Highlights from the broader tax news for the week ending 19 April 2023, including: closure of online VAT return; PAYE direct debits; TRS reporting requirements; interest rate increase for discounted gift trusts; NMW campaign; Finance Bill amendment for R&D; closure of the DAC6 reporting service; and Tax Administration and Maintenance Day.
Online VAT return closing to annual filers
HMRC is contacting traders who file annual VAT returns to remind them that the online VAT return will close from Monday 15 May 2023. Copies of the communications are being sent to agents. The online return closed for other traders in November 2022.
From 15 May, annual filers will need to use MTD compatible software to file their return, or claim a digital exclusion exemption.
Those who file or pay late as a result of this change may incur penalties.
Direct debits for employer PAYE
HMRC has fixed a problem with payment of employer PAYE liabilities by direct debit. HMRC was issuing automatic late payment notices from its generic notification service, even when a direct debit mandate was in place and payment had been collected. HMRC stopped issuing such notices on 23 March 2023.
Changes to reporting requirements for Trust Registration Service
From 1 April 2023, expanded reporting requirements are in effect for the Trust Registration Service (TRS). HMRC has updated its TRS manual to reflect these changes.
A relevant person is now required to conduct ongoing due diligence throughout a business relationship with a registerable trust, as well as prior to engaging in the relationship. Ongoing monitoring should be carried out in line with the relevant person’s money laundering obligations.
HMRC’s online form to report material discrepancies can be found here. Only material discrepancies need to be reported; this does not include small spelling errors or slight differences in the trust name provided that the trust is identifiable from the trust name on the TRS.
Discounted gift trusts
HMRC has confirmed in Revenue and Customs Brief 4/23 that the interest rate that it applies to valuation of the retained rights under a discounted gift trust will rise from 4.5% to 6.75%. The increased rate will apply from 1 May 2023.
Where an insurance policy or bond is placed in trust, but the settlor retains some rights, this may give rise to a discounted gift trust. The value of the rights that the settlor retains must be calculated to determine the transfer of value on setting up the trust, and the value of the settled property at 10-year anniversaries.
Campaign to promote national minimum wage (NMW) increase
The Department for Business and Trade (DBT) has launched a marketing campaign aimed at employees and workers to encourage them to be aware of their NMW rights, and with some messaging also aimed at employers.
NMW is not just the headline rate of employees’ pay, but has its own rules. An on-demand webinar from the Tax Faculty provides NMW worker definitions, NMW pay definitions, NMW hours definitions and what deductions from pay count for NMW.
Finance Bill amendment concerning the payable R&D credit for SMEs
The government has proposed an amendment to the Finance Bill currently passing through the House of Commons. The amendment will allow a company to claim an SME payable credit where its accounts have not been prepared on a going concern basis only because it has transferred its trade to another member of the group. This brings the SME payable credit into line with changes already included in the Finance Bill in respect of SME R&D tax relief and the R&D expenditure credit (RDEC).
Closure of the DAC6 reporting service
From 28 March 2023, reportable arrangements should be notified to HMRC via the Mandatory Disclosure Rules service. Taxpayers and their representatives can still use the DAC6 service until 31 May 2023 to tell HMRC about arrangements that became reportable before 28 March 2023, or to send additional information, replacements or deletions for previously submitted disclosures.
Tax Administration and Maintenance Day
It has been confirmed in a written ministerial statement that Tax Administration and Maintenance Day (TAM Day) is 27 April. This will outline the action the government is taking to simplify the tax system, tackle the tax gap and modernise the tax system.
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