This week we bring you news of an extension to the work of the HMRC taskforce on clearing post more than 12 months old, and advice for finalising 2021/22 Self-Assessment (“SA”) returns which were filed with provisional figures/estimates. HMRC has also published new guidance on “negative earnings” and the regulations which give effect to changes in transfer pricing records have been laid. A new online tool is now available to check your tax code and updated guidance has been published on basis period reform together with the online form to obtain details of overlap relief which was launched today as expected. HMRC has also announced a forthcoming change to the functionality that enables agents to copy across existing VAT clients to their Agent Services Account (“ASA”) and has updated the Agent Standard, which sets out what HMRC expect from agents representing or advising taxpayers.
Update on work of HMRC taskforce clearing post more than 12 months old
In July we outlined how HMRC had begun to implement its plans for dealing with agent post more than one year old which had not been responded to, and how agents could contact HMRC to action post more than a year old. Agents are able to use the Agent Account Manager team to escalate these cases via an online form. HMRC has since reviewed progress on this and has decided to continue with this work with no end date specified at present.
We would therefore encourage agents to use this process because although HMRC is identifying such post in its post queues, cases may be missed. We understand that once sufficient progress has been made on post more than 12 months, HMRC will then be seeking to address post in the 10-12 months old category.
2021/22 SA returns with provisional figures/estimates
Last month HMRC began sending letters to agents to encourage them to finalise any 2021/22 SA returns filed with provisional/estimates figures. HMRC is asking that these be amended by 30 November 2023 if actual figures are now available, or by 31 December 2023 if they are not yet available.
It should be noted however that this request does not displace the 31 January 2024 statutory date for amending these returns. Unfortunately, the agent letter does not include a list of affected clients, however HMRC can provide this on request by the agent.
Guidance on negative earnings
For the first time, HMRC has published guidance on negative earnings and clawback of bonuses. The guidance describes how employees may be able to claim an income tax refund.
Transfer pricing regulations
New tool to check your tax code
HMRC recently launched a new online tool “Check what your tax code means” which aims to assist taxpayers with understanding their tax code and what it means for them. To check what a tax code means, taxpayers need their tax code to hand together with an estimate of their annual income including details of any benefits and pension income. This new tool also directs taxpayers to the relevant service to change their tax code in specific instances.
As this is a new tool, HMRC is seeking feedback on user experiences via a screen at the end of the tool. Although the new tool is helpful to taxpayers, Chartered Accountants Ireland continues to advocate that HMRC should develop an online process which enables agents to amend taxpayer codes for their clients.
HMRC has published an updated guidance note on the basis period reform rules which commence with the changes required as a result of the transitional year 2023/24. From 2024/25, the current year basis of assessment will change to the tax year basis. More detailed guidance on basis period reform is available in HMRC’s Business Income Manual.
HMRC has also now launched the online form which enables a taxpayer or their agent to contact HMRC and request details of unused overlap. The need for HMRC to provide taxpayers with details of unused overlap relief was a recommendation of this Institute in its response to the consultation on basis period reform in summer 2021.
Change to Agent Services Account functionality
When using their ASA, agents can currently copy over existing client relationships for VAT and Income Tax Self-Assessment (ITSA) from their old Government Gateway ID. HMRC will be removing the functionality to do so in respect of VAT from October 2023. There is no change proposed to the functionality for copying ITSA clients to the ASA which will therefore remain in place.
Agents are therefore advised to ensure that existing VAT clients are copied across to their ASA before October. Once this functionality is removed, VAT clients must be authorised using the digital handshake authorisation route available in the ASA.
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