ICAS hosts digital Working Together meeting with HMRC
A summary of the recent digital Working Together meeting between ICAS and HMRC.
On Monday, 7 March, ICAS hosted a digital Working Together meeting with HMRC. It was only the fourth such meeting since digital Working Together was introduced, back in September.
Dawn Godard, Kathryn O’Donnell, Kenny McAllister, Leslie Reid and Nigel Wigglesworth represented a cross-section of Scottish firms at the meeting, which was broadcast across the UK via the Citrix platform. HMRC was represented by the Specialist Area Manager for Scotland and Northern Ireland, Brian Ainslie.
Charlotte Barbour, Director of Taxation at ICAS, opened the meeting, which was in two parts. One part, by HMRC, was on the Scottish Rate of Income Tax; the other half addressed practitioner issues.
Resolving problems with HMRC
Working Together was set up to help practitioners resolve those issues with HMRC which are widespread, affecting more than one practice or client. Face-to-face meetings were discontinued last year, and a new digital version is currently being trialled.
Resolving problems with HMRC is a key issue, and we need effective channels to achieve this. Making the system digital is non-negotiable, but there is potentially considerable scope for ICAS practitioner firms to be involved in shaping the future design.
Some of the issues we considered (outlined below) were:
- Resolving client specific queries with HMRC.
- Coding out of interest and dividends.
- Delays in agent authorisation, issue of UTRs and requirement for input from clients.
To achieve effective solutions here will require good communication: ICAS has the needed representation on HMRC committees and access to appropriate HMRC staff; but we need input from firms to prove difficulties are widespread - and we also need to suggest workable solutions.
ICAS would welcome your involvement and input on how this can be done – such as the possible shape of an ICAS digital forum to collate practitioner’s views. Please email to firstname.lastname@example.org.
Looking at the issues
The practitioner half of the session was introduced by Philip McNeill Head of Taxation (Tax Practice and Small Business Taxes).
Sometimes it doesn’t seem possible to resolve an issue with HMRC over the phone through the Agent Dedicated helplines, or by correspondence. So what do you do then?
One possibility is the Agent Account Manager Service. You need to register before you can use this service and around 2,200 agents in Scotland have registered.
Opinions were mixed: some people had found the service good; others had encountered difficulties, and could identify specific areas where the service could be improved. Practitioners reported generally positive experience of the Agent Dedicated Lines, though the absence of a dedicated Corporation Tax line was noted. There were concerns over delays on the Employers Helpline.
Issues which affect many practitioners can be raised with HMRC’s Specialist Area Manager. They are then reviewed by the Issues Oversight Group at HMRC, of which ICAS is a member.
Change in this area depends on receiving specific examples from practitioners, which can then be forwarded to HMRC via the Specialist Area Manager.
Coding out of interest and dividends
Changes to dividend and savings taxation in 2016-17 are causing difficulties:
- HMRC is including estimated amounts of dividend income for 2016-17 in clients' PAYE codes. This is usually based on levels in earlier years. In some cases, the result is that clients have no personal allowance left, or may have negative tax-free pay (PAYE K codes).
- Most of these clients are also in income tax self assessment, and would normally make payments on account. Coding out provisional amounts of dividend tax in such cases can cause cashflow difficulties, particularly where dividends are paid in a lump sum late in the tax year
- PAYE codes created through coding out estimated dividends are complex to explain to clients. This is creating additional time burdens.
It was suggested that HMRC should create a ‘dividend calculator’ or interactive model to which taxpayers could be directed. This would help people understand what is happening and reduce the need for agent input.
The process of automatically coding out needs to be reviewed, particularly in the light of moves towards digital tax accounts and reduced numbers of income tax self assessment returns.
Delays in agent authorisation, issue of UTRs and requirement for input from clients
Many of the digital services from HMRC appear to exclude agents. From registration for self-employment, to Annual Tax on Enveloped Dwelling (ATED), digital forms are being sent to clients, rather than agents, and client input is being required.
This runs contrary to the desire of clients to have their agent manage all their tax affairs: including the task of completing forms for them.
It is not possible both to register a client for self assessment and to appoint yourself as their tax agent at the same time. The agent appointed expects a UTR number, but this is going to the client, not the agent.
Scottish Rate of Income Tax
HMRC’s presentation by Louise Gaffney and Zoe Stokell, was on the Scottish Rate of Income Tax
The key things to watch out for now, being:
- Ensure that your payroll software can cope with the ‘S’ PAYE prefix which denotes a Scottish taxpayer.
- Check that HMRC has the correct address for your self assessment clients: that is the address where they are actually living, not a business or family address.
- There will be a new section on Income Tax Self Assessment tax returns from 2015-16, to show country and effective date for changes of address.
While this will make no immediate difference to the amount of tax due, it is important to ensure that details are correct now against a likely change in rates next year.