HMRC Stakeholder Digest – 11 April 2022

11 Apr 2022

Please see the following message which we are sharing on behalf of HMRC:

CAUTIONARY NOTE – under the section “Extending Making Tax Digital (MTD) to all VAT registered businesses”, HMRC say “VAT-registered businesses that have not yet signed up to MTD for VAT should do so in advance of their first VAT Return starting on or after 1 April 2022.” We would recommend that you consult the CIOT’s MTD Sign Up Illustration, and HMRC's guidance before signing up.

This HMRC Stakeholder Digest provides a round-up of our latest news and updates, which we’d be grateful if you could share with your clients, customers or members.

Ukraine tax relief and guidance

Homes for Ukraine: No tax to pay on £350 ‘thank you’ payments

Legislation will be introduced to exempt the £350 ‘thank you’ payments made by Local Authorities to sponsors under the ‘Homes for Ukraine’ scheme from income tax and corporation tax. In the meantime, we will not collect any tax on these payments. Recipients should also disregard such payments when calculating income for the purposes of tax credits.

Homes for Ukraine: Tax relief for companies making properties available

The government has confirmed that companies making dwellings available to support the ‘Homes for Ukraine’ scheme will be relieved from the Annual Tax on Enveloped Dwellings (ATED) and the 15% rate of Stamp Duty Land Tax (SDLT).

Arrivals from Ukraine: Guidance for claiming Child Benefit

Anyone coming to the UK under the ‘Ukraine Family Support’ or ‘Homes for Ukraine’ scheme is entitled to claim Child Benefit immediately – rather than having to wait for the usual three-month qualifying period. People should complete a CH2 Child Benefit claim form and submit this by post to the Child Benefit office, the address of which can be found on the form.

Claimants should provide an original birth certificate and the passport or travel document used to enter the UK. Where this documentation is not immediately available, people are advised to include a note in their claim and someone from HMRC will be in touch to discuss further. You can find more information on Child Benefit on GOV.UK or call 0300 200 3100 (from inside the UK).

Extending Making Tax Digital (MTD) to all VAT registered businesses

VAT-registered businesses that have not yet signed up to MTD for VAT should do so in advance of their first VAT Return starting on or after 1 April 2022.

MTD for VAT will apply to all VAT-registered businesses from their first VAT Return Period starting on or after 1 April 2022. This means all VAT registered businesses are legally required to use MTD compatible software to keep records digitally and submit their tax returns unless exempt.

This is an important step in delivering a modern, digital tax system, supporting the digitalisation of the UK and making it easier for businesses to get their tax right with an improved customer experience.

MTD helps taxpayers reduce common mistakes in their tax returns, which cost the Exchequer over £10 billion in lost revenue in 2019-2020.

Recently published research - Evaluating additional tax revenue from Making Tax Digital for VAT, found that MTD is succeeding in this core aim; to help ensure the right amount of tax is collected from businesses by reducing opportunities for error or miscalculation. This peer-reviewed study found that in 2019 to 2020 MTD is likely to have generated positive additional tax revenue of a similar magnitude to the latest public forecast for that year of £115m.

You can find further details on MTD for VAT on GOV.UK.

New 64-8 agent authorisation form

From 31 March 2022, customers will need to use a new version of form 64-8 to give authorisation for a tax agent to deal directly with us on their behalf. Existing clients do not need to re-authorise their current relationship.

How to access the new form

Customers can download the new agent authorisation form on GOV.UK.

Changes to the 64-8

The new version of the agent authorisation form is designed to give customers a better experience and improve data protection. It allows customers to state which tax regime they want their tax agent to access. The form also includes new guidance for customers on how to fill in the form correctly and what data they are agreeing to share with their agent.

We’ll phase out the current 64-8 form from Autumn 2022

We’ll write to tax agents closer to the time with a specific date.

After this date, we’ll only accept the new version of the 64-8 agent authorisation form and reject any authorisation requests sent using older versions of the form. 

Plastic Packaging Tax – now in effect

The new Plastic Packaging Tax (PPT) came into effect on 1 April 2022. Manufacturers and importers of plastic packaging must visit GOV.UK and work through the eight steps listed to determine if they need to register for PPT.

Businesses must register if they have manufactured or imported 10 or more tonnes of plastic packaging since 1 April 2022 or if they expect to manufacture or import 10 or more tonnes in the next 30 days. No business will need to file a PPT return until July 2022 at the earliest.

Importers of plastic packaging will need to check who is responsible for complying with and paying PPT; this is unlikely to be their suppliers.

We have provided the following resources to assist businesses with the tax:

Mae’r holl arweiniad craidd ar y Dreth Deunydd Pacio Plastig bellach ar gael yn Gymraeg ar y dudalen gasgliad ar GOV.UK / All core guidance on PPT is available in Welsh at the collection page on GOV.UK.

Please signpost your members to the above resources, and invite them to review these thoroughly to determine whether they are affected by PPT.

Checkyourpay Stakeholder Toolkit

The National Living and Minimum Wage increased on 1 April 2022 for more than two million eligible workers, including apprentices, in the UK. These increases are a key part of the government’s commitment to level up the UK and provide equal opportunities for all as part of the plan to Build Back Fairer. Over the next few weeks, we will be engaging in a communications campaign aimed at making sure the UK’s lowest paid workers receive the correct rates of pay.

We would appreciate you supporting the campaign to ensure eligible workers know their entitlement and what to do if they are not being paid the correct amount. As part of this we have developed the Checkyourpay Stakeholder Toolkit. The toolkit contains suggested messaging, tracked links to the campaign website, and images and videos to help you and any other relevant stakeholders within your networks share on social media, in newsletters, on websites and anywhere else you can help us reach employers and workers.

Use the right PAYE reference to avoid penalties and late charges

Are your members making PAYE payments to HMRC? If so, it’s important they check payment reference numbers are right, otherwise payments may not be recognised, leading to penalties and charges.

A payment reference number is specific to the type of tax and the accounting period the payment is for. The characters in the payment reference number tell us where to allocate payments, to help us process employers’ payments as quickly as possible.

Online banking services may also default to a previous payment reference, so make sure employers check this is right, every time they pay us.

We want to help employers get this right, and they can use the ‘Pay now’ tool on GOV.UK to find the correct reference number to use each time.

National Insurance Holiday for employers of veterans: claims process now live

In April 2021 the government introduced the National Insurance holiday for employers of veterans.  This relief allows employers who hire former members of the UK regular armed forces, during the first year of their civilian employment, to apply a zero-rate of secondary National Insurance contributions for up to 12 months.

From 6 April 2022, employers can claim this relief retrospectively for the period April 2021 to April 2022, and through Real Time Information submissions going forward.

Guidance on claiming National Insurance relief explains the qualifying rules and claims process for both 2021 to 2022 and 2022 to 2023 tax years. Employers are recommended to study this guidance to see if they are eligible to claim the relief.

Guidance on the new Residential Property Developer Tax

The Residential Property Developer Tax (RPDT) is a new tax on large residential property developers with annual profits over £25 million. It will be charged on profits arising from residential property development activity from 1 April 2022. RPDT aims to raise at least £2 billion over the next decade and was announced in February 2021 as part of a package of measures to contribute to remediation of cladding in certain high-rise buildings.

The legislation is included in the Finance Act 2022, which set the annual allowance at £25 million and the rate of the tax at 4%.

HMRC names avoidance scheme promoters for the first time

New powers have been used for the first time to name tax avoidance schemes and their promoters, as part of a campaign to warn the public not to get caught up in tax avoidance.

Please let your members know we advise anyone involved in Absolute Outsourcing or Purple Pay Limited’s Equity Participation Scheme to withdraw from them as soon as possible to prevent building up a large tax bill.

Both schemes involve individuals agreeing an employment contract and working as a contractor. The schemes pay contractors the National Minimum Wage (NMW) with the remainder of their wage paid through a loan to try to avoid National Insurance contributions (NIC) and Income Tax (IT).

By releasing the details of these schemes, we are letting customers know as early as possible so they can steer clear of them or leave them. We will also regularly update and add to the list by publishing the details of other tax avoidance schemes and their promoters.

Naming avoidance promoters is part of a wider ‘Tax avoidance - don’t get caught out’ campaign to help customers spot the signs of tax avoidance and know how to leave or report a tax avoidance scheme to HMRC. A payslip guide and interactive risk checker tool also helps them stay clear of tax avoidance.

Duncan, an IT contractor and Tanya, a nurse, share their personal stories of what it was like to be caught up in a tax avoidance scheme as a warning to others.

Update to Hybrid Working: Employment Income Manual Guidance

More employers are offering hybrid working arrangements and has updated guidance within the Employment Income Manual to reflect this. There have been no changes to the relevant legislation or policies.

We have introduced new signposting pages for travel expenses to enhance navigation across the existing guidance and to highlight pages that are most appropriate to those working under hybrid working arrangements. These can be found at EIM31801, EIM31802 and EIM31803.

We have made amendments to guidance on the tax treatment of certain homeworking costs and equipment, as well as the homeworking deduction, to provide certainty of our view on the application of such rules under hybrid working arrangements. The guidance at EIM21611, EIM01471, EIM01472, EIM32790, EIM32795 and EIM32810 has been amended.

NCSC Cyber Resilience Exercising Tool webinar

Our colleagues at the National Cyber Security Centre are inviting UK businesses and organisations to a free webinar to help better prepare and protect themselves from ransomware and other cyber attacks. The Digital Loft (aka webinar) takes place on Tuesday 12 April at 10am and will see experts from the NCSC demonstrate their free tool, Exercise in a Box, which any sized organisation can use.

The webinar is part of the ongoing work of the NCSC to tackle the threat from ransomware and to bolster the cyber resilience of the UK in light of events in Ukraine. While the NCSC is not aware of any specific cyber threats to UK organisations in relation to the Russian invasion, there is a heightened risk of hostile cyber activity. In the last year, two in five UK businesses were subject to some form of cyber-attack or attempted breach.

The event is open to any UK business or organisation and we would encourage you to register.

Help shape UK central government complaint handling

The Parliamentary and Health Service Ombudsman launched a survey asking about the new standards to improve complaint handling. A unified set of standards that will be used by the UK central government departments to improve complaint handling which focus on:

  • welcoming complaints in a positive way and recognising them as valuable insight for organisations
  • supporting a thorough and fair approach that accurately reflects the experiences of everyone involved
  • encouraging fair and accountable responses that provide open and honest answers as soon as possible
  • promoting a learning culture by supporting organisations to see complaints as opportunities to improve services.

The survey closes on 31 May 2022, and everybody is invited to respond.