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ICAEW technical round-up: September 2021

Author: ICAEW Insights

Published: 28 Sep 2021

This month’s top technical stories feature news on the MTD for ITSA deferment, COVID support schemes coming to an end and IR35 compliance checks for the finance and energy sectors.

Need to know

COVID support schemes coming to an end: On 30 September a range of government support packages to help businesses and individuals through the coronavirus pandemic will come to an end or change, including the furlough scheme and reduced SDLT rates in England. ICAEW insights provides a reminder of the changes.

PM confirms 1.25% increase to NIC and dividend tax rates: National insurance contributions and dividend tax rates will increase by 1.25 percentage points across the UK from April 2022, with the projected £12bn annual income to be ring-fenced to pay for health and social care.

MTD ITSA deferment provides more time to prepare, says FST: The new Financial Secretary to the Treasury has confirmed that the decision to postpone the introduction of Making Tax Digital for income tax was made in recognition of the time needed for taxpayers, agents and HMRC to prepare for changes.

Energy and finance sectors target of IR35 compliance checks: Businesses operating in the oil and gas, banking and finance sectors are being targeted by HMRC to confirm that they are complying with the off-payroll working regime introduced in April 2021.

ICAEW updates audit report wording guides: The Audit and Assurance Faculty at ICAEW has updated five of its popular audit report wording guides to reflect changes to auditing standards.

FRC presses for improved SECR disclosures: The Financial Reporting Council has urged companies to step up their efforts on climate-related disclosures for Streamlined Energy and Carbon Reporting rules, which came into effect from 1 April 2019.

Trust Registration Service opens to all non-taxable trusts: HMRC has opened the Trust Registration Service to all non-taxable trusts. The deadline for registering these trusts has been extended to 1 September 2022. ICAEW’s Tax Faculty can confirm that trusts relating to healthcare policies and children’s bank accounts will not be required to register.

New consumer protection measures may have consequences: A shake-up of retail financial services designed to offer a higher degree of consumer protection could have unintended consequences for the sector and may ultimately lead to consumers losing out, ICAEW has warned.

Online VAT return is closing to 800 traders: HMRC is trialling a forced closure of the online VAT return for 800 businesses that should be complying with Making Tax Digital for VAT. ICAEW warns that these businesses will not be able to file VAT returns due on 7 October 2021 unless they have signed up to MTD VAT.

New tax on the horizon: the Economic Crime Levy: HM Treasury has published plans for a new charge for professional firms and financial institutions: the Economic Crime (Anti-Money Laundering) Levy. Its collection will be the responsibility of HMRC, the Financial Conduct Authority and the Gambling Commission.

Registration of self-employed reverts to pre-COVID process: HMRC has confirmed that the normal process for registering as self-employed has been restored. Taxpayers who could not obtain a national insurance number during the pandemic used a workaround and now need to contact HMRC to arrange collection of Class 2 national insurance contributions.

Other technical news and updates

ICAEW backs UK bid to host new global sustainability body: With the new International Sustainability Standards Board’s location yet to be decided, ICAEW argues that hosting it in the UK represents the swiftest and most efficient way of accomplishing its goals

Annual accounts filing: Companies House pushes for digital delivery: With the peak filing month of September drawing to a close, Companies House says more streamlined ways to file digitally, some of which were introduced during the pandemic, have boosted the proportion of annual accounts filed electronically and reiterates its call for companies to go digital.

OTS provides valuable insights on changing the tax year: The Office of Tax Simplification has highlighted the benefits of a tax year aligned with the calendar year or a month-end. While cautioning against an immediate change the report suggests that it is not too early to start some long-term planning. 

ICAEW worried local audit reform may not get the focus it needs: ICAEW’s submission to government on the next stages of local audit reform highlights the importance of improving local authority financial reporting and getting the right regulatory arrangements in place.

Regulatory reporting deserves no less rigour than financial reporting: The Prudential Regulation Authority has written to bank and building society CEOs to reiterate their expectations of complete, timely and accurate regulatory returns.

Uncertain tax treatment rules still complex and confusing, warns ICAEW: Draft legislation and guidance implementing the government’s plans for large businesses to report uncertain tax positions will introduce additional complexity and not provide the clarity taxpayers need, according to ICAEW’s Tax Faculty.

Estimated tax gap increases to £35bn: HMRC figures released for the pre-pandemic period of 2019/20 show a £2bn increase in the estimated tax gap, largely attributable to an increase in the VAT gap. ICAEW’s Tax Faculty analyses the key data. 

New tax avoidance promoter rules could be clearer, says ICAEW: Draft legislation aimed at tackling promoters of tax avoidance schemes includes subjective terms and tests which are open to interpretation, says ICAEW. The terms should be amended or HMRC guidance created outlining its interpretation to avoid confusion. 

EU sets out to reform insurance and reinsurance sector: The European Commission has come forward with some key changes to the regime for insurers and reinsurers, addressing capital requirements and requiring more attention to climate change in risk management. 

FCA and TPR launch value for money framework on DC pensions: The framework - published in a joint discussion paper from the regulators - will allow trustees and independent governance committees to compare their scheme’s costs and charges.

More information on new plastic packaging tax: HMRC has published additional support for businesses that manufacture and import packaging to help them understand whether they need to register and are liable for the plastic packaging tax from April 2022.

Insights special: Hybrid working

Moving to a more digital workplace will create opportunities – better insights using data analytics, improved decision making, new skills and talent – but it also comes with challenges. ICAEW Insights takes a closer look.

Insights special: Hybrid working and the future of work

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