The Chancellor of the Exchequer, Jeremy Hunt delivered his UK Spring Budget 2024 today.
As you are aware, the Furnished Holiday Letting (FHL) regime provides tax relief for property owners letting out furnished properties as short term holiday accommodations. From 6th April 2025, however, the Chancellor is removing this tax incentive in an attempt to increase the availability of long term rental properties.
According to HMRC’s guidance material, a furnished holiday let is deemed to be a furnished commercial property which is situated in the United Kingdom.
It must be available to let for a minimum of 210 days in the year.
It must be commercially let as holiday accommodation for a minimum of 105 days in the year.
Guests must not occupy the property for 31 days or more, unless, something unforeseen happens such as the holidaymaker has a fall or accident or the flight is delayed.
You may wish to consider your options before the rules are abolished in April 2025.
Options include:
Please be aware that the information contained in this article is of a general nature. It is not intended to address specific circumstances in relation to any individual or entity. All reasonable efforts have been made by Accounts Advice Centre to provide accurate and up-to-date information, however, there can be no guarantee that such information is accurate on the date it is received or that it will continue to remain so. This information should not be acted upon without full and comprehensive, specialist professional tax advice.
Revenue Compliance Interventions – Income Tax, Corporation Tax, VAT – Risk Review, Revenue Audits and Investigations
The Revenue Commissioners published a new Code of Practice for Revenue Compliance Interventions today which will be effective from 1st May 2022 and will apply to all compliance interventions notified on/after that date. The revised Code applies to all taxes (including Personal Tax, VAT, Corporate Taxes, etc.) and duties, with the exception of Customs. Revenue’s new compliance framework outlines different levels of tax compliance intervention. Briefly, Level 1 interventions are designed to support compliance without the need for a more in-depth intervention. Level 2 interventions comprise a Risk Review or a full Revenue Audit. Level 3 interventions, however, are Revenue Investigations and are used to tackle serious fraud and tax evasion. Once a Revenue investigation is initiated, it is not possible for the taxpayer to make a qualifying disclosure in relation to the matters under investigation.
The revised Code reflects Revenue’s new Compliance Intervention Framework and the key changes include:
Level 1 Interventions are aimed at assisting taxpayers to bring their tax affairs in order voluntarily. They are designed to support compliance by reminding taxpayers of their obligations. They also provide them with the opportunity to correct errors without the need for a more in-depth Revenue intervention. These include the following:
The expected outcomes of Level 1 Interventions:
In Summary:
Important Change
According to the new Code, self-corrections can continue to be made the taxpayer is within the relevant time limits
From 1st May 2022 any such self-corrections must be made in writing.
The submission of an amended return on ROS will no be longer sufficient to qualify as a written notification.
Therefore, to qualify as a self correction, a written notification must be provided as well as any amendment made on ROS.
One of the more fundamental changes to the revised Code is the introduction of the ‘Risk Review’ as a Level 2 Intervention. Level 2 interventions are used by Revenue to confront compliance risks ranging from the examination of a single issue within a Tax Return to a full and comprehensive Revenue Audit. An ‘unprompted qualifying disclosure’ will not be available to a taxpayer who receives notification of a Risk Review in respect of the specified tax head and tax period. Taxpayers will, however, have the option to make a prompted qualifying disclosure when notified of a Level 2 intervention.
There are two types of Level 2 Interventions:
A “Revenue Audit” is an examination of the compliance of a taxpayer. It focuses on the accuracy of specific tax returns, statements, claims, declarations, etc. Broadly speaking, the operation of a Revenue Audit will remain the same under the revised Code. An audit will be initiated where there is a greater level of perceived risk. Also, please keep in mind that an audit may be extended to include additional tax risks depending on information discovered by Revenue during the audit process.
The main stages in a typical Revenue audit are unchanged under the new Code and can be summarised as follows:
Level 3 interventions take the form of Revenue investigations. These would generally be focused on suspected tax fraud and evasion. A ‘Revenue Investigation’ is an examination of a taxpayer’s affairs where Revenue believes that serious tax or duty evasion may have occurred. As the Revenue investigation may lead to a criminal prosecution, it is always recommended to seek expert professional advice and assistance in such situations.
A taxpayer is not entitled to make a qualifying disclosure from the date of commencement of the investigation, however, a taxpayer can seek to mitigate penalties by cooperating fully with a level 3 intervention.
Taxpayers will generally be notified of a Level 3 intervention in writing. However, in certain cases Revenue may carry out an unannounced visit or may carry out investigations without notifying the taxpayer in writing.
Just to reiterate, once an investigation is initiated, the taxpayer cannot make a qualifying disclosure in relation to the matters under investigation.
The main changes in the new Code of Practice for Revenue Compliance Interventions are:
Please be aware that the information contained in this article is of a general nature. It is not intended to address specific circumstances in relation to any individual or entity. All reasonable efforts have been made by Accounts Advice Centre to provide accurate and up-to-date information, however, there can be no guarantee that such information is accurate on the date it is received or that it will continue to remain so.. This information should not be acted upon without full and comprehensive, specialist professional tax advice.
The Finance (Covid-19 and Miscellaneous Provisions) Bill 2021 has extended the Employment Wage Subsidy Scheme (EWSS) until 31st December 2021.
It also amended the comparison periods for determining eligibility for EWSS for pay dates from 1st July 2021.
The main criterion for eligibility is that employers must be able to prove that they were operating at no more than 70% of either (a) turnover or (b) customer orders received for the period 1st January to 30th June 2021 as compared with 1st January to 30th June 2019. It must also be able to clearly demonstrate that this disruption was caused by Covid19.
In other words, an employer must be able to show, to the satisfaction of Revenue Commissioners, that their business is expected to suffer a 30% reduction in turnover or customer orders, which was due to Covid19.
Simultaneously, Revenue introduced a new requirement for employers to submit a monthly Eligibility Review Form (ERF) on ROS. The ERF requires (a) data relating to actual monthly VAT exclusive turnover or customers order values for 2019 in addition to actual and projected figures for 2021 for all relevant businesses as well as (b) a declaration.
The initial submission should be made between 21st and 30th July 2021 and by 15th of every month from August onwards.
On 15th of every month during the operation of this scheme, employers will be required to provide the actual results for the previous month, together with a review of the original projections they provided so as to ensure they continue to remain valid.
The eligibility for EWSS must be reviewed on the last day of each month. If the business is deemed ineligible, then that business must de-register for EWSS from the following day.
If, however, the situation changes, then the business can re-register again.
The following subsidy rates, based on employee’s gross pay per week, will continue to apply for the months of July, August and September 2021 as follows:
Additional Points:
For further information please visit: https://www.revenue.ie/en/employing-people/ewss/how-to-claim-for-employees-and-subsidy-rates.aspx
Ireland’s Research and Development (R&D) tax credit system is a valuable tax based incentive, providing major benefits to both multinational companies and SMEs operating in Ireland. The R&D tax credit was first introduced in the Finance Act 2004 and has been subject to various amendments in the subsequent Finance Acts. The credit operates by providing up to 25% of R&D expenditure incurred by a company on qualifying R&D activities (both revenue and capital) in a tax credit or in cash (subject to certain conditions being met). This 25% tax credit can be claimed in addition to the normal 12½% revenue deduction available for the R&D expenditure. Therefore, the total tax benefit to a limited company is 37½% being the 12½% standard corporation tax rate plus the 25% R&D Tax credit.
How can the Credit be used?
Companies are entitled to a credit of 25% of the incremental R&D expenditure incurred for periods commencing on or after 1st January 2015.
The credit can be used to:
The claim must be made within one year of the end of the accounting period in which the expenditure has been incurred.
Broadly,
It can alternatively be used as a key employee reward mechanism to remunerate R&D staff effectively, tax free subject to certain conditions. The effective income tax rate for such key employees may be reduced to a minimum of 23%, provided certain conditions are met by the company and the individual.
For further information, please click: https://www.revenue.ie/en/covid-19-information/index.aspx
Please be aware that the information contained in this article is of a general nature. It is not intended to address specific circumstances in relation to any individual or entity. All reasonable efforts have been made by Accounts Advice Centre to provide accurate and up-to-date information, however, there can be no guarantee that such information is accurate on the date it is received or that it will continue to remain so. This information should not be acted upon without full and comprehensive, specialist professional tax advice.