Staying informed about HMRC issues and tax matters is crucial for businesses and individuals alike. This article provides a helpful breakdown of recent developments that may impact you.

Calls for R&D Tax System Reforms

The Suffolk Chamber of Commerce is urging the government to reform the Research and Development (R&D) tax relief system to prevent negative impacts on small businesses. The Chamber’s report highlights issues with HMRC’s strict compliance regime and delays in processing claims.

“Every right-thinking person applauds the crackdown in fraudulent claims but HMRC appears to be going to extremes in its definition of the term.” – Steve Elsom, Chair of the Chamber’s R&D Tax Reliefs Task and Finish Group

HMRC Error and Self-Employed State Pension

An error by HMRC may cause some low-income self-employed workers to miss out on state pension entitlements due to rejected voluntary Class 2 National Insurance contributions. This issue affects contributions made for the 2022/23 tax year.

“The issue is unique to the year in question and our advice to those who might be affected is to first check to see whether they have received a refund from HMRC.” – Antonia Stokes, LITRG Technical Officer

HMRC Call Waiting Times

UK taxpayers spent a total of 800 years on hold to HMRC in the 2022/23 fiscal year. The National Audit Office (NAO) attributes this to funding cuts, job reductions, and a push for online tax management. The average wait time to speak to an adviser was nearly 23 minutes.

“HMRC’s telephone and correspondence services have been below its target service levels for too long.” – Gareth Davies, Head of NAO

Early Tax Return Filings

Nearly 300,000 self-assessment taxpayers filed their returns in the first week of the new tax year, with 70,000 filings on the first day. HMRC encourages early filing to avoid stress and aid in budgeting.

“Filing your self-assessment early means people can spend more time growing their business and doing the things they love rather than worrying about their tax return.” – Myrtle Lloyd, HMRC’s Director General for Customer Services

MTD for Income Tax Pilot

HMRC’s pilot for Making Tax Digital for Income Tax Self Assessment (MTD for ITSA) is now operational. Accountants, agents, and individuals can participate in the pilot, which targets self-employed individuals and landlords with annual incomes over £50,000. Starting 6 April 2026, these groups must sign up for MTD for ITSA.

Participants must maintain digital records and submit quarterly updates to HMRC via compatible software. Currently, five software products are available for private beta testing: 1 2 3 Sheets Ltd, Intuit QuickBooks Online, Sage Accounting, SE Reports, and Self Assessment Direct.

“Choosing the right software is a critical decision. Software products do need to comply with HMRC’s minimum functional standards but these are quite minimal. This means there will be very significant differences between products.” – Caroline Miskin, Senior Technical Manager at ICAEW

Clarification on WFH Commuting Tax Rules

HMRC has updated its guidance on travel expenses for remote workers. Travel from home to a permanent workplace is considered ordinary commuting and is not eligible for tax relief. However, travel costs from home to a temporary workplace may qualify for tax relief.

“Even though it may have been accepted that the employee’s home is a workplace it does not necessarily follow that they’ll be entitled to tax relief for the cost of travel between their home and a permanent workplace.” – HMRC

New Online NICs Payment Service

HMRC has introduced an online service for voluntary NICs payments, simplifying the process for customers to fill gaps in their National Insurance records and potentially increase their State Pension. The enhanced Check your State Pension service now includes an end-to-end digital solution.

“The State Pension is the foundation of income in retirement which is why we have introduced this new online tool to help simplify boosting it for those who are able to.” – Paul Maynard, Minister for Pensions

Latest Employer Guidance

HMRC’s latest Employer Bulletin covers various topics, including PAYE Settlement Agreement payments, reporting expenses and benefits for the tax year ending 5 April 2024, mandating the payrolling of benefits in kind from April 2026, PAYE tax calculator, basis period reform, and claiming tax relief on work-related expenses.

For detailed information and professional advice, consult the relevant legislation or seek professional guidance.

Advisory Fuel Rates

New advisory fuel rates for company cars took effect from 1 June 2024. These rates are applicable to employees using a company car and include specific rates for petrol, diesel, LPG, and fully electric cars.

For further details and professional advice, users should consult the detailed legislation or seek professional advice.

Keeping a close eye on developments in HMRC issues and tax matters empowers you to make informed decisions and navigate the tax landscape with confidence. Contact our experts for advice on any business-related matters.

Michelle Martin

Managing Director | Accace Adept

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