Agent Update: issue 89 – GOV.UK

This month’s content

Technical updates and reminders

Developments and changes to legislation and allowances relating to UK tax including:

Coronavirus (COVID-19) articles giving information on:

UK Transition

Tax

Making Tax Digital

HMRC Agent Services

Details of live consultations and links to responses, changes to HMRC service and guidance, including:

Agent forum and engagement

The latest updates from the partnership between HMRC and the main agent representative bodies, including:

Technical updates and reminders

COVID-19

Find updated guidance for employers, businesses and employees.

Updates to HMRC appeals processes

Extended appeal window due to COVID-19

As part of the COVID-19 support package for customers, HMRC introduced a 3 month extended window to appeal against tax decisions and penalties from February 2020, if the delay was due to COVID-19. This ended on 30 September 2021.

For tax decisions and penalties dated up to and including 30 September 2021, the extended window to appeal continues to be available. Customers should follow the normal process and times for appealing decisions dated from 1 October 2021.

Disagree with a tax decision: appeal against a tax decision

We know that some people are still feeling the impacts of COVID-19, and this may still be a reasonable excuse for customers not meeting their tax obligations in some cases. We will consider claims and ask for evidence if needed.

Disagree with a tax decision: reasonable excuses

Bulk appeals against Income Tax Self Assessment late filing penalties due to COVID-19

Since 24 March 2021 tax agents were able to appeal in bulk against late filing penalties, on behalf of their clients, for 2019-20 tax returns filed after 28 February 2021. This bulk process allowed agents to submit appeals for up to 25 clients at a time, only when the reasonable excuse was due to COVID-19.

We said the easement would be available for 6 months, until the end of September 2021. Agents can still claim reasonable excuse on behalf of their clients and, for decisions dated up to 30 September 2021, have the 3 month extended window to appeal.

The bulk appeal process has not been available since 1 October 2021, so agents need to follow the usual process, using the SA370 or appealing online.

Declaring COVID-19 support scheme overpayments on company tax returns 

We’re contacting customers about their Company Tax Returns (CT600) to remind them they need to declare overpayments from the Coronavirus Job Retention Scheme (CJRS) or the Eat out to Help Out (EOTHO) scheme.

Information your client needs to include

If your client received a grant from the CJRS, they need to complete boxes 471-473 during the accounting period covered by their Company Tax Return (CT600), and box 474 if there were any EOTHO overpayments. They must also include the grant as income when they calculate their taxable profits. 

These boxes were added to the online CT600 on 6 April 2021 so any of your clients who filed before 6 April 2021 would have been unable to declare this online. If they have an overpayment to report, they will need to resubmit their return and make sure they include these figures. We apologise if this causes any inconvenience.

CT600 returns submitted without boxes 471-474 and 526  

If you or your client submitted a CT600 return without boxes 471-474 and 526, or left the boxes incomplete, it should be resubmitted if a CJRS or EOTHO overpayment needs to be reported and repaid.  

If all COVID-19 support overpayments are already repaid or have already been assessed before the tax return is filed - and there’s no COVID-19 support schemes overpayment due -you do not have to correct the return.   

If the amount self-assessed in box 526 remains the same, you do not need to change the amounts entered in boxes 471-474.  

If the amount self-assessed in box 526 is higher or lower, you should amend the return to make sure the charge is amended.
 
We will issue tax charges for any overpayment due. If your client has received a charge following the submission of an incorrect CT600 return using the previous guidance, they should tell HMRC and amend their return for the charge to be amended.

Find out more information about company tax returns including how you and your clients can complete the CT600 return.  

Coronavirus Job Retention Scheme

Final Coronavirus Job Retention Scheme (CJRS) claims for September must be submitted by Thursday 14 October 2021. 

You can work out how much your client can claim, and the contribution they’ll need to make.

If your client has not submitted their claim by the deadline, and believe that they have a reasonable excuse, check if they can make a late claim.

If your client has claimed too much

If your client has claimed too much CJRS grant and has not already repaid the overclaimed amount, they can let us know and make a repayment online through our card payment service or by bank transfer.

Your client must tell us and repay the money by either:

• 90 days from receiving the CJRS money they’re not entitled to
• 90 days from the point circumstances changed so that they were no longer entitled to keep the CJRS grant

If they do not do this, they may have to pay interest and a penalty as well as repaying the excess CJRS grant.

If your client has not claimed enough

If your client made a mistake in their claim that means they received too little money, they’ll need to amend their claim within 28 calendar days after the month the claim relates to. The final deadline to amend claims for September is Thursday 28 October 2021.

Find out how to amend a claim.

Support available for employees if their employer is unable to bring them back to work 

There is UK government support available for employees through the JobHelp website, offering a range of support, training and advice, to help people find their next opportunity. This includes the Kickstart scheme and other Plan for Jobs support measures, along with advice on learning new skills and finding who is recruiting.

Normal redundancy rules and protections apply to furloughed employees.

Support available to help your client’s business grow

If your client is looking to grow their business, the UK government’s Help to Grow scheme offers management and digital programmes to help them learn new skills and reach more customers. Register your client’s interest.

If employers are considering taking on new employees, there’s a range of UK government support available to help them, including placements, apprenticeships and training opportunities. Find out how your client’s business could benefit.

Further support on COVID-19 schemes

You and your clients can sign up to receive regular email updates from HMRC, to keep up to date with the latest information on COVID-19 schemes. You can simply register and add the subscription topics you’re interested in.

Many agents have also benefitted from our webinars which offer information on the CJRS and other government support and how it applies to your clients.

UK Transition

UK-Swiss convention on social security coordination

On 9 September 2021, the UK and Switzerland signed a convention on social security coordination.

The convention makes sure ensuring that cross-border workers and their employers, are only liable to pay social security contributions in one state at a time. This benefits citizens of both countries as well as supporting business and trade.

The agreement will be available to use later this year and we’ll let you know when the start date has been confirmed. In the meantime, individuals going to work in Switzerland should follow current guidance.

Tax

Employment status guidance for associate dentists to be withdrawn with effect from 6 April 2023

From 6 April 2023, we will be updating our Employment Status Manual (ESM) to remove specific occupational guidance for associate dentists (ESM4030).

Where a contract either runs from or over 6 April 2023, associate dentists and their engagers will not be able to rely on ESM4030 to determine the employment status for tax of that contract.

Updates to our general Employment Status Manual, and the availability of the Check Employment Status for Tax (CEST) tool have removed the need for much of the traditional occupation specific guidance.

There has been no change in the rules, and removing ESM4030 does not mean we have changed our view on the employment status of associate dentists. We are asking associate dentists, or those who engage with associate dentists, to assess employment status in the same way as other customers in the dental sector and elsewhere. CEST offers a quick and easy way to do this.

Customers can continue to use ESM4030 until it is withdrawn on 6 April 2023. HMRC will not be using the withdrawal of the guidance as a reason to open retrospective enquiries into periods prior to 6 April 2023.

If after consulting our guidance you still have questions about determining employment status, you can contact the HMRC employer’s helpline on 0300 200 3200.

Tax avoidance

Anyone employed through agencies and umbrella companies should be careful they’re not getting drawn into tax avoidance. Many umbrella companies are compliant with the tax rules but some use tax avoidance schemes.

Tax avoidance schemes do not work, including those that may claim to be tax efficient or offer to increase your take-home pay. They sometimes carry high, non-refundable fees and are often provided by, or through, offshore promoters.

HMRC launched a Tax avoidance: don’t get caught out campaign to help agency workers and contractors understand the risks of using tax avoidance schemes and how they could be sold to them. 

Tax changes for health and social care  

The government has announced tax changes to fund £12 billion a year to be spent on the NHS and social care across the UK.  
  
National Insurance contributions (NICs) will increase by 1.25% for one year only for employees, employers and the self-employed from April 2022. This will cover both Class 1, (employee and employer), Class 1A and 1B and Class 4 (self-employed) National Insurance Contributions. 

From April 2023, a new ringfenced Health and Social Care Levy of 1.25% will be introduced which will apply to those who pay Class 1 (employee and employer), Class 1A and 1B and Class 4 (self-employed) National Insurance Contributions and will also be extended to those over state pension age who are in work. When the new levy comes into effect, National Insurance rates will revert back to current levels.

The levy will also apply to individuals above state pension age with employment income or profits from self-employment above £9,568. The levy will not be charged on pension income, and those over the state pension age who are neither in work nor self-employed.

The levy will be administered by HMRC and collected through the current reporting and collection procedures for National Insurance Contributions, Pay As You Earn and Income Tax Self Assessment. Like National Insurance, levy contributions will apply UK-wide, people will pay the same in England, Scotland, Wales and Northern Ireland.

From 2023 to 2024, levy contributions will appear as a separate item on payslips. A generic message may also appear on some payslips in the next tax year (2022 to 2023). For those self-employed individuals who pay National Insurance through the annual Self Assessment process, the rate increase will first be reported through the 2022 to 2023 tax return in January 2024.

The new levy will first be reported through the 2023 to 2024 tax return in January 2025. The government will also increase by 1.25% from April 2022 the rate of income tax which is paid by people who receive dividend income from shares.

Impact on individuals (including those over state pension age from 2023 with earnings over £9,688) 

A typical basic rate taxpayer (earning £24,100) will contribute £180 a year. A typical higher rate taxpayer (earning £67,100) will contribute £715 a year. 

Impact on employers 

The levy will also apply to secondary Class 1 National Insurance Contributions. Existing National Insurance Contribution reliefs and allowances will apply to the levy.

Impact on dividend holders 

Those with dividend income, like business owners and investors, will report through Pay As You Earn or the annual Self Assessment process. 

Non-resident Capital Gains (NRCG) transparency election and partnership returns

Schedule 5AAA Taxation of Chargeable Gains Act (TCGA) 1992 sets out the rules relating to ‘UK property rich’ Collective Investment Vehicles (CIVs) and their investors.

The schedule allows a CIV manager to make a transparency election on behalf of a relevant CIV. Once made, the CIV must file an annual partnership return in line with paragraph 8(4) of Schedule 5AAA TCGA 1992.

We are aware that due to the need to include a Self Assessment Unique Tax Reference number for each partner, several CIVs were unable to file a partnership return for the 2019 to 2020 tax year. We introduced a temporary process to allow those CIVs to submit the 2019 to 2020 partnership return by the filing deadline.

We will contact CIV managers who used this temporary process soon to provide an update. We will also ask for further information to enable submission of future partnership returns.

If you have any further questions, email the NRCG team in our Collective Investment Schemes Centre at: transparencyelectionnrcg.msb@hmrc.gov.uk

Completing 2021 to 2022 Self Assessment tax returns for student or postgraduate loan borrowers

In April 2021, the government for Scotland launched a new loan product known as Scottish Student Loan (Plan 4).

This new plan applies to new and existing borrowers paying back loans from the Student Award Agency for Scotland.

Student and postgraduate loan borrowers who are due to make repayments should include the cumulative amount of deductions from all employments in the appropriate box of their 2021 to 2022 Self Assessment tax return.

The Self Assessment system will then calculate the student or postgraduate loan deductions using the correct plan or loan type threshold and rate supplied to us by the Student Loans Company.

HMRC are working with software developers to finalise the technical specifications. More information on this product will be included in future updates.  

Plastic packaging tax: update to guidance

To help businesses prepare for the new plastic packaging tax, the guidance has been updated.

It provides more information about:

• the definition of packaging, including examples of items in scope of the tax
• when packaging becomes taxable

More information will be published later in the year. Agents representing businesses who may be affected by the tax should familiarise themselves with this guidance.

Extended Loss Carry Back – claims information for companies

This is a reminder of the availability of the Extended Loss Carry Back measure announced at Spring Budget 2021, enabling companies to make claims to carry back losses for a further two years, than current rules allow.

This temporary extension applies for losses arising in accounting periods ending between 1 April 2020 and 31 March 2022.

Claims Process

Claims that exceed a de minimis of £200,000 must be made in a company tax return. Box 45 (claim or relief affecting an earlier period) on the CT600 should be completed, with details of the carry back claims included in the computations that accompany the CT600 and accounts.

There is no need to submit amended returns for the earlier periods to which the extended relief applies, as the claims will be treated as amendments to those returns. Amended returns for these periods will be rejected for online submission as, in most cases, they will be out of time for amendment.

A quicker process is now available for claims below the de minimis limit of £200,000 which may be made outside of the company tax return.

Find out more information about Extended Loss Carry Back.

Off-payroll working rules (IR35)

It has been 6 months since the off-payroll working rules changed.

We are continuing to provide support to help your clients to comply with the rules. This builds on previous updates and is a summary of some further areas of support which you may find useful:

We drew attention in the August agent update to our guidance on ‘contracted out services’ and ‘statement of works.’ Anyone who is engaging contractors working through their own limited company via one of these contracts should make sure that they are applying the rules correctly.

We will be delivering webinars to help, which will be promoted on our LinkedIn social media pages and will be soon be available on our help and support page.

We have worked with stakeholders in the construction and transport sectors to provide customers in these sectors with additional support. If your clients work in these sectors and have not already seen our factsheets then they can check out our transport and construction sector factsheets on our LinkedIn page.

In February we published our compliance approach, outlining how we will support customers to comply with the changes to the off-payroll working rules. In line with this, we have started contacting some customers in the oil and gas, banking and finance sectors. We have issued letters to those customers to begin working together to gain confirmation that they are applying the rules correctly. You may also have received a copy of this letter.

VAT reverse charge on construction and building services

VAT registered construction businesses should note that this reverse charge came in on 1 March 2021. The Revenue and Customs Brief issued in June 2020 contains more information.

In January 2021, a letter was sent to every VAT-registered construction business. This followed letters previously sent out in February and September 2020, advising them to check if they’re liable for the reverse charge. If they’re liable, they need to apply these rules now.

Find more information on the scope and operation of the reverse charge.

The key aspects are:

• it applies to standard and reduced-rated supplies of building and construction services made to VAT registered businesses, who in turn also make onward supplies of those building and construction services
• the contractor is responsible for paying the output VAT due rather than the sub-contractor, and can continue to reclaim this amount as input tax
• the scope of supplies affected is closely aligned to the supplies required to be reported under the Construction Industry Scheme (CIS), but does not include supplies of staff or workers for use by the customer
• the legislation introduces the concept of ‘end users’ and ‘intermediary suppliers’

This covers businesses or groups of associated businesses that do not make supplies of building and construction services to third parties and, as such, are excluded from the scope of the reverse charge if they receive such supplies.

Examples include:

• landlords
• tenants
• property developers
• public bodies who are deemed contractors for CIS purposes.

In order to be treated as end users and intermediary suppliers, the customer needs to notify the supplier in writing. This can be done by correspondence or as part of terms and conditions. Find more detail in the technical guidance.

We’ve been running webinars for businesses which they can register for now. If there are no dates available, a webinar recording can be viewed.

Find more information on the Construction Industry Scheme.

Trust Registration Service and viewing customer data

Agents within the same business who share their user ID and password may experience issues when registering a trust.

We are aware that when 2 different users access the Trust Registration Service at the same time, using the same user ID and password, they may see a different customer account to the one they have authorised access to and not the one they want to register.

We have thoroughly checked our systems and can confirm the fault is not with the Trust Registration Service. The issue arises because of shared user IDs and passwords within a business.

Agents are reminded that user IDs and passwords must not be shared. Functionality is available within the Government Gateway to allow additional user ID and passwords to be created for each member of staff.

Find out how to give staff access to your HMRC online tax agent accounts.

Making Tax Digital

Update on Making Tax Digital (MTD) for Income Tax Self Assessment (ITSA)

The government has announced in a Written Ministerial Statement (WMS) that MTD for Income Tax Self Assessment (ITSA) will be introduced a year later, in the tax year beginning April 2024. This is in recognition of the challenges faced by many UK businesses and their representatives, as the country emerges from the pandemic over the last year and having listened to stakeholder feedback.  

General partnerships will not be required to join MTD for ITSA until the tax year beginning in April 2025. It will be confirmed at a later date when all other types of partnerships will be required to join.

The new, fairer system of penalties for the late filing and late payment of tax for ITSA, announced in March 2021, will now come into effect for those mandated for MTD for ITSA in the tax year beginning from April 2024. For all other ITSA customers, this will come into effect in the tax year beginning April 2025.   

In addition, the government has laid regulations in Parliament setting out the design and scope of MTD for ITSA, in order to help those impacted by the changes to prepare, and for their representatives to develop their own support and guidance.  

We have worked closely with partners in the business, tax and software community on MTD. We are grateful for the significant stakeholder input we have received, and we look forward to continuing to work together with stakeholders to ensure taxpayers are well supported as they adopt MTD.   

Check out the news release ‘Businesses get more time to prepare for digital tax changes’ for more information.

HMRC Agent Services

Agent talking points

All agents will be aware of our popular agent talking points webinars, for which most agents receive regular Monday morning updates.

Support for customers who need extra help

We have support for customers who need extra help. These set out our commitment to support customers according to their needs, and underpin the HMRC Charter.

Find out how to get help and extra support.

Consultations

Check the status of tax policy consultations

Find out about ongoing and closed tax policy consultations by checking
the status of tax policy consultations.

This file is in an OpenDocument format.

HMRC have 19 agent toolkits available for you to download and use. They have been designed to address the most common errors seen from previous years. They include checklists of the key issues to consider and links to HMRC technical guidance and manuals.

The complete catalogue of toolkits has been updated to assist you with completion of:

By identifying the most common errors this may prompt a conversation between you and your clients to ensure submissions are correct.

Tax Disputes

If your client is in dispute with HMRC over an appealable tax decision, you may be interested in our Alternative Dispute Resolution (ADR) service.

This service involves an impartial HMRC mediator working with all parties to prevent unnecessary litigation.

We hope to resolve tax disputes within 120 days using a collaborative and flexible approach that does not affect your client’s right to appeal or review.

For more information visit the ADR webpage.

Post Office card accounts

HMRC will stop paying benefits into Post Office card accounts from 1 December 2021. 

We are reminding any tax credits and Child Benefit customers who used to receive their payments through Post Office card accounts that they will need to contact us with their new bank account details:

• 0345 300 3900 for tax credits
• 0300 200 3100 for Child Benefit

We are encouraging customers to act now so they do not miss any payments. 

Agent view of employer liabilities and payments for PAYE

We’re trialling a pre-release (beta) version of our PAYE for the agents online service. This allows agents to see employer liabilities and payments.

We’re extending this service to more users on a rolling basis. When you log into your account, you’ll be prompted to join the trial if you’re eligible.

We’re continuing to improve this service and are making it available now while we do so, in response to positive feedback from recent user testing.

The pre-release version

The online service allows you to see a list of your authorised clients, view tax codes, student loan notices, and file forms and returns on their behalf. You can also see employer liabilities and payments – the same screens and data that your clients see in their business tax account.

Who is eligible

If you’re an agent with up to 2,000 clients, you may be eligible to use the new service early in October 2021. By mid-October, you may be eligible if you have fewer than 5,000 clients. You’ll be asked to confirm if you’d like to join the trial. If you choose not to, you’ll still be able to use our original service as normal.

Further changes to the new service

When you first opt in to use the service, you’ll need to confirm you act for a client before you can see the liabilities and payments data. In late October we are removing this part of the process.

If you’re accessing the service before then, you may decide to only confirm the clients you wish to view rather than all clients.

If you have a large employer client list, for example over 2,000, it may take several seconds for details to load. We are planning to reduce loading times over the coming months.

Self Assessment registrations and client addresses

We are aware of an issue resulting in incorrect data on customer records. This is occurring when agents register clients for Self Assessment.

Agent business addresses are being entered in client residential address fields when completing the registration for Self Assessment. This incorrect address can then be used across other HMRC systems.

When prompted to enter a client’s residential address, do not enter an agent business address. Doing so has several implications, such as:

• your client may be unable to pass verification checks when contacting HMRC
• your client could receive no correspondence from HMRC or other government departments
• adherence to Article 5(1)(d) of the UK GDPR (the accuracy principle) is at risk

We will correct all affected customer records. These records will have the correct customer residential address reinstated.

Agent Blog

There is a regular tax agent blog, highlighting the work HMRC do with tax agents, advisers and professional bodies.

We cover topics such as:

• agent specific news and updates
• consultations
• HMRC’s agent strategy

Subscribe to receive a notification when a new blog is posted.

Complain to HMRC

To make a complaint to HMRC on behalf of your client, you must be appointed as their Tax Advisor.

Employers need to register for email alerts

As more and more employers start to use digital platforms, it is becoming more apparent that the days of paper mailings are numbered.

It is important agents encourage employers to register to receive email alerts, so, they are aware of the latest coding changes and important information that is published.

Where’s My Reply? for tax agents

Find out when you can expect to get a reply from HMRC to a query or request you have made.

There is also a dedicated service for tax agents to:

• register you as an agent to use HMRC online services
• process an application for authority to act on behalf of a client
• amend your agent details

Manuals

You can check the latest updates to HMRC manuals or subscribe to automatic notification of changes. You can also suggest improvements for pages of our manuals by using the feedback options in the page footer.

Residence, Domicile and Remittance Basis Manual (RDRM) and deemed domicile

The domicile chapter within the RDRM has now been updated to include the changes applicable from the introduction of deemed domicile. For more information, check the Residence, Domicile and Remittance Basis Manual.

Online

Trusts and Estates newsletters

HMRC regularly publishes a Trusts and Estates newsletter. It contains the latest news, updates and guidance on Inheritance Tax and trusts.

Future online services downtime

Information is available on any downtime that may affect the availability of HMRC’s online services, this is subject to change and confirmation by HMRC’s IT provider.

Online security – stay safe online

HMRC continuously monitors systems and customer records to guard against fraudulent activity, providing regular updates on scams we are aware of.

If you have any concerns regarding the authenticity of any emails received from HMRC, check the online security pages for agents.

Phishing emails and bogus contact – HMRC examples

A new type of phishing scam regarding ‘Tax Returns’ is being circulated in high volumes and has been added.

Online training material and useful resources for tax agents and advisers

HMRC videos on YouTube, online learning modules, and live and pre-recorded webinars are available for tax agents and advisers providing you with free help, learning and support on topical subjects.

Publications

Spotlights

Check for new additions.

Employer Bulletin

The latest edition of Employer Bulletin is now available and contains topical and useful information about PAYE processes and procedures. For employers to be informed when it is available on the website, they must first register to receive email alerts.

National Insurance services to pensions industry – countdown bulletins

Check the latest countdown bulletins for more information.

Pension schemes newsletter

This newsletter is published by HMRC’s Pension Schemes Services to update stakeholders on the latest news for pension schemes.

Revenue and Customs briefs

These are briefs announcing changes in policy or setting out the legal background to an issue. They generally have a short lifespan, as announced changes are incorporated into permanent guidance and the brief is then removed.

Agent forum and engagement

Agent forum update 

The agent forum now has 1600 agents raising potential widespread issues and asking questions about HMRC’s systems and processes that may have significant impact on the agent community.

Agents can join the agent forum by registering.

A new article has been published in September 2021 and agents are encouraged to read the recently updated agent forum Good Practice Guide when posting, particularly when creating the post title, which should clearly indicate the subject and query.

Escalated issues

Professional bodies on the Issues Overview Group and Agent Support Group have identified the following issues for escalation:

• Self Assessment refund security checks
• P800
• HMRC emails
• processing times
• reporting Capital Gains Tax within 30 days
• authentication of software for an application programming interface
• Self Assessment application programming interfaces not returning expected data

Updates are available on the escalated issues board, which groups and provides links to related threads on the main forum.

Agent Dedicated Line (ADL)

Professional bodies are meeting with HMRC to provide feedback and discuss the trial of the repurposed Agent Dedicated Line, launched in early summer. Other measures to support agents include development of an improved “Where’s my reply?” service. 

Application programming interface

Following the presentation on application programming interfaces (API’s) to Professional Bodies, a further bespoke meeting is planned to progress outstanding queries on the service. Agents are invited to continue to post evidence of API issues on the agent forum to aid this discussion.

Working Together contact information for professional and representative bodies

AAT

ACCA Jason Piper

AIA David Potts

ATT Jon Stride

CIMA

CIOT Technical

CIPP Lora Murphy

CPAA Alison Hale

IAB

ICAEW Caroline Miskin

ICAS Tax Team

ICB Jacquie Mount

ICPA Tony Margaritelli

IFA Anne Davis

VATPG Ruth Corkin

If you are not a member of a professional body, contact the Agent Engagement Mailbox.