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HMRC Update confirms changes to code out of self-assessment debt

17 February 2020: in its latest Agent Update, HMRC has confirmed changes to collection of self-assessment debt, offered opportunities for agents to test new systems and published reminders for non-resident corporate landlords becoming liable to corporation tax from April 2020.

Edition 76 of Agent Update, published on 12 February, stated that from March 2020 HMRC will code out self-assessment debt ‘immediately and automatically within the current tax year’.

News of this change had not been published previously and ICAEW’s Tax Faculty has asked for further clarification as currently outstanding self-assessment debts are collected through a restriction in a taxpayer’s tax code following a notification letter.

The update also included details of HMRCs efforts to clear its backlog of research and development claims, with normal service expected to resume by early February.

Agent Update 76 outlined opportunities to test two new HMRC systems:

  1. CGT 30-day reporting and payment. The rules relating to the reporting and payment of capital gains tax (CGT) due on a disposal of UK residential property are changing in April 2020. The tax due must be reported and paid to HMRC within 30 days of completion of the disposal. HMRC is looking for tax agents and their clients to help them trial the new service for reporting and paying and to provide feedback. The issue of most concern to agents is that existing 64-8 authorities will not be recognised for this service and the client will need to engage digitally.
  2. Corporate interest restriction return. HMRC is working on improving the corporate interest restriction return. This work is expected to include bringing together all the current spreadsheets and forms into an easily accessible format that fits GOV.UK standards and developing an application programme Interface (API) that supports integration with software products, including in-house software.

Further details on how to participate in these test are available in Agent Update 76.

Alongside reminders for employers and to prepare to file 2020-21 ATED returns, HMRC included a note of the key actions for non-resident corporate landlords (NRCL) becoming liable to corporation tax instead of income tax from April 2020. The key actions are:

  • tell HMRC if the NRCL already has a CT UTR, no longer lets out UK property or completes a tax return other than a SA700; 
  • tell HMRC in writing if the NRCL prepares its accounts or financial statements to a date that is different from 5 April. HMRC will set up the CT record with a default accounting period which will end on 5 April 2021. This notification, which by law must be in writing, will help HMRC to issue correct notices to file a company tax return;
  • update the agent authority to include corporation tax.