HMRC Tax Agent Updates

Helen Knight summarises HMRC's most recent agent updates in advance of tax filing deadlines and upcoming changes.

For more information on this topic and more, please visit www.mercia-group.com for further details.

Transcript

Hello, everyone. It's Helen Knight, tax senior manager at Mercia here, back with another edition of the Mercia podcast. Unlike I'm sure the majority of accountants and tax advisors out there, I've kind of been able to have the chance over the last week to take stock of it, to have a bit of a look at some of the announcements that have come out Think about what is coming up. 

So in this podcast, just taking a bit of a look at some of the agent updates issued from HMRC since over the last six weeks or so. There's quite a few interesting points in there that I wanted to draw out. So the first one of those, there are a few points which were mentioned around benefits. HMRC have confirmed that they are proceeding with mandatory payrolling of benefits from April 2026. 

However, when this was announced, we knew that there were going to be issues for loans and accommodation because these were things which payrolled already. And the news that has come out on these is that these are not going to be included in the mandate from April, 2026. So for loans and accommodation, it is going to be up to the employer. 

They can choose either to payroll and there will be the facility to do that, or employers will be able to use a modified P 11 D and P 11 DB forms. We haven't as yet got any timetable for changes on whether that's going to change, whether loans and accommodation are going to fall under this mandation process later on. 

In advance of that, however, I know a number of employers are thinking about accelerating the payrolling of benefits and choosing to voluntarily payroll benefits. For the twenty five, twenty six tax year. Just important to register that employers, if they want to do that, do need to register with HMRC in advance of the sixth of April twenty twenty five. 

So just a point to flag there. Also in terms of benefits, it was one of the budget announcements, but it wasn't sort of as big news, it wasn't as widely reported, but it is something that could be of interest, it's going to have to be something that employers watch out for, is that from the 6th of April 2025, the commitment from the government introduced in January 2000, to maintain a constant official rate of interest throughout a tax year, will no longer apply. 

Why is that important? The official rate of interest is used to calculate certain benefits, including those loans and accommodation. So what might therefore happen and what employers need to be mindful of, is that we may see changes During a tax year in that official rate of interest, and that can have an impact on benefits calculations. 

The next thing I picked up in one of the agent updates in December was a reminder about these new reporting rules for digital platforms. We've seen a lot over the last few years that HMRC are increasing their information gathering powers, and this is Kind of forms part of that. So these new rules were introduced from 1st But why they've come up now is that the first reports are going to need to be submitted by 31st of January 2025 and effectively what online platforms have to do is to report to HMRC anyone who sells 30 or more items or earns approximately 1, 700 or more in a calendar tax year. 

Presumably this is a focus on only really targeting those individuals whose income wouldn't otherwise be covered by the 1, 000 trading allowance. It does come as part of this wider information gathering strategy and we've seen increasingly that HMRC is sort of targeting this. gig economy. They're sort of, where people have side hustles. 

Obviously we've got this digital online selling platforms, but we've seen a few one to many letters as well go out. This month's in January, it's been reported that HMRC recently started a one to many letter campaign, and this one was directed at individuals who they know have carried out deliveries during 23 24 and either aren't registered for self assessment or paid via PAYE for this work. 

It's definitely a direction of travel Something for taxpayers to be aware of. Also, in the agent updates, There was some news around the aims of raising standards in the tax advice market and this was particularly around elements such as mandatory registration, For tax advisors, that's expected to come in from 2026. 

There's going to be some enhanced powers and sanctions for HMRC to act against tax advisors who facilitate non compliance. That's going to be consulted on early this year. We're expecting legislation to apply again from 2026 for that. And also there's requirements around electronic signatures within the nominations process as well. 

And then obviously this wouldn't be complete without thinking ahead to the fact that our filing deadline for 23 24 is coming up apace at the end of January. Some interesting stats that HRC actually reported that about 40, 000 tax returns were filed over the period of Christmas Eve, Christmas Day and Boxing Day. 

And actually close to four and a half thousand of those were filed on Christmas Day itself. And so some people spending their downtime filing their income tax returns. However, at the start of the year, there were still 5. 4 million taxpayers who hadn't yet filed their 23 24 self assessment. So in those agent updates, HMRC has been Publishing a lot of links to guidance and a lot of topical issues around completing those self assessment returns. 

Obviously, basis periods is big news with 23 24 being the transition year for filing as we move towards a tax 24 25 onwards. Various information published here for taxpayers who do not know what their overlap fees are relief figure is, which may be deducted from their transition profit. So there's the stub period between the end of their accounting period and the end of the 23 24 tax year. 

There is an online service to ask what that overlap relief figure is. There's also various information about how that transition profit is going to be taxed. So the default is it will be spread over five tax years, but it is possible for taxpayers to accelerate that by election. So something to be aware of. 

A number of top tips for tax agents were also published. A couple of interesting points in there things around like first registering for self assessment, but also reactivating self assessment, perhaps where individuals haven't needed to file for a few years. And also, one point that I hadn't touched on, really appreciated before was to do with the transfer of the marriage allowance. 

So where that was relevant, it's helpful if the transferor submits their 

tax return first and the transfer really waits a couple of days to submit their own tax return just to make sure that's all processed effectively. There's also a tool for where's my reply which can be used where you are expecting HMRC communication. Finally, as part of this push towards the filing deadline, HMRC have reminded taxpayers about some of the guidelines in the issues that mistakes are often made in and these were available in the agent update. 

So things like capital allowances errors patent box, apprenticeship levy, and employment allowance. Last, three last things to finish off this podcast, just quick points which were raised in the agent updates, but which we have tended to cover, which we have covered elsewhere predominantly. Just a reminder that, that. 

Individuals have until the 5th of April 2025 to fill gaps in their national insurance records, dating back to 6th of April 2026. And after this deadline, they'll only be able to fill gaps for the previous six tax years. So that was point number one. Point number two is that HMRC launched a new disclosure facility on the 31st of December where research and development tax relief has been over claimed. 

It's a particular focus of HMRC as we're aware, R& D, and this way it's Aimed for research and development claims that have been made but are out of time to amend using the company tax return resubmission function. And so this is designed to make that disclosure easier. It's worth pointing out that because of the voluntary nature of the disclosure, any penalties will usually be accepted as unprompted, resulting potentially in a lesser penalty. 

The final point is on double cab pickups. We have published a bit on this already, in terms of the fact that double cab pickups, we used to have the, we used to apply the VAT definition when we were thinking about things like capital allowances, Car or van benefits and leasing adjustments. The VAT definition was double cab pickups with a payload of a ton or more would be considered vans. 

It's now moving, the HMRC guidance is to now look at the primary suitability. And because double cab pickups will generally have A dual suitability, so they will be equally primarily designed for both the carrying of passengers and goods. Then, because they don't have the primary suitability for goods, then they will be considered cars rather than vans. 

If you want any assistance with discussing this with your clients, we have produced a topical issue going into more detail. detail on what this new double cap pickup guidance means written in kind of a client friendly format. So that's the end of this podcast, just a bit of a whistle stop tour through some of the things which HMRC have announced in their agent updates over the last few months. 

Obviously, we will cover some of these issues in our regular tax update courses. We've got the spring tax update coming up in the next couple of months, followed swiftly after by our finance act course going into detail on some of those changes announced at the budget, which have been included. In the current finance bill to be enacted as finance act 2025. 

So have a look on our website, check out those courses and it was good to speak to you all today. Thanks a lot. Bye.