Highlights of our 2023 tax work
By Susan Cattell, Head of Tax Technical Policy
13 December 2023
We outline what the ICAS Tax Team has been doing in 2023 to raise your issues and improve HMRC service levels and systems.
Engagement with HMRC and ministers
An important part of the ICAS Tax Team’s work is engaging with HMRC. We regularly attend meetings with HMRC at which service levels, delays, and other issues are discussed. We raise problems you encounter in practice and give feedback on HMRC proposals, including those relating to services for agents. We also raise issues with government ministers and respond to tax calls for evidence and consultations.
2023 has been another busy year, and our key areas of work have included:
HMRC service levels and services for agents
Throughout the year, we have raised problems caused by poor HMRC service levels through the relevant HMRC stakeholder groups and via the agent forum. We have also given input to HMRC, stressing the importance of retaining the Agent Dedicated Line (ADL) for agents. Whilst it is disappointing that service levels were reduced from October, and will be further restricted during the self-assessment peak period, the ADL does continue to operate.
In March, we sent a joint letter with nine other professional bodies to the Chancellor, calling for the government to provide HMRC with adequate resources to tackle poor service levels.
We are part of the Charter Stakeholder Group (CSG), which is made up of representatives from the tax community. In addition to regular meetings with HMRC to discuss taxpayer and agent experiences of dealing with HMRC, CSG members also ran a survey of agents and taxpayers on HMRC’s performance. The results were used to compile the CSG contribution to the 2023 annual report, published in July. Complaints about HMRC’s service levels permeated the feedback: ‘Being responsive’ had the lowest score, with an average of just 2.3 out of 10. ‘Making things easy’ and ‘getting things right’ also scored poorly, at 2.7 and 3.4. Over 85% of respondents didn’t think that HMRC is held sufficiently accountable for its performance against the Charter.
We also held regular meetings with HMRC’s mid-sized business leadership team to discuss issues affecting SMEs and their advisers, and the HMRC initiatives to assist these businesses – including the two services accessible from gov.uk and the temporary Customer Compliance Manager scheme (tCCM).
In view of reductions in service on the ADL in 2023 and HMRC’s redirection of callers to digital channels, we are also pushing for HMRC to improve the digital options available for agents. Most of our members would prefer to use digital channels, rather than waiting on helplines, but it is vital that HMRC provides digital services that allow agents to act effectively for their clients. We are also part of the Agents Digital Design and Advisory Group, which discusses practical issues with HMRC digital systems for agents.
Tax simplification - joint letter and meeting with the FST
In April, we worked with the other main professional bodies to send a joint letter to the Financial Secretary to the Treasury (FST) about tax simplification, following the abolition of the Office of Tax Simplification. We offered support to HM Treasury and HMRC, and called for the government to take nine actions to deliver on its promise that tax simplification remains a priority. We held a meeting with the FST in May to discuss the joint letter, followed by discussions with HM Treasury and HMRC about how to embed simplification in policy and process.
A joint oversight forum has now been established and the professional bodies have developed templates for submitting suggestions for quick wins on simplification (administrative or legislative). We welcome ideas from members on processes or legislation that could be simplified.
Making Tax Digital and basis period reform
Preparations for the implementation of Making Tax Digital (MTD) for business income tax have gathered pace during 2023. We continue to take part in regular forum meetings, but in 2023 we also participated in four HMRC workshops. The workshops looked in detail at some of the most challenging areas for implementation of MTD ITSA, including jointly owned properties and self-employed accounting year ends that are not aligned with the tax year.
Members have raised concerns about the impact on businesses and agents of quarterly reporting. In June, we sent a letter to the business minister, Kevin Hollinrake, calling for MTD quarterly reporting to be restricted to businesses over the VAT threshold. We also gave input into HMRC’s review of MTD and small businesses. We were pleased to see the announcement in the Autumn Statement that MTD ITSA will not be extended to the self employed or landlords with income below £30,000 for now.
We are part of HMRC’s working group on basis period reform. Work in 2023 has included giving input into the development of the process for agents to obtain overlap relief details for their clients, and into HMRC communications about the transitional year and the new rules.
Capital taxes and trusts
Through the Capital Taxes Liaison Group (CTLG) and the Trusts and Estates Agent Advisory Group, we give input and raise issues relating to capital taxes and trusts, including the Trust Registration Service.
One important issue raised in 2023 arose from members’ reports of problems with the interpretation of the time limit for s49 TCGA claims (contingent liabilities). We requested this as an agenda item at a CTLG meeting. HMRC confirmed that the four year time limit runs from the date when all of the conditions for making a claim are satisfied (it is not linked to the date of the original disposal). The policy team agreed to add an example to the Capital Gains Manual (CG14805) to make this clear. An example was also added to CG14933 to clarify a similar issue with s48 claims (irrecoverable deferred consideration).
Employment taxes
We co-chair the Employment and Payroll group, the Construction Forum, the Share Schemes Forum, and the Employment Status and Intermediaries (formerly IR35) Forum.
One of the main issues raised with HMRC in 2023 was the need for an offsetting mechanism in the off-payroll working regime, and we were pleased to see the announcement in the Autumn Statement that this would be introduced.
Following discussions at the Construction Forum, draft regulations will also be published for consultation, to exempt more payments from landlords to tenants from the Construction Industry Scheme. This change should help some landlords to find tenants for their commercial premises.
VAT
We are part of HMRC’s Joint VAT Consultative Committee (JVCC), and regularly raise VAT issues reported by members through this forum. Problems pursued in 2023 have included ongoing issues caused by HMRC’s delays in processing VAT group registrations and difficulties with VAT registrations in general. We have continued to push for HMRC to publish guidance on VAT and cladding, following discussions at various stakeholder groups since 2019. We also take part in two HMRC working groups – on VAT registration and multiple rates (discussing possible improvements to the VAT regime).
Tax consultations, calls for evidence and parliamentary inquiries
In October, we gave oral evidence to the House of Lords Economic Affairs Committee, Finance Bill sub-committee inquiry into the draft Finance Bill. The sub-committee was considering the proposed merger of the existing R&D tax relief schemes, the requirement for some taxpayers to provide additional data to HMRC, and new measures to tackle promoters of tax avoidance. Written evidence was also submitted.
We continue to respond to tax-related consultations and calls for evidence, and to participate in discussions with consultation teams where appropriate. Formal responses submitted in 2023 can be found on the tax consultations and submissions page. We also give HMRC input on some proposed campaigns and ‘nudge’ letters.
Keep up with ICAS tax news and webinars in 2024
The ICAS tax news page features articles and updates on technical and practical matters. We also present tax webinars which are advertised in advance on the events page. Recordings of past webinars can be found there too, with topics covered in 2023 including MTD ITSA, basis period reform, company cars and tax updates (general, employment taxes and VAT).
Let us know your views
Your input is vital to the Tax Team’s work on consultation responses and to allow us to give feedback to HMRC on problems experienced with service levels and systems.
Email tax@icas.com to share your insights and feedback.
