HMRC have issued their Agent Update for February 2024. We have summarised the key content for you with links to our detailed guidance on the topics covered.
Employee taxes: these are covered in our separate version of HMRC's Employer Bulletin: February 2024.
National Insurance Contributions (NICs) rates change
- The main Class 1 NICs rate for employees was reduced on 6 January 2024 from 12% to 10%.
- Changes for self-employed taxpayers take effect on 6 April 2024:
- Class 4 NICs reduce by 1% from 9% to 8%.
- Self-employed people with profits above £12,570 will no longer be required to pay Class 2 NICs, but will still receive access to contributory benefits including the State Pension.
2024-25 Annual Tax on Enveloped Dwellings (ATED) returns
The next ATED chargeable period is 1 April 2024 to 31 March 2025.
- For properties held on 1 April 2024, returns must be filed and any ATED charge paid, by 30 April 2024.
- The population of online ATED returns for 2024-25 can commence from mid-March 2024 but submission is not possible before 1 April 2024.
- Use the same credentials used to set up the ATED online account when preparing your client’s 2024-25 ATED return.
- Ensure clients regularly log in to their Government Gateway account. If they don’t sign in for three years, their account details will be deleted.
- If a client has disposed of a property, you should submit an amended return, or contact HMRC to advise them of the change.
- HMRC should also be contacted if a client has had a change in their circumstances, e.g. they no longer need to file a relief return.
- If you cannot use the ATED online service, refer to the ATED returns notice. Do not send old paper versions of the ATED return.
See Annual Tax on Enveloped Dwellings (ATED)
Corporate Interest Restriction (CIR) common errors
HMRC has identified various mistakes that agents and taxpayers are making in respect of the CIR. The seven most common errors are:
- Reporting company appointments are submitted late and do not contain all the required information. This means the reporting company appointment is invalid.
- Interest Restriction Returns (IRRs) submitted are invalid because no reporting company has been validly appointed.
- The online form is not completed correctly, e.g. the figure for Qualifying Net Group-Interest Expense (QNGIE) should never be larger than the figure for Aggregated Net Group-Interest Expense (ANGIE). Figures in boxes should correspond to those in any supporting attachment.
- CIR groups with companies seeking to reactivate previously disallowed interest amounts have not submitted an IRR for the reactivation period as required and this means the reactivation is invalid.
- CIR groups seeking to apply the group ratio have not been appointing a reporting company and submitting an IRR, and this means the application of the group ratio is invalid.
- Errors are being made in the calculations, e.g. not excluding exchange gains and losses adjustments from the calculation of tax-interest, or not adjusting the calculation of tax-interest and tax Earnings Before Interest, Tax, Depreciation and Amortisation (EBITDA) where double taxation relief has been claimed.
- Companies not disallowing their pro-rata share of the total CIR disallowance (using the fixed ratio method) where no IRR has been filed.
CIR reminders
- If you would like to appoint a reporting company, you must do so within 12 months of the end of the relevant period of account.
- A reporting company must submit an IRR within 12 months of the end of each period of account.
- IRRs and reporting company appointments must be sent to HMRC electronically, using either the online submission form on GOV.UK or using commercial software.
- Where the ultimate parent of a CIR group changes and the new ultimate parent company is not already the parent of a CIR group, a new CIR group is created. A reporting company must be appointed for the new CIR group before any IRRs are submitted for the new CIR group.
See Corporate interest restriction
Basis period reform
HMRC has been seeking to increase awareness of the basis period reform changes from April 2024.
- In February 2024, HMRC sent a mailshot to unrepresented taxpayers which will give information on the basis period reform changes.
- HMRC will release a basis period reform YouTube video.
Insolvent members of VAT groups
From 22 January 2024, HMRC will no longer automatically remove insolvent members from VAT groups and allow them to join as long as control conditions are still met.
- This change was not retrospective.
- An internal review conducted by HMRC found that when an Insolvency Practitioner (IP) is appointed, most insolvent group members of VAT groups maintain common control with solvent members.
- Control of VAT group members only changes if the IP sells shares or reorganises the shares or voting arrangements.
- Updated guidance can be found at: VGROUPS01550 , VGROUPS02350, and Paragraph 20.6 of VAT Notice 700/56
- The joint and several liability of VAT groups is unaffected by this change.
See Groups (VAT)
Research and Development update
The current Research and Development Expenditure Credit (RDEC) and Small and Medium-sized Enterprise (SME) schemes will be merged from 1 April 2024.
- Legislation is included in Finance Act 2024, which received Royal Assent on 22 February 2024.
- HMRC have published draft guidance on the subcontracting and overseas rules for consultation.
- Comments from individuals or organisations who make use of, or provide tax agent services, for R&D tax reliefs are welcomed until 1 March 2024.
- Further guidance on the merged scheme and enhanced support for R&D-intensive loss-making SMEs will be published shortly.
See Research & Development Tax Reliefs and New guidance from HMRC on R&D changes
Making Tax Digital (MTD) for Income Tax Self Assessment (ITSA): take part in testing
From April 2024, HMRC is carrying out further testing to ensure that when the MTD for ITSA system is launched in April 2026, it provides agents and their clients with the best experience.
- HMRC are encouraging agents to take part in the testing programme from April 2024.
- During testing, agents will have access to a dedicated support team to help them through the process. Agents' feedback will help shape the system.
- After checking with clients, you can voluntarily sign them up if they meet the right criteria. More information on how to sign up and who is eligible will be shared in future agent updates.
See MTD: Toolkit for accountants
Removal of ‘VAT for Agents’ from HMRC’s Online Agent Authorisation (OAA) service
HMRC has removed ‘VAT for Agents’ from the OAA service.
- Agents who wish to be authorised to represent their clients for VAT must do so in the Agent Services Account (ASA) from now on. This process is known as a ‘digital handshake’.
- The ability to copy across to the ASA any ‘VAT for agents’ authorisations generated through OAA to the ASA has been removed.
- HMRC has already emailed agents to update them on this change, which came into effect on 16 February 2024.
- Any ‘VAT for Agents’ authorisation codes already generated in OAA service must be used before 18 March 2024.
- If you have already used OAA to get authorisation to represent a client for VAT but have not already copied your client across to your agent services account, you may need to complete a digital handshake to continue to act for them.
HMRC agent forum: important information for all users
All agent forum and customer forum users will have recently received an email asking whether they wish to retain their membership of the forum.
- This has been undertaken to comply with UK GDPR legislation. The email requests users to select the ‘opt-in’ button on the email which links to a landing page confirming that forum registration will continue.
- Forum users who do not select the ‘opt-in’ button will have their access removed on or shortly after 23 February 2024.
Self Assessment
A record 11.5 million tax returns were submitted by the Self Assessment deadline.
- Over 97% of these were filed online. Agents assisted in submitting 6.6 million tax returns by the deadline.
- A round-up of Self Assessment 2024 can be found in HMRC's latest press release.
Changes to form R40
From 30 April 2024, all paid tax agents submitting an R40 form to claim a refund of Income Tax deducted from savings and investments on behalf of their clients may use the new standard HMRC form.
- The new R40 form is available for download on the Claim a refund of Income Tax deducted from savings and investments page.
- If you want to be the nominated third party receiving the repayment, you must use the HMRC version of the nomination section on the new standard form and include your Agent Reference Number (ARN).
- Failure to complete the designated nomination section on the R40, including your ARN, on or after 30 April 2024 will result in repayments for valid claims being paid directly to the taxpayer, and not the nominated third party.
- Ensure the client completes the section informing HMRC whether they are nominating a professional to act on their behalf for the purposes of the repayment claim, otherwise, claims may be paid directly to the taxpayer.
- A section has been added to confirm where supplementary evidence has been included alongside the claim.
Submitting evidence alongside R40 claims for interest paid on Payment Protection Insurance (PPI)
HMRC now requires taxpayers, or their agents, to submit evidence of the original PPI payment as a supplementary item alongside their claim.
- Claims can continue to be made using the R40 form but evidence must be attached at the time of submitting the claim.
- Guidance on acceptable supporting evidence can be found here.
See Savings income: How interest is taxed
Update on the P87 form and Marriage Allowance Transfer Claim Form (MATCF)
Revised P87 and MATCF forms are available to view online, and must be used from 26 February 2024.
- The updated claim forms include a question to ask if the taxpayer is nominating a professional that charges a fee for their services to act on their behalf, and space to capture the nominated agent’s Agent Reference Number (ARN).
- Your ARN must given when submitting a P87 or MATCF form if you are making a claim on behalf of others and want to receive a repayment on behalf of your client.
- You will also need to ensure your client has completed the section which informs HMRC whether they are nominating a professional to act on their behalf for the repayment claim.
- Failure to add your ARN and/or select ‘Yes’ or ‘No’ in the appropriate section could result in repayments for valid claims paid directly to the taxpayer, not the nominated third party.
- The new forms should be submitted in the format exactly as they print out with no amendments or modifications.
- If it is essential for internal processes you may replicate, print and submit the form (e.g. to add a company logo or barcode reference to the form to connect it to your own systems).
- Changes may only be made in the white space at the top of the form and any other changes or additions outside of that white space will result in the claim being rejected.
See Annual expenses for employees: How to claim and Marriage Allowance (Transferable Married Couples Allowance)
Agent Dedicated Line (ADL) webchat service and progress chasing
On 30 January 2024, HMRC emailed agents to advise that webchat services for the ADL would continue beyond 31 January 2024 for both SA and PAYE. Support provided to agents progress chasing SA, PAYE and PPI tax relief repayments on the ADL also changed.
- HMRC's SA ADL webchat will continue to focus on all SA topics and the service can be accessed through HMRC's Self Assessment digital assistant.
- Agents who have urgent or complex SA queries and need to speak to one of HMRC's advisers can still call the ADL, selecting option 1 from the menu.
- HMRC's PAYE webchat service now focuses on repayment queries and can be accessed through the PAYE digital assistant.
- Agents with PAYE coding queries or complex PAYE queries can still call the ADL, selecting option 2 from the menu
- From 1 February 2024, agents wishing to progress chase repayment queries need to consult the ‘Where’s my reply’ tool before contacting HMRC.
- If the expected date of processing shown on ‘Where’s my reply’ has not passed, HMRC's advisers will be unable to help with the query.
- PAYE repayments may only be progress chased using the PAYE webchat.
HMRC’s activity relating to the Pandora Papers
The Pandora Papers was the largest release of offshore data by the International Consortium of Investigative Journalists, which involved 11.9 million leaked documents.
- The papers contain data regarding a range of individuals, with a large portion relating to individuals who have set up, or have an interest in, companies in low-tax or secrecy jurisdictions.
- HMRC are issuing further letters outlining key risks specific to taxpayers’ individual domicile positions.
- The letters inform recipients to report all their overseas income or gains that they owe UK tax on or face penalties of up to 200% of any tax due, or prosecution.
See Nudges: Pandora papers, online sellers & take-aways
Litigation Settlement Strategy webinar
If you are interested in how HMRC uses the Litigation Settlement Strategy to try and resolve tax disputes through civil law, you can Register now for the live webinar.
- The webinar will cover the key principles of the Litigation Settlement Strategy and how these principles ensure that HMRC treats taxpayers consistently.
Register for the new digital system that manages ‘Union goods’
Union goods (goods produced in the customs territory of the EU, goods imported goods that are in free circulation, and goods that have had all import duties and taxes paid) are not subject to EU customs processes.
- The customs status of Union goods must be proved when the goods return to the customs territory of the EU, if goods are transported between EU countries, or between EU countries and Northern Ireland by a route that deviates outside the customs territory of the EU, including goods moving through Great Britain,
- This is called ‘Proof of Union Status’ (PoUS).
- From 1 March 2024, there will be a new European system to store, manage and retrieve PoUS. This will replace the T2L certificate and suppliers’ declarations with a digital way of proving the customs status of Union goods.
- To access PoUS through the EU Portal, traders will need to register for Uniform User Management (UUM). You should email
This email address is being protected from spambots. You need JavaScript enabled to view it. and provide the following information:- Name and email address.
- Confirmation you want to register.
- Northern Ireland business address.
- XI EORI number.
- You will then be sent a link to register onto the EU trader portal to authenticate access and allow you to access the PoUS system when it is available in March 2024.
Changes for goods moving from the island of Ireland to Great Britain
From 31 January 2024, some goods face full customs controls when moved from Irish ports to Great Britain (England, Scotland and Wales).
- Traders will need to complete import processes for goods if they are imported directly from Ireland into Great Britain.
- Traders moving goods from Northern Ireland to Great Britain through Irish ports also have to complete import processes if they are non-qualifying Northern Ireland goods, excise goods, weapons of mass destruction related goods or endangered species, or goods which do not move directly to an Irish port once they have left Northern Ireland.
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
External link
