Other news in brief

With the first EU Public Country by Country reporting (CbCR) reports due to be filed in Romania by 31 December 2024, stakeholders have been waiting for the EU to release details of the forms that Groups need to submit. On 1 August 2024 the European Commission (EC) published a consultation on a common template and the electronic formats for submission. The consultation closes on 29 August 2024. The expectation is that the final template will be adopted by the end of Quarter 3 2024. The consultation only covers the requirements for EU headquartered groups and the position for non-EU headquartered groups still remains unclear. However, it is hoped that now the EC has released these details, individual countries will finalise their own submission processes and release guidance about how to comply with domestic legislation in respect of EU Public CbCR. 

On 31 July 2024, HMRC updated their Digital Services Tax (DST) Manual at DST43300 to add Canada to the section titled ‘Foreign taxes HMRC believes are similar to the UK DST’. This section lists out the countries that have taxes that are considered to be similar to the UK DST for the purposes of cross-border relief. The manual provides some further details on the new Canadian Digital Services Tax, confirming that it “is retrospective in its effect to revenues from 1 January 2022”. It then goes on to say that “Groups who are impacted and are subject to Canadian DST on the retrospective periods may submit amendments to DST returns to claim additional cross border relief on relevant cross border transactions. The qualifying cross-border transactions must be subject to the Canadian DST once due and the claim quantifiable. If a group is out of time to submit an amendment, the responsible member may make a claim for overpaid tax under paragraph 24, Schedule 8, Finance Act 2020.”

The first Double Taxation Convention between the UK and Ecuador was signed in Quito on 6 August 2024. It will enter into force once both countries have completed their parliamentary procedures and exchanged diplomatic notes.

On 1 August 2024, HMRC published a short briefing on the new ‘Reporting rules for digital platforms’. These rules require online marketplaces to report income and details of the sellers of goods and services on their platforms. These rules came into effect in the UK on 1 January 2024 and broadly apply to digital platforms which connect sellers to customers, e.g. taxi and food delivery services. The guidance covers a number of areas, including what qualifies as a digital platform, which platform operators are subject to the reporting requirements, which sellers the operators need to report, what and how to report and the penalty regime for failing to comply with the reporting requirements. HMRC have also published guidance for sellers on the digital platforms, so they may comply with the requirements and will continue to update detailed guidance to support compliance and reporting.

Following an earlier consultation on draft guidance, HMRC have now added new content to their Corporate Intangibles Research and Development (CIRD) Manual at CIRD100000 onwards. The new guidance covers the merged research and development (R&D) expenditure credit scheme and the enhanced R&D tax relief scheme for R&D-intensive loss-making SMEs which came into effect for accounting periods starting on or after 1 April 2024. The final wording broadly reflects the updated draft guidance published on 27 March following consultation – our earlier article discussed that in more detail.

On 30 July 2024, HMRC updated their ‘publishing your large business tax strategy’ guidance. The updated guidance clarifies that the turnover and balance sheet test that determines whether a UK group, sub-group, company or partnership is required to publish a tax strategy is mutually exclusive to the test that applies to UK companies or sub-groups which are part of a multinational enterprise (MNE) Group. The effect of this is that where a UK company or sub-group is part of a MNE group, it does not need to publish a strategy if the MNE group’s global turnover is less than Euro 750 million, even if it individually exceeds the £200 million turnover threshold.

On 1 August 2024, the Bank of England Monetary Policy Committee voted to reduce the Bank of England base rate to 5 percent from 5.25 percent. As a result, HMRC interest rates for late and early payments have also reduced. HMRC’s late payment interest rate for most taxes is set at the Bank of England base rate plus 2.5 percent, so their late payment interest rate reduced from 7.75 percent to 7.5 percent. Interest charged on underpaid quarterly corporation tax instalment payments is calculated as base rate plus 1 percent so this reduced to 6 percent. These changes came into effect on 12 August 2024 for quarterly instalment payments and will come into effect on 20 August 2024 for non-quarterly instalment payments. HMRC have also reduced their repayment interest rate for most taxes to 4 percent, as it is set at the Bank Rate minus 1 percent, with a 0.5 percent lower limit.