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Technical round-up: May 2024

Author: ICAEW Insights

Published: 29 May 2024

This month’s top stories include a HMRC warning about VAT bank details fraud; an NAO report showing taxpayers have been let down by poor HMRC service; and HMRC rejecting the ‘brightline’ test for furnished holiday lets.

Need to know

HMRC warns of VAT bank details fraud: Form VAT 484 has been used in fraudulent attempts to gain access to businesses’ VAT repayments.

HMRC rejects ‘brightline’ test for furnished holiday lets (FHLs): In response to ICAEW’s letter about the abolition of the FHL regime, HMRC has confirmed that the boundary between property letting and trading will be judged on the facts and by reference to case law.

Taxpayers let down by poor HMRC service, says NAO: The National Audit Office (NAO) has found that HMRC’s increased digital offering has not delivered the expected savings or improved services for taxpayers. The government has promised more funding for HMRC.

ICAEW welcomes updates to HMRC’s standard for agents: The standard for agents has been updated to highlight that it does not override duties set out by an agent’s professional body, or impose additional requirements on agents who meet Professional Conduct in Relation to Taxation standards.

Wanted: ideas to reform UK VAT: ICAEW is seeking research proposals by 30 June 2024 for simplifying the UK’s VAT system, with a £5,000 prize for the winning entrant.

HMRC should delay plans for employers to provide more data: The current start date of 5 April 2025 does not give employers and others enough time to prepare to give more detailed information on employees’ hours to HMRC.

Special tax sites postcode reporting burdensome says ICAEW: Draft regulations requiring employers in freeport and investment zones to report workplace postcodes may deter claims for national insurance contributions relief.

HMRC launches fully digital service for voluntary NI contributions: The government has launched a new service that allows individuals to identify gaps in their national insurance (NI) record and make voluntary contributions without phoning for a reference number.

New charges to import animal and plant products come into effect: From 30 April 2024, a new common user charge applies to imports of animal and plant products entering or transiting through Great Britain via the port of Dover or Eurotunnel.

Agents can register to payroll client’s benefits in kind: It is now possible for agents to register with HMRC for benefits in kind to be taxed through their client’s payroll for 2025/26 onwards.

ICAEW urges major simplification of tax penalties framework: The Tax Faculty welcomes the opportunity to reform tax administration but warns of significant challenges in implementing some of the changes. Existing safeguards should be publicised further.

HMRC confirms VAT treatment of voluntary carbon credits: With effect from 1 September 2024, the sale of voluntary carbon credits will be standard-rated where the place of supply is the UK.

Member help sheets and guidance

ICAEW publishes Q&As on the cash basis for traders: In TAXguide 04/24, ICAEW’s Tax Faculty answers the questions raised during a recent webinar on the changes to the cash basis for the self-employed and partners.

HMRC publishes over 100 FAQs on lifetime allowance abolition: HMRC has published an update for pension scheme administrators on a range of issues, including the abolition of the lifetime allowance.

Agents can now change contact details online: New functionality in the agent services account allows agents to change their contact details online.

Seven software products now support MTD ITSA: HMRC has added APARI and Digita Personal Tax to the list of software products compatible with making tax digital (MTD) for income tax self assessment (ITSA).

How taxpayers can take ‘reasonable care’: ICAEW’s Tax Faculty explains how taxpayers can take reasonable care when submitting a tax return, including when a second opinion may be needed.

Avoid payroll errors with HMRC’s online starter checklist: New employees should complete the starter checklist before their first payday so their employer can report the details via PAYE RTI to HMRC correctly first time.

Consultations

HMRC consults on a change to the reformed penalty system: Draft regulations allow HMRC to assess the second penalty for late payment before the tax has been paid in full.

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