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ICAEW technical round-up: August 2023

Author: ICAEW Insights

Published: 31 Aug 2023

This month’s top stories include HMRC’s extension to the trial for responding to old post; draft legislation released which prompts taxpayers to provide more information to HMRC; and the latest figures on HMRC caller waiting times.

Need to know

HMRC extends trial for responding to old post: HMRC is continuing to focus on processing older post. Agents can use the agent account manager team to escalate cases more than 12 months old.

HMRC’s debt levels remain high as interest rates increase: The increase in HMRC interest rates from 22 August 2023 will make it harder for taxpayers to clear these debts.

Taxpayers should prepare to provide more information to HMRC: Draft legislation released on 18 July indicates that business and individual taxpayers will be required to provide more information, from creative sector relief regimes to PAYE reporting, to HMRC in the coming years.

HMRC encourages finalisation of self assessment 2021/22 returns with provisional figures: HMRC is requesting that returns that include estimated or provisional figures should be amended by 30 November 2023 if the actual figures are now known, or by 31 December 2023 if they are yet to be discovered.

HMRC prompts taxpayer action on register of overseas entities: Following the creation of the register of overseas entities (ROE), beneficial owners of UK properties must now be reported to Companies House. HMRC is now using this new information to identify failures to notify, or errors in individual’s tax affairs.

Increase SAYE and SIP investment limits to increase take-up: ICAEW responds to HM Treasury’s call for evidence to consider opportunities to improve and simplify two types of tax-advantaged share schemes.

Charity tax reforms should not overly burden charities, cautions ICAEW: While ICAEW’s Tax Faculty supports HMRC’s efforts to counter the abuse of charity tax rules, any reforms should be proportionate to the issue. Otherwise, the reforms risk deterring volunteer involvement and vital donations to charities.

HMRC telephone service deteriorates further: The latest figures for April to June 2023 show that callers waited even longer on HMRC helplines.

Where are the gaps in HMRC’s digital services? ICAEW’s Tax Faculty wants to get your thoughts on the top priorities for the development of HMRC’s digital services.

HMRC interest rates increase again: Following the Monetary Policy Committee’s decision to increase the Bank of England base rate to 5.25%, HMRC has announced increases to interest charged on both late paid tax and the rate paid on repayments of tax.

Commons Treasury Committee calls for greater diversity of venture capital investment: The House of Commons Treasury Committee’s report into venture capital investment schemes recommends better support for female-led businesses and those outside the South East of England.

DPT, transfer pricing and permanent establishment reforms: ICAEW responds: ICAEW’s Tax Faculty welcomed HMRC proposals to make the UK legislation more closely aligned with OECD principles, but noted that there were good reasons to not fully adopt the OECD’s 2017 changes to the permanent establishment definition.

Member helpsheets and guidance

HMRC guidance on handling R&D tax relief claims: New guidance in HMRC’s corporate intangibles research and development (CIRD) manual focuses on procedures for companies with customer relationship managers but includes some points of wider interest that would also apply to smaller companies.

HMRC disclosure facility for non-resident landlords: Letters are being sent during August to companies resident outside the UK that HMRC’s records show hold UK commercial property and have not registered for income tax or corporation tax in relation to these properties.

Will income tax be extended to beneficiaries of all pensions? Policy documents regarding changes to the taxation of pensions were published as part of Legislation Day 2023. This included a suggestion that certain beneficiaries of pensions of members who died under age 75 may become subject to income tax as part of future tax changes.

HMRC guidance on digital records and signatures: HMRC confirmed its position on digital records and signatures in Agent Update 110. ICAEW’s Tax Faculty is encouraging HMRC to conduct a wider review of this area.

HMRC to remove XI EORI numbers from some businesses: Businesses should act now if they need to keep or restore their XI EORI number to move goods into Northern Ireland.

Check what your tax code means with HMRC’s online tool: HMRC has released a new online tool to help taxpayers understand what their tax code means.

Features of a merged R&D tax relief scheme: On 18 July, this year’s Legislation or ‘L’-Day’, the government published draft legislation setting out the design for a merged research and development (R&D) tax relief scheme. However, no decision has been taken to introduce a merged scheme.

Consultations

HMRC’s ‘legislative sandbox’ proposals would be difficult to implement: In its response to a consultation document issued by HMRC, ICAEW’s Tax Faculty highlighted the difficulties such an approach would cause if used to test potential changes to the administration and operation of the UK tax system.

Treasury Committee urges wholesale review of tax reliefs: In line with evidence from ICAEW, the House of Commons Treasury Committee has concluded that tax reliefs are adding complexity to the UK tax system and are open to abuse. The committee has called for a systematic review of reliefs, alongside greater consultation on new reliefs and measures to better manage existing reliefs.

Have your say: HMRC consultation on employee ownership trusts and employee benefit trusts: Reforms to the tax treatment of EOTs and EBTs proposed in the paper are intended to focus the rules more effectively on the policy objectives of rewarding employees and encouraging more employee engagement. Another objective is to prevent tax advantages being obtained through the use of these trusts outside their intended purposes.

HMRC consults on changes to plastic packaging tax: The consultation explores the application of a mass balance approach to determine the amount of chemically recycled plastic in plastic packaging.

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