HMRC have issued their Agent Update for December 2016 / January 2017: we have summarised the key content for you with links to our detailed guidance on the topics covered.
HMRC topical issue reminders
- Personal Savings Allowance
- HMRC are changing how the PSA calculations are applied.
- The PSA will be shown as a zero-rate tax band instead of an allowance on tax codes and liability calculations.
- PSA is not affected by the Scottish Rate of Income Tax.
- See Savings income: tax on interest.
- Changes to dividend taxation from April 2016:
- The dividend tax credit was abolished.
- New rates of tax for dividends were introduced.
- A £5,000 allowance was introduced.
- Dividend tax is not affected by the Scottish Rate of Income Tax.
- Taxpayers with dividends between £5,000 and £10,000 can have the tax liability deducted from their tax code or added to the End of Year Reconciliation.
- Taxpayers with dividends over £10,000 will need to fill in a Self Assessment Tax Return.
- See Dividend tax (rules 2016/17 on).
- Tax avoidance and compliance:
- HMRC’s let property campaign remains open for taxpayers with undeclared rental income.
- The offshore penalty regime has been extended to include IHT.
- HMRC can impose penalties and sanctions on serial tax avoiders.
- HMRC’s High Net Worth Unit (HNWU):
- The HNWU originally handled the affairs of taxpayers with net wealth of over £20 million.
- It has now been extended to those with net wealth over £10 million.
- Welcome letters are being sent to agents and clients with details of their Customer Relationship Manager and how to contact them.
- Pensions
- The update includes guidance for advisers assisting clients in choosing a pension auto-enrolment scheme.
- Applications for the State pension top up close on 5 April 2017. This is an opportunity for those reaching state pension age before 5 April 2016 to receive an additional weekly pension in exchange for a lump sum.
- Alcohol Wholesaler registration scheme
- Any business selling alcohol to other businesses prior to 1 April 2016 should have registered with the scheme by 31 March 2016.
- Retailers buying alcohol from UK suppliers from 1 April 2017 will need to check that the businesses they buy from are registered and have a Unique Reference Number.
- An online lookup for approved wholesalers will be available for retailers to check by 1 April 2017.
- HMRC are asking for feedback from affected businesses to assist with the design and delivery of the service.
- See Alcohol Wholesaler Registration Scheme.
- International Tax Compliance (ITC) Client notification regulations 2016
- These regulations came into effect on 30 September 2016.
- Businesses giving advice and services about tax or finance relating to offshore income or assets may need to send clients a Client Notification letter.
- The obligation to notify must be met by 31 August 2017.
- See Client notification for offshore bank account holders.
- Corporation tax repayments
- HMRC prefer to make CT repayments by BACS.
- To use BACS the CT600 should include details of its own or a nominated bank account on a CT600 or in writing on the company’s or its agent’s headed paper.
- Making a payment at the bank or post office
- HMRC changed its bank to Barclays in February 2016.
- The bank accounts for the previous supplier are due for closure and payments made using old payslips might be rejected.
- HMRC have begun to contact taxpayers who are still using the old payslips advising about the change to Barclays and what steps they need to take.
- Restriction of interest relieffor residential landlords will be phased in from April 2017. See Restricting mortgage interest relief.
- Advisers whose clients pay Machine Games Duty (MGD) can add ‘Machine Games Duty for Agents’ to their HMRC online services account.
- Agents and clients will be able to register for a new ATED digital service from about 17 January 2017, ahead of the April 2017 filing period.
- Two new VAT Briefs are highlighted:
- Brief 15 (2016): Use and enjoyment of insurance repair services. This sets out the background to the use and enjoyment provision and provides links to the guidance that explains how the provision works.
- Brief 16 (2016): Treatment of VAT incurred on assets that are used by the business prior to registration. This sets out HMRC policy, clarifies when and to what extent VAT is recoverable and what to do if the correct treatment has not been applied. See Pre-registration input tax.
- Minor amendments to other VAT guides are highlighted, including:
- VAT Notice 742: Land and property.
- VAT Notice 742A: Opting to tax land and buildings.
- VAT notice 744B: Freight transport and associated services.
- VAT Notice 998: VAT refund scheme for museums and galleries.
- VAT Notice 1001: VAT refund scheme for certain charities.
HMRC PAYE and payroll reminders
- Change of employee address
- It is the employee’s responsibility to notify HMRC of a change of address.
- This can be done through their Personal Tax Account.
- Company car tax: HMRC have updated their Employment Income Manual for Finance Act 2016 legislation, which
- Maintains HMRC’s long standing interpretation of when a car or van benefit under the benefit code arises, and
- Creates a new exemption when a business that hires out cars to the public also hires cars to their employees at the same cost.
- Full payment submission: Employers must use the correct start date for new employees on the first Full Payment Submission (FPS).
- PAYE accounts in credit: HMRC do not usually repay in-year credits. The best way to balance an account in credit is to deduct the amount from the next PAYE payment due.
- Employment intermediaries are reminded to file quarterly returns or face penalties. The next reporting deadline is 5 February.
Consultations
The update lists the following open consultations which are due to close in January and February 2017:
- Simplifying the Gift Aid donor benefits rules: further consultation.
- Employment Allowance: restricting the allowance from employers of illegal workers
- Draft Legislation: Lifetime Individual Savings Account (ISA).
The following consultations have been opened since HMRC's update was sent for publishing:
- Tax-advantaged venture capital schemes - streamlining the advance assurance service.
- Scope of VAT Grouping.
- Tackling offshore tax evasion: A requirement to notify HMRC of offshore structures.
A large number of consultation responses were published along with the Autumn Statement 2016 documents on 5 December 2016.
HMRC service reminders
- HMRC working with Tax Agents Blog. This provides another channel to communicate about consultations, news and updates, and the rollout of new digital services for agents.
- HMRC twitter account Twitter@HMRCgovuk.
- Agent Account Managers (AAMs). A UK wide team of AAMs will liaise with HMRC and agents regarding client issues when normal channels break down.
- Complain to HMRC. To make a complaint against HMRC on behalf of your client you must be appointed as their tax advisor.
- Where’s my reply? This service provides an estimated date that HMRC will respond to queries.
- Email alerts for employers. Agents should encourage employers to register for email alerts to be notified about coding changes and information published on Government Web pages.
- Future online downtime. HMRC provide information about planned downtime which will affect the availability of online services.
- Staying safe online. HMRC provides details and updates of scams that they are aware of together with information to help identify genuine and bogus contact.
- Webchat service. Online webchat service for Agent Services beta, for PAYE liabilities and payments.
Other content
In addition to the above, the update contains its usual mix of briefing notices and toolkits, and an update on Working Together
A link to the published Update can be found here or accessed via HMRC's website www.gov.uk.
