Other news in brief

HMRC make changes to the Double Taxation Treaty Passport scheme

The Double Taxation Treaty Passport Scheme (DTTPS) is widely used within the Financial Services sector by overseas lenders as an efficient way of ensuring UK withholding tax is deducted at the correct rate under the relevant double taxation treaty. HMRC have made a number of changes to the administration of the DTTPS and, most notably, they will no longer be reminding passport holders that a passport is due to expire. HMRC’s guidance previously stated that “HMRC will write to all existing passport holders 3 months before the passport is due to expire to request completion of a DTTP1 renewal application form”. On 20 October 2023 this was replaced with “We do not issue reminders when a treaty passport is due to expire”. For affected businesses, now would be a good time to undertake a review of the DTTPs that group companies hold, ensuring that records are being maintained of expiry dates and a process is in place to ensure that DTTPs are renewed in a timely manner. HMRC have also updated their correspondence details (both postal and email) for the DTTPS and made a number of changes to the scheme’s terms, conditions and guidance document.

Council of the European Union adopts DAC8

On 17 October 2023, the Council of the European Union (the Council) adopted DAC8, a directive amending EU rules on administrative cooperation in the area of taxation (the Directive on Administrative Cooperation or the DAC). The amendments mainly concern the extension of the DAC to cover the reporting and automatic exchange of information on crypto-asset transactions, the inclusion of crypto-assets into the CRS definition of Financial Assets, and automatic exchange of information on advanced tax rulings for high-net-worth individuals. The requirements of DAC8 have not changed since the Economic and Financial Affairs Council of the EU (ECOFIN) reached agreement on DAC8 on 16 May 2023. Among others, DAC8 requires in-scope crypto-asset service providers and crypto-asset operators to adhere to due diligence and related reporting requirements (with regard to EU clients) if they are authorised by an EU Member State, or allowed to provide crypto-asset services following a notification to a Member State under Markets in crypto-assets (MiCA) regulations (even if the crypto-asset service providers or crypto-assets operators are based outside the EU). DAC8 was published in the Official Journal on 24 October and will enter into force on the twentieth day following its publication. The rules will become applicable from 1 January 2026 (with some exceptions), which is aligned to the OECD’s Crypto-Asset Reporting Framework (CARF).

Research and Development regulations updated

On 16 October 2023, HMRC updated their directions under regulations 3 and 10 of Income and Corporation Taxes (Electronic Communications) Regulations 2003 (SI 2003/282) in respect of the Additional Information Form (AIF), which HMRC require to be submitted via a dedicated GOV.UK portal for all R&D tax incentives claims made since August 2023. In limited circumstances, the updated regulations allow HMRC to accept the AIF content (being mandatory for a R&D claim to be valid) to be submitted by email. HMRC advise that this is only to be the case where they specifically contact claimants to allow or invite them to do so, and that this is a backstop so that HMRC have an alternative method to gather the required information, e.g. in the event that HMRC’s online portal experiences technical issues. HMRC are clear, however, that claimants must continue to use the online portal unless specifically told not to, and that there is no option to submit the AIF content via email simply because the claimant chooses or prefers to do so.