Income-based tax incentives for R&D and innovation (IBTIs), sometimes referred to as patent boxes, innovation boxes, or intellectual property (IP) regimes, reduce the tax burden on the income that firms generate from their innovation activities. They have become part of many governments’ tax supports policy toolbox, with more than half of OECD countries offering IBTIs in 2023. This blog highlights five need-to knows about these incentives, the key categories of IBTIs, and their use, design, generosity and cost to governments and draws on the latest OECD evidence in this area.

Revenue has updated the Tax and Duty Manual which explains some of the key definitions and terms used in the close company provisions in Part 13 TCA 1997. The guidance now outlines how, in certain circumstances, taxpayers can seek agreement from Revenue that the close company legislation will not apply to an Irish resident company where the ultimate ownership and control of the company is widely dispersed among a large number of investors in funds operated through a limited partnership structure (paragraph 1). The details to be submitted to Revenue for the request to be considered are also outlined in the manual. With effect from 2 December 2024, these requests must be submitted via the Revenue Technical Service in accordance with the procedures set out in its guidelines.

Section 840A TCA 1997 restricts the ability of certain companies to claim a deduction for interest payable on certain connected party borrowings to fund the acquisition of certain assets from other group companies. Revenue has published a new Tax and Duty Manual which provides guidance on interest on loans to defray money applied for certain purposes under section 840A.

Revenue has warned that it did not issue SMS (text messages) seeking personal information from taxpayers in connection with a tax refund or seeking credit/debit card details. Revenue never sends emails or text messages requiring customers to send personal information via email, text or pop-up windows. Anyone who receives an email or text message purporting to be from Revenue and suspects it to be fraudulent or a scam should simply delete it. Anyone who is actually awaiting a tax refund should contact their local Revenue Office to check its status. Anyone who provided personal information in response to these fraudulent emails or text messages should contact their bank or credit card company immediately. Further information is available on Revenue’s security page.

Revenue has updated the Tax and Duty Manual regarding the taxation of provisions and accruals to reflect recent changes in Irish generally accepted accounting practice (FRS 100 – FRS 105) published in September 2024 and to provide for some miscellaneous minor revisions.

Agents now have until 6 December 2024 to send HMRC details of their agent codes. In October HMRC emailed agents asking them to provide details of their agent codes by 8 November 2024 via an online form. Last week HMRC emailed a reminder to agents to submit this information which also advised that the deadline is now 6 December 2024.   The email contains details of how to find your agent code and how to complete the form. HMRC  advises that if an agent has already completed and submitted their information to ignore this reminder.   

Revenue has updated the Tax and Duty Manual which provides guidance on the interest limitation rule. Sections 8 and 9 have been updated to reflect the amendments to Part 35D TCA 1997, contained in Finance Act 2024, which deals with the interaction of the interest limitation rule with leasing transactions. It also provides further clarity on the operation of the long-term public infrastructure project exemption.

HMRC is hosting a Making Tax Digital (MTD) for income tax event at their Croydon Regional Centre office later this week on Thursday 5 December 2024. Read on for more details. Note that events are being planned across the UK with one to be held in Belfast in Spring 2025. Event details: Location: HMRC, 1 Ruskin Square, Croydon, CR0 2WF.  Time: 11am start – 3pm finish.  The event is for agents and software developers who have clients who will need to use MTD for Income Tax, to help you get ready for when it becomes a legal requirement from April 2026. At the event you will: Find out more about the testing phase, including the extra support on offer, Have access to hands-on support to sign up to testing, and Be able to ask HMRC your MTD questions. This event has limited spaces so if you are interested and want to attend please email mailboxmakingtaxdigital@hmrc.gov.uk to secure a space. By emailing HMRC, you are agreeing to be contacted by HMRC before, during and after this event.   

In this week’s miscellaneous updates, HMRC has published updated guidance on the abolition of the furnished holiday lettings (FHLs) rules. The latest Agent Update is available as is the most recent News and Information Bulletin both of which contain important guidance on filing 2023/24 self-assessment returns where overlap relief is being deducted as part of the transition year to the tax year basis. The latest schedule of HMRC Talking Points live and recorded webinars for tax agents are available for booking. Spaces are limited, so take a look now and save your place. The most recent minutes/notes from HMRC’s Guidance Strategy Forum are also available. And finally, check HMRC’s online services availability page for details of planned downtime and the online services affected.   Updated FHL guidance  HMRC has published updated guidance on the tax rules for the abolition of FHLs. The purpose of the updated guidance is to make clear that the intention is to remove the specific tax reliefs currently available for FHLs, hence there will not be changes to other rules. For example, holiday accommodation, whether previously qualifying as a FHL or not, will remain standard-rated for VAT.  Latest Agent Update  Agent Update: issue 125 is now available. Get the latest guidance and information including: reporting rules for digital platforms with the first reports due 31‌‌‌ January‌‌‌ 2025, completing self-assessment tax returns for student and postgraduate loan borrowers, self-assessment top tips for agents including guidance on basis period reform and a request to submit overlap relief applications early and preferably by 31 December 2024, using the payrolling benefits in kind service for agents, and  an update on the new requirements for safety and security declarations.

The Institute, under the auspices of the CCAB-I, made representations on behalf of members at last week’s meeting of the TALC Collections Sub-Committee. At the meeting, Revenue provided an update on the local property tax (LPT) and vacant home tax (VHT) compliance projects and confirmed that it is undertaking a new project regarding simplified VAT filing arrangements. LPT compliance Monday 2 December 2024 is the deadline for property owners to file returns in respect of property that is newly liable to LPT.  It is also the deadline for property owners previously liable to LPT who did not opt to use a recurring payment method to notify Revenue of their preferred payment method. Revenue informed us that it has written to over 800,000 property owners due to file a return and those whose LPT charge has changed due to a change in their local adjustment factor. Revenue also confirmed that a new compliance unit has been established in LPT branch for 2025 as it initiates a dedicated intervention programme, primarily Level 1 with some Level 2 interventions. Work is also ongoing on the LPT portal to improve functionality. Vacant homes tax Revenue informed the meeting that there has been a reduction in the number of vacant homes tax (VHT) returns filed by 7 November 2024 when compared with the number filed by the same date in 2023. Revenue intends to write to property owners that previously filed a VHT return in 2023 but did not do so in 2024. VAT simplification arrangements Revenue is undertaking a new project regarding VAT registered businesses with quarterly/bi-annual/annual VAT filing periods. Approximately 57,000 businesses will be reassessed, and some may be required to change to a bi-monthly VAT filing basis. Revenue advised that it intends to give adequate notice to those businesses. We requested that agents be copied on such correspondence. CCAB-I asked that Revenue be cognisant of the impact such changes may have for tax agents that are responsible for the preparation and/or submission of the VAT returns for their clients.

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. Minutes from the latest Northern Ireland Joint Customs Consultative Committee, which the Institute participates in, have been published together with the slide deck used. These provide useful information on the forthcoming changes to the movement of consumer and freight parcels from Great Britain to Northern Ireland from 31 March 2025. It has also been confirmed that the Government’s single trade window has been paused and HMRC has recently published a range of guidance and communications particularly relevant to customs transactions in Northern Ireland.  Single trade window paused  The single trade window (STW) will be a UK Government service with the objective of providing a gateway between businesses and UK border processes and systems. The system will essentially  allow users to meet their import, export and transit obligations by submitting information once, and in one place. This was due to commence its initial phase in 2024. However it has now been confirmed by the Exchequer Secretary to the Treasury in Parliament that delivery is being paused. An update will be provided as part of the next phase of the Spending Review which is expected to report in late Spring 2025.  New guidance for customs  Earlier this month the following customs guidance relevant to Northern Ireland was published by HMRC: New guidance for customs Earlier this month the following customs guidance relevant to Northern Ireland was published by HMRC: Moving goods from Great Britain to Northern Ireland under the Windsor Framework: https://www.gov.uk/guidance/internal-market-movements-from-great-britain-to-northern-ireland, UK Internal Market Scheme process for using the UKIMS entry in the declarant’s records to move goods when the new Windsor Framework arrangements come into effect: www.gov.uk/guidance/apply-to-make-an-entry-declaration-in-your-records-under-the-uk-internal-market-scheme, Notification of presentation waiver: www.gov.uk/guidance/apply-for-a-notification-of-presentation-waiver-for-goods-moving-from-great-britain-into-northern-ireland, Categorisation: www.gov.uk/guidance/categorising-goods-for-internal-market-movements-from-great-britain-to-northern-ireland, Safety and security requirements on imports and exports, Register to use the Import Control System 2, Make an entry summary declaration using the Import Control System 2, Register to make an entry summary declaration in Northern Ireland, Making an entry summary declaration, Certified traders and tax representatives — EU trade in duty-paid goods, How to claim a repayment of import duty and VAT if you've overpaid, and Get proof your goods have Union (EU) status. Miscellaneous guidance updates and publications  Pay into your Customs Declaration Service cash account, Internal temporary storage facilities (ITSFs) codes for Data Element 5/23 of the Customs Declaration Service, Report a problem using the Customs Declaration Service, How to claim a repayment of import duty and VAT if you've overpaid, Search the register of customs agents and express operators, and Check if you can apply for other transit simplifications with consignor or consignee status,  

Readers are reminded that today is the deadline for local property tax (LPT) returns for properties that are newly liable for LPT in 2025. In addition, property owners previously liable to LPT who did not opt to use a recurring payment method must also notify Revenue of their preferred payment method by Monday 2 December. At a recent meeting of the TALC Collections sub-committee, Revenue informed us that it has written to over 800,000 property owners due to file a return and those whose LPT charge has changed due to a change in their local adjustment factor.