Agent Update: April 2023 - www.rossmartin.co.uk

HMRC have issued their Agent Update for April 2023. We have summarised the key content for you with links to our detailed guidance on the topics covered.

Agent Dedicated Line

Between 17 April and 2 June 2023, the Agent Dedicated Line will only answer calls relating to Self Assessment late filing penalties and appeals and PAYE coding enquiries.
For all other enquiries, agents will need to use HMRC's online services or the main helplines.
- The Agent Dedicated Line will not answer any progress-chasing calls.

Permanent Increase in the Annual Investment Allowance (AIA) to £1 million

The AIA has been set at £1,000,000 with effect from 1 April 2023.
Transitional rules limiting the AIA for chargeable periods straddling 1 April 2023 will be repealed.

See Annual Investment Allowance (AIA)

Update to assessment year for Time to Pay arrangements for disguised remuneration and the loan charge

HMRC have updated the assessment approach used when determining eligibility for automatic Time to Pay arrangements in relation to disguised remuneration settlements and the loan charge.
- These arrangements provide automatic five-year Time to Pay terms for individuals with earnings less than £50,000 and seven years for those impacted by the Loan Charge who earned less than £30,000.
HMRC will now use the most recent complete tax-year information available to determine eligibility to allow a more current picture of the taxpayer's financial position and ability to pay.
Support is available for taxpayers who earn more than £50,000 or need longer to pay through the standard Time to Pay offer.
- These arrangements are flexible and can be amended over time to take account of changes in circumstances.
Any existing arrangements will be unaffected.

See Disguised remuneration loan charge and Disguised remuneration 2020 settlement opportunity

The Second-hand Motor Vehicle Payment Scheme

In January 2023, HMRC published guidance on the second-hand motor vehicle payment scheme.
This is due to be introduced on 1 May 2023 to allow VAT-registered businesses to claim a VAT-related payment if they buy a second-hand vehicle in Great Britain and move it to Northern Ireland for resale.
From 1 May 2023, businesses will no longer be able to use the VAT margin scheme in such cases.
- Although VAT will be charged on the full selling price of the vehicle when it is sold, the VAT-related payment puts businesses who buy eligible vehicles from Great Britain, in a similar position to that of the VAT margin scheme.

See Margin scheme

Research and Development (R&D) tax relief reform: changes from 1 April 2023

On 1 April 2023, a number of R&D tax relief reforms came into effect.

See R&D Tax Relief: Overview

Homeworking deduction for expenses and benefits

The rules on tax relief for individuals working from home have been in place for many years and have not changed.
- The COVID-19 pandemic resulted in many more taxpayers becoming eligible for relief during that period.
As restrictions have now been lifted, employers and employees should review the eligibility criteria to ensure they understand what can be claimed.

See Working from home (employees)

State Pension Arrears

In August 2020, the Department for Work and Pensions (DWP) began to make State Pension arrears payments to individuals who had been underpaid. This work will continue until December 2024.
HMRC will be assessing affected Self Assessment clients, to establish if additional Income Tax is due for the current tax year and the previous four tax years.
- Letters will be issued to taxpayers (and their agents, where relevant) with an additional liability.
Taxpayers who passed away before the date DWP paid the arrears will not be taxed.

See Are your state pension arrears taxable?

Plastic Packaging Tax update

PPT rate and penalties

The Plastic Packaging Tax (PPT) rate increased from £200 per tonne to £210.82 per tonne from 1 April 2023.
- The new rate applies to all plastic packaging manufactured or imported into the UK on or after 1 April 2023.
The government is bringing forward technical changes to PPT penalties via the 2023 Finance Bill. These changes will simplify the late payment penalty regime for PPT and apply to all late payments in relation to accounting periods from 1 April 2023 onwards.

Statements on invoices

HMRC encourage businesses liable to PPT, to provide information about the tax paid on invoices to business customers. This will no longer be introduced as a legal requirement.

See Plastic Packaging Tax (subscriber guide)

Mandatory Disclosure Rules: in force from 28 March 2023

The UK Government implemented the OECD Mandatory Disclosure Rules for Common Reporting Standard Avoidance Arrangements and Opaque Offshore Structures on 28 March 2023.
The Mandatory Disclosure Rules replace the existing European Union-wide legislation, DAC6.

See Mandatory Disclosure (DAC6): Do you need to make a report?

Economic Crime Levy for anti-money laundering regulated businesses

The Economic Crime Levy was introduced in Part 3 of Finance Act 2022, as part of the Government’s plan to develop a sustainable resourcing model for economic crime reform.
HMRC has now published guidance on the topic, which can be found on GOV.UK.

See Economic Crime Levy

Off-Payroll Working rules (IR35): engaging contractors

See Employer Bulletin: April 2023

Tax and NICs on termination payments

HMRC is raising awareness of the rules around Income Tax and NICs on termination payments. Several changes were made to these rules over the past five years including:
- The introduction of post-employment notice pay.
- The removal of foreign service relief on termination payments to UK resident individuals.
- Clarification that the exemption for injury does not apply to injury to feelings.
- Alignment of the rules for Income Tax and NICs.

See Employer Bulletin: April 2023 and Termination, redundancy and leaving payments

Student and Postgraduate Loans generic notification service messages

It is important that payroll agents check HMRC online services for generic notification service messages.

See Employer Bulletin: April 2023

Update to 'fix problems with payroll' guidance and new process for overpayments of National Insurance Contributions (NICs)

See Employer Bulletin: April 2023

Update on UK implementation of global tax reform

The government introduced legislation in the Finance Bill 2022 to 2023 on 23 March 2023, to implement the globally agreed G20-OECD Pillar 2 framework in the UK.
This legislation introduces a:
- A multinational top-up tax will require large UK headquartered multinational groups to pay a top-up tax where their foreign operations have an effective tax rate of less than 15%.
- A supplementary domestic top-up tax that will require large groups, including those operating exclusively in the UK, to pay a top-up tax where their UK operations have an effective tax rate of less than 15%.
These changes will apply to large groups with over 750 million euros in global revenues and will take effect in relation to accounting periods beginning on or after 31 December 2023.

New tax year basis: Income Tax Self Assessment

From April 2024, unincorporated businesses will be taxed on profits for the tax year and not the profits for the accounting year ending in the tax year.
- This change is not affected by the delay to the introduction of Making Tax Digital for ITSA announced on 19 December 2022.
- For 2024-25 and future years, where accounting years are different from the tax year end, the taxable profits will be worked out by apportioning the profits for the two accounting periods that straddle the tax year.
The year 2023-24 is a ‘transition year’ in which self-employed businesses will move to the new way of calculating taxable profits for the tax year.
- In this transition year, overlap relief may be available.

Determining overlap profits

For businesses changing accounting date in the 2021-22 tax year, HMRC will be able to provide details of overlap relief figures or historic profit figures on request, if these figures are recorded in HMRC systems.
- Taxpayers should ring the HMRC Self Assessment Helpline and agents should ring the Agent Dedicated Line.
HMRC is currently developing an online form for submitting overlap relief requests.
- Alongside this online form, HMRC is training more officers to deal with overlap relief queries and is developing an internal tool to collect and quickly play back overlap relief information.
HMRC is planning to launch the online form and additional support this summer.
HMRC needs as much information about a business as possible to be able to find the correct figures to report back to the taxpayer. This should include:
- Taxpayer's name.
- National insurance number or tax Unique Tax Reference (UTR).
- Name or description of the business.
- Whether this business is self-employment or part of a partnership.
- If the business is part of a partnership, the partnership’s UTR.
- Date of commencement of the self-employment business, or date of commencement as a partner in partnership (if not known, then the tax year of commencement).
- The most recent period of account or basis period the business used.

See Basis Period reform

Annual Tell ABAB survey

The annual Tell ABAB Survey 2023 is now available to complete.
Commissioned by an independent body, the Administrative Burdens Advisory Board (ABAB), the survey aims to provide crucial insight into the big issues faced by small businesses (including tax agents) in the tax system.
- In 2022, 32% of respondents identified as tax agents.
The survey takes approximately 10 minutes to complete and will be open until 2 May 2023. Results from the survey will be published in the ‘Tell ABAB’ report, which will be published on GOV.UK in summer 2023.

Agent Services Account: Access Groups trial

HMRC recently launched a new 'Access Groups' feature in the Agent Services Account.
- This allows you to manage how your staff access client information.
One of the features is a Client List for Agents taking part in HMRC’s Access Groups trial.
If you are already taking part in the trial and using Access Groups, you can view your Client List simply by navigating to the ‘manage account’ page of your Agent Services Account.
- The Client List allows Agents to view all authorised clients on Agent Services Account services (except Income Record Viewer clients) and associated information in one convenient location.
Trial participants with administrative access can:
- Search, sort and filter your Client List.
- Quickly view which client authorisations are in place and for which tax services.
- Amend references to easily identify clients.
- View which access groups, if any, the client belongs to within the Agent Services Account.
If you’re interested in joining the trial or would like to find out more, you can contact HMRC at This email address is being protected from spambots. You need JavaScript enabled to view it..

Making Tax Digital for VAT: clients filing annually

All VAT-registered businesses must now use compatible software to keep VAT records digitally and file their VAT returns to HMRC unless they are exempt.
Businesses that file their VAT returns annually will no longer be able to use their VAT online account and instead must use compatible software to file their future VAT returns.
- From 15 May 2023, taxpayers who do not file their VAT returns through compatible software may have to pay a penalty.

See Making Tax Digital: VAT (subscriber guide)

Government’s Border Target Operating Model

On 5 April 2023, the Government’s Border Target Operating Model was Published in draft form, setting out a new model for importing goods into the UK from countries inside and outside the EU.

Changes to Corporation Tax: Small Profits Rate, Marginal Relief and the CT600

From 1 April 2023, the main rate of Corporation Tax increased to 25% for companies with profits over £250,000.
- A small profits rate of 19% applies 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).
- The lower and upper limits are proportionately reduced for short accounting periods or the number of associated companies of the reference company.
New boxes are being introduced to the CT600, these boxes include box:
- 326 number of associated companies in this period.
- 327 number of associated companies in the first financial year.
- 328 number of associated companies in the second financial year.
- 329 put an ‘X’ in box 329 if the company is chargeable at the small profits rate or is entitled to marginal relief
Box 435 is being renamed to ‘Marginal Relief’.

See Tax Data Card 2023-24

Identity checking app

As part of the Government Gateway setup process, people can use the selfie camera on their mobile to confirm a match with either their UK driving licence or ePassport.
To use the free identity app, taxpayers need to:
- Have a working camera on their device.
- Use the Chrome browser if on an Android phone.
- If on an iPhone, have an iPhone 7 or above to use an ePassport to prove their identity.
Taxpayers can still opt to provide two forms of evidence instead of using the identity-checking app.
Later this year HMRC aim to start rolling out GOV.UK One Login to individual taxpayers who want to access online services. This is a way for people to access government services and prove their identity.

Anti-Money Laundering Supervision YouTube videos to help businesses

HMRC has launched four new Anti-Money Laundering Supervision video guides to help businesses get things right first time when registering with HMRC for money laundering supervision.

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: