Guidance

Issue 113 of agent update

Published 18 October 2023

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Technical updates and reminders

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

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:

Tax

Alcohol Duty: check if you can take advantage of the new reliefs

Changes for Alcohol Duty took effect on 1 August 2023. This includes new reliefs which could reduce your clients’ tax bill:

  • a Small Producer Relief, which reforms and extends the relief previously enjoyed by small breweries, to producers of all alcoholic products under 8.5% alcohol by volume (ABV)  

  • a reduced rate for draught products, also known as Draught Relief, which reduces the tax due on draught alcoholic products under 8.5% ABV, packaged in containers of at least 20 litres, and designed to connect to a qualifying dispense system

Make sure to check if your clients can take advantage of the 2 new reliefs and transitional arrangements for producers and importers of some wine products.

You can find more information on Alcohol Duty and how the changes might affect you, by:

If you support a Small Producer they can also use the Small Producers Relief calculator to work out their reduced duty rate.

Loss carry back claims for Corporation Tax

The following guidance will enable HMRC to process your clients’ repayment claims with minimum delay.

General reminders

When submitting your client’s company tax return, include the most up-to-date bank details on the CT600.

If the CT600 includes a loss carry back claim, you must tick box 45 to show that a repayment for an earlier or prior accounting period is due.

Further information on completing the CT600 tax return is available in the Company Tax Return guide.

If you have ticked box 45, you must supply a breakdown of the claim in your computations showing how losses are to be used. Failure to do so will result in HMRC being unable to process your client’s claim.

Progress chasing

If making a loss carry back claim, you should not:

  • submit an amended CT600 tax return for the same accounting period that does not include new information

  • submit an amended CT600 tax return for the period in which the losses are being received

  • submit an original CT600 tax return by post — all returns should be submitted online through the Government Gateway portal

This does not apply if an amended return is not solely in relation to the loss carry back claim, or if the loss carry back claim itself requires amending.

Amended returns are still required to reflect additional changes to your client’s self assessment for any accounting period.

Resubmitting your client’s original claim will also increase the time taken for HMRC to review and process your client’s loss carry back claim.

Overlap Relief — preparing for the new tax year basis

On 11 September the online form for submitting requests for details about Overlap Relief was launched on GOV.UK.

Taxpayers with an accounting date other than 31 March or 5 April who are affected by the move to the new tax year basis may need to find out the details of their Overlap Relief. They’ll need to do this ahead of submitting returns for the 2023 to 2024 transitional year.

Overlap Relief information can only be provided if these figures are recorded in HMRC systems and taken from information submitted by taxpayers as part of previous tax returns. If this information has not been submitted in tax returns, HMRC will not be able to provide Overlap Relief. However, in these circumstances, it may be possible to provide historic profit figures, to allow Overlap Relief to be recalculated.

When preparing to fill out the online form for details about Overlap Relief, make sure that you have the following information:

  • customer name
  • Unique Taxpayer Reference (UTR) or National Insurance number
  • name or description of business, or both
  • whether the business is a sole trader or part of a partnership
  • the partnership’s UTR, if the business is part of a partnership
  • date of commencement of the self-employed business, or date of commencement as a partner in a partnership — if this is not known, then the tax year of commencement
  • the most recent period end date up to which the business used to report its profit or loss
  • year or years the accounting period changed (if applicable)

Further guidance on Overlap Relief and basis period reform is available on GOV.UK.

HMRC is also running a series of webinars for tax agents and advisers about the new tax year basis.

Launch of tax agent toolkit for the assurance of remittances to be reported on tax returns

As covered in Agent Update 112, HMRC has created a toolkit to support agents in assuring that non-domiciled clients are reporting taxable remittances on their Self Assessment returns.

The toolkit launched on 2 October 2023 and can be found on GOV.UK.

The remittance basis legislation is wide ranging and can be challenging to apply, particularly where affairs are complex or records covering many years must be considered.

We hope the toolkit will assist conversations with clients to help them understand:

  • HMRC’s expectations in this area
  • the benefits of fully engaging with you in this process
  • the possible consequences of not engaging — this could include the cost of HMRC enquiries and possible extra tax, interest and penalties

The toolkit sets out HMRC’s expectations in relation to the issues that need to be considered. This will help agents and clients satisfy themselves about whether taxable remittances have occurred.

Some agents may need to seek assistance to support their clients if they do not have sufficient experience in relation to the remittance basis.

Risks relating to remittance reporting

Areas of risk relating to remittance reporting fall broadly into the following categories:

  • agent not having all the relevant information
  • incomplete record keeping, including not being able to identify the source of funds in bank accounts or used to buy assets
  • interaction with anti-avoidance legislation, such as settlements, transfer of assets abroad and Capital Gains
  • remittances by other relevant persons or through offshore structures
  • relevant debts and collateral
  • use of credit cards
  • remittances of gifts by third parties

The content of the toolkit is based on HMRC’s view of how tax law should be applied. Application to specific cases will depend on the law at the relevant time and on the precise facts.

The tax agents toolkits collection provides further information on using this toolkit and reasonable care under HMRC’s penalty system.

Making a valid claim for Research and Development (R&D) tax reliefs

If your business or your client’s business involves working on innovative projects in science and technology, and your projects meet the standard definition of ‘Research and Development’ or R&D, you may be able to claim Corporation Tax relief on these projects.

You can find out about Corporation Tax Research and Development relief projects that count as R&D on GOV.UK.

There are some rules in place that you need to be aware of and adhere to, in order to make a successful claim for R&D tax relief.

Claim notification form requirement

For accounting periods beginning on or after 1 April 2023, you may need to complete a ‘claim notification form’ to tell us about your claim. When we receive your ‘claim notification form’, we will send an email to confirm receipt and provide a reference number. 

If you need to complete a claim notification and you do not, your claim will be invalid.

Guidance on how to inform HMRC about a claim for R&D tax relief is available on GOV.UK.

Additional information form requirement

For new claims made on or after 8 August 2023 you must send us an additional information form (AIF) before you file your company’s tax return.  

If you do not send us an ‘additional information form’ before you file your company’s tax return, your claim will be invalid. 

Guidance on completing the additional information form can be found on GOV.UK.

Comprehensive information on how R&D tax reliefs work can be found on GOV.UK.

Correcting payroll mistakes — updated content

From April 2019 HMRC changed the way in which employers can correct payroll mistakes for an earlier tax year.

If you reported the wrong pay or deductions

To correct a mistake made in the current tax year, update the year-to-date figures in your next regular Full Payment Submission (FPS).

Submit another FPS with the correct year-to-date figures if you reported the wrong pay or deductions for the following tax years:

  • 2020 to 2021
  • 2021 to 2022
  • 2022 to 2023

If you reported the wrong pay or deductions in the 2018 to 2019 and 2019 to 2020 tax year, you can correct this by submitting an Earlier Year Update (EYU) or a further FPS with the correct year-to-date figures.

If you reported the wrong pay or deductions in the 2017 to 2018 tax year, send an EYU showing the difference between what you originally reported and the correct figure. You can only use an EYU for tax years when you were reporting online in real time.

If your payroll software cannot send an EYU, you can use HMRC’s Basic PAYE Tools.

The rules are different if you find a mistake in your final FPS of the year.

Correct an employee’s student loan repayments

What you need to do depends on when you made the mistake.

GOV.UK has information on errors deducting student loan or postgraduate loan repayments.

The following GOV.UK links are due to be updated in October:

Correcting an employee’s National Insurance deductions — updated content

What you need to do depends on when you made the mistake.

If the mistake was in this tax year

Repay or deduct the balance from your employee. Update the year-to-date figures to the corrected amount in your next regular FPS or send an additional FPS.

If you deducted too little, you cannot recover more than the employee’s National Insurance contribution due that month.

Example

You deducted £100 too little in January. In February, your software calculates an £80 National Insurance deduction, which means you can recover up to £80 towards the underpayment that month (a £160 deduction in total).

Recover the remaining £20 in another month.

If the mistake was in the tax years between 6 April 2020 and 5 April 2023

Send an FPS with the amount you should have deducted if the mistake was in the following tax years:

  • 2020 to 2021
  • 2021 to 2022
  • 2022 to 2023

You’ll need to write to HMRC if both the following apply:

  • the difference is negative because you deducted or reported too much National Insurance
  • you still owe your employee a refund (for example, because they’ve left your employment)

In the letter you’ll need to include:

  • the reference ‘Overpaid NI contributions’
  • your employee’s name, date of birth and National Insurance number
  • why you overpaid National Insurance contributions
  • which tax years you overpaid in
  • how much National Insurance you overpaid
  • why you are unable to make the payment to the employee

For a claim for one employee, send the letter to:

HM Revenue and Customs
National Insurance Contributions and Employer Office
BX9 1AN

For a claim for more than one employee, send the letter to:

HM Revenue and Customs
National Insurance Contributions and Employer Office
BX9 1BX

If the mistake was in the 2018 to 2019 and 2019 to 2020 tax years

Send an FPS with the correct year-to-date National Insurance if:

  • your payroll software will let you submit an FPS
  • you can pay any National Insurance refunds you owe

If you cannot use an FPS, send an EYU with the difference between:

  • the amount of National Insurance you originally deducted
  • the correct amount you should have deducted

If the difference is negative (because you deducted or reported too much National Insurance), you also need to set the ‘NIC refund indicator’ to:

  • ‘Yes’, if you have refunded your employee or no refund was due
  • ‘No’, if you still owe your employee a refund (for example, because they’ve left your employment)

If the mistake was in the 2017 to 2018 tax year

Send an EYU with the difference between:

  • the amount of National Insurance you originally deducted
  • the correct amount you should have deducted

If the difference is negative (because you deducted or reported too much National Insurance), you also need to set the ‘NIC refund indicator’ to:

  • ‘Yes’, if you have refunded your employee or no refund was due
  • ‘No’, if you still owe your employee a refund (for example, because they’ve left your employment)

If there’s an underpayment

If you deducted too little National Insurance, pay HMRC the underpayment straight away. You can then recover the amount from your employee by making deductions from their pay.

You cannot recover more than the amount of National Insurance the employee owes in a month (so the employee pays no more than double their normal contribution). Carry over the difference to later months — you can only make deductions in the tax year when you made the mistake and the year after.

The following GOV.UK links are due to be updated in October:

Statutory Residence Test: webinar

HMRC are inviting agents to an educational webinar on the Statutory Residence Test. The webinar is due to take place in November 2023.

Agents will be notified of the webinar if they are subscribed to HMRC’s help and support email service. You can subscribe to receive these emails through the HMRC email updates and webinars for tax agents and advisers page.

In advance of the 2022 to 2023 Self Assessment filing deadline, you can visit our residence status checker which gives an indication of whether a person will be UK resident.

For further information, read:

You can find available legislation on Schedule 45 of the Finance Act 2013.

Making Tax Digital

Making Tax Digital for Income Tax Self Assessment: the case for change

HMRC’s vision is of a trusted, modern tax system — one that fits with how taxpayers live their lives and run their businesses, keeps the tax gap low, and helps to create the right conditions for UK economic growth.

Making Tax Digital for Income Tax Self Assessment (MTD for ITSA) is key to enabling this vision.  It will require mandated taxpayers and their agents to use software to keep records and update HMRC.

This improved real-time record keeping brings various benefits and will:

  • help customers get their tax affairs right first time
  • reduce the tax gap by reducing genuine mistakes
  • support wider productivity and growth through more accurate forward planning and better cash flow and management

The benefits of MTD also go beyond Self Assessment as the programme will:

  • deliver groundwork for technology changes that will help HMRC’s progress towards its vision
  • deliver improvements to HMRC’s IT infrastructure by moving Self Assessment off legacy platforms and onto modern, secure systems designed with the future in mind
  • provide a more joined up single view of each taxpayers’ affairs (by having all information in one place) and more automatic population of data using information already reported elsewhere (such as PAYE)
  • lay the foundation for even more service improvements in the future

Further information on the progress of MTD for ITSA will be provided with when the outcomes of our review into the needs of small businesses are announced. Keep up to date with this and the latest MTD news and guidance, through this monthly agent update and by subscribing to HMRC’s help and support email service.

Update on the removal of functionality to copy across existing VAT clients to agent services accounts

In the Agent Update 111 we told you that from October 2023 we were intending to remove the functionality which allowed agents to copy across existing VAT clients to their agent services account (ASA).  Due to some technical complexities this process is going to take slightly longer than originally planned. As soon as we have a firm date, we will provide further communications. 

Whilst this copy across function will remain available for now, we are strongly encouraging agents to use the digital handshake process to authorise new VAT clients in order to prepare for the removal of the copy across service in the near future.

HMRC Agent Services

Important information for customers using ‘pay by bank’ to pay HMRC

Feedback has indicated that a small minority of customers are unsure about using ‘pay by bank’ when paying HMRC because they notice their payment has gone through the HMRC Shipley bank account, when they are historically used to paying HMRC Cumbernauld.

Please reassure your clients that this is not a scam, that ‘pay by bank’ is still the preferred method for paying HMRC and that this won’t affect payments going to the correct customer record or the time taken to update it.

Pay by bank was introduced in March 2021 and a large proportion of our customers regularly use this method, which prepopulates all payment details when they log in to their HMRC online account, making the process quicker and easier.

Intelligent text message service — update

Our intelligent text message service has proven to be a useful tool in encouraging the use of our digital services, and it’s now a key component of our business as usual activity. 

Since its launch on 19 January 2023, over 1 million text messages have been sent to customers who called us from a mobile phone.  

The service is helping customers resolve their queries online, with 38% not going on to speak to an adviser or calling back within 7 days.   

The texts are triggered by the call reason, and they deliver links that provide immediate access to relevant online content which customers can use to resolve their query independently at their own convenience. Encouraging customers to use our online services and reduce the reliance on phone support means we can free up our advisers’ time to assist those with more complex needs.   

We receive thousands of calls each week for simple things that are easier to do online, such as resetting your online password, which we cannot do over the phone, or getting your National Insurance number which for security reasons has to be posted and cannot be given out on a call. 

The service doesn’t operate on the Agent Dedicated Line, but it is used on 11 other helplines with the texts covering 51 simple call queries. These call queries are configured to either allow customers to remain on the line after the text message has been sent (65% of queries) or they’re disconnected (35% of queries) and they can go on to use our online services, digital assistant and chat if they need further help.

Alongside the text service we’ve been improving information on GOV.UK, and we’ve re-recorded the messages customers hear when they call us to make them clear and helpful.

We will continue to learn from and develop the service, looking for improvements to the helpline messages, query types, and text messages to ensure they are meeting customer and HMRC needs.

Advance Valuation Ruling service now available to all

The Advance Valuation Ruling service is now available to agents representing traders who cannot use a business tax account. 

Traders and agents using a business tax account have been able to apply for rulings since April 2023. 

The service provides traders with legal certainty on the valuation method of goods they are importing into the UK, for a period of 3 years. 

The service is not mandatory, but it provides reassurance that a chosen valuation method is correct and assists in the completion of customs declarations. 

To use the service, traders need: 

  • a Government Gateway user ID 
  • an EORI number 

Further information on the Advance Valuation Ruling service can be found on GOV.UK.

New YouTube videos for Self Assessment

We’ve produced 4 new YouTube videos to guide customers through the online process of registering and stopping Self Assessment.

You may want to promote and share these step-by-step videos with your clients. You’ll see the self-employed videos includes information on how clients can set up their tax agent to complete the form for them.

Going online to register and stop Self Assessment is much quicker than printing and posting this information to us.

The videos have had over 12,000 views in just 3 weeks.

Registering for Self Assessment

For those who need to register, we’ve produced step-by-step instruction videos showing the self-employed and not self-employed how to register online.

How to register online for Self Assessment if I’m self-employed

How to register online for Self Assessment if I’m not self-employed

Stopping Self Assessment

The following videos explain the straightforward, important process of stopping Self Assessment for the self-employed and not self-employed.

How to go online and stop Self Assessment if you’re self-employed

How to go online and stop Self Assessment if you’re not self-employed

Income Record Viewer — the must have tool for agents

The Income Record Viewer (IRV) is the easy way for agents to check their client’s pay, tax, employment history, pension (private and state) and tax codes.

Get access to the IRV now and join over 3,000 agents who are already using it.

Here’s some agent feedback on the tool:

  • ‘As an agent this is the most worthwhile addition from HMRC. Information held is excellent.’
  • ‘Really pleased to finally have access to my client’s income record. When clients have multiple sources of income it helps to reassure me that everything has been included on the tax return.’
  • ‘It’s long overdue to give agents this access but it saves so much time and hassle when a client loses documents and can’t remember dates.’

You’ll need authorisation from your clients to access their information in the IRV. Your client only needs to authorise you once using their personal Government Gateway account.

We’ve produced a short YouTube video that will guide your client through the simple process of authorising your access.

How do I authorise an agent for the Income Record Viewer?.

On average, 50 new tax agents a week are realising the benefits, such as:

  • it saves time and is much quicker than waiting for information to arrive in the post or calling us
  • the information you need is all in one place
  • mistakes are less likely, and you can check any information your client gives you

We’ve listened to feedback from agents and will be making more improvements to the IRV and we’ll keep you updated.

McCloud digital service launch

The McCloud digital service (‘Calculate your public service pensions adjustment’) that enables members, affected by public sector pension reform, to claim compensation and make tax changes was launched as a beta service on 5 October 2023. Due to time constraints some elements of the digital service are not yet available.

Agents can use the digital service on behalf of their clients to calculate compensation and adjustments to filed tax returns that are needed, but they can’t currently submit a digital claim on behalf of a client.

Improvements to agent access will be explored during the beta service stage. In the meantime, HMRC is providing a way for agents to submit the claim on behalf of their client either by email or post and will provide further details shortly.

Changes to the Agent Dedicated Line

We want to remind agents of the changes recently announced to the Agent Dedicated Line (ADL) which came into effect from 2 October 2023:

  • we no longer operate to a 10-minute service level on the ADL — waiting times on the ADL may vary depending on how many agents are calling at one time and agents may wait longer than usual for their call to be answered

  • ADL now features call waiting times in our in-call messages — these messages will tell agents the average wait time for the previous day, allowing them to decide on whether to continue with their call, call back another time, or if they can, use a digital option to resolve their query

  • when calling the ADL, agents with certain types of PAYE queries (like PAYE coding or PAYE repayment queries) will need to select the PAYE option (option 2) and their call will be routed to an experienced PAYE adviser

We have updated our in-call selection process — agents should listen to the options available and select the one which best reflects their reason for calling, to ensure their call is handled in the right place.

We want to assure agents that if they have multiple queries on different subjects, our advisors can redirect the call and connect them to the right ADL team who can deal with their query.

The Warehousekeepers and Owners of Warehoused Goods Regulations — share your views

HMRC is currently reviewing the requirements for the registration and approval of warehousekeepers, and owners of goods and duty representatives storing excise goods warehoused in the UK. These requirements form part of The Warehousekeepers and Owners of Warehoused Good Regulations (WOWGR) 1999.

HMRC would welcome your views on potential changes to these regulations to:

  • gain a better understanding of whether businesses benefit from the provisions of WOWGR
  • identify any risks if WOWGR were reformed

If you would like to get involved, email holding.movement@hmrc.gov.uk. You will have until 29 November 2023 to participate.

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.

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:

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

Contact

Complain to HMRC

You can complain to HMRC.

To make a complaint to HMRC on behalf of your client you must be appointed as their tax adviser.

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.

Online

You can find online training material and useful resources through the HMRC email updates and webinars for tax agents and advisers page.

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                                        

National Insurance Services to Pensions Industry: countdown bulletins.

Countdown Bulletin 53 has been added to this collection.

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

Issues Overview Group and agent forum

Complex issues which require additional focus or detailed discussion are escalated from the agent forum to the Issues Overview Group (IOG), comprising representatives of professional bodies and agents in practice. The group provides input and explores outcomes for issues with subject matter experts from HMRC. Unresolved issues can be referred to HMRC’s senior agent forum — the Representative Bodies Steering Group (RBSG) for confirmation of outcome.  

Updates on issues escalated to the IOG will be published in agent update and posted on the agent forum. Details of issues currently under escalation, closed, or locked pending additional ‘new’ evidence, a change of prioritisation, funding, policy, or technology, and those under long term consideration where a response may take a very extended timeframe, can be found under the IOG escalated issues section of the agent forum.

SA-22356 — Marriage Allowance 

In Agent Update 111 we confirmed that where an enduring Marriage Allowance election exists, and either spouse is a Self Assessment customer, no entries are required on the Marriage Allowance section of the return. The calculation will be updated automatically to show the transfer of allowance upon receipt of the return. We’d like to expand on that advice by providing a couple of options for agents to confirm whether their client has an enduring Marriage Allowance claim. 

The Agent Dedicated Line are able to confirm whether an enduring Marriage Allowance claim exists for a client. However, there is an alternative way for an agent to confirm this. If your client has a PAYE source of income, then the existence of an enduring Marriage Allowance claim can be determined by checking the suffix of your client’s tax code (suffix ‘N’ indicates transfer to spouse in place and suffix ‘M’ indicates receipt from spouse in place).

CT-38844 — delays submitting the CT600 returns

Agents have reported delays when filing CT600 returns and receiving an acknowledgement. A solution to improve the service is being developed. This will need to be tested before deployment into live service. It is anticipated the solution will be deployed at the end of the year.

Working from home tax relief

It is important to check tax codes regularly to ensure they are correct. Since the end of COVID-19 regulations, we expect that there will be fewer customers who are eligible to claim working from home tax relief. Agents should review their client’s tax code to ensure they don’t have this allowance if they are no longer eligible.

Contact information for professional and representative bodies

If you are not a member of a professional body, contact the agent engagement mailbox: team.agentengagement@hmrc.gov.uk.

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