Tax Administration and Maintenance Day

This took place on 18 April and the Tax Faculty produced a news article on the day covering the main measures. The government announced a package of technical tax policy proposals, which included the publication of consultations on the VAT treatment of private hire vehicles and on technical changes to the national insurance contribution (NIC) reliefs for freeports and investment zones. The government also provided an update on its work to tackle non-compliance in the umbrella company market. A consultation will also be published later this year on the VAT treatment of charitable donations. We would welcome comments on any of these consultations. 

What was perhaps more surprising was the documents that weren’t published. We had been expecting updates on a number of consultations, including:

• the taxation of decentralised finance involving the lending and staking of cryptoassets (ICAEW REP 60/23); 
• charities tax compliance (ICAEW REP 70/23); and
• the taxation of employee ownership trusts and employee benefit trusts (ICAEW REP 96/23). 

In the event there was nothing on the government’s responses to these consultations nor any indication of when the government might publish them. There was also no further information about the proposed payrolling of benefits, moving the high income child benefit charge to a household basis, or the withdrawal of the furnished holiday letting regime. When we have further information about these developments we will share them with members. 

HMRC service standards

HMRC service standards continue to be a major headache for taxpayers and their agents with little sign of any improvements on the horizon. The announcement of the further closure of some of HMRC’s helplines, followed by a reversal the following day, was a deeply disappointing development. However, on a more positive note, this may have been the catalyst needed as to whether HMRC has the necessary frontline resources it needs to ensure it provides a decent service. These concerns were discussed in some detail at the Representative Bodies Steering Group meeting on 16 April and we are hopeful that it may lead to a greater appreciation by ministers that HMRC’s frontline may need more resources to ensure that taxpayers receive a decent service. We will provide members with further details in due course, but in the meantime the faculty encouraged members to complete the Admin Burdens Advisory Board’s Annual Survey into HMRC’s performance before the deadline of 30 April. 

PCRT and revised IESBA ethical code on tax planning

The International Ethics Standards Board (IESBA) has published the final pronouncement on an updated code of ethics, which includes detailed commentary on ethical requirements in relation to tax planning. IESBA’s code of ethics forms the foundation of ICAEW’s own ethical code and, as a member of the International Federation of Accountants, which sponsors IESBA, ICAEW is duty bound to alter its ethical code to reflect these changes. The changes take effect for tax planning services beginning after 30 June 2025.

Prior to the changes, IESBA’s ethical code did not include detailed commentary on tax advice. ICAEW, along with six other UK professional bodies and associations, has already adopted the Professional Conduct in Relation to Taxation (PCRT). The PCRT has been in place since 1995 and was strengthened in 2017 in response to the government’s request that the professional bodies take greater responsibility in helping to curb tax avoidance. 

Although the PCRT and IESBA’s final pronouncement are substantially similar in effect, IESBA’s code adopts a very different drafting style to the PCRT, which makes reconciling the two documents more challenging than might be hoped. Over the rest of 2024 ICAEW will be exploring with fellow PCRT bodies how the PCRT requirements and IESBA’s final pronouncement can be reconciled in a way that maintains the well-established and understood nature of the PCRT in relation to UK matters.

Regulation of the tax profession 

As reported last month, on Budget Day the government published a consultation document on Raising Standards in the tax advice market – strengthening the regulatory framework and improving registration. Given the regulatory and ethical aspects it raises, the faculty is in discussions with our colleagues in ICAEW’s regulatory policy and ethics teams. In addition, the faculty has also sought feedback from various stakeholder groups within ICAEW, including the ICAEW Board, the Tax Faculty Board and the Tax Policy and Reputation Committee. Lindsey Wicks, Senior Technical Manager, Tax Policy, has undertaken some outreach sessions with ICAEW members in the districts and we have also received some feedback directly from members following my request in the faculty’s latest tax news pages. The faculty has also been in discussions with fellow PCRT bodies and has also attended some feedback sessions with HMRC staff. I would like to thank all those who have sent us some comments, which we are now collating and considering before we prepare a draft of our response. The deadline for comments is 29 May and members may wish to respond directly to the government by completing its online survey or by email to raisingstandardsconsultation@hmrc.gov.uk.

Making Tax Digital

On 22 April 2024, HMRC reopened its MTD pilot – also known as the private beta. Functionality is still being built and as a result taxpayers need to meet certain criteria before they are allowed to join. As time goes on and more functionality is added, further taxpayers will be able to join. Agents need to consider a number of matters before putting taxpayers into the pilot. Please watch Senior Technical Manager Caroline Miskin’s MTDTalk webinar, broadcast on 24 April, for further details about the pilot, the pros and cons of joining it and whether your clients meet the criteria necessary to do so (and don’t forget to record it on your CPD record). If you decide to put one or more clients into the pilot, Caroline would be very interested to hear your experiences so we can provide HMRC with feedback and hopefully improve the system as it continues to be developed ahead of its proper launch in 2026. In the run-up to 2026, faculty staff also attended a number of meetings with HMRC staff on the design of MTD.

Representational work

One of the most important consultations currently under consideration is the faculty’s response to HMRC’s consultation document The Tax Administration Framework Review: enquiry and assessment powers, penalties and safeguards. The faculty plans to submit ICAEW’s response at about the time that this edition of TAXline is published. I would like to thank Annis Lampard, the chair of the faculty’s compliance and investigations committee, and Senior Technical Manager Richard Jones, for all the work they have put in to preparing the response and liaising with members. 

As reported in previous months, ICAEW members continue to see serious problems in the R&D sector. The faculty is in discussion with HMRC about what more ICAEW can do to help improve the current system to the benefit of taxpayers, HMRC and agents. We are continuing to consider how the existing PCRT topical guidance on R&D could be updated to reflect developments and address emerging concerns in the R&D claim sector. 

Tax Faculty committee and other meetings 

During the month there were meetings of the Tax Policy and Reputation Committee, the VAT Committee, the Duties sub-committee and the Private Client Committee.

In addition, I attended a bi-monthly meeting of the tax directors of the Global Accounting Alliance (GAA). Many of the issues and concerns about the tax system that we have in the UK are also shared by GAA colleagues, including a near universal concern about poor service standards provided by national tax authorities. This is an issue that the group intends to come back to in the coming months.

The faculty hosted an evening working dinner with colleagues from the CIOT. Matters discussed included the regulation of tax advisers agenda, what more the professional bodies could be doing to help improve service standards, and the forthcoming meetings of the European tax body CFE. 

I attended a meeting of ICAEW’s Wales Policy Board where tax policy development in Wales was the major item on the agenda. The wide-ranging discussion included the proposals for a visitor levy, land transaction tax policy, business rates and the need to focus on improving growth and productivity to help encourage people to live, work and invest in Wales. The faculty will provide further support to the Board on tax policy as needed.

Webinars, events and podcasts

On 10 April the faculty presented its latest Payroll and Rewards Update webinar. This ever-popular update was presented by Payroll and Reward Consultant Ian Holloway and moderated by Technical Manager Peter Bickley. Some follow up Q&As are being prepared. 

On 18 April, Richard Jones presented a webinar on the cash basis. It was moderated by Lindsey Wicks. 

Finally, as mentioned above, on 24 April the Tax Faculty’s Senior Technical Manager Caroline Miskin presented the latest MTDtalk webinar. With the start of the private beta pilot, the focus was very much on the pros and cons of joining the pilot and what are the likely next steps for MTD. The webinar was moderated by Lindsey Wicks. 

Our new monthly podcast series The Tax Track continues to get good feedback and engagement. The latest episode considers the corporation tax associated companies rules and other areas where family relationships can have an impact on business taxes. Faculty staff members Lindsey Wicks, Stephen Relf and Angela Clegg made up the panel. 

Tax representations and guides

TAXguide 03/24: Payroll rates, allowances and thresholds in 2024/25

Updated: TAXguide 07/23: Making R&D claims

Updated: TAXguide 15/20: CGT UK property disposal reporting