Tax news in brief

R&D tax relief enquiries

HMRC has written to those taxpayers it believes are affected by recent First-tier Tribunal (FTT) decisions in the area of subsidised and subcontracted research and development (R&D) (eg, the cases of Stage One Creative Services Limited and Collins Construction Limited). HMRC has confirmed that, wherever possible, it will seek to close those enquiries by 30 June 2025, although timescales could extend beyond this deadline, particularly where enquiries remain open for issues beyond the FTT judgments.

HMRC says that further guidance will be published this month explaining how, in HMRC’s opinion, the FTT decisions will affect claims. HMRC will then contact taxpayers to confirm if enquiries will continue into their claims. For any taxpayers who believe that they are affected by these cases and have not received a letter, ICAEW Tax Faculty recommends contacting HMRC.

Learn more by listening to the latest episode of ICAEW’s The Tax Track podcast.

Updates to HMRC's employment status manual

HMRC has updated its employment status manual to reflect the Supreme Court judgments in the case of Professional Game Match Officials Ltd (commonly referred to as PGMOL), as well as drawing from the findings of other cases, including those of Atholl House, UT Red, White and Green, UT Northern Lights and CoA Kickabout Productions. The updated sections focus on the various aspects of control, with some guidance also added to the sections on mutuality of obligation and the right to terminate a contract.

Adelle Greenwood, Technical Manager – Employment Taxes, ICAEW, said: “Almost four years on since the introduction of the off payrolling working regulations in the private sector, employment status continues to be complex topic of significant concern. We can expect further developments and interest in this area as the year progresses, especially in view of the potential impact of the increased employer national insurance contributions as of April 2025 and the reforms proposed in the Employment Rights Bill.”

Testing making tax digital (MTD) for income tax

Capium Limited - MTD for IT, Clear Books and TaxNav have been added to the list of software products currently available for taxpayers who have volunteered to test MTD for income tax. This brings the total number of software products to 16.

To find out more about MTD for income tax, visit ICAEW’s hub.

Freeports and investment zones: postcode provision

Legislation has been enacted that requires employers operating in a designated special tax site in a freeport or investment zone to provide their employee’s workplace postcode to HMRC if they are claiming the secondary class 1 national insurance contributions relief through their payroll. ICAEW responded to a consultation on the draft legislation.

Further information:

The Social Security (Contributions) (Amendment) Regulations 2025 (SI 2025/144)
Policy paper

GAAR advisory panel opinion

The general anti-abuse rule (GAAR) advisory panel has published an opinion covering certain employee reward arrangements. The arrangements involve the creation and subsequent sale of pension obligations to another employee with the consideration for taking on each obligation being discharged by payment to the other employee. The panel is of the view that entering into and carrying out the arrangements is not a reasonable course of action in relation to the relevant tax provisions.

Fraudulent VAT correspondence

ICAEW members have reported an increase in fraudulent correspondence relating to VAT. One email, which begins “we are reaching out regarding your recent VAT submission to ensure compliance”, appears to be intended to trick the recipient into revealing their GOV.UK account details.

HMRC has published guidance on how to spot and report suspicious HMRC emails, texts, social media accounts and phone calls.

Carbon border adjustment mechanism (CBAM)

At the Autumn Budget 2024, the government confirmed that it would introduce a UK CBAM on 1 January 2027. The CBAM will impose a carbon price on imports from sectors at risk of carbon leakage, including aluminium, cement, fertiliser, hydrogen, iron, and steel.

The government has now introduced a UK CBAM international group. The government says that the group will serve as a forum through which it can communicate updates to UK CBAM policy design and gather views from governments of other countries. The group will meet at least annually.

On 11 February 2025, ICAEW hosted a webinar on CBAM and European Union deforestation regulation. The webinar is available to watch on demand.

Update on the customs declaration service

The customs declaration service (CDS) supports making import and export declarations when moving goods into and out of the UK.

A CDS release (R4.7.0) had been planned for December 2024. HMRC has informed ICAEW that this was cancelled as some Northern Ireland-related changes required further development. HMRC says that the next release, R4.8.0, is planned for May 2025 and that, due to ongoing development work, Northern Ireland functionality will be removed from R4.8.0.

Any questions should be addressed to the business’ HMRC account manager or customer compliance manager, or by using the general contact channels for import and exports queries.

Business rates relief for film studios introduced

At the Autumn Budget 2024, the government confirmed that it would deliver on the previous government’s plans to introduce 40% relief on business rates for film studios. The government has now announced that, from 17 February 2025, local authorities can begin implementing local schemes and awarding the tax relief. Where applicable, the relief can be backdated to 1 April 2024.

The government says that film studios will not need to apply for the relief, as local authorities will award it to eligible properties. Film studios should contact their local authority if in doubt.