Need to know

HMRC’s 2022/23 customer service performance falls short: Data on HMRC’s performance in 2022/23 contained in its annual report and accounts, the Charter annual report and research reports reveals the severity of the department’s problems. ICAEW continues to highlight the impact on taxpayers and agents and press for improvement. 

Legislation Day 2023: R&D, pensions and some unexpected announcements: While a lot of the material published on 18 July was expected, there were some surprise announcements including planned administrative changes to the high income child benefit charge.

Finance (No.2) Act 2023 receives Royal Assent: Finance (No. 2) Act 2023 received Royal Assent on 11 July, bringing into law various tax measures with effect from that date. Full expensing, the abolition of the pension lifetime allowance charge, and many other measures come into force.

HMRC: Half of all R&D claims by SMEs at least partly non-compliant: In a report published alongside its annual report and accounts for 2022/23, HMRC also noted the smallest claims had the highest value of non-compliance and confirmed compliance behaviour varied according to industry sector.

OECD makes further progress in implementation of pillars one and two: Members of the inclusive framework agree not to introduce unilateral digital services taxes before 2025.

ICAEW supports greater pre-population of tax returns: Pre-population has the potential to increase accuracy and reduce taxpayer compliance obligations. However, it must be balanced with mechanisms for taxpayers to check and amend pre-populated data.

Treasury Committee Chair shares her priorities with ICAEW tax experts: ICAEW hosts Treasury Committee Chair Harriett Baldwin MP for a discussion on the Committee's upcoming work and the future of tax simplification.

Home responsibilities protection may not be reflected in national insurance records: Some individuals may be missing home responsibilities protection (HRP) from their national insurance record, which could impact the amount of state pension that they are entitled to. The government is identifying affected individuals and will be writing to them with their recalculated state pension entitlement.

Trial for agents to get HMRC’s response to old post: HMRC is expanding the role of the agent account manager team, which will now assist with processing post that is more than 12 months old.

HMRC sets date for launch of overlap relief information request form: The new online form will allow unincorporated businesses and their agents to request the information HMRC holds on the overlap relief available to them on transition to a tax year basis of taxation from 2023/24 or earlier.

HMRC sends pillar two educational letters to large businesses: HMRC has started sending letters to large businesses who it believes may be within the scope of the UK’s new multinational top-up tax (MTT) and domestic top-up tax (DTT). The letters are intended to educate businesses about the new rules being introduced and allow them to clarify any issues in advance with HMRC.

Estimated tax gap figure remains in line with previous year: HMRC’s released figures estimate that the tax gap has held steady at 4.8% in percentage terms. In real terms, though, the tax gap increased to £36bn, an increase of £5bn from the previous year. ICAEW’s Tax Faculty looks at the key figures.

Adjudicator's report reflects concerns over HMRC’s service performance: The Adjudicator’s annual report highlights that HMRC’s complaints handling performance has not fully recovered post pandemic. A large number of complaints are raised prematurely by those who have been unable to successfully navigate HMRC’s internal complaints system. 

Member helpsheets and guidance

When can you rely on HMRC guidance?: HMRC has updated its statement on when taxpayers can rely on HMRC guidance. It is now framed within the context of how HMRC advice and information can help taxpayers.

HMRC's tips to help protect taxpayers: HMRC has provided information about how taxpayers can help protect themselves when dealing with their tax affairs.

Construction industry scheme: drop VAT compliance test, says ICAEW: ICAEW’s Tax Faculty considers the proposed construction industry scheme (CIS) gross payment status (GPS) VAT compliance test is unlikely to deter organised criminal groups and should be dropped.

ICAEW supports measures to address carbon leakage risk: ICAEW’s response focuses on reducing the potential administrative burdens associated with introducing a carbon border adjustment mechanism and mandatory product standards.

ICAEW considers proposed taxation framework for decentralised finance: The Tax Faculty supports implementing a regime for taxation of decentralised finance (DeFi) involving the lending and staking of cryptoassets. However, it is vital that any regime is simple for individual investors to understand and abide by.

Consultations

UK Government consults on measures to tackle business rates avoidance and evasion: The consultation focuses on proposed changes to prevent abuse of empty property relief and the “next in use” exemption involving charities and community amateur sports clubs (CASCs). It also asks for evidence relating to other rates avoidance and evasion behaviour including the existence of “rogue agents” that promote such behaviour.

ICAEW supports modernising stamp taxes on shares: HMRC’s consultation follows an earlier call for evidence and considers proposals to modernise stamp taxes on shares. This includes whether to have a single tax on securities, rather than the current stamp duty and stamp duty reserve tax regimes.

ICAEW responds to consultation on tougher sanctions for tax avoidance promoters: HMRC’s proposals would allow a criminal offence to be applied where promoters continue to promote a scheme after a stop notice has been issued, and directors to be disqualified in some situations.

HMRC continues to consult on border processes: Calls for evidence launched on temporary admission and the future of customs declarations.

UK international tax legislation to be reformed: The UK government is seeking views on reforming the UK rules on transfer pricing, permanent establishments, and diverted profits tax.

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