Agent update 76: processing of R&D claims, coding out of self assessment debt and opportunities to test HMRC systems

HMRC has published edition 76 of Agent Update and has made some minor changes to the format. The update now includes the following sections:

  • Technical updates and reminders
  • HMRC agent services
  • Agent forum and engagement

Updates that have not been published elsewhere:

  • Details of HMRC’s concerted effort to clear the backlog of research & development (R&D) claims. By 1 November 2019 HMRC was handling claims in line with its published service standard. The volume of R&D claim increases significantly in December which meant some delays in dealing with claims through January 2020 but HMRC expects to be back to normal service by early February.
  • Changes to the coding out of self assessment debt. From March 2020 HMRC will code out self assessment debt ‘immediately and automatically, within the current tax year’. HMRC currently collects outstanding self assessment debts via a restriction in a taxpayer’s tax code from the 6 April following a notification letter. The Tax Faculty has asked for further clarification of this change.

Opportunities to test new HMRC systems:

  • CGT 30-day reporting and payment. The rules relating to the reporting and payment of capital gains tax (CGT) due on a disposal of UK residential property are changing in April 2020. The tax due must be reported and paid to HMRC within 30 days of completion of the disposal.
    HMRC is looking for tax agents and their clients to help them trial the new service for reporting and paying and to provide feedback. Further details on how to participate are available in the update.
    The issue of most concern to agents is that existing 64-8 authorities will not be recognised for this service and the client will need to engage digitally.
  • Corporate interest restriction return. HMRC is working on improving the corporate interest restriction return. This work is expected to include bringing together all the current spreadsheets and forms into an easily accessible format that fits GOV.UK standards and developing an application programme Interface (API) that supports integration with software products, including in-house software. Further details on how to participate are available in the update.

Reminders:

The update includes several reminders relevant to employers, a reminder to prepare to file 2020-21 ATED returns and a note of the key actions for non-resident corporate landlords (NRCL) becoming liable to corporation tax instead of income tax from April 2020. These key actions are:

  • tell HMRC if the NRCL already has a CT UTR, no longer lets out UK property or completes a tax return other than a SA700;
  • tell HMRC in writing if the NRCL prepares its accounts or financial statements to a date that is different from 5 April. HMRC will set up the CT record with a default accounting period which will end on 5 April 2021. This notification, which by law must be in writing, will help HMRC to issue correct notices to file a company tax return;
  • update the agent authority to include corporation tax.
Anonymous
  • How will the client 'engage digitally'?  With only a very short period of time to go before the new rules commence there needs to be a lot more clarity about how these procedures are going to work!!

  • "The issue of most concern to agents is that existing 64-8 authorities will not be recognised for this service and the client will need to engage digitally."  So how does this fit in with Charter which states that taxpayers have a right to be represented? Is it going to be possible to act as an agent for a client and get the authority in place in time? None of my clients are likely to want to deal with this on their own.  So frustrating that yet again HMRC apparently hasn't taken into account the needs of represented taxpayers.