Welcome to the August 2024 edition of our New Tax Updates blog. This month, we cover significant changes and updates from HMRC, including new guidance for digital platforms, revised interest rates, updates to the construction industry scheme, and new processes for claiming PAYE repayments. Here's a comprehensive overview of the latest developments.
1. Quick Hits
Interest Rates:
Following the Bank of England's interest rate cut to 5%, HMRC has updated its rates:
Late Payments: 7.5% from August 20, 2024.
Repayment Rates: 4% for repayments.
SAYE Schemes: New rates for five-year bonuses and early leavers are 3% and 1.33%, respectively.
Publishing a Tax Strategy:
HMRC has refined its guidance for large businesses on publishing tax strategies, including:
Multi-national Enterprises: Updated rules for determining which companies must publish strategies.
Content and Timing: Clarifications on required content and future publication schedules.
Healthcare Certificates:
A new form (CA8454) for healthcare cover applications in the EU, Iceland, Liechtenstein, Norway, or Switzerland has been released, accompanied by an interactive guidance tool.
Reporting Dividends and Capital Gains:
The latest Employment Related Securities Bulletin includes new guidance on:
Income Tax and Capital Gains: Calculations for dividends and share sales.
Reporting: Instructions for submitting these details to HMRC.
Avoidance and Evasion:
Updated documents from HMRC include:
Litigation Decisions: Cases involving tax avoidance.
Corporate Criminal Offenses: Current investigations and procedures to prevent tax evasion.
2. New HMRC Guidance on Digital Platforms
As of January 1, 2024, the UK has adopted the OECD model's reporting rules for digital platforms. This means online marketplaces must now report the details and income of their sellers to HMRC. The first report, covering the year to December 31, 2024, is due by January 31, 2025.
Key Points:
Definition: Digital platforms include apps or websites connecting sellers to customers for services like taxi hire, food delivery, freelance work, and short-term accommodations.
Responsibilities: Platform operators must collect, verify, and report seller information to HMRC annually.
Guidance: HMRC's published guidelines detail the meaning of a digital platform, reporting requirements, and penalties for non-compliance.
Seller Information: Sellers on digital platforms will be asked for specific information and need to understand their tax obligations.
3. Contractors Reminded to Verify Subcontractors
HMRC has initiated a campaign reminding contractors in the construction industry to regularly verify their subcontractors' CIS status. Incorrect CIS tax deductions have been noted, prompting HMRC to emphasize the following:
Verification Requirements:
New Subcontractors: Must be verified before payment.
Existing Subcontractors: Verify if not included in CIS returns for the current or past two tax years.
Verification Tools: HMRC's online service or commercial software for more than 50 subcontractors.
Compliance Checks:
Failure to verify may lead to compliance checks, and any errors discovered will be treated as prompted disclosures, potentially increasing penalties.
4. Further Details on Claiming PAYE Repayments
Recent changes to the process for claiming P800 PAYE repayments have been highlighted by ICAEW, noting that the automatic issuance of cheques after 21 days has been removed.
New Process:
Action Required: Taxpayers must claim repayments online.
Methods: Request a cheque by post or a bank account transfer.
Security: The process ensures cheques are sent to addresses on HMRC's records, requiring address updates if necessary.
Online Process Concerns:
While the new process does not require government gateway credentials, it involves direct interaction with banking apps for transfers, potentially causing confusion. Alternatively, using the HMRC app or online account provides access to additional services but requires sign-in credentials.
Conclusion
August 2024 brings several critical updates from HMRC, impacting digital platforms, interest rates, CIS contractors, and PAYE repayment procedures. Staying informed about these changes is essential for compliance and effective tax management. For detailed guidance and further information, please contact one of our team today.
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