRC will not pursue a criminal investigation into the behaviour they disclose.
- The revised Code of Practice is part of a wider push to re-establish COP9 as HMRC’s primary civil investigation tool in tackling tax fraud.
- The new Code of Practice:
- Restates the Code of Practice, so that the COP9 recipient fully understands that the Contractual Disclosure Facility (CDF) is an opportunity offered to them as an alternative to a criminal investigation.
- Resets the terms of the CDF contract to make sure the recipient is clear on exactly what they are signing up to, HMRC’s expectations throughout the investigation and the serious consequences of their non-compliance.
- New sections have also been added to the Code of Practice. These:
- Reinforce the criminal underpin in COP9 by emphasising the different circumstances when a COP9 case can escalate to a criminal investigation and ultimately to prosecution.
- Clarify when COP9 can cover fraud in respect of HMRC functions not involving tax.
- Set out what HMRC can do if the COP9 recipient rescinds their admission of deliberate behaviour after they have accepted the CDF offer.
New interactive guidance and form for self-employed taxpayers working abroad
HMRC has introduced new interactive guidance on GOV.UK to support taxpayers who are working abroad and applying for a certificate to confirm they pay UK National Insurance.
- HMRC have also created a new form (CA3837) to apply for an A1 certificate, for taxpayers who will be self-employed while working abroad.
- The form also includes an email validation service to give quicker access to taxpayers without a Government Gateway or Business Tax Account.
VAT registration helpline
On Monday 22 May 2023, HMRC closed the VAT registration helpline (a subsidiary of the VAT helpline) so that advisers' time could be used more effectively to process applications.
- Over 85% of calls to the VAT registration helpline were from taxpayers who wanted an update on their applications.
- HMRC are committed to responding to taxpayers within 40 days of submitting their applications. HMRC ask that taxpayers do not make contact within this period.
- If a reply is not received within 40 days, taxpayers can check on the progress of their application using the dedicated email inbox:
- Taxpayers who have not received a response to their application within 40 days will receive a reply to their email within five working days.
- HMRC will not respond to the email if the application has already been dealt with.
- Digitally excluded taxpayers can get help through the main VAT helpline where their applications were submitted more than 40 days prior.
Accessing the Income Record Viewer
Agents can check their clients' pay, tax details, employment history and pension information by using the Income Record Viewer.
- Agents will need an agent services account and must obtain their client’s consent using HMRC's digital services to access their information.
Anti-Money Laundering (AML) Supervision videos to help businesses
HMRC has launched four new Anti-Money Laundering Supervision video guides to help taxpayers get things right the first time when registering with HMRC for money laundering supervision.
- Videos cover risk assessments, how to keep records, identifying and reporting suspicious activity, and training your employees to comply with money laundering regulations.
Tax agent toolkits
HMRC have many Tax agent toolkits available for you to download and use that address the most common errors seen in previous years.
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 you as an agent to use HMRC Online Services.
- Process an application for authority to act on behalf of a client.
Check the latest updates to HMRC manuals or subscribe to the automatic notification of changes.