Agent update: July 2024

HMRC have published Agent Update 121 for July 2024. Here is our summary of the highlights in direct and indirect tax announcements affecting SME owners and advisers.

Football agents’ fees and dual representation contracts

• HMRC have recently issued 'Help with football agents' fees and dual representation contracts'.
• These are guidelines on dealing with fees charged by football agents when a player transfers from one club to another or when a playing contract is negotiated with their current club.
• The new guidelines outline HMRC's views on dual representation contracts and reporting obligations.

See, Football agents' fees and contracts

P11D and P11D(b) filing and payment deadlines  

• Employers should have reported the amount of Class 1A NICs owed for the tax year ending 5 April 2024 to HMRC by 6 July 2024.
  
  • Failure to do so may result in penalties.
  • Any Class 1A National Insurance owed must reach HMRC by 22 July 2024.
• If there are any errors in P11Ds, employers must now complete the online P11D amendment form to alter the incorrect submissions. 
• Employers only need to tell HMRC that they do not need to make a return if HMRC has sent an electronic notice to file a P11D(b) or a reminder to file a P11D(b) letter and the employer has not paid any taxable expenses or benefits to employees. 

See, July Employer Bulletin and P11D forms

Payrolling Benefits in Kind

• Employers or their agents must register before 5 April 25 to be able to payroll benefits for 2025-26. 

See, Payrolling of benefits

Basis period reform

• From 2023-24 sole trader and partnership businesses must report their profits on a tax-year basis.
• The transitional profit from the previous accounting date in 2022-23 up to 5 April 2024 must be accounted for on the Self Assessment return due by 31 January 2025. This transitional profit will be spread over five years by default including 2023-24.
• Accounting periods ending on 31 March will be treated as equivalent to those ending on 5 April.
• Businesses can choose their accounting date. Those with a non-tax year accounting period after 6 April 2024 must apportion profits from their accounting periods to the tax year.
• Some third-party software providers have had issues calculating profits. HMRC confirms there is no restriction on accounting period length, and transition profit spreading is available to businesses with basis periods over 12 months in 2023-24. Agents should contact software providers for errors.
• HMRC is clearing the backlog of taxpayers' requests for overlap relief figures and advises against contacting them to chase a request or check figures already held. The backlog is expected to be cleared in the coming weeks.
• HMRC reminds taxpayers that basis period reform doesn't affect partnership returns (SA800). Adjustments for transitional profit and overlap relief are on individual partners' returns. If a partnership shortens its accounting period, it may need two sets of trading and professional income pages and partnership statements.

See, Basis Period Reform 

See, HMRC's transition profits calculator for basis period reform

Non-Resident Company Tax Rates

• Non-resident companies without a UK permanent establishment are not eligible to use the Small Profits Rate (SPR) or apply Marginal Relief (MR) and must use the main tax rate. 
• Taxpayers are encouraged to amend returns where the SPR or MR was incorrectly claimed.
• HMRC will issue a Notice of Correction (CT620) for any errors identified and advise on the additional liability.

See, Non-resident companies miss Corporation Tax rate changes

Expanding the Cash Basis for self-employed and partnerships 

From 2024-25:

• Cash basis will become the default for calculating taxable profit, with opt-out for accruals accounting.
• Turnover limits will be removed for self-employed and partnerships.
• Restrictions will be removed, allowing cash basis users to: 
  
  • Set their losses off against other income.
  • Businesses to deduct all of their business interest.
• People with more than one business can choose between cash or accruals accounting for each business, rather than having to pick one method. 
• Changes apply to trading income only; no changes to cash basis for property businesses.

See, Cash or accruals accounting toolkit

Pensions for seasonal temporary staff  

• Employers of seasonal or temporary staff must ensure they understand who needs to be enrolled into a pension scheme.
• Additional staff need to be assessed individually every time you pay them, including those with variable hours. 
• Employers who fail to comply with their pension duties could face enforcement action, including fines.
• Employers can use postponement to delay assessing staff that are expected to work for less than three months, pausing assessment duties until the end of the three-month period. 

See Auto-enrolment: Workplace pensions

Construction Industry Scheme (CIS),  Payment Deduction Statement

• Subcontractors operating under the Construction Industry Scheme (CIS) will no longer be able to request payment deduction statements from HMRC's CIS helpline. From 1 July 2024, the request must be made by post.
• Subcontractors can also ask their contractor for a copy of any missing statements.

See, Another CIS telephone service withdrawn

See, CIS: Contractors and Subcontractors

Changes to PAYE repayments 

• From 31 May 2024, HMRC will no longer automatically issue cheque refunds to employees receiving tax calculation letters.
• Employees must now claim their refund online, using GOV.UK or the HMRC app.  
• Instructions for claiming online will be provided in the tax calculation letter, with a phone number available for those unable to claim online and needing a cheque by post.

See Time limits for tax assessments, claims and refunds

New Alcohol Duty approvals, returns and payments digital service

• HMRC has requested views on its communications on the new digital service to process Alcohol Duty Approvals, Returns and Payments (due to launch in 2025).

Changes to the form R40

• Agents are encouraged to use the new R40 form for claims dated 30 April 2024 onwards.
• To be a nominated party to receive the repayment, agents must use the nomination section on the new form and include their Agent Reference Number (ARN).
• Claims on other versions of the R40 form will be accepted but any nomination will be disregarded, and repayments will be sent directly to the customer.
• When reclaiming tax deducted from interest on a Payment Protection Insurance (PPI) claim, taxpayers must provide HMRC with a document detailing gross interest, tax deducted, and net interest received.

See Savings income: How interest is taxed.

Workplace nursery partnership requirement rules s.318 ITEPA

• The tax exemption for workplace nurseries is available where employers open their own nursery by grouping with others (including commercial nursery providers), where the partnership requirements are met. 
• This benefit, typically provided through salary sacrifice, is exempt from taxation unlike most other forms of salary sacrifice.
• To qualify under partnership requirements the employer must be wholly or partly responsible for: 
  • Financing.
  • Managing the provision of care.
• Merely covering the fixed costs of an existing nursery doesn't satisfy HMRC's requirement of financial responsibility.
• Managing care provision entails active employer involvement in decision-making and operational aspects.
• When an employee joins the nursery management board as an agent, HMRC expects clear evidence that the employee is fully empowered to act for their employer and does so. Activities may include liaising with the employer, coordinating with other parents, agreeing on action points and following them up. 
• Occasional consultations or general updates alone will not meet HMRC's criteria for managing the provision of care.
• HMRC have warned that some scheme operators have advertised their services as having HMRC approval, where in some instances, the partnership requirements are not met. HMRC will never approve a business to advertise that a scheme is tax-compliant.

See, Childcare: Employer provision

Update on UK implementation of Multinational Top-up Tax and Domestic Top-up Tax

• HMRC has launched a new webpage consolidating links to content on GOV.UK, previously communicated directly to groups that HMRC believe are in the scope of Pillar 2.
• HMRC has issued their third direct update, it covers:
  • Reporting obligations of if a business is in scope, even if there’s no tax liability. 
  • Requirements for the group’s filing member to submit UK and Global Base Erosion (GloBE) returns, or an overseas return notification.
  • It confirms that if a GLoBE Information Return (GIR) has already been submitted to a qualifying authority outside of the UK, then an overseas return notification must be submitted to HMRC instead of a GIR. 
• Groups can register for the Pillar 2 top-up taxes digital service using their Government Gateway user ID; agent credentials are not accepted for group registration.
• The registration deadline is six months from the end of the accounting period in which the group becomes a qualifying group.
• The next stage of the online service will be released in late 2024, it will enable taxpayers to make payments and authorise agents to carry out future tasks on their behalf.
• HMRC is collaborating with third-party software providers for UK Pillar 2 return submissions.
• A transitional ‘safe harbour’ aims to ease compliance in initial regime years; draft guidance is available from MTT15900 onwards.

See, BEPS & Diverted Profits Tax (for SME owners)

Class 2 National Insurance Contributions (NICs) refund notification error

• Due to a processing error, some taxpayers have received a self-assessment tax calculation (SA302) indicating that the payment of NIC class 2 contributions for 2022/23 was made late, despite being paid before the 31 January 2024 deadline. 
• Affected taxpayers will have: 
  • Received a refund of class 2 NIC.
  • Received a credit on their Self Assessment account.
  • Received a credit that has been allocated against a different liability.
• If the payment was incorrectly refunded, then please contact HMRC.

See, Update on unexpected Class 2 NIC refunds

Making Tax Digital

• In April 2024 HMRC confirmed the expansion of the MTD pilot (private beta). A larger but still restricted pool of sole traders and landlords will be able to volunteer. Taxpayers can check their eligibility using our MTD: Income Tax Pilot Tool
• Making Tax Digital for Income Tax is currently voluntary. It will become Mandatory from 6 April 2026 in phases based on taxpayers' total annual income from self-employment or property. 

See, MTD: Toolkit for Accountants

Notifying HMRC of changes to VAT registration details

• From 5 August 2024, any changes to clients’ VAT registration details must be made using the Agent Services Account, not by using form VAT484 or any other postal or electronic means.
• There are exceptions, for example where a taxpayer is digitally excluded or needs assistance with digital services.  These customers can contact HMRC to ask for a form.
• Changes to bank account details and client email addresses can only be submitted by the client through their VAT Online Account.

See, Changing VAT registration details

Staying alert to malicious software

• Agents are often targeted by criminals trying to install malware on their devices. If HMRC suspects malware has compromised client data, they will suspend the agent’s account and provide further instructions.
• Agents should keep their software and antivirus updated and avoid suspicious links or attachments.
• Taxpayers and agents can verify senders or callers using HMRC phishing and scams. Report suspicious texts to 60599, emails to This email address is being protected from spambots. You need JavaScript enabled to view it., and scam calls to GOV.UK.

Correspondence in an alternative format

• HMRC intend to update the 'Requesting information in a different format page' once we are out of the pre-election period in July.

VAT registration estimator tool

• HMRC have launched a new VAT registration estimator tool. 
• The tool works anonymously and allows you to produce an estimate of business profits, based on a range of estimated costs and the associated VAT rates.

See, Registering for VAT

Update to HMRC's standard for agents

• HMRC updated their 'Standards for Agents' in May 2024. 
• The new version acknowledges that if a tax agent is a member of one of the professional bodies that have signed up to Professional Conduct in Relation to Taxation (PCRT) and adhere to its values, HMRC's Standard for Agents should not place further requirements on them. 

See, Update to HMRC's standard for agents 

See, Tax Agents: HMRC's Standard for Agents

Filing your 2023-24 tax returns early

• HMRC are encouraging agents to file taxpayers' 2023-24 tax returns early, outlining the benefits of early filing tax. 

Helping customers to get tax right

• HMRC is writing to around 800 tax agents to ask them to check for any potential errors in their clients’ Self Assessment tax returns for 2022-23 in relation to P14, P11D or the Higher Income Child Benefit Charge (HICBC).
• The letter is being sent to agents representing 20 or more clients (around 28,000 clients in total). 
• Action by agents who receive a letter is entirely voluntary, it is not a formal enquiry or compliance check. HMRC will contact agents to discuss the clients’ returns to assist with the correction process.

Support for customers who need extra help

• HMRC has principles of support for customers who need extra help. 
• These set out our commitment to support customers according to their needs and underpin the HMRC Charter.
• Find out how to get help and what extra support is available. 

Tax Agent Toolkits

• HMRC have 26 tax agent toolkits available for you to download and use.
• They have been designed to address the most common errors seen from previous years. They include checklists of the key issues to consider and links to HMRC technical guidance and manuals.

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 automatic notification of changes.

Online

Online training material and useful resources for tax agents and advisers

HMRC Publications 

• Countdown bulletins for pension scheme administrators.
• Revenue and Customs briefs  

Using incorrect Self Assessment (SA1) forms

• Some agents and professional bodies are using links and PDFs for obsolete versions of the SA1 form. These old forms are out of date and they include incorrect information for the helpline, return address and Self Assessment criteria. 
• Please remove any old links and forms from your websites or online systems and replace them with the following: 
  • SA1 short form which agents can complete and submit online. Using the online service means you do not run the risk of using the wrong form or sending it to the wrong address. 
  • SA1 Print and Post (SA1 G-form) which is completed online and then printed and posted.

External links

Agent Update 121: July 2024