This month’s content
COVID-19:
Self Assessment:
UK Transition:
Tax:
Student and postgraduate loans:
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.
Latest updates from the partnership between HMRC and the main agent representative bodies, including:
COVID-19
We have published updated COVID-19 guidance for employers, businesses and employees. You can find more information on financial support for your business.
Reminder to declare Coronavirus grants on company tax returns
Coronavirus grants and payments to support businesses during the pandemic are taxable. If your client needs to complete a company tax return and claimed Coronavirus Job Retention Scheme (CJRS) grants, Eat Out to Help Out (EOHO) payments, or any support payments made by local authorities and devolved administrations, they must report this as income when calculating their taxable profits.
If they’ve already filed a return and have not declared their coronavirus support grants or payment as taxable income, they’ll need to submit an amended return.
If you’re completing a company tax return (CT return) on your client’s behalf, check what coronavirus grants and payments they received. This is particularly important if another agent made a CJRS claim on their behalf, or they claimed a grant themselves.
If your client received a CJRS grant and, or an EOHO payment, they’ll also need to report this separately in the boxes provided on their CT600. These boxes were added to the CT600 on 6 April 2021. If they are using a third-party software, they’ll need to download the latest version to be able to complete the relevant boxes in the CT return.
If your client filed before 6 April 2021 (or after that date but did not fill in the relevant boxes) they’ll need to amend their return unless they included all their grants as taxable income and have no CJRS or Eat Out To Help Out overpayment to declare. This is explained fully in the company tax return guide.
On 21 December 2021, the government announced additional support would be available for businesses who’ve been impacted by the Omicron variant in England. This will also need to be reported in the accounts and Corporation Tax return for the relevant accounting period when the time comes.
For more information on which grants to report, how to report them, and what happens if your client has claimed too much and more, you and your clients can sign up for live webinars about declaring your grants.
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 our COVID-19 schemes. You can simply register and add the subscription topics you’re interested in.
Many agents have also benefitted from webinars offering information on the CJRS, other government support and how it applies to your clients.
Self Assessment
SA Penalty Waiver
On 6 January HMRC announced that we will not charge late:
- filing penalties for those who file online by 28 February 2022
- payment penalties for those who pay the tax due in full or set up a payment plan by 1 April 2022
This will give taxpayers and their representatives additional time if they need it and will operate in the same way as the equivalent waivers last year. However, HMRC is encouraging taxpayers to file and pay on time if they can ― almost 6.5 million have already done so.
Our Time to Pay options are still available to assist taxpayers. Once they have filed their 2020 to 2021 tax return, taxpayers can set up an online payment plan to spread Self Assessment bills of up to £30,000 over up to 12 monthly instalments.
The payment deadline for Self Assessment is 31 January 2022 and interest will be charged from 1 February 2022 on any amounts outstanding. Normally a 5% late payment penalty is charged on any unpaid tax that is still outstanding on 3 March 2022. This year, like last year, HMRC is giving taxpayers more time to pay or set up a payment plan.
Self Assessment taxpayers will not be charged the 5% late payment penalty if they pay their tax or set up a payment plan by midnight on 1 April. They can pay their tax bill or set up a monthly payment plan online at GOV.UK.
There is no change to the filing or payment deadline and other obligations are not affected.
This means that:
- interest will be charged on late payment (the late payment interest rate from 4 January 2022 is 2.75%)
a return received online in February will be treated as a return received late, with a valid reasonable excuse for the lateness — this means that:
- there will be an extended enquiry window
- for returns filed after 28 February the other late filing penalties (daily penalties from 3 months, 6 and 12 month penalties) will operate as usual
- a 5% late payment penalty will be charged if tax remains outstanding, and a payment plan has not been set up, by midnight on 1 April 2022 — further late payment penalties will be charged at the usual 6 and 12 month points (August 2022 and February 2023 respectively) on tax outstanding where a payment plan has not been set up
- we will not charge late filing penalties for SA700s and SA970s received in February 2022 (these returns can only be filed on paper)
- for SA800s and SA900s we will not charge a late filing penalty if taxpayers file online by the end of February 2022 (the deadline for filing SA800s and SA900s on paper was 31 October 2021) — taxpayers who file late on paper will be charged a late filing penalty in the normal way (they can appeal against this penalty if they have a reasonable excuse for filing their paper return late)
self-employed taxpayers who need to claim certain contributory benefits soon after 31 January 2022 need to make sure their annual Class 2 National Insurance Contributions (NICs) are paid on time (this is to make sure their claims are unaffected) — Class 2 NICs are included in the 2020 to 2021 balancing payment that is due to be paid by 31 January 2022 and benefit entitlements may be affected if they:
- could not pay their balancing payment by 31 January 2022
- have entered into a Time to Pay arrangement to pay off the balancing payment and other Self Assessment tax liabilities through instalments
- affected taxpayers should contact HMRC on 0300 200 3822 for help as soon as possible
Self-employed customers will need to contact HMRC on 0300 200 3500 for assistance if they have profits below £6,475 in the 2020 to 2021 tax year and
- want to pay voluntary Class 2 NICs for contributory benefits after 31 January 2022
- paid voluntary Class 2 NICs through Self Assessment before 31 January 2022 but will not file their return until after 31 January 2022
UK transition
Full customs controls are now in place
Full customs declarations are now needed on all imports from the EU.
Customs arrangements in place throughout 2021 for goods moving from Ireland to Great Britain (England, Scotland and Wales) will continue to apply while discussions on the Northern Ireland Protocol (NIP) are continuing.
The changes include:
- requirement for full customs import declarations for all goods at the time traders, or their courier or freight forwarder, bring them into Great Britain, except if they are non-controlled goods imported from Ireland to Great Britain
- making sure you or your customers submit the correct customs export declaration if you are exporting goods
- customs controls at all ports and other border locations
- requirement for a suppliers’ declaration proving the origin of goods (either UK or EU) if traders are using the zero tariffs agreed in the UK’s trade deal with the EU
- commodity codes, which are used to classify goods for customs declarations, are changing
Further information explaining the changes to importing and exporting goods between Great Britain and the EU, what they mean for businesses, and how to prepare, is available on GOV.UK.
Haulage and logistics firms also need to be prepared for changes at the border if they are moving goods through border locations that use the Goods Vehicle Movement Service (GVMS) to control goods. Register for GVMS and find out how to move goods through border locations that use the service.
Tax
Derivatives used to hedge foreign exchange risks in share transactions
HMRC has launched a technical consultation to extend the scope of existing regulations, which are designed to align the tax treatment of hedging instruments and hedged items. However, they do not cover derivative contracts used to hedge foreign exchange risks in anticipated future acquisitions or disposals of substantial shareholding.
Under current rules, such derivatives are taken into account as income items during the lifetime of the contract. This gives rise to a mismatch with the tax treatment of the shares, which will not be taxed or relieved until the shares are disposed of. Often the gain or loss on disposal is exempt.
Agents raised this issue during the asset holding company consultation and in response, the government committed to examining the possibility of legislating to address this issue, including continued engagement with stakeholders.
You can submit a response on the draft regulations to HMRC by 24 January 2022 by emailing: financialproductsbai@hmrc.gov.uk.
The draft regulations and further information can be found at GOV.UK.
Residential Property Developer Tax
In February 2021, the government announced a package of measures to bring an end to unsafe cladding, providing reassurance to homeowners and support confidence in the housing market.
Part of this package is the Residential Property Developer Tax (RPDT), which comes into effect from 1 April 2022. Given the significant costs associated with the removal of unsafe cladding, the government believes it is right to seek a fair contribution from the largest developers in the residential property development sector to help fund it.
RPDT is only likely to affect companies or groups of companies undertaking residential property development with annual profits exceeding £25 million.
RPDT will be charged at 4% and will apply to the largest residential property developers on the profits they make on UK residential property development.
The tax will be collected through the Corporation Tax administrative system, with the first Corporation Tax returns including RPDT expected from April 2023 ― however if the company pays Corporation Tax by quarterly instalments RPDT will be included within these payments.
Guidance will be included within a new RPDT manual from 1 April 2022. You can find more information on Resident Property Developer Tax.
VAT reverse charge on construction and building services
The reverse charge for VAT registered construction businesses came in on 1 March 2021 and was explained in a Revenue and Customs Brief issues in June 2020.
In February 2020, September 2020 and January 2021, we wrote to every VAT-registered construction business, advising them to check if they’re liable for the reverse charge.
Business who are liable must apply these rules going forward and more information is available in 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 and Construction Industry Scheme (CIS) 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 CIS, but does not include supplies of staff or workers for use by the customer
- supplies to CIS registered businesses can be excluded from the reverse charge if the customer is an ‘end user’ or ‘intermediary supplier’ (a business that is closely associated with an end user) — this exclusion:
- covers property developers and other ‘deemed contractors’ provided the construction services concerned are not being re-supplied by them
- only applies if the customer notifies their supplier in writing that they are an ‘end user’ or ‘intermediary supplier’ (this can be done by correspondence or as part of terms and conditions as explained in the technical guidance)
You can register for live webinars about VAT for businesses or view a recording if no dates available.
Find more information on the Construction Industry Scheme.
Tax gap and compliance yield
We have published an updated technical note explaining the tax gap and compliance yield — what they are and how they relate.
The tax gap is the difference between the amount of tax that should in theory be paid to HMRC and what is actually paid. Compliance yield is the estimate of additional revenues that HMRC considers it has generated, and the revenue losses it has prevented.
The compliance yield is one of our main performance measures and our risk-based activities to tackle non-compliance aim to increase tax receipts and thereby reduce the tax gap.
Changes to Claiming Subcontractor Construction Industry Scheme (CIS) deductions
In order to claim CIS deductions as a subcontractor on your Employer Payment Summary (EPS), your business must be a limited company operating within the construction industry. If your company is not a limited company, you should report the deductions on your Self Assessment (SA) Tax Return instead of using the EPS to claim them.
From April 2022, we are introducing an additional field on the EPS. Limited companies must enter their Corporation Tax Unique Taxpayer Reference (CT UTR) or COTAX reference number in that field to claim credit for these deductions.
Any EPS submissions which include a claim for CIS deductions, but don’t include the CT UTR will be rejected. If you can not satisfy the new CT UTR validation but need to report anything else, you must remove the claim for CIS deductions and resubmit your EPS.
If you have lost or cannot find your CT UTR, you can request your Corporation Tax UTR online. We will send it to the business address registered with Companies House.
Preparation for notification on uncertain tax treatments by large businesses
Agent Update 91 explained that legislation being introduced by Finance Bill 2021 to 2022 includes a new requirement for large businesses to notify HMRC of Uncertain Tax Treatments.
We’re continuing to work with large agent firms and stakeholder organisations, including those representing businesses and the legal and accounting sectors, to provide opportunity for them to input into plans for introduction of the measure.
Key topics discussed with stakeholders include our plans for customer support, how customers can engage early to obtain exemption from the need to notify an uncertain amount and the operation of the notification process. We aim to share updated draft guidance with stakeholders for comment early in 2022, with publication in advance of legislation being implemented. It is expected the guidance will include details of information customers will need to provide to comply.
We’re also planning to provide webinars for customers and agents to explain the changes and processes in more detail. You can find dates and times of planned webinars published on GOV.UK in advance of the sessions and a recording will also be available.
Student and postgraduate loans
Updated thresholds and rates from April 2022
This article is for Agents that operate payroll.
From 6 April 2022, repayment thresholds and interest rates for student loans will be as follows:
- plan 1 — £20,195 (up from £19,895)
- plan 4 — £25,375 (up from £25,000)
The interest rate for plan 1 and plan 4 remains at 9% for any earnings above the respective thresholds.
The repayment thresholds and interest rates for plan 2 and postgraduate loans have not yet been announced. This information will be shared as soon as possible.
More information on the new student loan thresholds and rates for 2022 to 2023 is available on GOV.UK.
Student and postgraduate loan start notice (SL1/PGL1)
This article is for Agents that operate payroll.
Check your PAYE account for student loan (SL) or postgraduate loan (PGL) for start and stop notices from HMRC.
If you receive a SL1 and or PGL1 start notice from HMRC you should:
- use the correct loan and or plan type to calculate record the deductions on the employee’s full payment submission
- check the start date shown on the notice and take deductions from the next available pay day
If an employee’s earnings are below the SL and or PGL thresholds, update the employee’s payroll record to show that they have a SL and or PGL loan — and then file the start notice.
Deductions should continue until HMRC tells you to stop.
If the business email or correspondence address has changed, update this as soon as possible.
Further information can be found on student loan and postgraduate loan repayment guidance for employers.
Student loans: off-payroll working rules
This article is for Agents that operate payroll.
If you are operating a payroll, be aware that where the employment is subject to off payroll working rules, Student Loan deductions should not be made. The worker will account for student loan obligations in their own tax return.
Further help and support for tax agents and advisers can be found on GOV.UK.
Making Tax Digital
Changes to VAT Registration Service (VRS) ― agents registering their clients for VAT
In Agent Update 90, published in November, we told you about changes to the VAT Registration Service and how this will affect the agent community. Plans to extend this functionality to the agent community are still on track for release early this year.
We would like to remind you that you need to finalise any registrations using the current process before the switchover, so you do not lose any information from open applications. We will communicate a date for the switchover in due course.
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 principles of 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 what extra support is available.
Check the status of tax policy consultations duplicated
Find out about ongoing and closed tax policy consultations.
Check the status of tax policy consultations.
Tax agent toolkits
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 can assist you with completion of:
By identifying the most common errors this may prompt a conversation between you and your clients to make sure submissions are correct.
Alternative Dispute Resolution
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, which does not affect your client’s right to appeal or review.
For more information visit the ADR webpage.
Updates to Employer Helpline (EHL) processes
It’s important that HMRC holds customer data securely.
When calling our Employer Helpline, customers must be able to confirm their Pay As You Earn (PAYE) or Accounts Office reference. Customers who do not have those details should obtain them before they call. Where they cannot provide their PAYE or Accounts Office reference, we will give general advice only. If the customer asks us to tell them their references, we will post these to the address held on our records.
For security reasons, we are unable to provide the PAYE or Accounts Office reference over the phone following a request for a PAYE registration. Details of the references will be sent by post within 7 days.
Decommissioning of HMRC’s Online End of Year Expenses and Benefits service
From 6 April 2022 the interactive PDF known as HMRC’s Online End of Year Expenses and Benefits service, used to submit P11D and P11D(b) won’t be available. Instead, you should use our PAYE Online service. This allows:
- submissions for up to 500 employees
- online submissions of P46(car) ― without the need to download the latest version of Adobe Reader or use a certain web browser to access it
Using the PAYE Online Service should be straightforward. You can access this using the government gateway details you used to access the previous service. If you do encounter any problems, use the help function on the PAYE online service or contact the Online Services Helpdesk.
Contact
Agent blog
There is a regular Tax agent blog that highlights the work HMRC do with tax agents, advisers and professional bodies.
We cover agent specific news and updates, consultations and HMRC’s agent strategy to name but a few.
You can 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 the Department moves rapidly down the digital road, 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 on the Government webpages.
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
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 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, read the Residence, Domicile and Remittance Basis Manual on GOV.UK.
Online
HMRC regularly publishes a Trusts and Estates newsletter. It contains the latest news, updates and guidance on Inheritance Tax and trusts.
Find out about 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.
Find out more about online security and staying 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, read the online security pages for agents.
Find out more about phishing emails and bogus contact, with HMRC examples.
A new type of phishing scam regarding tax returns, which is being circulated in high volumes, has been added.
Read the 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
Check for new Spotlights.
The latest edition of the 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 the email alerts.
Countdown Bulletin 53 has been added to the National Insurance Services to Pensions Industry: countdown bulletins.
The Pension schemes newsletter is published by HMRC’s Pension Schemes Services to update stakeholders on the latest news for pension schemes.
Revenue and Customs briefs announce changes in policy and set 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
HMRC online Tax Agent forum
The Agent Forum is where agents can raise general queries about HMRC systems or processes that they come across in day-to-day practice.
The forum is a place for agents to report issues that are widespread affecting a number of taxpayers or agents. Answers or updates will not be provided on:
- specific technical questions
- client specific queries
- ongoing complaints cases
- compliance reviews
- appeals against HMRC decisions
Agents can use the forum to provide evidence to support an issue raised, and where required email to the Agent Forum team specific information to assist investigation or resolution of a query.
Closing and locking Agent Forum posts
When a query has been answered or a final response provided the post will remain open for 5 days before being locked and closed.
If a query has been investigated and taken as far forward as it can at present, an update will be provided and the post locked 5 days after the HMRC response.
These posts can be reopened by HMRC should there be new developments or by the provision of additional information or evidence from agents, which warrants a further investigation or response.
If you want your thread re-opened, email: agentforum.wt@hmrc.gov.uk with an explanation as to why you wish your thread to be reopened.
Agent Forum updates
Following consultation with Professional Bodies the forum has been reformatted by removing boards that were not being used and expanding the description of others to aid input.
Professional bodies on the Issues Overview Group and Agent Support Group have identified the issues and items below for escalation. The latest updates on these issues are available on the Agent Forum Escalation Board.
SA-9471 SA services returning unexpected data ― examples emailed to Agent Forum team are being investigated.
SA-11680 ― HMRC emails without a client reference ― Professional Bodies have requested HMRC to undertake further investigation on including client references in emails.
Professional Bodies met with HMRC in December to discuss agents concerns on HMRC service levels. Meetings
on service levels will continue as measures to strengthen and improve communications on performance are implemented.
Ways to fix common error message
If you experience an error message advising ‘HMRC Agent Forum Invalid sign-in attempt’ it means that either your username or password is incorrect while attempting to sign into your Agent Forum account.
You can take the following steps to resolve this error:
- use the same username you created when you first registered your account (do not enter your email address in this box)
- you can reset your password through the ‘Forgot your password?’ button
- a reminder of your username can be obtained by emailing: agentforum.wt@hmrc.gov.uk from the email address that owns the account
Contact information for professional and representative bodies
AAT
ACCA Jason Piper
AIA David Potts
ATT Jon Stride
ATT Technical
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.
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