HMRC have issued their Agent Update for August 2023. We have summarised the key content for you with links to our detailed guidance on the topics covered.
Correcting payroll mistakes for an earlier tax year
- If you reported the wrong pay or deductions you can correct this by:
- For 2020-21 onwards: submitting another Full Payment Submission (FPS) with the correct year-to-date figures.
- For 2019-20: submit an Earlier Year Update (EYU) or an FPS with the correct year-to-date figures if your software allows.
- For 2017-18 or 2018-19: submit an EYU showing the difference between what you originally reported and the correct figure.
Correct an employee’s National Insurance (NI) deductions
- If you have used the wrong category letter for 2020-21 or a later tax year, submit an additional FPS with the correct category letter and correct the year-to-date NI accordingly.
- To correct a mistake for 2019-20 tax year, check your software to see if you can submit an FPS instead of an EYU.
- For mistakes in 2017-18 or 2018-19, submit an EYU with negative amounts in all the NI year-to-date fields in the incorrect category letter to reduce the employee’s NI to zero then enter the correct year-to-date NI amounts under the correct category letter to reinstate the employee’s correct NI.
If the mistake caused an overpayment or underpayment
- You must correct your employee’s NI deductions if they paid the wrong amount because they were on the wrong category letter.
You will also need to write to HMRC if:
- The difference is negative because you deducted or reported too much NI.
- You still owe your employee a refund, e.g. because they have left your employment.
In the letter you will need to include:
- The reference ‘Overpaid NI contributions’.
- Your employee’s name, date of birth and NI number.
- Why you overpaid NI contributions.
- Which tax years you overpaid in and how much NI you overpaid.
- Why you are unable to make the payment to the employee.
See RTI: Real-Time Information for PAYE
Reporting of Electricity Generator Levy receipts
- There are currently no boxes available on the Corporation Tax (CT) return for the submission of Electricity Generator Levy (EGL) receipts or the levy amounts payable.
- These will be updated in the April 2024 release of the CT600 tax return.
See Finance Act 2023: tax update & rolling planner 2023-24
Plastic Packaging Tax – Mass Balance Approach consultation
- On 18 July 2023, the government published a consultation on using a mass balance approach (MBA) for Plastic Packaging Tax (PPT). It ends on 10 October 2023.
Alcohol Duty new rates and reliefs introduced on 1 August 2023
At Spring Budget 2023, the Chancellor confirmed changes to the structure of the Alcohol Duty system, creating standardised tax bands for all alcoholic products based on alcohol by volume (ABV).
The changes to the Alcohol Duty structure and the new reliefs took effect from 1 August 2023 and include:
- Small Producer Relief, which reforms and extends the relief previously enjoyed by Small breweries, to producers of all alcoholic products under 8.5% ABV.
- Reduced rates for draught products, ‘Draught Relief’.
- There are transitional arrangements for producers and importers of some wine products to help them move to the new method of calculating the duty on their products.
Capital Gains Tax on UK property paper return
- As announced in Agent Update 106, HMRC has created the paper version of the Capital Gains Tax on UK property returns, available to download on a trial basis.
- The trial began in February 2023 and has been extended until the end of September 2023.
- The downloadable forms do not replace the Online CGT on UK property account and are only intended to assist those who cannot report and pay tax using the online service.
- Non-resident UK individuals should continue to use the alternative sign-in process to report and pay through the Capital Gains Tax on UK Property Account, unless digitally excluded.
See CGT: Reporting when & how? and CGT: Payment of tax
Removal of the country-by-country reporting notification requirement
From 26 July 2023
- Taxpayers who file Country-by-Country reports are no longer required to submit notifications to HMRC.
See Common Reporting Standard (CRS)
Research and Development (R&D) tax relief reform: new requirements for claiming R&D tax relief
From 8 August 2023:
- All companies claiming R&D tax relief are required to submit an additional information form before their Corporation Tax return containing the claim.
For accounting periods starting on or after 1 April 2023:
- Some customers are required to provide claim notification ahead of a claim for R&D tax relief via an online form to be submitted no later than six months after the end of the accounting period that the claim falls into.
- Customers can claim qualifying expenditure on data licences and cloud computing costs.
Additional relief for R&D intensive companies, merger of the SME and research and development expenditure credit (RDEC) schemes
At Legislation Day on 18 July, draft legislation on the additional tax relief for R&D-intensive companies and the proposed merger of the SME and RDEC schemes was published for consultation.
- The government has also published a summary of responses to the initial consultation on the proposed merger of the R&D relief schemes.
See Consultation responses: R&D Tax Relief Review
Overlap Relief: preparing for the new tax year basis
On 29 August 2023, HMRC is launching an online form for submitting requests for details about overlap relief.
- Taxpayers with an accounting date other than 31 March or 5 April may need to find out the details of their overlap relief ahead of submitting returns for the 2023 to 2024 transitional year.
- Overlap relief information can only be provided if the figures are recorded in HMRC systems from information submitted as part of previous tax returns. Where information has not been submitted in tax returns it may be possible for HMRC to provide historic profit figures, to allow overlap relief to be recalculated.
See Basis Period reform and Agent Update: July 2023
Update on UK implementation of global tax reform
On 18 July, the Government published proposed draft amendments to the Multinational Top-up Tax legislation in the Finance (no2) Bill 2023, which would introduce the Undertaxed Profits Rule (UTPR) when implemented. The UTPR is a backstop rule that ensures that any top-up taxes that are not paid under another jurisdiction’s income inclusion rule (IIR) or domestic minimum top-up tax rule (DMTT) will be brought into charge. As part of the draft legislation, the Government has also set out amendments to the multinational and domestic top-up taxes to respond to stakeholder observations and to ensure consistency with the Organisation for Economic Cooperation and Development (OECD).
They will not take effect until they have been included in a Finance Bill and regulations have been made by Treasury to set a commencement date, which will not be before accounting periods beginning on or after 31 December 2024.
See BEPS & Diverted Profits Tax (for SME owners)
New Administrative Guidance and GIR published
On 17 July, the OECD published new administrative guidance on the IIR and DMTT and an update to the Globe Information Return. These documents, which the UK has agreed with other Members of the Inclusive Framework, can be accessed on the OCED website.
Reporting rules for digital platforms
- New rules are being introduced that will require digital platform operators in the UK to collect and verify information about users selling goods or services on their platforms. Digital platform operators will have to report this information to HMRC.
- Digital platform operators will also have to provide sellers with a copy of the information they sent to HMRC. This will help sellers to get their taxes right.
- Digital platform operators must start collecting information from 1 January 2024. The first reports are due by 31 January 2025.
See Finance Act 2023: tax update & rolling planner 2023-24
EU Exit
Second-hand motor vehicles bought in Great Britain and moved to Northern Ireland before 1 May 2023 that are still held in stock
- If businesses have second-hand motor vehicles in stock that they bought in Great Britain and moved to Northern Ireland before 1 May 2023, these will only be eligible for the VAT margin scheme if the business resells them by 31 October 2023.
- If businesses resell the vehicles after 31 October 2023, they will have to account for VAT on the full selling price of the vehicles.
- Businesses who bought second-hand vehicles in Great Britain and moved them to Northern Ireland on or after 1 May 2023 for resale, will not be able to use the VAT margin scheme when they resell them.
- They may be able to claim a VAT-related payment under the second-hand motor vehicle payment scheme.
See Margin scheme
UK signs Convention on Social Security Coordination with Iceland, Liechtenstein and Norway
The UK and the European Economic Area (EEA) European Free Trade Association (EFTA) states of Iceland, Liechtenstein and Norway signed a Convention on Social Security Coordination on 30 June 2023.
- HMRC anticipates the Convention will be first brought into force and apply between the UK, Iceland and Liechtenstein later this year, and then extend to Norway in 2024.
- In the meantime, individuals going to work in Iceland, Liechtenstein or Norway should follow the Guidance on GOV.UK.
Making Tax Digital
Removal of functionality to copy across existing VAT clients to agent services account.
- HMRC will be removing the functionality to copy across existing VAT clients to Agent Services Accounts (ASA) from October 2023. Ensure that your existing VAT clients are copied across to your ASA before this date.
- Once this functionality is removed you can authorise VAT clients using the digital handshake authorisation route available in your ASA. The copy functionality will remain for ITSA customers.
See Agent Service Account & VAT: Top Tips
HMRC Agent Services
HMRC have launched a campaign to encourage taxpayers to check if they need to complete a Self Assessment tax return.
- Agents with clients who need to submit a tax return for the first time, or who no longer need to because their circumstances have changed, must notify HMRC by 5 October 2023.
See Do I need to file a tax return?
National Minimum Wage (NMW)
This is the first update from the National Minimum Wage Promote Team whose job is to educate and support agents, employers and workers.
Support for employers on the NMW
- HMRC are offering live webinars all through September 2023 about salaried hours work and the National Minimum Wage.
- As part of their compliance approach, HMRC have a programme of geographical interventions. These enable them to target multiple sectors in a specific location. As part of the interventions, they provide employers with education and guidance on common NMW issues encouraging them to review pay arrangements to check they are complying with the law.
- Some employers are also offered a free call with one of the HMRC NMW experts to talk about key issues that can lead to NMW underpayments. If potential issues are identified, employers are given a chance to correct them without sanctions, for example, penalties and naming.
See National living/minimum wage rates
Support for agents
HMRC also provides agents with education and guidance on common NMW issues to enable them to support their clients including the invitation to attend a NMW awareness session specifically tailored for agents.
NMW Naming: published by the Department for Business & Trade
In June, over 200 employers were named by Government for failing to pay their lowest-paid workers the minimum wage and were found to have failed to pay their workers almost £5 million leaving around 63,000 workers out of pocket. These employers faced penalties of nearly £7 million.
The companies named range from major high-street brands to small businesses and sole traders.
The employers previously underpaid workers in the following ways:
- 39% of employers deducted pay from workers’ wages.
- 39% of employers failed to pay workers correctly for their working time.
- 21% of employers paid the incorrect apprenticeship rate.
There is information and support available to help agents support their clients.
- A checklist for employers which lists all of the common issues which can lead to workers being underpaid.
- Calculating the minimum wage: guidance on paying the NMW correctly
Customs intermediaries voluntary standard consultation
- HMRC would like to hear from customs intermediaries and organisations across the border industry as part of a Consultation on introducing a voluntary standard for the customs intermediary sector.
- The consultation launched on 5 June 2023 and will close on 30 August 2023.
- If you have an interest in the customs intermediary sector and would like to get involved in the consultation, responses or enquiries to:
This email address is being protected from spambots. You need JavaScript enabled to view it.
COVID-19 helpline
Due to the COVID-19 schemes now being closed, the COVID-19 helpline will be closing from 18 September 2023.
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.
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 you 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
Agent forum and engagement
Agent or client reference
Following investigations into the capturing and replaying of the agent or client reference within the PAYE and SA services, HMRC are considering the feasibility and cost implications of any changes. If changes are required, these will be prioritised.
Marriage Allowance
- Where both the transferor and recipient of marriage allowance report their income via Self Assessment, it is recommended that the transferor’s return is filed 72 hours before the recipients to allow sufficient time for the marriage allowance relationship to be established on HMRC systems and prevent cases from falling out of automation.
- Marriage allowance elections made solely via Self Assessment need to be made each subsequent year by completing the relevant boxes on the transferor’s return.
- Elections made outside of the Self Assessment return will become enduring and carry forward each year until the customer cancels the election. Where an enduring election exists, and either spouse is in Self Assessment, no entries are required on the marriage allowance section of the return. The calculation will be updated automatically to show the transfer of allowance upon receipt of the return.
- There is a project underway to review cases that fall out of automation and marriage allowance has been included in that review.
See Marriage Allowance (Transferable Married Couples Allowance)
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