Other news in brief

Following our earlier article about proposals from the International Accounting Standards Board (IASB) to amend IAS 12 in relation to IFRS tax accounting for Pillar Two, a supplementary IASB meeting was held on 11 April 2023 where a decision was made to finalise the amendments to IAS 12. The amendments are expected to be released by the end of May 2023. The deferred tax exception is moving forward in line with the Exposure Draft and is expected to be applicable by 30 June 2023. There has been a shift in the approach to specified disclosures: (i) from a list of jurisdictions, to a disclosure objective with supporting guidance; and (ii) from IAS 12 based information about the current period, to estimated future tax exposure under Pillar Two. We will provide further information in the next edition of Tax Matters Digest. Also, on 5 April 2023, the Financial Reporting Council (FRC) published FRED 83 containing draft amendments to FRS 102 (the financial reporting standard applicable in the UK for entities that are not applying adopted IFRS, FRS 101 or FRS 105) similar to those proposed by the IASB. Although there are expected to be limited FRS102 consolidations within Pillar Two, this is nevertheless welcome news for single entity financial statements. Comments on FRED 83 are requested by 24 May 2023. For their next steps, in scope groups should continue to be prioritising impact assessments for completion during the year before Pillar Two applies to the group (e.g. during year ended 31 Dec 2023 for calendar year end groups) to support external financial statement disclosures and their assessment as to estimated future Pillar Two tax exposures. In addition, groups should be getting prepared through identifying and addressing data gaps to capture the required information in real-time, along with planning for their approach to real-time calculations, when Pillar Two applies to the group (e.g. from 1 January 2024).

Residential property developer tax (RPDT) applies to profits arising from 1 April 2022 earned by corporates from the development for sale of residential property (see previous article). On 1 April 2023 HMRC published additional guidance on how to complete the supplementary corporation tax pages ‘CT600N’ in connection with RDPT and what information needs to be included. We are seeking clarity from HMRC on some points of detail around the new process.

As previously announced, additional information and notification requirements have been introduced for the UK’s Research and Development (R&D) tax incentives. HMRC published further guidance on the processes to be followed on 1 April 2023. For accounting periods beginning on or after 1 April 2023, ‘new’ claimants will be required to make a claim notification within six months of the end of the claim period or the claim will be invalid. The claim notification form and details of how to complete it have now been published. Also, as confirmed at the Spring Budget, all claimants will need to submit a digital ‘Additional Information Form’ alongside R&D claims submitted from 1 August 2023, regardless of the accounting period end of the claim. Details of how to submit the additional information have been published. It is important to note that this additional information must be submitted before the corporation tax return is submitted. More detailed guidance is still expected and further commentary on this will be provided in a future edition of Tax Matters Digest.

As announced in the Scottish Draft Budget in December, effective from 6 April 2023, the higher rate of Scottish Income Tax increased from 41 percent to 42 percent. The top rate also increased from 46 percent to 47 percent and the income threshold for the top rate reduced from £150,000 to £125,140 (mirroring the change made in Westminster). The starter, basic, intermediate and higher rate income thresholds are unchanged.