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

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

Employment-Related Securities (ERS), end-of-year return deadline

The deadline for filing the annual ERS return is 6 July 2023. Penalties may be charged if a return is late.
Returns are due for every scheme, even where it is a nil return or the scheme is no longer used.
Agents can deal with HMRC but the responsibility ultimately rests with the employer.
See: Employment-Related Securities: Reporting

Tax Administration and Maintenance Day, Spring 2023

On 27 April, the government published a series of tax and administration measures following the Spring Budget 2023.
The focus was on simplifying and modernising the UK tax system and reducing the tax gap.
See: Tax Administration and Maintenance Day: At a glance

Tax Administration Framework review, publication of new legislative pilot discussion documents

The government has published two documents as part of the Tax Administration Framework Review:
- Creating innovative change through new legislative pilots discussion document, a publication exploring the benefits and challenges of HMRC introducing a new approach to testing and piloting where certain legal obligations could be suspended or altered for participants.
- Information and data powers call for evidence, a publication seeking views on how to update and reform HMRC’s information and data powers and accompanying safeguards which aims to improve taxpayers’ experience and reduce administrative burdens.
Both are open for feedback until 20 July 2023.

Preparing for the new tax year basis, Income Tax Self Assessment

The basis upon which profits are to be calculated for Income Tax Self Assessment for sole traders or partners is changing for the tax year 2023-24.
Only those taxpayers with an accounting date of 31 March or 05 April will be unaffected.
For 2024-25, the calculation of profits will be based on those arising in the tax year, not those arising in the accounting period as is the case now.
2023-24 will be a transition year, where overlap profits can be used and additional profits arising as a result of the transition will be spread across a five-year period. The guidance on the use of provisional figures will be relaxed going forward.
Additional support and an online form for requesting overlap relief figures will be launched in the summer.
If requesting overlap relief information, please provide HMRC with as much of the following as possible:
- Taxpayer name.
- National Insurance number or Unique Taxpayer Reference (UTR).
- Name and/or description of 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 a 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

Plastic Packaging Tax, monthly update

Mass balance approach for chemical recycling announcement:
- On 27 April 2023, HMRC announced that it will launch a consultation to explore the use of a mass balance approach (MBA) to account for chemical recycling for Plastic Packaging Tax (PPT) later in 2023.
HMRC Evaluation List:
- PPT now features in the HMRC evaluation list.
Penalties guidance:
- From 1 April 2023, failure to register or late registration may give rise to a ‘failure to notify’ penalty.
- The penalty is calculated as a percentage of the ‘potential lost revenue’.
Spring Budget and Finance Bill 2023, uprating by Consumer Price Index.
Tax credit negative Statutory Instrument consultation running from 9 to 22 May 2023.
Registration and returns:
- If you manufacture or import 10 or more tonnes of plastic packaging within a 12-month period you must register for PPT, even if your packaging contains 30% or more recycled plastic.
- There are two tests: the 'forward test' (if you expect to pass to manufacture or import more than 10 tonnes in the next 30 days) and the 'backward test' (if you have manufactured or imported more than 10 tonnes in the last 12 months).
Guidance: Guidance for PPT is available at our collection page.
See: Plastic Packaging Tax

Research and Development (R&D) tax relief reform, updated draft guidance published

Updated draft CIRD guidance

HMRC has published An update to draft Corporate Intangibles Research & Development (CIRD) guidance which was originally published for consultation in December 2022.
The guidance will be incorporated into the CIRD manual once Finance (No2) Bill 2022 receives Royal Assent later this summer.

Reminder: requirements for claiming R&D tax reliefs as of 1 April 2023

For accounting periods starting on or after 1 April 2023:
- Customers who have not claimed within the last three years will be required to provide claim notification ahead of a claim for R&D tax relief.
- Claims can now include qualifying expenditure on data licences and cloud computing costs.
From 1 August 2023:
- All companies will be required to submit an additional information online form before making a claim.
Reminder about a technical note on additional tax relief for Research and Development intensive small and medium enterprises:
- At Spring Budget 2023, a pre-draft legislation Technical note was published concerning a new additional tax relief for Research and Development intensive small and medium enterprises.

See: R&D Tax Relief: Overview

Self Assessment threshold change

From 2023-24, the Self Assessment threshold for customers taxed through PAYE only, will change from £100,000 to £150,000. No action is required yet, as the 2022-23 year is unaffected.
A Self Assessment exit letter will be issued if they submit a 2022-23 return showing income under £150,000 taxed through PAYE and no other criteria for Self Assessment is present.
The other criteria for submitting a Self Assessment return include:
- Receipt of any untaxed income.
- Partner in a business partnership.
- Liability to the High Income Child Benefit Charge.
- Self-employed individual and with a gross income of over £1,000
See: Do I have to file a tax return?

Marriage Allowance: new print and post claim form to be published

In order to support agents who are unable to use the online process to apply for Marriage Allowance, HMRC have published a new Print and post claim form.
See: Marriage Allowance (Transferable Married Couples Allowance)

Loan relationship unallowable purpose rule updated guidance

The ‘unallowable purpose’ rule can operate to limit the deduction of interest in cases where a loan has a non-commercial, or ‘unallowable’, purpose.
HMRC has published Updated guidance on the rule at CFM38100 to CFM38200.
See: Loan Relationships

Making Tax Digital

HMRC's old VAT online account stopped on 15 May

Agents are reminded that from 15 May, VAT-registered businesses are required to keep digital VAT records and submit their returns to HMRC using Making Tax Digital (MTD) compatible software, unless they are exempt.
Exemptions are available: Check here.
From this date, the VAT online account will no longer be available for annual filers.
See: Making Tax Digital: VAT

HMRC Agent Services

Repayment agent registration, check if you need an agent services account to submit repayment claims

On 11‌‌‌ ‌‌January 2023, a number of measures to improve transparency in the repayment agent market and protect customers were announced.
The government will now require paid agents to Register with HMRC via the agent services account (ASA) if they want to continue to submit claims for Income Tax repayments. Such agents will be given a three-month window to register with HMRC, starting on 2‌‌‌ ‌‌May 2023.

Continuing to support customers to interact digitally

Following a recent trial, from 4 May, customers calling about routine queries which could be answered online will be given the option to either receive a link via text message or remain on the phone. These queries and requests are:

Proof of entitlement document for Child Benefit.
Voluntary National Insurance Contributions and checking National Insurance record.
Applying, amending or cancelling Marriage Allowance claims.
Checking for receipt of a voluntary National Insurance payment.
Chasing HMRC for when a reply is expected.

HMRC will automatically redirect these routine queries:

Finding your UTR number.
Registering for HMRC online services.
Lost or forgotten online service password or user ID.

The following routine queries will be redirected to online services automatically:

Claiming tax credits (while signposting to benefit entitlements information as tax credits has been replaced by Universal Credits).
State pension forecasts (a service provided by the Department for Work and Pensions, but HMRC often receives calls about it).

HMRC’s Advance Valuation Ruling Service (AVRS) is here

Traders can now get legal certainty on their chosen valuation method for imported goods, for a period of three years.
How to sign up - if traders want to sign up for AVRS, they need:
- A Government Gateway ID.
- An EORI number.

Read more information on Applying for an advance valuation ruling.

Update on employer direct debits

Recurring direct debits for employer PAYE need to be set up at least six working days before the payment due date of the 22nd of the month.
There will no longer be a late payment generic notification when the payment is collected after the 22nd. Interest may be shown as charged on the online account but this will be reversed once the payment is processed.

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: