HMRC have issued their Agent Update for December 2023. We have summarised the key content for you with links to our detailed guidance on the topics covered.
Off-Payroll Working rules (IR35): opportunity to pause settlement
- From 6 April 2024, when HMRC find that a client has made a mistake in applying the Off-Payroll Working rules when assessing how much the deemed employer owes in Income Tax and National Insurance Contributions (NICs), they will be able to set off the taxes the worker or their intermediary has already paid.
- The policy applies to Income Tax and NICs assessed on or after 6 April 2024, from Off-Payroll Working errors in payments since 6 April 2017.
- Organisations may be able to pause the settlement of their open Off-Payroll Working compliance check until after 6 April 2024.
- HMRC will consider a pause where:
- The compliance check has reached a settlement, and:
- The organisation has acknowledged in writing an error in applying the Off-Payroll Working rules.
- The deemed employer’s gross liability, including any penalty, has been agreed.
- The organisation gives HMRC the information we need to work out a set-off. This is:
- The name of the Personal Service Company and Company Registration Number.
- The worker’s full name or National Insurance number.
- The compliance check has reached a settlement, and:
See Off-Payroll Working: PSCs & Private Sector Engagers
2022-23 self-assessment exclusions
- HMRC's self-assessment exclusions document for individuals, which sets out whether taxpayers should file a paper tax return rather than an online one, has been updated.
See Online filing exclusions for 2022-23 tax returns
Digital or electronic signatures
- Signatures signed on the screen of a digital device or displayed in a keyboard-typed font will now be accepted for P87, Marriage Allowance (MA) claims, R40 and 64-8s (standalone and those included on P87, R40 and MA claims).
- To be valid, the taxpayer must have provided the signature themselves.
- Electronic signatures are only accepted for the types of claims listed above. All other claims and paper tax returns will still require an original signature on them.
- Where there are doubts that the taxpayer has provided the signature themselves, HMRC will seek assurances from the agent or request further information about the processes that the agent uses.
- If the taxpayer did not place the signature themselves then the document will be invalid.
See Marriage Allowance (Transferable Married Couples Allowance) and Annual expenses for employees: How to claim
Creative industry tax reliefs: update on reforms
- As part of the reform of audio-visual creative tax reliefs, two new expenditure credits will become available for expenditure incurred from 1 January 2024. These are the:
- Audio-Visual Expenditure Credit (AVEC) (replacing the existing Film Tax Relief, High-end TV Tax Relief, Children’s TV Tax Relief and the Animation Tax Relief).
- Video Games Expenditure Credit (VGEC) (replacing the Video Games Tax Relief).
- Eligible existing productions will be able to opt into the new regimes in their first tax return for an accounting period ending on or after 1 January 2024.
- The existing reliefs will continue until 31 March 2027 but will be unavailable to productions that start principal photography or development after 31 March 2025.
- The new AVEC and VGEC credit regimes will be taxable and are calculated similarly to the Research and Development Expenditure Credit (RDEC).
- Several changes are also being made to the cultural tax reliefs for theatre, orchestra, and museum and gallery exhibitions from 1 April 2024.
- These include the requirement to disclose connected party transactions and a transition to the ‘used or consumed in the UK’ rule for eligible expenditure.
- The deadline for orchestras to notify HMRC that they wish to make an election for a concert series will be extended to the date that they first claim the series (if this is after the date of the first concert in the series).
- All claims submitted on or after 1 April 2024, for both creative industry tax reliefs and expenditure credits, must be submitted digitally.
- Before tax returns are submitted, claimants must complete the new mandatory digital additional information form.
See Creative Industries Tax Reliefs: At a glance
Visual effects industry: call for evidence
- The government launched a call for evidence on the visual effects industry on 22 November 2023, exploring opportunities to provide further tax relief on visual effects expenditure.
- This call for evidence is looking for evidence and views about current trends in the visual effects industry and the impact of the existing creative industry tax reliefs on investment decisions.
See Call for Evidence: UK visual effects sector
Director’s loan repayments using Loans to Participators (L2P) forms
- Agents can now complete and submit L2P forms online using their agent services account.
- Previously, only companies could submit online through their Government Gateway accounts, with agents (and others) required to use print-and-post applications.
- The new process is fully digital.
See How to reclaim s.455 tax paid on loans to participators
New interactive guidance form for Corporation Tax penalty appeals
- HMRC have introduced a new interactive guidance form for penalty appeals on GOV.UK.
- It is now possible to complete the form online and then print and post it to the Corporation Tax Services address: Corporation Tax Services, HM Revenue and Customs, BX9 1AX.
- The new form allows HMRC to capture all the necessary information for reviewing penalty appeals in full, helping to prevent unnecessary delays and the need to obtain further information.
See How to appeal a tax penalty (subscriber version)
Capital Gains Tax on UK property paper return
- The paper version of the Capital Gains Tax (CGT) on UK property returns was made available to download on a trial basis between 28 February 2023 and 30 September 2023.
- HMRC now confirm that the CGT on UK property paper returns will now remain available on GOV.UK.
- This paper form is only intended to assist those who cannot report and pay CGT using the online service.
See At a glance: Reporting CGT when & how?
Reporting rules for digital platforms: 1 January 2024
- New rules starting from 1 January 2024 will require digital platforms (software that allows sellers to be connected to users for relevant services or the sale of goods) in the UK to collect and verify information about sellers using their platforms.
- Platforms will have to report this information to HMRC, who will use the information to help sellers get their taxes right and identify, and tackle, non-compliance.
- Platforms also have to provide sellers with a copy of the information they sent to HMRC. This will help sellers to get their tax right.
- The first reports are due by 31 January 2025.
See Online sellers: Tax Overview
National Insurance Contributions rate changes 2024
- As announced at the 2023 Autumn Statement:
- The main rate of employee Class 1 National Insurance Contributions (NICs) will be reduced by 2%, from 12% to 10% from 6 January 2024.
- The main rate of Class 4 self-employed NICs will reduce from 9% to 8% from 6 April 2024.
- No one will be required to pay Class 2 self-employed National Insurance contributions from 6 April 2024.
- Some employers may face challenges in implementing the changes to payroll systems in time for the 6 January 2024 change.
- If employers are unable to make changes in time, they will charge their employees the incorrect Class 1 NICs rate and will need to correct this later. Normal guidance on correcting payroll errors should be followed.
- The Class 2 and Class 4 NIC changes taking effect from 6 April 2024 will be accounted for through the normal Self Assessment process by 31 January 2026.
- To benefit from having their Class 2 NICs ‘treated as paid’, taxpayers should simply file their tax return by the usual deadline.
Guidelines for Compliance: Off-Payroll Working rules (IR35)
- HMRC has recently published new Guidelines for Compliance — help to comply with the reformed off-payroll working rules (IR35).
- HMRC will update the Employment Status Manual over the coming months to give further guidance in areas such as appeals and disagreements for off-payroll workers.
See Helping to comply with Off-Payroll Working rules
Umbrella company guidance
- HMRC has published new Guidance for employment businesses who use umbrella companies to employ workers.
- This guidance aims to help employment businesses understand their legal responsibilities, protect their business from bad actors in their supply chain and support umbrella company workers.
- HMRC has also published Updated guidance for umbrella company workers.
- The guidance now includes advice on how workers can protect themselves from the actions of fraudulent umbrella companies.
- The government is considering the responses it has received to the recent consultation on potential approaches to bringing umbrella companies within the scope of government regulation and options to tackle tax non-compliance in the sector.
- A response will be published in due course.
Stopping paper BACS repayment notifications for Self Assessment
- HMRC are changing how they advise agents and taxpayers that a Self Assessment (SA) BACS electronic repayment has been issued.
- From 7 December 2023, HMRC will no longer send letters informing agents and taxpayers of an SA repayment.
- HMRC are also making IT improvements to digital notifications for SA repayments, which means such notifications are temporarily paused.
- Taxpayers will still receive repayments to their chosen bank account and can see any transactions in their online account and the HMRC app.
- Agents can also review transactions via their online services for agents' accounts.
Changes to the process for claiming Payment Protection Insurance (PPI) tax relief repayments
- On 26 October 2023, HMRC suspended the processing of all claims for PPI tax relief on the R40 form while the risk of incorrect, inflated or incorrectly authorised claims was investigated.
- Processing of PPI tax relief repayment claims has since restarted, with a new evidence requirement added.
- The existing R40 form may be used, with supplementary evidence attached. The evidence required can be either:
- The final response letter from the company that made the PPI payment to the taxpayer.
- A certificate from the company that refunded the taxpayer to confirm the amount of tax deducted from the refund.
- Any unprocessed claims will be returned to the original claimant, or their agent, asking for them to be resubmitted with supplementary evidence.
Prepare for changes for goods moving from the island of Ireland to Great Britain
- From 31 January 2024, some goods will face full customs controls when moved directly from Irish ports to Great Britain.
- Goods will need to complete import processes if they are being imported directly from Ireland into Great Britain.
- Goods moving from Northern Ireland to Great Britain through Irish ports will also have to complete import processes if they are non-qualifying Northern Ireland goods, excise goods or goods which do not move directly to an Irish port once they have left Northern Ireland (for example, goods which are held in storage in Ireland).
- HMRC's guidance can be found at:
Making Tax Digital for Income Tax Self Assessment and small businesses
- Several simplifications to the design of Making Tax Digital (MTD) for Income Tax Self Assessment (ITSA) were announced at the 2023 Autumn Statement.
- These changes will:
- Simplify the requirements for all taxpayers providing quarterly updates and for taxpayers with more complex affairs (such as landlords with jointly-owned property).
- Remove the requirement to provide an End of Period Statement.
- Exempt some taxpayers, including those without a National Insurance number, from MTD.
- Enable taxpayers using MTD to be represented by more than one tax agent.
- From April 2024, taxpayers who volunteer for MTD will benefit from the new points-based system of penalties, which will begin in a simplified form from April 2024, for annual obligations only.
See Making Tax Digital: Index & timeline
Changes to the Self Assessment (SA) helpline and Agent Dedicated Line
- Between 11 December 2023 and 31 January 2024, HMRC's Agent Dedicated Line (ADL) advisers will only take calls about Self Assessment filing, and payments or repayments.
- Agents with queries on other topics, including PAYE queries, will need to use other channels for assistance.
- HMRC expect normal service to resume once the Self Assessment deadline has passed.
See HMRC helpline to focus on ‘priority queries’
DIY Housebuilder Scheme digitalisation
- On 5 December 2023, the DIY Housebuilders Scheme was digitalised.
- The previous process of making paper-based claims will remain as an option for those who cannot use the digital service.
- The time limit for making a claim has also been extended from three to six months.
- Individuals who are eligible to make a claim will be able to do so for six months after completion for any eligible construction or conversion completed on or after 5 December 2023.
See Land & Property: DIY Housebuilders scheme
Use of the Agent Reference Number (ARN) in HMRC contact and processes
- In 2017, HMRC introduced a single unique identifier for each agency firm that registered with them. This unique identifier is known as an ‘Agent Reference Number’ (ARN).
- HMRC has recently undertaken a review into how the ARN is being used and have decided that an ARN should no longer be treated or used as a secure or confidential piece of information.
- It is intended that the ARN is used as a key piece of information in connecting agent firms with their submissions to HMRC, meaning that ARNs may be requested more as part of your regular contact and transactions with HMRC.
- An agent's ARN can be found on the agent services account homepage within the blue ‘Welcome’ box and will be in the format of four letters, followed by seven numbers.
- Where the use of an ARN when communicating with HMRC becomes a requirement, HMRC will not progress an action without a valid ARN.
- For example, from 26 February 2024, ARNs will be mandated on all P87 and Marriage Allowance transfer claim forms submitted to HMRC if the payment is to go to a nominee
The Administrative Burden Advisory Board (ABAB) Annual Report 2023
- The Administrative Burden Advisory Board (ABAB) published their Annual Report 2023 on GOV.UK on 12 December 2023.
- The Annual Report details ABAB’s progress against the priority areas identified in the previous report and also shares ABAB’s priorities for the forthcoming year.
Corporation Tax CT600 delays in receiving return submission responses
- Some companies have been experiencing issues in filing their CT600 returns.
- The initial issue is affecting a small number of larger, more complex submissions.
- You may find there is a delay in receiving your return submission confirmation response when submitting your CT600 form online.
- If you do not receive your online submission response after 48 hours you should contact the online service helpdesk.
- When contacting HMRC, ensure you leave a contact name and number so they can call you back and support you through how to refile your CT return.
Tax agent toolkits
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