Agent Update: November 2023

HMRC have issued their Agent Update for November 2023. We have summarised the key content for you with links to our detailed guidance on the topics covered.

Tax 

Electric charging of company cars and vans at residential properties

• HMRC has published amended guidance on a change in home charging of electric vehicles.
• Section 239 of the Income Tax (Earning and Pensions) Act 2003 (ITEPA 2) provides an exemption on payments and benefits provided in connection with company cars and vans. This legislative provision therefore exempts aspects such as vehicle repairs, insurance and vehicle excise duty.
• HMRC had previously maintained that the reimbursement of costs in relation to charging a company car or van at a residential property was not covered by this exemption.
• The change of position now means that employer reimbursement of domestic energy costs used to charge a company car or van will be covered by the exemption and will not give rise to a taxable Benefit In Kind. The exemption will only apply where the reimbursement is purely for electricity used to charge the company vehicle.

See Electric Vehicles: Update 2023

Update on agent registration

Changes to the P87 form and Married Allowance Transfer Claim Form (MATCF)  

• On or after 26‌‌‌ ‌‌February 2024, all agents submitting a P87 or MATCF repayment claim on behalf of their clients will need to use the new standard HMRC form. 
• Failure to submit claims in the agreed format will result in the claim being rejected and a new correct form will need to be submitted.
• The new forms will be available on GOV.UK from early 2024.
• Stakeholders have been sent watermarked copies of the new forms so the changes can be seen. If agents believe they should have had a copy contact This email address is being protected from spambots. You need JavaScript enabled to view it..
• Existing forms received and date stamped by HMRC before 26 February 2024 will be processed as normal. Leave about 10 days for delivery and processing. Submission of the new forms before 26 February 2024 will be rejected.
• Upon the submission
• If agents wish to receive repayments on behalf of clients when submitting these forms, they will need to provide their agent reference number on the forms. The client must also complete the section for nominating an agent to act on their behalf. Failure to do either of these will result in the payment will be made directly to the taxpayer.
• Agents wishing to receive repayments will need an Agent Services Account.

Similar changes to the R40 form will be introduced in due course. We will provide a further update in advance of this change.

Update on UK implementation of global tax reform: Pillar 2

• HMRC have recently issued a direct communication to groups with a UK presence, that they believe are in scope of Pillar 2. 
• This latest update includes the following information:
  
  • The new online service. The service is being developed and will be available in stages from Spring 2024. The first stage will include the ability to register for the new taxes and make a payment on accounts. This will be well in advance of the registration deadline, which is six months from the end of the accounting period in which the group became a qualifying group.
  • Legislation: The Spring Finance Bill 2023 (Finance (No.2) Act 2023) is where the legislation on the Multinational Top-up Tax and Domestic Top-up Tax is found. Additional draft legislation has also been published reflecting stakeholder feedback on the existing legislation and new guidance from the OECD (‘Agreed administrative guidance’ and 'GloBE information return' both published in July 2023).
  • Update on guidance: Draft HMRC guidance was published for consultation in July 2023 and the responses are now being reviewed.
  • Questions and contact information. An FAQ section with HMRC responses has been published as part of the update. HMRC are also working with advisers to understand potential issues. If any agents have a query, represent clients who have not received the recent letter, or wish to receive updates, contact This email address is being protected from spambots. You need JavaScript enabled to view it..

See BEPS & Diverted Profits Tax

Help to check if work qualifies for Research and Development (R&D) tax relief

• HMRC has published Guidelines for Compliance (GfC) to help companies check if work qualifies for R&D tax relief.
• The guidance identifies common errors by explaining what the terminology means and what HMRC's expectations are, as well as what evidence is required to support a claim.

See Research & Development Tax Reliefs

Relevant motoring expenditure; impact of recent Upper Tribunal decision on National Insurance Contributions

• Employees can get tax relief when using their own car to incur business miles.
• National Insurance relief is provided when the expenditure incurred is classed as relevant motoring expenditure and is based on the highest approved mileage rate.
• When employees use their own car for work, relief from Income Tax and an equivalent disregard from Class 1 National Insurance Contributions (NICs) can be due based on business miles driven.
• The definition of 'relevant motoring expenditure' is now wider due to recent case law, to now include payments related to potential and anticipated use of the vehicle. This was ruled to cover fixed-sum car allowances.
• If NICs have been paid in relation to such fixed sum amounts, a refund can be claimed, provided the business miles can be evidenced and there was no salary sacrifice.
• HMRC guidance is being updated for the above.

Employers may correct such overpayments through Real-Time Information (RTI) but must provide:

• A list of the employees, with their National Insurance numbers, is included in the claim.
• Evidence of the number of business miles undertaken by each employee.
• The amount of car allowance payments that these employees received.
• Details of any other relevant motoring expenditure payments that the employees have received (for example if they have received mileage payments at less than the HMRC approved rate).
• The Primary and Secondary Class 1 National Insurance contributions that is being reclaimed.

For employers within HMRC’s Large Business population, claims should be made through their customer compliance managers. If RTI cannot be used, written claims can be made, detailing the qualifying expenditure and an explanation as to why RTI cannot be used. Reclaimed amounts should be passed on to the employees.

In the absence of an employer claim, employees may make a claim on a pay period-by-period basis, including:

• Evidence of the number of business miles.
• The amount of car allowance payments that they have received.
• Details of any other relevant motoring expenditure payments that they have received (for example if you have received mileage payments at less than the HMRC approved rate).
• The Primary Class 1 National Insurance Contribution that is being reclaimed.
• The reason their employer is not applying for this refund on their behalf.

See Payrolling of benefits and Authorised mileage rates (own vehicle)

Property business arrangements involving hybrid partnerships — Spotlight 63

• There is currently a tax scheme being marketed that targets individual property landlords. The scheme is sold on the basis that it secures mortgage relief, reduces taxable profits, as well as Capital Gains Tax and Inheritance Tax (IHT).
• HMRC believe that the marketed tax advantages do not work and have set this out in Spotlight 63.
• If your clients are using such a scheme, they should stop and seek a settlement with HMRC as set out in the Spotlight.
• If you, as an agent, are promoting such a scheme, HMRC will seek to enforce the tax avoidance enablers penalty regime and other powers under the Promoters of Tax Avoidance Schemes regime.

See Spotlight 63: Property business arrangements involving hybrid partnerships

Returns for deceased persons and estates in the administration period

• Upon a taxpayer's death, if an agent wants to continue acting in respect of their tax affairs, a new 64-8 will be required.
• If repayments as required, HMRC will also need notification of any personal representatives or capacitators to allow automatic processing.
• If a Self Assessment record needs reactivating to report larger income or gains, there is currently delays in processing these.
• Instead, it is recommended that a paper return is sent, using the existing Unique Taxpayer Reference (UTR).
• See also Agent Update 103.
• If waiting for an HMRC response or repayment for more than two months, please contact the Bereavement helpline instead of the agent helpline. 
• If at a later date in the administration of an estate, it becomes complex, the personal representatives will need to complete a Self Assessment return for that year only (and any relevant later years).
• If the return is for an earlier year, a covering letter noting that the estate was not complex at the time should mean that it will not be subject to late submission penalties.
• Alternatively, the informal process can be used.
• For in-year submissions for the completion of a complex estate, a paper return can be used by taking the prior year return and clearly marking at the top that it applies to the current year.

See Estates: Income Tax and Capital Gains Tax

Overlap Relief, preparing for the new tax year basis

• The Overlap Relief form was launched on 11 September 2023 for businesses wishing to find out the amount of Overlap Relief available to them.
• Overlap Relief can be offset against profits in 2023-24 as part of the Basis Period transitional year, provided they do not have a 31 March or 4 April year-end.
• HMRC is also offering help and support for tax agents and advisers by running a series of webinars for tax agents about the new tax year basis.

See Basis Period reform

EU Exit 

Second-hand motor vehicle VAT-related payment scheme an update to deadline

• Businesses that have second-hand motor vehicles in stock, bought in Great Britain and moved to Northern Ireland before 1 May 2023, can continue to use the VAT margin scheme, provided that those vehicles are sold by 31 October 2023.
• The initial rule was that for vehicles sold after after 31 October 2023, VAT on the full selling price of the vehicles will need to be accounted for.
• This deadline has now been extended after business feedback, to 30 April 2024. 

Income Record Viewer: the must-have tool for agents

• The Income Record Viewer (IRV) allows agents to check their client’s pay, tax, employment history, pension and tax codes. 
• To access it, you'll need authorisation from your clients. Your client only needs to authorise you once using their personal Government Gateway account.
• Get access here: Get access to the IRV and watch the YouTube video explaining client authorisation.

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

Publications

National Insurance services to pensions industry: countdown bulletins.

Countdown Bulletin 53 is the latest bulletin in this collection.

Revenue and Customs briefs.

Agent forum and engagement

Issues Overview Group and agent forum

• Agents can use different links on GOV.UK pages to provide feedback, and if required, receive a reply from HMRC. This is more effective than using the agent forum, and can be used to canvas feedback from other agents if they feel it is a systemic issue.
  • Use the contact link at the very bottom of any GOV.UK page, then under ‘Find contact details for services’, scroll down to HM Revenue and Customs and click on the link which will take you to the ‘GOV.UK form’ to provide more detailed feedback — you will receive an acknowledgement, and HMRC subject matter experts will email you a response.
  • Click either ‘Yes’ or ‘No’ to the question ‘Is this page useful?’ You can answer anonymously.
  • Report typos, broken links, missing/incorrect information etc. by using the ‘Report a problem with this page’ button at the bottom of any GOV.UK page.
• Agent online forum hints and tips to improve posts:
  • Improving the quality and relevance of agent forum posts will assist in the handling and responses to queries. These are hints and tips that will assist in improving the quality and relevancy of posts.
  • For queries for pages on GOV.UK use the contact form to receive a direct reply first, before posting on the forum.
  • Technical issues with online services should be reported to contact centres in advance of posting on the agent forum to see if other agents are affected. IT service management will initially assess the impact by reviewing reports from contact centres.
  • Agent forum responses may direct agents to guidance, but will not give advice on a query.
  • The agent forum does not handle complaints. If the post is not about the subject of the complaint, but relates to the process, or seeks to assess impact, it is a valid post.
  • Removal of posts. Posts may be removed if agent forum administration deem a post breaches forum guidance. Decisions can be challenged by emailing This email address is being protected from spambots. You need JavaScript enabled to view it. and further review is possible by contacting their professional body representative on the Issues Overview Group.
  • Consideration of posts recently removed has resulted in a more pragmatic approach, on rare occasions allowing posts over the 250-word limit when the description of supporting evidence and impact requires it.
  • Response times. Agents can now see the average response time by Head of Duty on the top of key forum boards.
• Digital signatures. Policy colleagues have now confirmed that a PDF version of the original document for Gift Holdover Relief is acceptable.
• Income Record Viewer. Issues Overview Group members reviewed the update of Income Record Viewer provided in Agent Update 113 with subject matter experts.
  • Improvements sought are to extend coding data to the previous four years.
  • Conversations are underway relating to Construction Industry Scheme data.
  • Issues should continue to be reported using the Income Record Viewer page.
  • Subject matter experts have requested that agents submit examples of cases where issues have not been dealt with.
• Marriage Allowance. Work is continuing to improve the existing Marriage Allowance guidance, Issues Overview Group members requested these changes are made prior to peak season.

External link

Agent update 114