Guidance

Agent Update: issue 97

Published 15 June 2022

This month’s content

Technical updates and reminders

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

Latest updates from the partnership between HMRC and the main agent representative bodies. Including:

Technical updates and reminders

COVID-19

We have published updated guidance for employers, businesses and employees and you can find more information about COVID-19 on GOV.UK.

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 our webinars which offer information on the CJRS, other government support and how it applies to your clients.

Tax

Check if your clients are liable for the new Plastic Packaging Tax

The new Plastic Packaging Tax (PPT) came into force on 1 April 2022.

If your clients manufacture or import plastic packaging into the UK, they may need to register for the tax.

Businesses that are liable to register, or have already registered, must submit their Plastic Packaging Tax return from 1 July 2022 and pay any tax due no later than 29 July 2022. Agents can apply to submit returns on behalf of their clients.

The return needs to cover plastic packaging the business manufactured or imported into the UK from when they became liable, to 30 June 2022.

Your clients:

• must keep accounts and records to support the information provided when they complete their quarterly return
• must show how they work out the figures they submit on their return in their accounts
• must show evidence to support the figures they submit on their return in their records
• must keep their accounts and records for at least 6 years from the end of the accounting period, and record weight in tonnes, kilograms, and grams
• will need to pay any tax due through their online Plastic Packaging Tax account (they can pay through Direct Debit, BACS, CHAPS, debit or corporate credit card or Faster Payments)

For support, read the guidance on how to complete your Plastic Packaging Tax return, or sign up to our live Plastic Packaging Tax webinars.

Company Tax Returns: non-UK resident companies receiving UK property income

Since 6 April 2020, non-resident company landlords are required to file an online Corporation Tax Return and submit financial statements which should be tagged in accordance with the relevant taxonomy. To help these customers and their agents to comply with their obligations, we have updated our existing guidance about the format of accounts and other information to be filed online.

As well as non-UK resident company landlords, this guidance also applies to offshore property development companies dealing in or developing UK land.

The guidance on GOV.UK and COM 130010 has now been updated.

You can find out how to format for accounts forming part of an online Company Tax Return.

There is separate guidance for a non-UK resident company trading in the UK though a permanent establishment at the same GOV.UK page.

Increase in National Insurance thresholds

On 23 March 2022, the UK government announced an increase in National Insurance thresholds affecting the 2022 to 2023 tax year.

We want to take the opportunity to remind agents that the threshold changes will take effect from 6 July 2022, meaning employees will pay National Insurance contributions on less of their income.

The primary threshold from 6 July 2022 to 5 April 2023 will be £242 per week and £1,048 per month, equivalent to £12,570 per year (increased from £9,880 per year).

Find out more about rates and thresholds for employers 2022 to 2023 and Class 1 National Insurance thresholds.

The National Insurance lower profits limit for self-employed people is also increasing, in line with the changes for employees. The annual lower profits limit will be set to £11,908 for 2022 to 2023. This is equivalent to 13 weeks of the threshold at £9,880 and 39 weeks at £12,570, mirroring the position for employees.

Self-employed people will also no longer be required to pay Class 2 National Insurance contributions on profits between the small profits threshold (£6,725) and lower profits limit (£11,908), but still be able to build National Insurance credits.

We will publish further information on the changes for self-employed people in due course.

Please note that HMRC has reminded employers by email to check that their payroll software is updated to use the new thresholds, if it is not done automatically.

We have also advised them that if they use Basic PAYE tools, this software will be updated to take account of National Insurance threshold increases from 4 July 2022 and to wait until after this date to run payroll for any payments made on or after 6 July 2022.

Improvements to Corporation Tax letters

We’ve updated our CT603 (notice to file a return), and CT208 (reminders to make payment, or to pay and file a return) letters, to make it easier for customers to get their Corporation Tax right.

The new letters no longer include a payslip — customers are asked instead to use electronic payment methods. Find out how you can pay your Corporation Tax bill.

There are no changes to statutory obligations for customers.

Customers will start to receive these new forms from June onwards, in line with their accounting period end dates, return filing and payment obligations.

Domestic reverse charge for mobile phones and computer chips — sales reporting

From 1 July 2022, businesses applying the domestic reverse charge to their UK sales of mobile phones or computer chips, will no longer need to compile and submit information about those sales — known as the reverse charge sales list. The domestic reverse charge remains in place and businesses must still operate that accounting procedure.

Find out more about the Value Added Tax (Reverse Charge Sales Statements) (Revocation, Saving and Transitional Provision) Regulations 2022. This legislation was introduced on 18 May 2022.

A domestic reverse charge means the UK customer that receives supplies of mobile phones or computer chips must account for the VAT due on these supplies on their VAT Return rather than the UK supplier.

This domestic reverse charge was introduced in June 2007 and was the only one with a requirement to complete a reverse charge sales list with each of VAT Return period. For each customer the UK business makes a reverse charge sale to, it must report to HMRC the relevant period, the UK VAT registration number of the customer and the total net value of reverse charge sales to that customer for each calendar month in the VAT period.

For sales from 1 July, there is no longer this requirement. This is because HMRC has assessed that it no longer needs the data provided through reverse charge sales lists. The fraud risk has reduced significantly over the years since 2007 and it now has other, more effective, ways of monitoring any residual risk.

However, it is still a requirement for businesses to submit a reverse charge sales list with their VAT Return up and including 30 June 2022.

If the business is on:

• monthly VAT Returns — a final reverse charge sales list will need to be submitted with the June 2022 VAT Return
• quarterly VAT Returns — a final reverse charge sales list will need to be submitted with either the June 2022, July 2022 or August 2022 VAT Return

The online service for submitting the reverse charge sales list will be switched off on 17 October 2022 and businesses will no longer be able to send this information to HMRC this way.

Businesses on annual VAT Returns or non-standard VAT Returns that will be filed on 17 October 2022 or after, will need to submit a separate reverse charge sales list for the period up to 30 June 2022 between 1 July 2022 and before 17 October 2022.

A Revenue and Customs brief was published on 18 May 2022 and VAT Notice 735 has since be updated.

Residency and the remittance basis charge

Introduction

In June 2022 HMRC will send letters to agents and taxpayers in the wealthy population. The letters will be sent to those who have been tax resident in the UK for 7 years out of the preceding 9 years and 12 out of the proceeding 14 years.

These taxpayers have been identified as needing to pay the remittance basis charge (RBC) of either £30,000 or £60,000 or alternatively move to the arising basis of taxation.

The letter will state the steps required, allowing taxpayers time to amend their 2020 to 2021 return. This will also educate them in advance of filing their 2021 to 2022 Self Assessment tax return. The letter also advises amendments should be done within 60 days. If no amendment is made, HMRC may open an enquiry to check the correct position.

The guidance has been clarified making the Residence domicile and remittance basis manual (RDRM32220) clearer for customers regarding the year count for remittance basis purposes.

The guidance reinforces that taxpayers must be tax resident in the year of arrival, departure and split year (or both) to count as a year of residence for remittance basis charge purposes. The update will ensure such years are accurately reflected in the year count and aid preparation of their tax return.

In addition, updates will be made to the notes that accompany the Self Assessment tax return (SA109) to educate taxpayers prior to them filing their 2021 to 2022 tax return.

Guidance available

Find out:

• about the remittance basis conditions
• how to identify remittances
• about long term UK residents
• about deemed domicile rules
• how to nominate foreign income and gains

Use the SA109 supplementary pages when filing your SA100 tax return to record your residence and domicile status and claim personal allowances as a non-UK resident.

Read the guidance notes for residence, domicile and the remittance basis.

Get help from HMRC if you need extra support.

Legislation

Read the legislation at section 809C of the Income Tax Act 2007.

Important things to remember

There are two charges for individuals who meet either the 7 out of 9 or 12 out of 14-year count. These are:

• £30,000 for taxpayers who are tax resident in the UK for 7 out of the previous 9 years
• £60,000 for taxpayers who are tax resident in the UK for 12 out of the previous 14 years

For the charges to apply, the taxpayers must be tax resident in the UK by virtue of either:

• the statutory residence test (post 2013)
• IR20 and case law (pre 2013)

An individual can choose to be taxed on the arising basis or the remittance basis of taxation.

Making a notification into the Qualifying Asset Holding Company Regime

In Agent Update 94, we told you about the new Qualifying Asset Holding Company Regime.

We explained that companies that meet the criteria and wish to join the regime must send an entry notification to HMRC in advance of the joining date. We would now like to clarify the notification process.

You can make a notification to enter the Qualifying Asset Holding Company Regime.

It is important to note that this is simply a notification rather than an application. HMRC will not typically enquire into whether the various eligibility conditions have been met at this point. It is for the company entering the regime to self-assess whether the conditions have been met and continue to be met.

If the company is unsure whether conditions have been met, it might want to discuss the matter with the Qualifying Asset Holding Company team by emailing: qahc@hmrc.gov.uk.

You can find out more about the Qualifying Asset Holding Company Regime in the Investment Funds manual at IFM40000 plus.

Application of the Construction Industry Scheme to property investment Companies

We are seeing a number of property investment companies undertaking substantial redevelopments such as the example below, being unaware of the need to register as a contractor within the Construction Industry Scheme.

If you think your client’s business is acting as a contractor, it must comply with the scheme. If it does not, the business can be left with an unexpected tax liability that they may not be able to recover from the subcontractor.

The following three headings are reminders of the published guidance giving the definitions of property developers and property investment businesses.

Property developers

Property developers are included within the meaning of mainstream contractors because their business activity is the creation of new buildings, or the renovation or conversion of existing buildings, or other civil engineering works. The same is true of a speculative builder.

Property investment businesses

A ‘property investment business’ is not the same thing as a ‘property developer’. A property investment business acquires and disposes of buildings for capital gain or uses the buildings for rental. It need not be involved in the construction, alteration or extension of buildings.

Even so, if its property estate is substantial enough, its expenditure on construction operations may well cause it to fall within the meaning of a ‘deemed contractor’. Find out about who is a ‘deemed contractor’.

When a business that is ordinarily a property investor undertakes some activities attributed to those of ‘property development’, they will not usually be considered a mainstream contractor during the period of that development. This is because the usual nature of the business is ‘property investment’ and not ‘property development’.

When the property investment business enters into multiple or substantial contracts relating to construction operations, for the purposes of development of one or more properties, you will need to decide if the nature of that business has now changed from ‘property investor’ to ‘property developer’.

If this is the case, the business would now be considered to be mainstream contractors as the nature of their business has changed.

When, at a future date, they revert to property investment activities only, then their status as a deemed contractor should be applicable once again. If their expenditure is likely to remain below £3 million on a rolling 12 month period, then deregistration from CIS may also be considered appropriate.

However, where it is clear that further property development is likely to be undertaken in the future, it may be more appropriate for the business to remain registered for the Construction Industry Scheme.

When property development appears to be a regular and substantial activity of any business purporting to be a property investment business, then they are likely to be a property developer and therefore a mainstream contractor within the Construction Industry Scheme.

Example

A property investment business acquires a number of properties which it intends to let, but before letting, minor refurbishment is required to bring the properties up to a suitable standard to be able to let them.

For the purposes of the Construction Industry Scheme, we would see this as the normal activities of a property investor. If the expenditure on such activities exceeds £3 million in a rolling 12 month period, then the scheme applies.

The property investment business then acquires a large, dilapidated hotel to add to its portfolio, and decides to convert the building into a series of flats which it will then individually let out. As a result, substantial development is required to the property to change the building to its new use.

In respect of this particular development and contract, we would regard the property investment business as having taken on the mantle of a mainstream contractor as its business activity is now that of construction operations.

Amendments to Corporate Interest restriction — working group

The Corporate Interest restriction legislation applies to corporate entities and aims to restrict a group’s deductions for interest expense and other financing costs for Corporation Tax purposes, to an amount that is commensurate with taxed UK activities, taking account of how much the group borrows from third parties.

We are aware of various technical issues with the legislation and would like to set up a working group to consider these issues further and how they might be addressed.

If you would like to join the Corporate Interest restriction working group, please contact Jackie Phillips by emailing: jackie.phillips@hmrc.gov.uk

Self Assessment

Nearly 66,500 customers filed their 2021 to 2022 tax returns on the first day of the new tax year 6 April 2022. In recent years, there has been an increasing number of ‘early-bird’ customers filing their completed Self Assessment tax returns at the start of the new tax year.

Almost 30,000 more customers filed their returns on 6 April this year, compared to 2018. HMRC is encouraging others to change their filing habits and file as soon as they can.

Customers can file a tax return online. It is the quickest way to complete a Self Assessment return and it does not need to be completed in one go, as customers can access their return online anytime and save their progress, until it is completed and ready to submit.

Customers who file their tax return early could benefit from:

• receiving a tax refund on any overpaid tax from the 2020 to 2021 tax year sooner — once a customer has filed their 2021 to 2022 tax return, they can check if a repayment is due via their Personal Tax Account
• managing their tax bill via direct debit — customers can use the budget payment plan service to set up weekly or monthly direct debit payments to spread the cost of any tax owed (the Self Assessment tax payment deadline for balancing payments is 31 January 2023 and remains unchanged)

Get help with navigating through the tax return process. This includes helpful information on:

• how to get help with your tax return
• what to do when declaring furlough payments, Self-Employment Income Support Scheme grants or other COVID-19 support measures
• what information you need before you can start completing your tax return
• help with paying your self-assessment tax bill
• what to do if you have overpaid tax and are due a refund
• Self-Employment Income Support Scheme
• Coronavirus Job Retention Scheme
• other COVID-19 grants and support payments
• any coronavirus payments incorrectly claimed

The Self Assessment deadline to file a return and pay any tax owed for the 2021 to 2022 tax year is 31 January 2023.

Making Tax Digital

Changes to VAT penalties

Guidance is now available on GOV.UK on how your clients can prepare for upcoming changes to VAT penalties and VAT interest charges. These charges will apply to all businesses who pay late or are late in filing their VAT Return from 1 January 2023.

For VAT periods starting on or after 1 January 2023, the default surcharge will be replaced by new penalties if a VAT Return is submitted or paid late.

Further detailed guidance about changes to VAT late submission penalties, late payment penalties and VAT interest charges will be published on GOV.UK in December 2022.

VAT Registration Service

The VAT Registration Service (VRS) will speed up the VAT Registration process and is on track to launch later in summer 2022.

We are currently ramping up the volume of applications being processed through the VRS and aim to reach around 40% by the end of June. This is for UK companies only and does not include agents, third parties or customers that require attachments, such as ID documents.

We continue to work with agents to make sure any applications in the system at the time of launch are completed before switching over, and further details on timelines will be published in future Agent Updates.

Making Tax Digital — make sure your clients are ready

Making Tax Digital for VAT — make sure your clients are signed up

All VAT-registered businesses should now be using Making Tax Digital compatible software to keep records digitally and submit tax returns to HMRC.

If you work with VAT-registered businesses, please check they’re on track to do this, and if not, you can use our step by step guide to sign your clients up to Making Tax Digital.

You can also check when you should submit their first Making Tax Digital VAT Return.

Making Tax Digital for Income Tax Self Assessment — joining the pilot

From April 2024, all businesses with annual income from self-employment or property above £10,000 will have to follow Making Tax Digital rules.

We want to ensure this is well tested before mandation, and that agents and customers have opportunities to feedback on how it will work in practice. That’s why we’re running a pilot, inviting agents to recommend clients who can help us test and learn.

The pilot is still a test environment. Those taking part have the benefit of testing the Making Tax Digital Income Tax Self Assessment before April 2024, including their own internal processes for managing Making Tax Digital.

Agents and customers are already taking part, and we would like to encourage more agents to start signing up a small number of their clients.

If you are interested in joining, we suggest you review your client list now and see who is likely to be eligible based on the following criteria.

From next month (July 2022), we plan to bring customers with the following income types into the pilot:

• self-employment (including multiple self-employments)
• UK property
• Gift Aid
• Pay As You Earn income, including employment income and occupational pensions (excluding those with a coded out liability)
• UK interest
• UK dividends

You can go to GOV.UK for more information on the eligibility criteria for joining the pilot.

Clients will need to have an accounting period that aligns to the tax year (6 April to 5 April) to join the 2022 to 2023 pilot, and have Making Tax Digital compatible software before signing up (free and low-cost options are available, search ‘Making Tax Digital software’ on GOV.UK).

Those interested in joining the pilot can contact their software developer or email mailboxmakingtaxdigital@hmrc.gov.uk.

HMRC agent services

The Trust Registration Service

Deadlines for registering a trust with HMRC

The deadline for registering most trusts on the Trust Registration Service is 1 September 2022.

Trusts that are not taxable

The deadline for registrations of non-taxable trusts that were in existence on 6 October 2020 is 1 September 2022. These trusts must be registered even if they have since been closed.

Non-taxable trusts created after 6 October 2020 must register within 90 days of being created or otherwise upon becoming registerable, or by 1 September 2022 (whichever is later).

Taxable trusts created on or after 6 April 2021

Taxable trusts must register within 90 days of the trust becoming liable for tax or by 1 September 2022 (whichever is later).

There are different registration deadlines for taxable trusts that were created before 6 April 2021, guidance for these types of trusts can be found on GOV.UK.

You can register your clients trust or find more information in the Trust Registration Service manual.

Agent services account — granular permissions

Following agent feedback, we’re improving the service by adding an opt in and out button and a list of clients that can be filtered by tax service to the granular permission functionality. This will allow the responsible person to control access by assigning appropriate employees to specific groups of clients.

Currently helping small to medium sized agents, with up to 1,000 employees, we’re also looking at how larger agencies could use this functionality in future.

We are currently user-testing this service with agents and aim to deliver this in Autumn 2022.

Further information will follow in Agent Updates.

Applying for a certificate of liability to pay social security contributions only in the UK — new attachment facility

We have now extended the attachment facility to all five of our forms for applying online for a client’s certificate of liability, to pay social security contributions only in the UK. Previously only two of these forms had this facility.

This means that 64-8s and any supporting information may now be attached at the time when any of these forms are submitted online.

This will help speed up processing of applications. It is one of the improvements we are making following the recent research HMRC commissioned Kantar to carry out with Agent groups.

P11D and P11D(b) filing and payment deadlines

Do not forget that you need to tell us about any Class 1A National Insurance contributions that your client owes for the tax year ending 5 April 2022 by 6 July 2022 at the latest.

You also need to send us any P11D forms due by 6 July, failure to do so may result in a penalty for your client. Any Class 1A National Insurance your client owes must reach us by 22 July.

The June Employer bulletin contained more detailed information about how and what to submit.

When to tell us if your client does not need to file a P11D or P11D(b)

You will only need to tell us your client does not need to make a return if we sent you or your client a paper P11D(b), an electronic notice to file a P11D(b) or a reminder to file a P11D(b) letter.

How to make sure you have filled everything correctly

Use our working sheets and online toolkits to make sure you have filed everything correctly.

More detailed information including common errors to avoid were published in the June Employer Bulletin.

Where to send amendments or paper P11D and P11D(b)

Amendments and paper submissions must be sent to:

P11D & P11D(b)
HM Revenue and Customs
BX9 1WE

Change in the CT600 supplementary page CT600L from 1 April 2022 — update

In Agent Update 95, we advised of known issues with the CT0600L that impacts claims if companies claim:

• SME Research and Development Enhanced Expenditure but not SME Payable Tax Credit or Research and Development Expenditure Credit
• Research and Development Expenditure Credit and report Income Tax deducted from profits

We continue work to resolve them but do not currently have a date for a fix to be implemented.

You can check the latest information on service issues.

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 which 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.

Tax agent toolkits

HMRC have 20 tax 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.

Please be aware that our toolkits are currently being updated.

Here is the breakdown of toolkits by category:

• Capital Gains Tax toolkits
• toolkits for companies
• employer toolkits
• toolkits for individuals
• property rental toolkit
• trusts and estates toolkits
• VAT toolkits

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

Contact

Agent Blog

Did you know there is a regular Tax agent blog, highlighting 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.

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

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.

Online

You can access 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

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 the email alerts.

National Insurance services to pensions industry: countdown bulletins

Countdown Bulletin 53 has been added to this collection.

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 Online Forum

The Agent Online Forum continues to grow with over 2000 agents registered for the service, enabling them to view queries, provide evidence, and access updates on potential systemic issues impacting the operation of the tax system.

To help us respond more quickly to a larger number of queries, including occasions when we need to identify and liaise with a subject matter expert, we would ask you to ensure your posts are concise, evidence based and only refer to a single issue, with questions pertaining to that issue. This helps us review and triage the posts quickly, commission the responses and equally follow up if there are delays or the responses need further input.

Where posts are long winded and contain multiple queries, we have to spend a disproportionate amount of time interpreting how to try and respond — and this impacts on our ability to provide the wider service for others.

Please note feedback, opinion, and comment may not receive a response, and posts that do not comply with Agent Forum good practice guide, which can be accessed by joining the Agent Online Forum, will be locked or deleted. The insight or sentiment will however be made available to the relevant business area.

The process for triaging posts is:

Single issue posts and queries: acknowledged and a response requested from the relevant business area; once the response is published, the post will remain open for five days at which point it will be locked pending any follow up queries.

Feedback, opinion and comments, acknowledged and locked. The content will made available to the relevant business area as insight.

Guidance on how to post effectively is available in the Agent Forum Good Practice Guide. Posts which do not comply with the Agent Forum good practice guide can be locked and if necessary, removed.

Issues Overview Group 25 May 2022

Professional bodies and agents discussed the work on resolving queries on data returned by the Self Assessment pre-population service, including client references in HMRC registration acknowledgement emails. Work is continuing on both these items in seeking to improve the service provided to agents.

Discussions also took place on improving the quality and triaging of Agent Online Forum posts, and the drive to improve the quality and timelines of responses on the Agent Forum.

Issues Overview Group contact information for professional and representative bodies

AAT

ACCA Jason Piper

AIA David Potts

ATT Technical

ATTTechnical@att.org.uk

CIMA

CIOT Technical

CIPP Lora Murphy

CPAA Alison Hale

IAB

ICAEW Caroline Miskin

ICAS Tax Team

ICB Jacquie Mount

ICPA Tony Margaritelli

IFA John Edwards

VATPG Ruth Corkin

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