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Practical points: tax administration 2023

Helpsheets and support

Published: 10 Jan 2023 Updated: 30 Nov 2023 Update History

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Every month, the Tax Faculty publishes short, practical pieces of guidance to help agents and practitioners in their day-to-day work.

Agents and HMRC

December 2023

Checking marriage allowance claims using PAYE codes

Agents are able to check whether a client has an enduring marriage allowance claim using the client’s PAYE code. PAYE codes ending in the suffix ‘N’ indicate that an election is in place to transfer part of the personal allowance to a spouse. PAYE codes ending in the suffix ‘M’ indicate that a spouse receives the allowance.

Alternatively, agents can confirm whether an enduring claim is in place by calling the Agent Dedicated Helpline.

Contributed by Mei Lim Cooper

  • Agents and HMRC - February 2023

    Income record viewer guidance updated

    HMRC has updated the guidance on its income record viewer service for agents. The income record viewer allows agents to view their clients’ pay and tax details, employment history and tax codes.

    The update includes:

    • information on how agents should get authorised by their client using the digital handshake; 
    • what the client will need to do to authorise the agent, including how to get help if the client is digitally excluded; 
    • what the agent should do after they have been authorised; and 
    • what information the agent will be able to access in the income record viewer.

    Get access to the Income Record Viewer for agents

Tax returns

November 2023

Relying on HMRC guidance

Some advisers may have noticed an increase in the number of changes to HMRC’s guidance – in particular changes to articles in Agent Update and Employer Bulletin.

It is always advisable that, when relying on HMRC guidance, a copy of the guidance is retained noting the date.

Professional conduct in relation to taxation (PCRT) Helpsheet A: Submission of tax information and tax filings also contains guidance at paragraphs 27 and 28 concerning reliance on HMRC published guidance. This states:

“27. Whilst it is reasonable in most circumstances to rely on HMRC published guidance, a member should be aware that the Tribunal and the courts will apply the law even if this conflicts with HMRC guidance.

“28. Notwithstanding this, if a client has relied on HMRC guidance which is clear and unequivocal and HMRC resiles from any of the terms of the guidance, a Judicial Review claim is a possible route to pursue.”

  • Tax returns - October 2023

    Self assessment exclusions and special cases

    Tax agents with clients with complicated tax affairs will often refer to the self assessment exclusions and special cases as they set out whether taxpayers should file a return online rather than a paper return. As these documents are primarily produced for software developers, they can be found at Self Assessment technical specifications (2023) for individual returns.

    Where a paper return is filed in an exclusion case, this should be very clearly noted on the front page of the return, along with the reference number for the exclusion that applies.

    If a return is unable to be filed online due to an exclusion identified by HMRC, this is a reasonable excuse for filing on paper after the 31 October deadline for paper returns. No penalty will be charged by HMRC, provided the return is filed by 31 January (the online filing deadline) and a reasonable excuse claim is included in the return.

    Disposals of excluded indexed securities

    The 2022/23 self assessment return includes a new box for individuals to declare their gains on excluded indexed securities. The information to be included is the total gains from the disposal of excluded indexed securities during the year before the effect of any losses or reliefs.

    Although most tax return software has been updated to accommodate this requirement, HMRC is aware that some financial institutions will not be able to provide this information to their customers for the 2022/23 tax year.

    HMRC advises that if a taxpayer has made a disposal of excluded indexed securities, but are unable to quantify the gain, they should make a disclosure under ‘any other information’.

    If the information becomes available after the return has been filed and within the window for amending the return, taxpayers should file an amendment to the return to include the details for the excluded indexed securities.

    Details of HMRC’s self assessment legal framework and approach to provisional and estimated information can be found in HMRC’s internal manuals at SALF206.

    Corporation tax returns for long accounting periods 

    Extended accounting periods (longer than 12 months but not more than 18 months) must be notified to HMRC at least three months before the standard filing date of the first return to avoid any late payment penalties. This is because extended accounting periods are required to be set up by an HMRC caseworker on HMRC’s IT systems. Notification should be made in writing providing full details of the change.

    For example, a 30 June 2023 year end extended to 30 September 2023 would submit two returns – the first to 30 June 2023 and then a three-month return to 30 September 2023. The standard filing date for the first return is 30 June 2024, so HMRC would need to be notified of this change by 31 March 2024.

    When filing an amended return for an extended accounting period, this can only be filed electronically if the returns are filed within two years of their respective accounting period end dates. All amendments after this date would need to be filed on paper.

    Contributed by Angela Clegg

  • Tax returns - September 2023

    Marriage allowance elections 

    Elections for marriage allowance may be made online, by telephone, via print-and-post form and through the submission of a self assessment tax return. 

    Where both the transferor and recipient of a marriage allowance election submit self assessment tax returns online, HMRC has advised that the transferor should submit their tax return at least 72 hours before the recipient of the marriage allowance. This allows time for HMRC’s systems to establish the marriage allowance relationship and gives the best chance for the process to be automated. 

    Elections for marriage allowance made through self assessment tax returns only last for one tax year (ie, the tax year being reported in the tax return). Marriage allowance elections made through tax returns only will therefore need to be made year-on-year via the transferor’s tax return.

    Elections made outside the tax return process (eg, online, telephone or post) are enduring until cancelled by the transferor. Where an affected transferor also submits a tax return, there is no need to complete the marriage allowance section of the tax return. The tax return calculation should update automatically to apply the marriage allowance election.

    Contributed by Mei Lim Cooper, Technical Manager, Personal Tax, ICAEW

    Being a director removed from HMRC’s list of people required to register for self assessment

    Via GOV.UK, HMRC gives examples of people that are required to use form SA1 to register for self assessment. If you hold form 64-8 for a client, individuals can authorise you to perform this registration. GOV.UK is public-facing guidance, often seen as the law rather than HMRC’s interpretation.

    For many years, HMRC’s guidance on GOV.UK indicated that company directors had to register for self assessment, regardless of whether their income had been subject to income tax. This is referred to as a ‘no income other than PAYE’ director. This was tested in a 2017 case where Karen Symes was instructed by HMRC that she was required to register (via her agent). The ruling went against HMRC with the ruling indicating that just being in the position of a director is not sufficient for HMRC to require registration.

    In 2018, HMRC updated some of its guidance, but not the public-facing ‘Register for Self Assessment’ on GOV.UK. On 25 July 2023, this guidance was finally updated.

    Action for accountants

    The fact that GOV.UK has changed public-facing guidance is not an indication that a self-assessment tax return is no longer due. There is a danger that it could be interpreted that way, which may lead to confusion and conversations with clients.

    There is still a legal requirement to complete one if HMRC has instructed via a notice to file. However, for ‘no income other than PAYE’ directors, this can be appealed, with the notice withdrawn together with the obligation to submit a tax return.

    Therefore, the fact that guidance has been updated needs to be welcomed but should be approached with caution. It is not a blanket update that negates any previous registration. If the director is registered for self assessment and you are acting on their behalf, you still have an obligation to file unless you can get HMRC to withdraw its instruction. Failure to file, remember, carries penalties that you will not want clients to incur (and, possibly, pass on to you).

    Register for Self Assessment – GOV.UK

    Symes v Revenue and Customs [2018] UKFTT 42 (TC)

    This information is taken from the weekly Tax Tips, published by the Tax Advice Network, for which you can subscribe at www.TaxAdviceNetwork.co.uk

  • Tax returns - July 2023

    HMRC highlights two company tax return online filing issues

    On 22 May 2023, HMRC updated its guidance page Changes and issues affecting the Corporation Tax online service with details of two new technical issues affecting the ability of companies to file company tax returns (CT600) online. As announced at Spring Budget 2023, 100% full expensing of capital expenditure on main rate assets and 50% first-year allowances for special rate expenditure were introduced for qualifying expenditure incurred on or after 1 April 2023. HMRC’s guidance states that its online service will not be updated to support full expensing before April 2024. If returns reflecting full expensing need to be filed prior to this update, HMRC sets out guidance on how existing capital allowances boxes within the CT600 should be repurposed. Guidance is also provided on how the CT600’s existing boxes should be used by companies claiming a 50% first-year allowance.

    HMRC also flags an issue currently preventing online filing by any taxpayers required to file a supplementary form CT600N in relation to residential property developer tax (RPDT), where claims for RPDT group relief for tax losses brought forward are included but simplified group relief arrangements are not in place. HMRC’s service will be updated next April to fix this issue, but in the meantime affected RPDT filers are instructed to contact their HMRC Customer Compliance Manager.

    From the Deloitte Monthly Tax Update dated 9 June 2023

  • Tax returns - May 2023

    What does HMRC mean by digitally excluded?

    HMRC is moving to digital by default across many of its services. This includes P11D reporting by employers and making paper self assessment (SA) returns available only on request for some taxpayers. The discussion document, Simplifying and modernising HMRC’s income tax services through the tax administration framework, includes proposals for several HMRC outputs, including SA notices to file, P2 coding notices and P800 tax calculations, to become digital by default. HMRC will only be able to introduce this change for those taxpayers who have accessed their digital tax account. 

    Following the 2013 decision in LH Bishop Electrical Co Ltd & Others v HMRC Commissioners UKFTT 522 (TC), HMRC accepts that it is required to provide a non-digital service to those who are digitally excluded.

    HMRC’s view of what it means to be digitally excluded was initially set out in VAT legislation and subsequently mirrored for making tax digital (MTD) for VAT and income tax self assessment.

    A digital exclusion exception may apply if it’s not reasonable or practical for a taxpayer to use computers, software or the internet because:

    • of age, a disability or location;
    • of an objection on religious grounds; or
    • for any other reason why it’s not reasonable or practical.

    HMRC will consider each application on a case-by-case basis. Some additional guidance is available in the MTD VAT notice and may have wider relevance.

    HMRC has declined to specify a particular age for exemption. However, it has decided to continue to issue paper SA returns to those aged 70 and over who have previously filed paper returns, so this may be indicative.

    Exemption on the grounds of disability applies where an individual cannot use a computer, tablet, or smartphone with the frequency or for the amount of time required.

    Exemption on the grounds of location applies if a taxpayer cannot get internet access at their home or business premises and it is not reasonable to get internet access at another location. It does not apply to those who could obtain access to the internet but have chosen not to do so. HMRC should accept that it may not, for privacy or security considerations, be appropriate to use public computers (such as in a library) for accessing HMRC online services.

    An individual or business may choose to rely on an agent or third party for help with meeting their tax obligations, but they are not obliged to do so. HMRC should not refuse an application for a digital exclusion exemption solely on the grounds that a digitally excluded individual or business could or should rely on an agent or other third party.

    In some cases, a digital exclusion exemption may apply because HMRC’s systems do not provide the necessary functionality. For example, HMRC’s online SA return does not have the functionality to file certain sections of the return (eg, residence and domicile). Cases listed on the SA individual exclusions for online filing also need to be filed on paper. 

    Contributed by Caroline Miskin, Senior Technical Manager, Digital Taxation, ICAEW

    HMRC updates Company Tax Return

    On 1 April 2023, HMRC published updated versions of the Company Tax Return Form (CT600) and its accompanying guide for the start of the new financial year. Changes include new form boxes added in relation to: the restoration of the small profits rate of corporation tax from 1 April 2023; the Energy (Oil and Gas) Profits Levy and Electricity Generator Levy; and the administration of research and development claims (see below). A new supplementary return page (CT600N) and supporting guidance were also published in relation to residential property developer tax (RPDT).

    From the weekly Business Tax Briefing dated 6 April 2023, published by Deloitte 

    Research and development claim administration changes

    The updated Company Tax Return (see above) reflects two changes to the administration of claims for R&D tax relief and R&D expenditure credit (RDEC) to be introduced by the Spring Finance Bill 2023. Two new HMRC guidance pages were published on 1 April 2023 in connection with these new requirements:

    • Tell HMRC that you’re planning to claim Research and Development (R&D) tax relief – a requirement for companies in certain circumstances to submit a ‘claim notification form’ to HMRC within six months of the end the relevant period of account if they are planning to make an R&D claim. Circumstances where a notification is required will include where a company has not previously submitted an R&D claim in respect of prior periods, or where a company’s last claim was made more than three years before the end of the claim notification period. This requirement is due to apply to accounting periods beginning on or after 1 April 2023.
    • Submit detailed information before you claim Research and Development (R&D) tax relief – for all R&D claims to be made on or after 1 August 2023, HMRC will require companies to submit to them an ‘additional information form’ containing detailed information supporting the claims.

    From the weekly Business Tax Briefing dated 16 April 2023, published by Deloitte 

  • Tax returns - March 2023

    Reporting capitals gains in real time

    HMRC has a ‘real time’ Capital Gains Tax service for taxpayers to report in-year gains on assets outside of the tax return process. This may be of particular use for individuals who pay their tax through PAYE. 

    Taxpayers who are not within self assessment may use the service to report gains, including gains chargeable to capital gains tax (CGT) from employment-related securities. HMRC will then send a letter or email providing a payment reference number. 

    Gains can be reported up to 31 December after the end of the tax year in which they were realised, and any CGT due paid by the normal payment date of 31 January following the end of the tax year. Such taxpayers will not need to submit a self assessment tax return for the affected year.

    Self assessment taxpayers may also use the service but will still need to report any gains on their self assessment tax return.

    The online service is accessed using a taxpayer’s government gateway credentials and cannot currently be accessed by agents. 

    The service cannot be used to report gains on disposal of a residential property. These should continue to be reported using HMRC’s online CGT for UK property service, for which agent authorisation is possible. 

    Contributed by Mei Lim Cooper, Technical Manager, Personal Tax, ICAEW

    EIS and SEIS application procedures updated

    HMRC has revamped its guidance and forms for applying for enterprise investment scheme (EIS) or seed enterprise investment scheme (SEIS) status for a company. This status must be granted by HMRC in order for investors to claim EIS or SEIS relief on an investment into the company. 

    The EIS1 or SEIS1 form (compliance statement) has now moved to HMRC’s gForm format (replacing the previous iForm). This means that forms can be previewed before completion. Users are required to log in using an email address or government gateway ID to access and submit the forms online. It appears that the option to submit a paper form by post is no longer available.

    Additionally, the SEIS guidance has been expanded to include new sections on meeting the ‘risk to capital’ condition and the requirements for making a qualifying share issue.

    There is also a new email address for contacting HMRC regarding EIS or SEIS queries.

    Contributed by Mei Lim Cooper, Technical Manager, Personal Tax, ICAEW

  • Tax returns - February 2023

    Share scheme returns

    HMRC has provided advance notice of four changes that it is making to the five employment-related securities (ERS) end-of-year return templates from 6 April 2023.

    The changes include making completion of the following data fields mandatory:

    • the “PAYE reference of the employing company” for all end of year templates;
    • the “Is PAYE operated Y/N” field on the "Other ERS schemes and arrangements” end-of-year return template; and
    • the National Insurance number (NINO) field for all end-of-year templates.

    The final change will clarify the HMRC reference number to use in the share valuation columns.

    Recognising that some individuals included on the return may not have a NINO, there is guidance for an alternative nine-character reference that can be used in exceptional circumstances.

    Employment Related Securities Bulletin 47 (January 2023)

  • Tax returns - January 2023

    CGT reporting proceeds threshold to rise

    The limit above which gains must be reported to HMRC, even if no capital gains tax (CGT) is due, will rise to £50,000 of proceeds from April 2023. This is to prevent it falling when the annual exempt amount (AEA) is cut.

    The CGT reporting limit, alongside other factors, impacts whether or not an individual within self assessment is required to complete the CGT pages of the tax return.

    The reporting limit is currently set at four times the AEA, but to prevent it falling with the AEA it will be set at the new fixed level of £50,000.

    This will take effect from 6 April 2023.

    Reducing the annual exempt amount for capital gains tax

    From the weekly Tax Update dated 30 November 2022, published by Evelyn Partners LLP

    Court of Appeal dismisses taxpayer appeal on SDLT repayment claim time limits

    The Court of Appeal (CA) has dismissed the taxpayer’s appeal in the stamp duty land tax (SDLT) case Candy v HMRC. The judgement concerns time limits for claims for a repayment of SDLT under s44(9), Finance Act 2003 where a land contract is substantially performed, but is subsequently “rescinded or annulled, or for any other reason not carried into effect”.

    In the present case, an initial liability to SDLT was triggered in 2012 by the substantial performance of a contracted-out lease by the taxpayer. The liability was declared in his land transaction return and paid to HMRC. The contract was subsequently not carried into effect, but at a time after the expiry of the normal 12-month time limit for amending SDLT returns.

    HMRC contended that, as s44(9) specifies that a “repayment must be claimed by amendment” of the return, the claim had to be made within the normal amendment time limit. Taxpayer counsel argued that this gave rise to unfair results and that the correct interpretation was that a claim could be made at any time after the contract was not carried into effect, however long a period that was.

    For the same reasons given by the Upper Tribunal, the CA unanimously agreed with HMRC that s44(9) did not operate as an exception to the generally applicable time limit for amending SDLT returns. The outcome means that there is a risk for claiming repayments for purchasers who substantially perform conditional land purchase contracts if the contract condition fails to be met at a time that is more than one year later.

    An appeal to the Supreme Court is possible, but paragraph 27 of the judgement also notes that a separate alternative claim for repayment is being pursued by the taxpayer at the tribunal, so the law in this area might yet develop further.

    From the weekly Business Tax Briefing dated 11 November 2022, published by Deloitte

Making tax digital

October 2023

Manual MTD registration required for some new VAT registrations

When registering for VAT through HMRC’s VAT registration service, businesses should be automatically signed up to making tax digital (MTD). However, in some exceptional cases, the MTD registration is not being processed correctly. This also causes issues when completing the agent authorisation for a new VAT registration. 

When this happens, manual intervention is needed to link the VAT registration to MTD. In the first instance, agents or taxpayers experiencing this issue should email vrs.newregistrations@hmrc.gov.uk with ‘MTD registration needed’ in the subject line. HMRC has indicated that a response should be received within five working days. 

HMRC’s VAT helpline should also be able to support this activity. The helpline number is 0300 200 3700.

Contributed by Ed Saltmarsh

Tax payments and repayments

October 2023

HMRC guidance on reducing self assessment repayment delays

Self assessment repayments can be delayed at three different stages:

  1. A delay to the processing of the return, form, or amendment that generates the repayment.
  2. A repayment inhibitor is triggered.
  3. The repayment is flagged for a security check.

HMRC advises that almost 90% of self assessment repayments are processed automatically without delay. The remainder leave the automated system and take longer to process.

A full list of the repayment inhibitors is available in HMRC’s internal manuals at SAM113011.

HMRC advises that to reduce repayment delays agents and taxpayers should:

  • not send in voluntary returns. Instead register for self assessment and await the notice to file a return before submitting the return;
  • not submit a repayment claim within 14 days of making a payment to allow time for the payment to clear;
  • ensure the taxpayer’s address is up to date. Correspondence returned to the HMRC return letter service will result in additional checks;
  • double check the bank sort code and account number before submitting a repayment claim;
  • ensure that any capacitor for a deceased client is notified to HMRC before submitting a return on which a repayment is requested; and
  • ensure the repayment requests for previously bankrupt taxpayers are submitted using the post-bankruptcy unique taxpayer reference (UTR).

Contributed by Caroline Miskin

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