Guidance

Issue 101 of Agent Update

Published 18 October 2022

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This publication is available at https://www.gov.uk/government/publications/agent-update-issue-101/issue-101-of-agent-update

This month’s content

Technical Updates and Reminders

Developments and changes to legislation and allowances relating to UK tax including:

Tax

Making Tax Digital

HMRC Agent Services

Details of live consultations and links to responses, changes to HMRC service and guidance, including:

Agent Forum and Engagement

Latest updates from the partnership between HMRC and the main agent representative bodies, including:

Technical Updates and Reminders

Tax

Reduction in the rate of National Insurance Contributions (NICs) and reversal of the Health and Social Care Levy — action needed

On 22 September 2022 the Government announced in-year reductions to National Insurance rates and the cancellation of the Health and Social Care Levy as a separate tax. We emailed tax agents on our database to ensure awareness of the key changes which are:

  • National Insurance contributions (NICs) rates will be cut by 1.25 percentage points for employees, employers and the self-employed, effectively reversing the uplift introduced in April 2022 for the rest of the tax year — this cut will take effect from 6 November 2022, and it will cover Class 1, (both employee and employer), Class 1A, Class 1B and Class 4 (self-employed) NICs.

  • the ringfenced Health and Social Care Levy of 1.25% due to be introduced from April 2023 will not go ahead

We also requested removal (from 6 November 2022) of the temporary generic message on payslips for the tax year (2022 to 2023) explaining the NICs uplift, and we confirmed full detail on all the changes would be published on GOV.UK in due course.

We wanted to take the opportunity now to remind agents and their clients to please make the necessary changes to be ready for November 2022 payroll. We realise the timeline is tight and some may face challenges in implementing the changes in time. We will be directing employees to their employers to correct any overpaid NICs in the first instance. Where needed, corrections can be made by submitting a revised Full Payment Submission.

On 22 September 2022, payroll software developers were made aware of the actions they need to take and provided with the relevant technical documents to facilitate software changes. You should therefore contact your payroll software developer initially with any queries. Please always ensure that you are using the latest version of your payroll software.

HMRC’s Basic PAYE Tools (BPT) will also be updated to calculate the correct National Insurance contributions from 6 November 2022 and therefore BPT users should ensure they install this new update, which will be available to download from 4 November 2022. For any employee payments due on or after 6 November 2022, BPT version 22.2 (or later) must be used (the version number appears in the bottom left-hand corner of the BPT screen).

Basic PAYE Tools from GOV.UK can be downloaded and this includes comprehensive help on installing this software.

Residence: exceptional circumstances

In October 2022, HMRC sent letters to approximately 5,000 agents and taxpayers. We wrote to customers who included days spent in the UK on their 2020 to 2021 tax return for:

  • exceptional circumstances (box 11 of SA109)

  • coronavirus (COVID-19) related work (box 11.1 of SA109)

We’ve seen that some customers have:

  • included days in box 11 (SA109 — ‘Residence, Remittance Basis etc. supplementary pages’) that go above the 60-day limit on exceptional circumstances per tax year

  • included days in box 11.1 (SA109 — ‘Residence, Remittance Basis etc. supplementary pages’) that go above the 57-day limit for the 2020 to 2021 tax year (the period 6 April 2020 to 1 June 2020 only) for coronavirus (COVID-19) related work

Taxpayers with a clear error on their 2020 to 2021 tax return will have 60 days from the letter issue date to amend their tax return. All other taxpayers will receive an educational letter which consolidates the guidance in a single help sheet.

When amending the tax return, the residence position of the taxpayer should be reconsidered. HMRC introduced a residence status checker in June 2022 which can assist in determining a taxpayer’s residence position.

HMRC are inviting agents to an educational webinar on exceptional circumstances. The webinar is due to take place in November 2022. You can register your interest by emailing us at [email protected].

Guidance available

For further information, see:

Legislation available:

For further information see:

Plastic Packaging Tax — Check if your clients need to submit their return and payment by 31 October 2022

If your clients produced or imported 10 tonnes or more of packaging within a 12-month period, starting from 1 April 2022, they may need to register for Plastic Packaging Tax (PPT) — even if their packaging contains 30% or more recycled plastic. They must submit their return for the 1 July to 30 September period by 31 October 2022.

Your clients must register, submit their PPT return, and pay any tax due by 31 October even if their packaging contains 30% or more recycled plastic.

Agents can apply to submit PPT returns on behalf of their clients.

Your clients:

  • must keep accounts and records to support the information provided when they complete their quarterly PPT return

  • must show in their accounts how they have worked out the figures they submit on their PPT return — their records must show the evidence to support these figures

  • must keep their accounts and records for at least 6 years from the end of the accounting period, and record weight in tonnes, kilograms, and grams

  • will need to pay any tax due through their online PPT account — they can pay via Direct Debit, Bacs, CHAPS, Debit/Corporate credit card or Faster Payments

For support, read the guidance on how to complete your PPT return on GOV.UK.

Alcohol Duty Reform — Consultation response and draft legislation published

Small producers survey launched

The government has published its response to the consultation on the new alcohol duty system, announced at Autumn Budget 2021. It has also published accompanying draft primary legislation.

Representing the biggest changes to the alcohol duty system in over 140 years, on 1 August 2023 the government will introduce new alcohol duty rates based on products’ alcoholic content, known as Alcohol by Volume (ABV).

The new alcohol duty system also includes an easement for the wine industry for the first 18 months of the new system, amended qualifying criteria for draught products relief (smaller container sizes, in support small businesses in the hospitality industry), and a small producer relief that extends the benefits of Small Brewers Relief to producers in other categories.

We continue to work closely with businesses to develop the new alcohol duty system, which aims to be simpler, more rational, and better support public health. Since Autumn Budget 2021, there have been over 70 meetings and site visits, and over 350 responses to the consultation on the new alcohol duty system.

Find out more about the upcoming changes to the alcohol duty system on GOV.UK.

Guidelines for Compliance and the Guideline for Supporting PAYE Settlement Agreement Calculations

Guidelines for Compliance were announced in November 2021 as part of the review of tax administration for large businesses.

They offer HMRC’s view on complex, widely misunderstood or novel risks that can occur across tax regimes. They include best practice examples to follow and steps to:

  • help you understand our expectations and avoid non-compliance

  • highlight approaches that can lead to inaccuracies and the need to pay more tax, interest, and penalties

  • offer insights into the practical application of the law and HMRC’s administrative approaches, expanding the scope of HMRC material, beyond interpretation of the law

Over time, a suite of guidelines will be published to help customers get things right first time. The Guidelines for Compliance landing page contains more information on what Guidelines for Compliance are and links to individual guidelines.

The first of these Guidelines for Compliance has been published and will provide support to employers regarding PAYE Settlement Agreement calculations.

The Guidelines for Compliance for supporting PAYE Settlement Agreement calculations includes:

  • an overview of the PAYE Settlement Agreement legislation and available guidance

  • HMRC’s recommended approach to PAYE Settlement Agreement calculations

  • common errors made in the PAYE Settlement Agreement process

  • example PAYE Settlement Agreement calculations

  • link to digital PSA1 form

  • how to correct identified PAYE Settlement Agreement errors

The Guidelines for Compliance for supporting PAYE Settlement Agreement calculations is on GOV.UK and follows the redesigned PSA1 form which was covered in the August 2022 employer bulletin .

Making Tax Digital

Making Tax Digital for VAT — make sure your clients are signed up

All VAT-registered businesses should now be using Making Tax Digital (MTD) compatible software to keep VAT records digitally and file their VAT returns to HMRC, unless they are exempt.

From 1 November, businesses that file their VAT returns monthly or quarterly will no longer be able to use their existing VAT online account to do so. This means they will need to use MTD compatible software to file their future VAT Returns.

If your client’s turnover is under the VAT threshold of £85,000 and they have not signed up to Making Tax Digital in time to file their next return by 7 November, they can still use their existing VAT online account for that return only.

If you work with VAT-registered businesses, please check they’re on track to do this, and if not, you can use our step by step guide to sign your clients up to Making Tax Digital.

If you or your clients do not sign up for Making Tax Digital and file your VAT returns through this software, you may have to pay a penalty.

VAT Registration Service — VRS

The way customer register for VAT changed from the 1 August 2022.

To access the VAT Registration Service (VRS) on behalf of your clients, you should use the following link VAT: registration applications, exceptions and changes and use your Agent Services Account (ASA) credentials to sign in your clients. If you register using this route you will be asked to provide your name, phone number and email address. We will only use these details if we need to contact you about your application.

If you use the VRS available through the older AOS portal or from HMRC services: sign in or register, you will need to verify your identity with your National Insurance number, name and date of birth.

When using the VAT Registration Service (VRS) your clients will be automatically signed up to MTD for VAT.

If your client needs to make an exemption claim, this must be done separately and will be considered independently of the registration.

How to apply for an exemption from using software

If you are already exempt from filing VAT returns online or if you or your business are subject to an insolvency procedure, you’re automatically exempt.

You can check if you can apply for an exemption on GOV‌‌‌.UK.

You can find more information on GOV.UK about Making Tax Digital.

Changes to the Agent Services Account (ASA) content — removing references to ‘Making Tax Digital’ for VAT

The Agent Services Account (ASA) allows agents to access HMRC services to transact on behalf of their clients.

From April 2022, all VAT-registered customers were mandated to sign up to Making Tax Digital (MTD) and use Making Tax Digital compatible software to keep their VAT records and file their VAT returns, with some exceptions.

Therefore, the terminology MTD VAT will be reduced to simply, VAT.

That’s why soon you’ll no longer see references to the MTD VAT service from the content in the Agent Services Account, as all our customers should now be using this service for all VAT as standard (unless they are exempt).

Agent Services Account (ASA) — Granular Permissions

HMRC are developing a new feature within the Agent Services Account called Manage Access Groups, you may have previously heard us refer to this as Granular Permissions.

This functionality will allow agents to control who in their agency can access client records, with the option to opt in or out of using it. It is specifically aimed at supporting small to medium sized agents with up to 1,000 clients.

From September, we started testing this new feature with a small group of the agents that have up to 1,000 clients. Manage Access Groups does not support agents with over 1,000 clients at this time due to design and technical limitations. We are however, investigating options for allowing larger agents to use the service and will be looking for volunteers to test this over the coming weeks.

If all goes well, the aim is to release the functionality to the wider agent community soon.

HMRC Agent Services

New Starter checklist interactive guidance goes live — helping customers get it right

The New Starter Checklist is an alternative method, in the absence of a P45, of providing HMRC with new employer details. This ensures that employers apply the most appropriate tax code so that the correct tax is deducted by HMRC.

If a new employee has a P45 but also a student loan, they would also be required to complete a New Starter Checklist so the correct amount of student loan deductions is made.

Working with stakeholders, online interactive guidance has been developed which allows a new employee to answer a series of questions and select the appropriate answers to their circumstances. This will produce a new starter declaration which can then be downloaded and emailed or posted to the employer.

Nearly 3 million Real Time Information (RTI) submissions for new starters with discrepancies were received in 2021 to 2022. The new guidance will help avoid postage costs, incorrect tax being applied, saving employees and employers time and less contact with HMRC.

For those customers that require a print and post service, the New Starter Checklist has been amended to reflect the interactive guidance and can be printed from GOV.UK.

New VAT Error Correction Notice Online Form (VAT652)

HMRC launched a new online VAT Error Correction Notice (VAT652) online form on 8 August 2022.

While this has not replaced the ‘print and post’ form, it is now the first and preferred option on the GOV.UK landing page (Tell HMRC about any errors in your VAT Return).

The benefits of the new online form should be that we see a reduction in incomplete or incorrect forms, reducing customer contact and leading to more efficient processing.

Summary of changes:

  • the online form does not require the user to have Adobe Reader installed (as with the print and post form)

  • users can sign-in via their Government Gateway account (or via email validation)

  • the user can enter contact details for confirmation and enquiries if needed

  • there is now the ability to upload supporting documents (such as calculations or explanatory letters)

  • a question has been added asking if a payment has been made and, if so, the amount and date of payment (making it easier to allocate payments and process)

  • there is now the ability to save and complete the form at a later date

  • on submission, a reference number is now provided, and the user has the option to save or print a copy of the form

Though take-up has been positive since launch, we’d like to further encourage all VAT customers and agents to use the online digital version of the VAT652.

Webinar for completing the VAT 484 form

We will be holding two webinars, one for customers and one for Agents, which will focus on making changes to VAT Registration details.

Each webinar will explain how to complete the VAT484 form to report any changes to a VAT-registered business, and will include changing business contact details, bank details and VAT return dates.

You can register for the agent webinar online via the link.

We’re also hosting a version of this webinar for your clients, and we’ve contacted all VAT registered customers directly by email to inform them of this opportunity.

A recorded version of this webinar will be available later on HMRCs Help & Support page.

Agent Talking Points

All agents will be aware of our popular Agent Talking Points webinars, for which most agents receive regular Monday morning updates.

Support for customers who need extra help

We have principles of support for customers who need extra help.

Find out how to get help and what extra support is available.

Tax Agent Toolkits

HMRC have 20 Tax agent toolkits available for you to download and use. They have been designed to address the most common errors seen from previous years. They include checklists of the key issues to consider and links to HMRC technical guidance and manuals.

Please be aware that our toolkits are currently being updated.

Here is the breakdown of toolkits by category:

By identifying the most common errors this may prompt a conversation between you and your clients to ensure submissions are correct.

Contact

Complain to HMRC

To make a complaint to HMRC on behalf of your client you must be appointed as their Tax Advisor.

Find out when you can expect to get a reply from HMRC to a query or request you have made. There is also a dedicated service for tax agents to:

  • register you as an agent to use HMRC Online Services

  • process an application for authority to act on behalf of a client

Manuals

You can check the latest updates to HMRC manuals or subscribe to automatic notification of changes. You can also suggest improvements for pages of our manuals by using the feedback options in the page footer.

Online

Online training material and useful resources for tax agents and advisers

HMRC videos on YouTube, online learning modules, and live and pre-recorded webinars are available for tax agents and advisers providing you with free help, learning and support on topical subjects.

Publications

The employer bulletin.

The latest edition of the employer bulletin is now available and contains topical and useful information about PAYE processes and procedures. For employers to be informed when it is available on the website, they must first register to receive the email alerts.

National Insurance Services to Pensions Industry: countdown bulletins.

Countdown Bulletin 53 has been added to this collection.

Pension schemes newsletter.

This newsletter is published by HMRC’s Pension Schemes Services to update stakeholders on the latest news for pension schemes.

Revenue and Customs Briefs.

These are briefs announcing changes in policy or setting out the legal background to an issue. They generally have a short lifespan, as announced changes are incorporated into permanent guidance and the brief is then removed.

Agent Forum and Engagement

Agent Online Forum

The Agent Online Forum (AOF) provides a service for Agents to post and view queries, provide relevant evidence, suggest solutions, and access updates on potential systemic issues which may have a widespread impact on the operation of the tax system.

AOF staff provide and direct agents to where information is available, or where there is sufficient evidence of a systemic issue, obtain updates or responses from colleagues who are Subject Matter Experts (SMEs) on the topic.

Professional Bodies may also identify potential systemic issues that could be of high impact, and request prioritisation and escalation within HMRC to achieve resolution or an update on the item.

Escalated issues from the AOF are monitored and progressed by the Issues Overview Group (IOG), of Professional Bodies and Agents in practice, who prioritise and provide input on the resolution or outcome of escalations. Professional Bodies can also highlight and seek progress on high priority issues, when engaging with HMRC board members in the Representative Bodies Steering Group. The process for posting, response, prioritisation, escalation, and review of an issue outcome, is outlined in Agent Update 98.

Issues Overview Group Escalated Issues

Answers and the latest updates available on issues are published on the relevant AOF subject thread. Information available on the progression of the top issues, as prioritised by the IOG, can be viewed in the IOG Escalated Issues section of the AOF.

The IOG met in August to review progress on outstanding escalated issues and to update prioritisation. MTDVAT Exemptions MTDVAT-16256, and the VAT Registration Service (VRS) VAT-18548, were the top issues on which updates and progress were sought by the IOG. A bespoke meeting on VRS is being arranged as a priority.

SA-9471 — SA Pre-population data: Subject Matter Experts (SMEs) updated the group on investigations around data flows in SA pre- population, and the possible availability of additional online access to information in the coming months which will assist viewing of data, and queries by agents.

SA-11680 — Linking emails to clients: IOG members met with HMRC Subject Matter Experts in August to provide updates and additional input on challenges tracking client forms. HMRC are seeking further input from colleagues to understand solutions that may be available.

SA-17269 — Transferring VAT Numbers: The IOG Agent in practice representative, who provided detailed evidence on transferring VAT numbers, outlined the background to date. Updates have been published on the AOF. Additional information on timescales is being sought.

SA-16038 — Tax Repayment Delays:  Changes to process and guidance will ensure more SA advisers can release repayments where it is appropriate to do so. This change was implemented week commencing 25 July 2022, and other solutions are being tested to increase the number of repayments that can be made. This work area will continue to be monitored.

In seeking to improve the triage of enquires and follow up on responses, posts which at the outset do not clearly appear to be about a potentially systemic issue may be locked within 5 days.

Similarly comments which follow a response, and do not contain additional new evidence can also be locked within 5 days. In both instances the feedback provided will be made available to SMEs as insight on the topic.

Should Agents or Professional Bodies identify additional evidence on the topic in the future, they can email [email protected] requesting the thread to be reviewed and re-opened. HMRC may also re-open a post if there is new information or the outcome advised changes, for example:

  • introduction of new technology

  • new policy

This ensures the AOF is able to balance resources and increase effectiveness in triaging greater volumes and a wider range of queries from more agents. This will benefit most users, avoiding disproportionate resources being used on providing multiple follow-on responses after the answer has been provided.

Contact Information for professional and representative bodies

If you are not a member of a professional body, please contact the Agent Engagement Mailbox.

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