HMRC have issued their Agent Update for December 2022. We have summarised the key content for you with links to our detailed guidance on the topics covered.
Reduction in the rate of National Insurance Contributions from 6 November 2022: updated guidance
HMRC guidance has been updated to reflect the National Insurance Contributions rate change from 6 November 2022.
- HMRC have also updated the fix problems with running payroll guidance.
- This advises you on what to do if you are unable to charge the correct rate in National Insurance Contributions for the period from 6 November 2022.
- Employers and agents are asked employers to remove the temporary generic message on payslips which explained the April 2022 National Insurance contributions uplift.
- In most cases, employers will correct any overpaid National Insurance contributions and a revised Full Payment Submission can then be submitted to make corrections.
- HMRC’s Basic PAYE Tool has been updated to account for National Insurance contributions from 6 November 2022.
- You should make sure you are using Basic PAYE Tools version 22.2 (or later), this can be downloaded from GOV.UK.
- HMRC continue to work closely with payroll software developers on these changes and you should contact your software provider with any payroll queries in the first instance.
Tax avoidance: how to avoid being caught out
If your client is a contractor and would rather avoid an unexpected tax bill, then HMRC’s Tax avoidance — don’t get caught out campaign may help them.
Launch of toolkit for reporting Foreign Income in Tax Returns
HMRC has created a Toolkit to support agents with identifying areas within the Foreign Income pages (SA106) of the Self Assessment return, which taxpayers commonly complete incorrectly or fail to complete.
- HMRC identify a number of areas of risk relating to foreign income reporting:
- Taxpayers may be unaware of the need to report.
- The understanding of what to report may be incorrect.
- Taxpayers may not be aware that the income arises.
- Taxpayers may be aware that they have income and that it should be reported to HMRC but fail to report anyway.
See Offshore Income Tax Toolkit and Foreign and residency pages: FAQs
Plastic Packaging Tax: check if your clients need to register
Plastic Packaging Tax (PPT) was introduced on 1 April 2022.
- If your clients manufacture or import 10 or more tonnes of plastic packaging within a 12-month period they must register for PPT, even if their packaging contains 30% or more recycled plastic.
Capital Gains Tax (CGT) on UK property account
CGT on UK property paper return
HMRC has made changes to the CGT on UK property paper return to make it easier to complete.
- These include notes to help complete the return, a section to enter details of an authorised agent, a section to enter repayment details if the return is an amendment and a section to allow taxpayers to make a return after a Self Assessment (SA) return.
- To request a paper return, the taxpayer or agent will need to contact HMRC. Paper returns should only be made in certain circumstances.
2021-22 Self Assessment (SA) return where there is an ‘initial overpayment’
Where a taxpayer has completed a 2021-22 SA return which has resulted in an ‘initial overpayment’ of CGT, this ‘initial overpayment’ of CGT will be automatically offset against other SA charges.
- The ‘initial overpayment’ is based on the original CGT on UK property return made.
- Alternatively, the taxpayer has the option to amend their CGT on UK property returns prior to the submission of the SA return.
- Once the SA return has been submitted, the taxpayer should not attempt to amend their CGT on UK property returns for the corresponding tax year.
See CGT: Payment of tax and CGT: Reporting when & how?
If your clients benefit financially from UK property owned through offshore entities
The Register of Overseas Entities is now live at Companies House.
- Overseas entities that own UK property must register by 31 January 2023, providing information about their beneficial owners and relevant trusts.
- Information on the Register will be available to HMRC and will be used to identify tax non-compliance of overseas entities and beneficial owners (including settlors and beneficiaries).
- If you are concerned that a client has not paid the right amount of tax, you should contact HMRC to tell them that you will be making a disclosure via the Worldwide Disclosure Facility before 31 January 2023.
See Register of Overseas Entities and Worldwide Disclosure Facility
Preparing for the new tax year basis: Income Tax Self Assessment
The basis period rules for taxing sole traders’ and partners’ profits for Income Tax are changing for many businesses for 2023-24 onwards.
- Under the new rules, from April 2024, businesses will be taxed on profits for the tax year and not the profits for the accounting year ending in a tax year as is currently the case.
- Tax year 2023-24 will be a transitional year, in which additional profits may be taxed although overlap relief may be available and there are spreading provisions.
- Only taxpayers with an accounting date other than 31 March to 5 April are affected by this reform.
HMRC clamps down on major till fraud
HMRC are investigating businesses that are using till systems to evade tax.
- Electronic Sales Suppression allows businesses to artificially reduce the number or value of sales through their electronic tills, meaning they can declare a lower turnover and reduce the tax that is owed.
- Businesses involved should make a voluntary disclosure to HMRC. Making a disclosure could see financial penalties reduced.
See Penalties: Electronic Sales Suppression
Updated online filing exclusions
HMRC's online filing exclusions document that sets out whether self-assessment taxpayers should file a paper tax return rather than an online one has been updated.
Making Tax Digital (MTD) for VAT
Most businesses are now signed up to MTD for VAT and have compatible software.
- Existing VAT online accounts can no longer be used to submit quarterly or monthly VAT returns; returns can only be submitted through MTD-compatible software.
- Businesses that file annual VAT returns are still able to use their VAT online account until 15 May 2023.
VAT penalties and interest from 1 January 2023
New VAT late submission and late payment penalties come into effect on 1 January 2023.
- For businesses with accounting periods starting on or after 1 January:
- The default surcharge will be replaced by new penalties when VAT returns are submitted or paid late.
- The way that VAT interest is calculated will be brought in line with Income Tax Self Assessment.
- These reforms will apply to everyone who submits VAT returns, including nil or repayment return customers.
See Penalties (VAT)
VAT: Agent Services Account
The HMRC Agent Services Account can be used to manage a large part of your clients' VAT affairs online.
PAYE Notice of Coding (P2): interactive guidance
HMRC have produced new interactive guidance to assist taxpayers in understanding their tax codes.
See What is the 2022/23 PAYE tax code?
HMRC app: improvements
HMRC have added a new function to the HMRC app, allowing taxpayers to copy and paste their Self Assessment Unique Taxpayer Reference.
See HMRC's App, not just for Christmas
Form P87 (employment expenses): information requirements
From 21 December 2022, claim forms P87 for Income Tax relief for employment expenses must include additional information or they will be rejected. The additional information required is:
- All the details in section 1, except for the title and contact phone number which are optional.
- Employer PAYE reference number in section 2.
- Clients can get this from their Personal Tax Account, the HMRC app, P45 or P60.
- Type of industry in section 2 if the claim includes flat-rate expenses.
See Annual expenses for employees: How to claim
Construction Industry Scheme: requests for payment and deduction statements
See Employer Bulletin: December 2022
Self-assessment returns for the tax year in which someone died and earlier
For security reasons, personal representatives or executors cannot file a deceased customer’s self-assessment tax return online for tax years up to the date of death. They must send paper returns.
- Authorised tax agents can file the tax return online that covers the tax year in which the person died (6 April to the date of death) but this can only be done after that tax year has ended.
- Agents can also file returns online for earlier years.
- Normal filing deadlines apply.
- Repayments are not made automatically for deceased customers. The agent may need to call the bereavement helpline to action a claimed repayment. The tax return’s repayment section should still be completed.
- Reporting tax on income and gains arising to a person’s estate after their date of death (in the administration period) must be done separately.
See Estates: Income Tax and Capital Gains Tax
XBRL tagging of 2022 Accounts
HMRC are currently unable to accept accounts tagged with the Financial Reporting Council 2022 Taxonomy.
- These issues will not be resolved before 2022 company tax returns are due to be filed.
- HMRC still require that accounts are fully tagged, meaning that 2022 accounts must be tagged with the Financial Reporting Council 2021 Taxonomy.
- Most eXtensible Business Reporting Language (XBRL) software will be doing this automatically, but it is worth checking which accounts taxonomy is being used.
- HMRC are currently unable to accept the US Generally Accepted Accounting Principles (GAAP) 2021 taxonomy.
- If you are tagging accounts prepared under US GAAP, you must use the 2018 taxonomy.
- If accounts are tagged with the Financial Reporting Council 2022 or US GAAP 2021 taxonomies, the company tax return will be rejected.
- HMRC will accept the need to re-tag as a reasonable excuse for late filing if accounts are rejected before the due date.
- This issue does not impact the tagging of tax computations. These should be tagged as usual, using the appropriate version of the Corporation Tax computational taxonomy.
See iXBRL: a guide for advisers
Calculating Marginal Relief for Corporation Tax
From 1 April 2023, the main rate of Corporation Tax increases to 25% for companies with profits over £250,000.
- A small profits rate of 19% will apply for companies with profits of £50,000 or less.
- Marginal Relief will apply for profits greater than £50,000 (the lower limit) up to £250,000 (the upper limit).
- HMRC have released a new online service, Calculate Marginal Relief for Corporation Tax which allows companies and their agents to accurately calculate the amount of Marginal Relief applicable to a company’s profits falling between £50,000 and £250,000.
See Company tax rates and allowances
Administrative Burden Advisory Board (ABAB) 2022 annual report
The Administrative Burden Advisory Board published their 2022 ABAB annual report on 1 December 2022.
See CIOT survey supports postponing MTD ITSA
Agent Forms
HMRC provides forms which can be used to submit information to HMRC. Many of these forms are accessible to agents who can submit information on behalf of their clients.
I-Forms (Intelligent Forms)
- I-Forms contain ‘digital-forms’ in the URL and often have bespoke agent forms.
- There are currently 13 HMRC agent I-Forms. These include:
- Non-resident landlord application for companies and trusts (NRL2e)
- Digital Disclosure Service (DO4SUB)
- Many agents are not aware of a service called the Agent Forms Dashboard. It can be logged in to using an agent user ID and password.
- An agent service account user ID will allow access to all 13 forms. Any other type of agent user ID will only allow access to 8 forms.
- Upon starting an I-Form, the user will be given a code which lets them use the save and return function. The code can be entered within the Agent Form Dashboard to return to an existing form.
G-Forms (GOV Form)
- G-Forms contain ‘submissions’ in the URL and are used for both agents and non-agents with a bespoke service delivered based on the User ID which was used to log in with.
- HMRC currently offer around 90 G-Forms, of which 86 are available to agents. These include:
- Apply for a partial exemption special method.
- Send details to support a Research and Development tax relief claim for an SME.
- G-Forms can only be seen once all questions have been answered and the form is ready to be submitted.
- To preview the G-Form (i.e. to read all of the information you need to complete the form, before you complete it), you can add the end of the URL of the G-Form to the end of the following link: https://www.tax.service.gov.uk/submissions/new-form/specimen-
Updated Agent Guidance on GOV.UK
HMRC has reviewed and updated agent-related content on GOV.UK.
- Existing guidance has been restructured around the lifecycle of an agent firm and new content has been produced to help eliminate gaps.
- A total of 27 pages have been updated or published.
Income Record Viewer
The Income Record Viewer gives you access to your clients':
- PAYE information for the current year plus the four previous tax years.
- Employment records, including time in employment, taxable benefits and any gap where no record is held by HMRC.
- Income record.
- State and private pension information.
Agent Talking Points
Updates on these webinars are regularly sent to agents on Monday mornings.
Support for taxpayers who need extra help
Following the principles of support for customers who need extra support, you can find out how to get extra help here.
Tax agent toolkits
HMRC have many tax agent toolkits available for you to download and use that are designed to address the most common errors seen from 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
HMRC Publications
Agent Online Forum (AOF)
- The agent forum enables agents to raise general queries about HMRC systems or processes impacting day-to-day practice, including matters escalated by the Issues Overview Group.
- Agents can join the agent forum by registering and providing their professional body membership reference.
External link
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