HMRC have issued the Agent Update for December 2020. We have summarised the key content for you with links to our detailed guidance on the topics covered.

Some of the following items have been duplicated in this month's Employer Bulletin and rather than reproduce these we have linked to those updates where appropriate, See: Employer Bulletin December 2020

Self Assessment

Talking points

Agent Talking Points are weekly online webinars for tax agents and advisors, with HMRC experts on hand to answer questions. This update contains links to November's webinars.

Toolkits

There are 19 toolkits that can be found on gov.uk here and which provide guidance on common errors that HMRC frequently see in filed returns. The toolkits are updated each year to reflect any changes.

The update focusses on eight toolkits that could help minimise errors on SA returns for 2019/2020.

HMRC YouTube

Did you know HMRC has its own YouTube channel? They produce help and support videos on a range of different tax matters, to guide customers through various transactions with HMRC. You can subscribe here

Agent Forum

  • The Agent Forum has a board, SA21, dedicated to the year-end filing for Self Assessment for 2019/2020. It is aimed at small businesses and agents, with the latest information available and a place for agents to ask questions.
  • There are also dedicated sections for COVID-19 and UK Transition.
  • The Agent Forum Service is currently available to registered members of Professional Bodies (PBs). If you are not registered, belong to a PB and wish to join, you can do so by opening this HMRC URL link

Self Assessment (SA) Peak 2021, providing accurate information on your client`s return

HMRC receive over 11 million digital tax returns each year and approximately 90,000 need clerical review. This results in a delay in processing your client’s return.

Below are some of the main reasons why the process can be delayed:

  • Marriage Allowance (MA) relief claimed through return only
    • If your client's partner did not submit a regular claim (online/phone call/letter) this could cause a delay.
    • Check your client's P2 notice for the correct year to find out.
    • If both partners are in SA, it is preferable that the transferring partner submit their return first. This will allow the SA system to update and process the transfer.
  • Submitting a return as an amendment
    • A large number of returns are submitted as amendments and cannot be processed without the filing of the original return.
    • Ensure the correct return type when submitting: live/test, full return/amendment.
  • Did your client receive a Self Assessment closure letter (form SA832) for the year you are trying to submit?
    • If HMRC recently closed your client’s Self Assessment record this means that you might not be able to submit their return online and you will need to ask HMRC to reopen the account for filing.
  • Does the Class 2/4 National Insurance Contributions (NICs) show correctly on the return?
    • Class 2/4 NIC can only be included on your client`s return if they are set up correctly on our National Insurance self-employed database.
    • Submit a form CWF1 to tell HMRC about any new self-employment or partnership income source.
  • Have you checked that your software is up-to-date?
    • Out of date software can cause the return to be rejected due to non-compatibility. Rejected returns then require clerical review, causing lengthy delays.
  • Are you submitting an amendment for an earlier year on the 31 January?
    • Filing amendments for prior years on 31 January can cause delays. To help avoid this, please file amendments as early as possible.

HMRC has also reviewed the information available from the COVID-19 support schemes to locate issues with Tax Returns. There were common errors which made some customers not eligible for Government help. These influenced individuals’ liabilities and eligibility for National Insurance benefits. It also affected eligibility for the Self-Employed Income Support Scheme (SEISS) grants.

  • Employment or Self-Employment?
    • Inputting income into the incorrect sections on the return can lead to miscalculations of tax liabilities and NICs. Income from different sources must be filed in the correct sections.
    • Care should be taken in industries such as Entertainment or Construction, where employed and self-employed contracts are used.  
  • Self-Employment as Other Income
    • Self-employed income must be declared on the Self Employment pages and Class 2 and 4 NICs must be registered for.
    • Declaring this income as 'Other Income' will give rise to incorrect NIC liabilities, may affect available reliefs and will not count for National Insurance Benefits.
  • Declaring income for the wrong tax year
    • If a return is submitted late, ensure that all the information is for the relevant year. HMRC can find the return unsatisfactory if it contains income for the wrong year.
  • Not completing the return fully
    • Do not submit the return until the software shows as 100% complete.
    • SEISS can be refused on this basis.
    • You will get a receipt number upon submission, keep this safe for later reference.

Whilst a tax return may be subject to delays, the payment deadline stays the same. Ensure clients have paid on time along with any Payments on Account due. HMRC acknowledges that this has been a difficult year and reminds agents that their clients could spread the costs through a Self-Serve Time to Pay arrangement.

Self Assessment Paper Returns
Including personal details on Self Assessment paper tax returns

If you need to submit a paper return, remember to include the following details on the SA100, not the covering letter, to avoid delays:

  • National Insurance Number.
  • Unique Tax Reference.
  • Name and address.

You can enter these details before you print whether using GOV.UK or your own software.

Check if you need to tell HMRC about additional income

You can now check on GOV.UK to confirm whether you need to declare, or possibly pay tax on any ‘casual’ income you receive. This can include selling things online, casual jobs, charging for your equipment or renting out property.

31 January deadline for tax credits customers to update Self Assessment income types for the year ending 2019-2020, alongside the submission of their Self Assessment tax return

  • Due to Covid-19, HMRC did not stop payments or end awards at 31 July 2020.
  • Estimated income was still required to be reported by the self-employed.
  • Whether estimated income was reported to HMRC by 31 July 2020 or not, actual income figures need to be reported by 31 January 2021.
  • Updating estimated income can be done via the taxpayer's Personal Tax Account.
  • If no estimate was provided, HMRC should be informed by calling 0345 300 3900.

Capital Gains Tax (CGT), 2019-2020 SA Returns, Claims to Entrepreneurs’ Relief possibly showing as claims to Investors’ Relief

  • The 2019/2020 SA Return is the first to have a box specifically for claiming Investor's Relief (IR). It is Box 49 and Box 50 is Entrepreneur's Relief (ER).
  • Some claims for ER have been made in the IR box.
  • If a return has been filed with either relief being claimed, taxpayers are being asked to check the claim has been entered into the correct box. If not, an amendment can be made with a short accompanying note explaining the change, 

Non-Resident Company landlords, 2019-20 Tax Return

  • From 6 April 2020, non-UK resident companies carrying on UK property businesses will come within the charge to Corporation Tax. Up until that point, any profits of the business will have been chargeable to Income Tax.
  • Where a company uses a 31 March 2020 accounting year as the basis for the 2019/2020 Income Tax return, HMRC will accept the ignoring of the apportionment of 1 April - 5 April 2020 (as previously was the accepted approach). 
  • It will be expected that such an approach is taken for the following year and the Company Tax return due for 6 April 2020 - 31 March 2021 will include the full 12-month results from 1 April 2020.

Self Assessment and Corporation Tax repayments by Bankers Automated Clearing System (Bacs), a quicker way

  • Repayments of Self Assessment or Corporation Tax will be received quickest where the taxpayer enters their bank details on the SA100 or CT600, allowing payment via Bacs.
  • If no bank details are provided, repayments will be by a payable order which will take longer to clear.

Agent Account Managers (AAMs)

AAMs provide a service to help resolve client-specific issues, acting as an intermediary between agents and HMRC where the normal communication channels have broken down. The top three issues dealt with during the last SA peak were:

  • SA Correspondence: Forms SA400/SA1 and repayments made by tax return.
  • PAYE Correspondence: Repayment requests made by tax return.
  • Agent Maintainer: Form 64-8 authorisation.

During the peak period, timescales will be affected, so additional time should be allowed for.

For more information about the AAM service, please visit Agent Account Managers in HMRC.

Technical Updates & Reminders

Be prepared to send your client’s 2021-2022 Annual Tax on Enveloped Dwellings (ATED) return online

HMRC are reminding taxpayers and agents to be ready for filing the ATED returns on time. Benefits of filing online include:

  • Agents being able to have all of their ATED client accounts in place.
  • Taxpayers having immediate confirmation of submission and a payment reference number.
  • Taxpayers can also authorise an agent online.

For property owned on 1 April 2021, the return must be filed by 30 April 2021. The next ATED period is 1 April 2021 to 31 March 2022.

HMRC must be notified if the taxpayer has:

  • Disposed of a property.
  • Claim a relief.
  • Changed from relief to liability for a property.
  • Changed relief codes for a property.
  • Had any other change in circumstances.

Disguised remuneration settlements, 2020 terms

See: Employer Bulletin December 2020

VAT reverse charge on construction and building services

See: Employer Bulletin December 2020

Transformation of VAT services

From March 2021, HMRC will be moving all remaining VAT customers still on the VAT Mainframe (VMF) to the new Enterprise Management Platform (ETMP) as part of modernising tax administration. Taxpayers signed up to Making Tax Digital will not be affected and no action is required.

  • Agents will not be able to file client returns through the Government Gateway after the migration.
  • Agents will need to use the Agent Service Account (ASA) to file client returns and will need to create an account if they don't already have one.
  • Agents will not know when the client has been migrated, so from March 2021, agents will have to attempt to file client VAT returns as usual and if this is not possible, migration has occurred and the ASA will need to be used.
  • Businesses filing their own VAT returns will continue to use the Business Tax Account for filing. There may be a change in the design of the service but the process will remain the same.
  • Under the new system, businesses paying VAT by Direct debit will be asked to provide a valid email address for payment notifications under UK banking regulations.

Capital Allowances: Extension of First Year Allowances for Cars, Zero Emission Goods Vehicles & Equipment for Gas Refuelling Stations

See: 100% FYA extension for zero-emission cars

Student and Postgraduate Loans. occupational pension and Off-Payroll Working rules

See: Employer Bulletin December 2020

Tax avoidance: don’t get caught out in the campaign for clients who are contractors

See: Employer Bulletin December 2020

Customs Authorisations and Insolvency

Many businesses involved in international trade hold customs authorisations, including:

  • Inward Processing.
  • Outward Processing.
  • End-Use.
  • Customs Warehousing.
  • Customs Freight Simplified Procedures (CFSP).
  • Authorised Economic Operator (AEO).

Upon appointment, Insolvency Practitioners become responsible for these authorisations and the related compliance. Incorrect use can lead to customs debt, so it is important that practitioners understand the rules.

Upon appointment, a practitioner must:

  • Identify if the insolvent entity holds any customs authorisations.
  • Identify the goods currently held under those authorisations.
  • Notify the supervising office (stated on the authorisation) that the business is insolvent.
  • Ensure that any goods held under a customs authorisation/special procedure are correctly disposed of.
  • Notify the supervising officer of the change to the business.

These conditions and obligations are detailed in the:

  • Authorisation itself.
  • Union Customs Code (UCC).
  • Implementing and Delegated Act to the UCC.

Following the end of the EU Transition period, the conditions and obligations will be reflected in UK legislation.

Businesses may also hold a Duty Deferment Account, identifiable through the Duty Deferment Account Number (DAN). To establish the status of the account or resolve any issues, contact HMRC's Duty Deferment Team at This email address is being protected from spambots. You need JavaScript enabled to view it.. 

It is also possible that goods may be held under a special procedure, without authorisation. The goods will still need to be disposed of in accordance with the procedure. In these cases, you should contact the National Import Reliefs Unit (NIRU) as well as the usual Customs and International Trade contact point for the business if one exists.

Authorisations cannot be transferred between legal persons.

Guidance for employers and agents on reporting PAYE information in real-time when payments are made early at Christmas

See: Employer Bulletin December 2020

Client authorisation

Informing HMRC of an agent-client authorisation

HMRC has several different databases for different taxes. Using the right authorisation process will help ensure agents can access the right data through the right channel.

  • Individual Non-Business Income Tax and National Insurance Contributions (NICs)
    • The National Insurance and PAYE Scheme (NPS) system hold data regarding non-business income (i.e. employment income under PAYE) and National Insurance.
    • Authorisation can be obtained via a 64-8 form or through the Online Agent Authorisation (OAA), only available where the individual is also in Self Assessment.
    • Authorisation allows an agent to act for a client for non-SA income in writing or over the phone, but not online.
  • Self Assessment Income Tax
    • The Computerised Environment for Self Assessment (CESA) system holds data about individuals within SA.
    • The Enrolment and Agent Client Database (EACD) stores agent-client relationships linked to agent enrolments and enables Agents to transact for their clients online.
    • Authorisation can be obtained via a 64-8 form or Online Agent Authorisation (OAA). This authorisation allows an agent to act on behalf of a client, in writing, over the phone and also online through HMRC Online Service for Agents.
  • Corporation Tax Self Assessment (COTAX)
    • Authorisation can be obtained via a 64-8 form or Online Agent Authorisation (OAA), both options giving full access including online.
  • Pay as You Earn (PAYE) and Construction Industry Scheme (CIS)
    • The Employer Business Service (EBS) holds all employer level data. The Construction Industry Scheme (CIS) holds all Contractor and Sub-Contractor data.
    • Authorisation can be obtained in one of four ways, each with different levels of access, so thought needs to be given to what the agent would like to be able to do on the client's behalf:
      • 64-8 Form: This is for EBS only and provides access in writing and over the phone.
      • File by Internet form (FBI2): By adding the agent-client relationship to the EACD, using the Agent Government Gateway Identifier enabling the agent to transact online through HMRC Online Service for Agents and software, but they are not able to access pay and tax details.
      • Online Agent Authorisation (OAA): This enables the agent-client relationship to be added to both EBS and CIS and the agent has access online, over the phone and in writing.
      • Client's Business Tax Account (BTA): A taxpayer can add their agent via the BTA using the Agent Government Gateway Identifier provided by the agent. This is identical to gaining access through the FB12. The Agent Government Gateway Identifier can be found by logging on to HMRC Online Services for Agents and selecting 'Authorise client' from the left-hand menu. The identifier will appear on the next screen under the title 'Agent Identifier'.
    • HMRC also has a beta service which is open via a limited number of invitations a day where the agent has less than 200 clients. This provides a new homepage but with the same access as through HMRC Online Services for Agents, as well as employer level pay and tax details. The latter is only available where the agent exists in both EACD and EBS.
  • Value Added Tax (VAT)
    • VAT Mainframe is used to hold data about Value Added Tax and to store the record of a Non-VAT Registered Agent and Agent Code. Electronic Folder (EF) is used to store all customer documents and correspondence.
    • Agents can obtain authorisation through a 64-8 form (access in writing or over the phone), the OAA (full access including online) and the BTA (using an Agent Government Gateway Identifier which gives online access only).
    • HMRC is migrating the VAT service onto ETMP (Electronic Tax Management Platform). Where customers move under MTD-VAT, agent relationships are created in ETMP against the Agent's Service: Agent Reference Number (ARN). HMRC are working on instances where there may not be an Agent Service Account or where it is the link between that and the Non-VAT registered Agent Code is unconfirmed.
    • VAT and MTD-VAT are two separate services and systems, requiring separate authorisations. Adding or removing an agent from one will not affect the other and additional action will be required.
  • Agent Services Account (ASA)
    • Authorisation can only be added to the ASA via a digital handshake using the Agent's ARN. This creates a relationship within the ETMP and EACD, giving the agent full online, written and phone access.
    • The digital handshake allows for increased identity verification and authentication. The client provides specific consent and the HMRC links the agent and client records as required.
    • Agent Services is the new service for agents in ETMP, where all new services will be added and existing services will, in time, migrate. ETMP will ultimately cover all taxes and will become the single platform for all services.
    • There are exceptions to the digital handshake:
      • Existing agent-client relationships at the point of sign up to MTD services will be honoured by HMRC. Prior to sign up, the agent can use the old agent code against their ASA and a linking service will allow HMRC to copy the relationship over to ETMP.
  • Comp 1
    • This is a temporary authorisation allowing an agent to act during an Intervention.
    • HMRC systems can only deal with one authorisation at a time so this temporary one is scanned and held by the compliance officer dealing with the intervention. It is difficult for this relationship to be seen by other areas of HMRC.
  • ATED (Annual Tax on Enveloped Dwellings)
    • Authorisation can be obtained either using an ATED1 Form or a digital handshake (different to that used by Agent Services).
  • Excluded Customers
    • Where a taxpayer is unable to transact digitally or requires extra support, they can contact HMRC directly to create the relationships in the relevant systems. 

HMRC Agent Services

 Raising standards in the tax advice market, a summary of responses and next steps

The government published a summary of responses and next steps on 12 November 2020 following the call for evidence on raising standards in the tax advice market. This can be found on GOV.UK.

Alternative Dispute Resolution

As well as telephone mediation, the Alternative Dispute Resolution (ADR) team are now offering video mediation in their cases. To have a case considered for Alternative Dispute Resolution, complete the online application form.

Trust Registration Service

See: Trusts and Estates: What’s New? December 2020

New HMRC Charter

Can be viewed here.

Paying HMRC

  • There are several ways to pay HMRC:
    • Direct Debit.
    • Faster Payment.
    • BACs.
    • CHAPs.
    • Personal debit card.
    • Corporate credit and debit card.
  • Payments made by corporate credit card incur a surcharge which goes direct to merchant acquirers, card schemes and card providers.
    • This will also apply to corporate debit cards from 1 November 2020. Taxpayers may want to consider another payment method if they do not wish to incur this surcharge. 

Government support for businesses

Government has recently launched a new Business Support campaign. This brings a range of business advice and support into one place, from help with finance and business planning, to export advice. For more information, visit www.businesssupport.gov.uk.

Tax Agent Toolkits

The complete catalogue of HMRC toolkits has been updated to assist with completion of:

  • 2019-20 Company Tax Returns.
  • 2019-20 Self Assessment Tax Returns including Capital Gains Tax toolkits.
  • 2019-20 National Insurance Contributions and Statutory Payments, employers’ end of year forms and 2020-21 recordkeeping.
  • 2019-20 Property Rental Income.
  • 2020 VAT returns.

Contact & HMRC service

  • 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.
  • Complain to HMRC: to make a complaint against HMRC on behalf of your client you must be appointed as their tax advisor.
  • 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.
  • Where’s my reply? Find out when you can expect to get a reply from HMRC to a query or request you have made.
  • You can check the latest updates to HMRC manuals or subscribe to an automatic notification of change.
  • Future online downtime. HMRC provide information about planned downtime which will affect the availability of online services.
  • Staying safe online. HMRC continuously monitors systems and customer records to guard against fraudulent activity, providing regular updates on scams they are aware of.
  • Phishing emails and bogus contact: a new type of phishing scam regarding ‘Tax Returns’, which is being circulated in high volumes, has been added.
  • Online training material and useful resources for tax agents and advisers: HMRC videos on YouTube, online learning modules and live and pre-recorded webinars are available for tax agents and advisers providing you with free help, learning and support on topical subjects. 

Other recent publications

Spotlights

Employer Bulletins

Trust and Estates newsletters

National Insurance Services to Pensions Industry: countdown bulletins

Pension schemes newsletters

Revenue and Customs briefs

 

Agent Forum and Engagement

 Agent Forum: Working to support the agent community

  • Agents can access help, support and guidance on general tax matters as well as real-time updates from agents and HMRC.
  • The dedicated COVID-19 topic has been very effective.
  • A new dedicated SA2021 will be set up soon.
  • Recent issues trending on the forum include:
    • PAYE-6357 P800 Reporting Bank Interest.
    • SA-7128 Working from home expenses under COVID-19
    • SA-7612 Emails re: SA reminders
  • Recent successful results on the Agent Forum include:
    • CGT-7308 CGT 30-day reporting and paper returns.
    • Others-6768 HMRC post destined for overseas.
    • SA-6838 2019-20 POA2 & recent HMRC letter re: deferment.
    • CGT-6829 30-day reporting, HMRC guidance suggests that it is optional.
  • Issues recently prioritised include:
    • SA-4994 Phones not answering on Agent lines again.
    • Others-5504 HMRC Webchat.
    • Others-5425 Taxpayers can only revert to paper communications by accessing their PTA.

 

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