Last week, the draft Programme for Government was released setting out what can be expected once the programme is officially agreed later this week. Most readers’ attention will be drawn to the measures aimed at growing our economy and delivering on infrastructure. The document is ambitious in its scope with a commitment to create 300,000 extra jobs by 2030 as well as build over 300,000 homes by 2030 in line with the revised Housing Targets. There is also a commitment to rigorously implement the SME test when designing each new piece of legislation and regulation to determine the impact on SMEs. On taxation, the Government’s priorities are as follows: Broad Tax Base Maintenance: Ensure a wide-ranging tax base to mitigate the need for counter-cyclical fiscal policies during economic downturns and to address future budgetary challenges, particularly those related to an aging population. Progressive Taxation Adjustments: If economic conditions remain robust, implement progressive tax changes. This includes indexing credits and bands to prevent an increase in the real burden of income tax. International Tax Reform Engagement: Actively participate in the OECD's international tax reform initiatives. Our corporate tax policy must reflect the globalized nature of trade and industry. A tax system that supports innovation and entrepreneurship is crucial to maintaining Ireland's attractiveness for sustaining and growing existing businesses, as well as for starting and scaling new ventures. Energy Cost Containment: In response to rising energy costs for households and businesses, introduce tax measures to help manage these expenses, including adjustments to VAT. The document contains a commitment to delivering a clear and credible macroeconomic and fiscal framework which will meet future needs. As part of this a new Government Action Plan for Competitiveness and Productivity will be published within 12 months focusing on “industrial policy, reducing the cost and regulatory burden on business, investing in infrastructure, digital regulation and reform, energy reform, international trade and research and development, and innovation”.

In this week’s post EU exit corner, we bring you the latest guidance updates and publications relevant in the post EU exit environment. The most recent Trader Support Service bulletin is also available as is the latest Brexit and Beyond newsletter from the Northern Ireland Assembly EU Affairs team. HMRC has also asked us to highlight a current issue with the Customs Declarations Service (CDS) and its inability to accept certain characters.  CDS issue  The CDS is currently unable to accept special and diacritic characters. HMRC has asked us to share their guidance giving examples of these. This also explains what to do in certain circumstances such as where the user has an approved licence with such characters. HMRC is aiming to fix this issue in Spring 2025.  Miscellaneous guidance updates and publications  Simplified Process for Internal Market Movements (SPIMM) and UK Carrier (UKC) Scheme: Procedure Code to Additional Procedure Code correlation matrix,  SPIMM and UKC Scheme: terms and conditions,  SPIMM and UKC Scheme: Customs Simplified Procedures Guidance,  SPIMM and UKC Scheme: CDS Declaration and Customs Clearance Request Instructions,  SPIMM and UKC Scheme: Navigate the Customs Declaration Service Declaration Instructions,  SPIMM and UKC Scheme: Declaration Category Data Sets,  SPIMM and  UKC Scheme: Procedure Codes,  SPIMM and UKC Scheme: Additional Procedure Codes, and  SPIMM and UKC Scheme: Customs Declaration Service Data Element Completion Guide. 

In this week’s miscellaneous updates, the OECD has published updated Pillar Two guidance and employment expenses relief claims can be made online again for all qualifying employment expenses. HMRC has also published detailed guidelines for compliance (GFC) and a Revenue and Customs Brief on the VAT treatment of remedial works.  OECD publishes updated Pillar Two guidance  Last week, the OECD published the following documents:  Administrative guidance on article 9.1 of the GloBE model Rules, which clarifies the treatment of deferred tax assets arising from tax benefits provided by a government. However, the Inclusive Framework has agreed that, for a two year grace period, jurisdictions will not apply 9.1 to neutralise the deferred tax expenses arising from arrangements that were entered into before 18 November 2024, unless the deferred tax expense exceeds 20 percent of the relevant excluded deferred tax asset amount originally recorded,  Administrative guidance on articles 8.1.4 and 8.1.5 which clarifies how groups will be required to complete GloBE Information Returns (GIR) when there is a difference between domestic legislation and the GloBE model rules,  A list of jurisdictions whose legislation for the Income Inclusion Rule and Domestic Minimum Top-up Tax (DMTT) have been granted transitional qualified (and DMTT Safe Harbour) status by the Inclusive Framework, and  An update to the GIR, a XML schema user guide for tax administrations, and a Multilateral Competency Authority Agreement on the exchange of GloBE information.   All of the updated guidance is available on the OECD website at: Global Anti-Base Erosion Model Rules (Pillar Two).   Online claims for relief from all employment expenses restored  HMRC has recently fully restored the online option for an employee to make a claim online for tax relief for all types of employment expenses. This was restored for uniform, work clothing, and tool expenses from 31 October 2024. However, from 23 December 2024, an employee can make a claim and submit evidence for all qualifying employment expenses online using a new iForm. Note that agents cannot make claims online and can only do so by post.  From Monday 14 October 2024, claims for relief for employment expenses had only been possible by post using form P87 and were required to be backed up by supporting evidence.   More information and guidance is available in the following publications:  HMRC policy paper: Evidence required to claim PAYE (P87) employment expenses, and  HMRC guidance: Claim tax relief for your job expenses.  VAT treatment of remedial works  HMRC has published a GFC and a Revenue and Customs Brief on the VAT treatment of remedial works. The GFC includes illustrative examples to help stakeholders understand how these rules apply. See the following documents for more information:  Help with VAT treatment of remedial works — Guidelines for Compliance GfC11, and  Revenue and Customs Brief 3 (2024): VAT on cladding remediation work. 

A new R&D disclosure facility recently went live on GOV.UK and HMRC has set out its position following the First-tier Tribunal (FTT) decisions in Collins Construction Ltd v HMRC [2024] UKFTT 951 (TC) and Stage One Creative Services Ltd v HMRC [2024] UKFTT 1059 (TC).  New R&D disclosure facility  HMRC’s new R&D disclosure facility went live last month on 31 December 2024. This facility has been designed to make it easier for taxpayers or their agents, to disclose non-deliberate inaccuracies in R&D claims to HMRC.  This facility is for:   R&D tax reliefs claims which are out of time to amend via the company tax return; and   Taxpayers who have self-served R&D tax relief claim inaccuracies by mistake, despite taking reasonable care or carelessness.  Any deliberate inaccuracies disclosed will be re-directed to the contractual disclosure facility as tax fraud.   The facility itself is a form on GOV.UK. The accompanying GOV.UK page details the information required to complete the disclosure, which includes uploading computations, explanations and the submission of a letter of offer. The facility also enables taxpayers/agents to self-serve any tax, tax credit repayments, interest, and penalties due. Once received, HMRC will review the disclosure and if the offer is satisfactory a letter of acceptance will be issued. This facility does not require notification of the intention to make a disclosure.  FTT cases  In both these cases, the FTT found in favour of the appellant companies. HMRC has been considering the outcome of the cases and has decided that it will not be appealing the decisions.  HMRC has set out that it recognises clarity is needed on the impact of these cases on open enquiries, appeals, and other claims with subcontracted R&D and subsidised expenditure issues.   HMRC is now considering the wider impacts these FTT decisions have on such claims and aim to publish further guidance on this next month. HMRC is also contacting companies with existing enquiries this month to update them on next steps. 

Both Finance Bill 2024/25 and The National Insurance Contributions (Secondary Class 1 Contributions) Bill continue their passage through parliament.   Finance Bill 2024/25  Committee of the whole House for the Finance Bill took place last month on 10 and 11 December. The Bill is therefore currently at Committee stage with the next stage of its progress being scrutiny by the Public Bill Committee. This is expected to have concluded by 4 February 2025. In preparation for this, last month the Government published proposed amendments to the Bill and associated updated explanatory notes.   A meeting took place with HMRC on 18 November to discuss the changes to the taxation of non-UK domiciled individuals which are contained in the Bill. The Institute was in attendance at that meeting the minutes from which have been published on GOV.UK.  The National Insurance Contributions (Secondary Class 1 Contributions) Bill  This Bill implements the changes to employers National Insurance Contributions (NICs) from 6 April 2025 as announced in the Autumn 2024 Budget. It is now at Committee Stage in the House of Lords.   The Bill provides for the 1.2 percent increase in employers NICs from 13.8 percent to 15 percent and the reduction in the secondary threshold to £5,000. It also increases the annual employment allowance (which currently reduces the employer’s NIC liability of eligible employers by up to £5,000) to £10,500 and removes the qualifying requirement to have a total secondary Class 1 NICs liability of less than £100,000 in the prior year. 

The Platform for Collaboration on Tax is compiling a concise set of high-level principles that are designed to help navigate the policy, legislative and administrative issues related to tax incentives. It has published a draft version of its Tax Incentives Principles as it seeks feedback on its contents from tax policymakers, practitioners and experts by 10 February 2025.

The European Parliament’s Subcommittee on Tax Matters (FISC) hosted a public hearing on the impact of taxation on gender equality in the EU. The hearing examined tax policies that are considered obstacles to promoting gender equality and tax policies that can contribute to advancing gender equality.

Kenya has deposited its instrument of ratification for the Multilateral Convention to Implement Tax Treaty Related Measures to Prevent Base Erosion and Profit Shifting (BEPS Convention). The BEPS Convention will enter into force on 1 May 2025 for Kenya.

The Co-Chairs of the Inclusive Framework on BEPS have provided an update on the progress made in developing a final package for Pillar One of the Two-Pillar Solution.

The OECD has released the updated GloBE Information Return (GIR) which incorporates clarifications on completing the GIR. It also includes a template to use to notify jurisdictions that they will receive the GIR through exchange of information. Each constituent entity of an MNE Group is required to annually file a GIR with the tax administration of the jurisdiction where it is located to support the administration of the GloBE rules.

In Irish news, Revenue has published preliminary results for 2024 and the Department of Finance has published final Exchequer figures for 2024. In UK news, we issue key reminders ahead of the 2023/24 online self-assessment filing deadline on Friday 31 January 2025 and update you on the joint response from the Professional Bodies, including this Institute, to a HMRC letter on service levels. In International news, the OECD have released a pricing tool for the implementation of Amount B under Pillar Two.      Ireland Read the Revenue Commissioners published preliminary headline results for 2024. Exchequer figures for 2024 show further growth in tax revenues.   UK Read our key reminders ahead of the 2023/24 online self-assessment filing deadline on Friday 31 January 2025. The Professional Bodies have jointly responded to a HMRC letter on service levels.   International The OECD have released a pricing tool and factsheets to facilitate the implementation of Amount B under Pillar Two. Keep up to date with all the latest Irish, UK, and international tax developments through Chartered Accountants Ireland’s Tax Newsletter. Subscribe to the Tax News by updating your preferences in MyAccount. You can also read this week’s post EU exit corner here.

For 2024, the Irish Exchequer recorded a surplus of €12.8 billion, up €11.6 billion from 2023, largely reflecting the transfer of once-off receipts from the Apple case. Total tax receipts of €108 billion were collected in 2024, with the main sources of income broken down as follows: Income tax receipts of €35.1 billion were collected. This figure is €2.2 billion, or 6.6 percent ahead of 2023, reflecting earnings growth and strong employment. Corporation tax receipts of €39.1 billion were collected. This figure is €15.2 billion, or 63.9 percent ahead of the previous year, with the bulk of the increase arising from the Apple case. VAT receipts of €21.8 billion were collected. This figure is €1.5 billion, or 7.3 percent ahead of 2023, reflecting solid consumer spending. Commenting on the figures, Minister for Finance Jack Chambers TD said: “The end-year figures are affected by one-off receipts arising from the Court of Justice of the European Union and so it is important to dig below the surface. When we do this, we see solid growth in income tax and VAT receipts last year; these trends demonstrate the underlying strength of our economy. Looking ahead, there are clearly identifiable risks on the horizon. Navigating through these will require a greater focus on competitiveness and on getting the basics right – especially in areas like energy, water, transport and housing. This is why Government is committed to using the proceeds of the CJEU ruling to expand infrastructure in these critical areas.”