Tax measures and the general election

The Prime Minister has called a general election for 4 July and Parliament was dissolved on 30 May. The Finance (No 2) Bill 2024, which was wending its way through Parliament, completed its Parliamentary stages and received Royal Assent on 24 May. 

The dissolution of Parliament has a number of consequences for tax matters, not least that Treasury and HMRC officials now enter into ‘purdah’, which limits the interaction allowed between them and external stakeholders such as professional bodies. One consequence is that continued discussions between HMRC officials and tax specialists in areas such as the changes to the rules for non-domiciled taxpayers and the abolition of the furnished holiday lettings rules, will not now take place until a new government is in place and a decision is taken to reopen such discussions. As a result there remains considerable uncertainty about how exactly these (and other measures in the pipeline) will be taken forward, and when. 

The Public Accounts Committee (PAC) also had an open enquiry into HMRC’s performance to which the Tax Faculty submitted some written evidence. However, the enquiry will now be ended – we presume without the publication of a report. It remains to be seen if a newly constituted PAC in the next Parliament will pick up this enquiry.

Professional standards and regulation 

ICAEW submitted its response on 23 May to the consultation document Raising standards in the tax advice market: strengthening the regulatory framework and improving registration. In its response, ICAEW highlighted the need for any change to the regulatory framework to be made in the public interest. The chosen approach must raise technical and ethical standards among tax practitioners and protect consumers from incompetent or unscrupulous practitioners, but without increasing costs to the extent that taxpayers cannot afford professional advice. All three approaches set out by the government have challenges, but ICAEW’s preference would be for mandatory membership of a professional body, but only if such an approach is appropriately designed and scoped. 

Following consultation with the professional bodies, HMRC has also updated its standard for agents. This latest update helpfully highlights that it does not override duties set out by an agent’s professional body. In particular, it does not impose additional requirements on agents who meet Professional Conduct in Relation to Taxation (PCRT) standards, which was a concern under the previous draft. 

We also attended a meeting with IESBA where one of the items under discussion was the recently released Final Pronouncement on Tax Planning and Related Services. We stressed the importance of PCRT, given its status as an established part of UK tax standards and enforcement that had been adopted by several UK bodies and endorsed by HMRC, not least in the updated Agent Standards mentioned above. 

HMRC service standards

On 15 May, the NAO issued a report on HMRC customer service, finding that HMRC has not achieved the planned efficiencies from digital services and that HMRC’s telephone and correspondence services have been falling below the expected service levels for too long – something that ICAEW has highlighted frequently. The embargoed report must have caused considerable concern to Treasury Ministers because, two days earlier, it was announced that the government would provide HMRC with £51m in new funding for improved customer service. Press releases were issued for both announcements and Senior Technical Manager Caroline Miskin was quoted in the Financial Times newspaper as well as the professional press. The key points made are that while the additional funding announced on 13 May should help to alleviate the current situation, it will be some months before the impact of that will be seen. It also does not address the need for HMRC to improve its digital services.  

Making Tax Digital

As noted last month, HMRC has reopened its MTD pilot. I would urge members to watch Caroline Miskin’s MTDTalk webinar, broadcast on 24 April, which highlights the many issues that members need to consider in the run up to the implementation of MTD in April 2026. Tax Faculty staff also had a separate consultation meeting with HMRC’s MTD team at which we were able to explore areas of concern and what more ICAEW can do to help members and HMRC in the run up to mandation. It was agreed to hold regular calls between us from now on.

Representational work

As reported in previous months, ICAEW members continue to see serious problems in the R&D sector. The faculty has been in discussion with HMRC about what more ICAEW can do to help improve the current system, but we need to clarify whether or not purdah will affect these discussions. In the meantime, we are continuing to consider with colleagues from CIOT how the existing topical guidance on R&D should be updated to address emerging concerns in the R&D claim sector. 

As mentioned above, we are now in purdah where access to Treasury and HMRC officials is limited. One consequence is that we are not now likely to see the proposed changes to the non-domiciled rules and the proposed anti-forestalling rules for furnished holiday lettings until later this year, leaving less time to consider them before they come into effect. The faculty did propose to HMRC that, following the abolition of the special furnished holiday lettings rules, the government should introduce a statutory ‘brightline’ test such as the one introduced for determining statutory residence. However, the faculty’s proposal was not adopted. 

We also attended various other meetings with HMRC, including the latest meeting of HMRC’s representative bodies steering group, where service standards and the extra investment mentioned earlier were discussed, as well as the status of the raising standards consultation. 

Tax Faculty meeting

During the month there was a meeting of the Tax Policy and Reputation Committee where the main topic for discussions was the raising standards consultation response. 

Webinars, events and podcasts

On 14 May Caroline Miskin was joined by Sharon Cooke for the latest Tax in practice webinar.

Our new monthly podcast series The Tax Track continues to get good feedback and engagement. The latest episode was presented by Lindsey Wicks and she was joined by tax faculty staff Stephen Relf and Peter Bickley. 

Tax representations and guides

ICAEW REP 049/24 Raising standards in the tax advice market: strengthening the regulatory framework and improving registration 

ICAEW REP 048/24 Finance (No2) Bill 2023-24 Clause 22 Transfers of assets abroad 

ICAEW REP 047/24 Additional tax relief for visual effects 

ICAEW REP 046/24 Freeport and Investment Zone Employer NIC reliefs reporting requirements 

ICAEW REP 043/24 Improving data HMRC collects from customers: draft legislation 

ICAEW REP 041/24 Tax Administration Framework Review enquiry and assessment powers, penalties and safeguards 

TAXguides

TAXguide 04/24: The cash basis for trades: Q&As

TAXguide 05/24: Payroll and reward update webinar Q&As