22 Nov 2013

Weekly tax update

Our look at the technical updates and notices in the tax world this week

agent authorisation turnaround times

HMRC has warned agents that if they need authorisation for self-assessment to be effective before 31 January 2014, they will need to apply at the latest by 23 December if using the postal system or by 15 January if applying online. Applications for self-assessment registration should be posted no later than 20 December.

Updated FPP test guidance for charities

HMRC has updated its detailed guidance for charities on the fit and proper persons test.

It is aimed at trustees of charities (including directors of corporate trustees), directors of corporate charities, employees of a charity and volunteers who act on the charity’s behalf and are involved in appointing people to claim tax reliefs or to exert control over spending the charity’s funds.

Employment allowance consultation

HMRC has issued for consultation the proposed employment allowance arrangements under the National Insurance Contributions Bill. These set out how employers may claim the employment allowance of up to £2,000 against their secondary Class 1 national insurance contributions (NICs) liability from 6 April 2014.

The draft regulations introduce a certification scheme for workers on the UK continental shelf where someone other than the secondary contributor discharges the national insurance liability on their behalf.

They establish who the secondary contributor is where the workers have an offshore employer, and they also include other changes necessary to deliver the overall offshore intermediaries policy.

The technical consultation is for seven weeks and the deadline for comments is 9 January 2014.

Updated guidance


HMRC has updated the following:

Notice 550, Air Passenger Duty

Notice 732, Annual Accounting

Customs Information Paper 13/70, Tariff preference: Costa Rica and El Salvador

Customs Information Paper 13/72, National Clearance Hub change of address

Customs Information Paper 13/73, Additional information about Import Control System planned downtime

Liability of entertainers

HMRC has set out how the liability of entertainers to pay national insurance contributions (NICs) will change from 6 April 2014 if proposed changes to the Social Security (Categorisation of Earners) Regulations 1978 are approved by parliament.

In Revenue and Customs Brief 35/13, it says that the employment status of entertainers – those engaged as an actor, singer, musician or in any other similar performing capacity – is usually self-employment for the purposes of tax and NICs.

However, since 1998 the regulations have deemed self-employed entertainers in certain prescribed circumstances, to be employer earners for national insurance purposes; this gave them access to earnings-related contributory benefit entitlement when out of work.

HMRC says that because the manner in which entertainers are being engaged and paid for their work has changed in recent years, it  has made it increasingly difficult for the regulations to be applied and operated as intended. This has caused uncertainties for both entertainers and engagers in deciding whether Class 1 NICs should be deducted and accounted for on payments made to and by them.

From April 2014, entertainers will no longer be included in the scope of the regulations. These means that payments to them will attract Class 2 (and where applicable Class 4) NIC liability, rather than Class 1 NIC liability. This includes payments made to entertainers after 6 April 2014 but which derive from a contract for services entered into before this date.

Producers engaging entertainers will not be required to deduct Class 1 contributions from any payments they make, including additional use payments such as royalties. Payments will be made gross of tax and NICs and the entertainer will have to declare the earnings as part of their normal self-employed self-assessment return.

Applying for fixed protection 2014

HMRC is encouraging people applying for fixed protection to apply online rather than by post. Doing so ensures that the application is complete and gets processed more quickly.

HMRC says that it will also confirm online applications although it warns applicants preparing multiple online applications to leave 15 to 20 minutes between sending each application if they want to receive auto-acknowledgement for each one. Sending applications more frequently will probably result in only one confirmation.

Applicants will still be able to apply by post. They can download form APSS228, fill it in on-screen, print it off and post it to HMRC. Failing that, there is a version of the form that can be printed off and completed by hand. However, HMRC warns that handwritten application forms can lead to longer processing times and delays if they are not completed correctly.

For further information and advice call the Pension Scheme Services on 03001 231079.

Offer to settle over EFRBS arrangements

HMRC is writing to taxpayers giving them an opportunity to settle open enquiries into the use of employee financed retirement benefit schemes (EFRBS) arrangements by agreement and without needing to engage in litigation. This offer, which is open until 31 December 2013, is intended to minimise costs for both taxpayers and HMRC.

Taxpayers who decide to accept the terms will have their settlement with HMRC concluded by 30 June 2014.

HMRC has provided a list of frequently asked questions explaining how the terms apply in practice to the arrangements taxpayers have entered into.

Hardman lecture

Copies of this year’s Hardman lecture, which was given last week by Paul Aplin, chairman of the ICAEW tax faculty’s technical committee, are now available on the institute's website.

More tax news and analysis from this week

JFK’s international tax legacy

50 years ago, on 22 November 1963, President Kennedy was assassinated. His life, the manner of his death and his presidency have remained of consuming interest ever since and this week will be marked by many tributes and reassessments of his legacy, but possibly not of the role he played in setting up the OECD

Lords to review personal service companies

Former ICAEW president Baroness Noakes is to chair a House of Lords inquiry into the use of personal service companies

GiftAid not value for money

GiftAid may be an important source of income for charities but it does not represent value for money for the taxpayer, the National Audit Office (NAO) has found

ICAEW urges Osborne to cut VAT

ICAEW has called on the chancellor to cut VAT on home improvement to boost the construction industry

UAE tops global tax ranking 

The UK has moved up two places in the global ranking of effective business tax systems, which is headed by the United Arab Emirates

Devolved Welsh tax powers unveiled

The Welsh government could be given control of £3bn of tax revenue and the power to set business rates

Julia Irvine