CIOT Technical Team successes

Below are examples of where the CIOT has been instrumental in influencing changes to legislation, HMRC guidance or procedure, or whose efforts were singled out for recognition by revenue authorities, or central/devolved government or parliament. Some of these outcomes follow many months’, or even years’ work and discussion, so those efforts are not necessarily confined to one quarter or year; many other matters are still ongoing but remain confidential.

Quarter ending 31 March 2025

Changes to draft legislation/guidance/interpretation/procedure

Following representations made by CIOT, HMRC have changed their guidance on Condition C of the LLP salaried members rules to reflect the position as it was understood to be pre- February 2024. Revised guidance published in February 2024 suggests that a capital contribution made into an LLP by a member would be caught by the rules if their remuneration increased and a contribution was subsequently made to avoid the application of Condition C. The more recent amendments to the guidance now confirm that a further contribution like that, if made as a genuine and enduring investment, will not trigger Condition C.

Following concerns raised by CIOT (and others) the government has decided not to introduce an obligation on employer businesses to report the number of paid hours worked by employees because of the administrative burden it would create. The draft Income Tax (Pay As You Earn) (Amendment) Regulations 2024 will not be progressed further after the results of a consultation were published on 28 January 2025 (https://tinyurl.com/bdde6ayb). The CIOT warned in May last year that the estimated one-off cost to businesses of £58 million and ongoing costs of £10 million - an average per business of £29 and £5 respectively - were “significantly underestimated” and that gathering additional data to provide to HMRC would lead to extra work for many employers. It was also not clear why HMRC needed the information or what they would do with it.

Following questions asked by the CIOT about discrepancies between the data published annually by HMRC and the Ministry of Justice in relation to appeals at the First Tier Tax Tribunal, both organisations have said that they are exploring including an explanatory footnote alongside future data tables.

Following representations made by CIOT, amendments were tabled to the Finance Bill 2024/25 during its passage through Parliament concerning Employee Ownership Trusts. Concerns were raised about the narrow statutory exemption from income tax treatment for contributions to the trust by the trading company. The perimeters of that allowance were extended by the amendments to cover most share purchase costs and associated expenditure. Other government amendments within the Finance Bill concerning non-dom reform were also tabled to reflect concerns which the CIOT had put forward. These amendments are reflected in Finance Act 2025 that received Royal Assent on 20 March 2025.

Suggestions made by CIOT have been incorporated into the guidance for the Digitalisation of VAT Grouping Forms 50/51.

HMRC have fully adopted 57 of the 69 suggestions made by CIOT for the Economic Operators Registration and Identification (EORI) Customs Technical Handbook (https://tinyurl.com/yedysz6b) – a further two suggestions have been partly incorporated.

Following a technical question raised by the CIOT about student loan repayments being calculated on payrolled benefits-in-kind for taxpayers in self-assessment when benefits-in-kind should be excluded from the calculation, HMRC has confirmed that the 2025 self-assessment return has been amended to ensure payrolled benefits-in-kind are excluded from the self-assessment calculation. An announcement of this change was included in March’s Agent Update (https://tinyurl.com/4k2franj).

Following a submission by the CIOT to the Guidance Strategy Forum, HMRC confirmed that it will remind VAT content designers that ‘change notes’ in VAT public notices should include enough information so that users can understand what has changed without visiting the page. HMRC also confirmed that our points on change notes have been disseminated to the Making Tax Digital team for learning.

Following a submission by the CIOT, HMRC has fixed the printing issues for the VAT forms VAT1614A (option to tax land and buildings) and VAT642 (error correction) for taxpayers using paper applications.

On 11 March, James Murray, Exchequer Secretary to the Treasury, announced at the ICAEW - CIOT conference that HMRC will be introducing a new service for agents on 31 March, to help escalate and resolve PAYE and Self-Assessment queries. An escalation service for complex cases was one of our ten key recommendations from our joint CIOT / ICAEW report “Tackling HMRC’s customer service challenge”, which was published in December 2024 (https://tinyurl.com/y5hwuszc).

The CIOT had previously made representations recommending permitting employers to ‘self-service’ that ‘section 690 directions’ can be applied by them to a particular employee. Income Tax (Earnings and Pensions) Act 2003 s690 allows employers to request a direction from HMRC that they can limit the application of PAYE to the proportion of a qualifying employee’s employment income that will relate to work duties that are physically performed in the UK. Applications to HMRC for section 690 directions have been subject to long delays. Finance Act 2025 makes changes such that HMRC approval will no longer be required for section 690 treatment to apply and an auto acknowledgement from HMRC on submission of the application is all that is required. Essentially, HMRC will be adopting the process now, check later approach the CIOT recommended in 2023.

Parliamentary mentions

At the Public Bill Committee stage of the passage of the Finance Bill 2024-25 through Parliament, the CIOT received 38 separate mentions in the debates, including for the “excellent CIOT” and the “now-famous CIOT”. These mentions were made with respect of changes to the rules for:

Employee-Ownership Trusts
Furnished Holiday Lets
Alternative Finance
Annual Tax on Enveloped Dwellings
Non-dom Foreign Income and Gains, and IHT

In the Scottish Parliament, LITRG was called upon to give in-person evidence before the Housing & Planning Committee on the issue of council tax; the CIOT was also cited in a debate on the increase in employers’ NIC.

Other recognition of the CIOT’s contribution

The CIOT is recognised as a key stakeholder in the Welsh government’s Tax Policy Report for 2024. (See para 152: https://tinyurl.com/yc4wwrzv)

The CIOT has been invited to join the Valuation Office Agency’s Agent Working Group that is helping to design and deliver changes to the business rates system to implement the new information duty that will begin to be rolled out from April 2026.

Quarter ending 31 December 2024

Changes to guidance/interpretation/procedure

As a result of our feedback on a proposed ‘one-to-many’ letter regarding the High Income Child Benefit Charge (HICBC), HMRC have updated their guidance on GOV.UK: Personal Allowances: adjusted net income.

We said in relation to the proposed letter: ‘Under the heading ‘Check if you need to pay the High Income Child Benefit Charge for 2023 to 2024’, it says ‘Your adjusted net income is your total taxable income, less certain tax reliefs and before deducting any Personal Allowances. For more information, go to GOV.UK and search ‘adjusted net income’ – doing this the first hit that comes up says ‘updated 11 December 2018’. How does a taxpayer know they can rely on this as being current? Can it be updated to 2024?’

HMRC responded by updating the page on 17 October with a more up to date HICBC example.

As a result of feedback from CIOT as part of reviewing draft One-to-Many letters, HMRC have updated relevant parts of their guidance (including examples) concerning the HICBC.

As a result of feedback provided at the Guidance Strategy Forum on 31 July 2024, HMRC have included some tips on using GOV.UK as part of the trial of a new tax agent ‘handbook’.

Parliamentary mentions

During the Committee stage debate of the National Insurance Contributions (Secondary Class 1 Contributions) Bill (National Insurance Contributions (Secondary Class 1 Co - Hansard - UK Parliament) on 17 December 2024, the CIOT’s concerns were mentioned by the Shadow FST Gareth Davis in his criticism of the Bill.

House of Commons debate 10 December 2024 – the CIOT was cited by Shadow FST Gareth Davies during a debate on the CGT proposals within the Finance Bill 2024-25 in a Committee of Whole House; he also placed on record his thanks to the CIOT for its ‘invaluable support’.

Westminster Hall debate 8 October 2024 - the CIOT’s submission on VAT and private school fees was cited in this debate.

Other recognition of the CIOT’s contribution

The CIOT, jointly with ICAEW, launched a 45-page report, ‘Tackling HMRC’s Customer Service Challenge’. The report presented key findings from a six-week study - involving 31 agent firms - recording 634 contact attempts across HMRC phone lines and web chats. The evidence from the six week study and wider experiences of our members were used to inform ten key recommendations to improve HMRC customer service performance. As well as representatives from CIOT, ICAEW and several tax firms, HMRC also attended the launch at the CIOT’s office on 11 December. The report can be found on the CIOT website here and has received widespread support. Our joint report was referred to in the Administrative Burdens Advisory Board 2024 annual report and it is hoped will lead to further collaborative work with HMRC and ministers during 2025.

The CIOT was quoted in the Daily Telegraph (6, 11 and 14 October 2024) concerning the imposition of VAT on private school fees, in particular our expressions of concern at the timing of introducing the charge from January 2025.

Aspects of the Finance Bill 2024-25 contain proposals which echo recommendations made by the CIOT on matters such as: changes to the ten-year qualifying residence period for the four-year tax-free remittance window, the ten-year IHT ‘tail’ being tapered, changes to the ‘Transitional Repatriation Facility’, and tighter measures concerning employee ownership trusts and the availability of tax reliefs.

Quarter ending 30 September 2024

Parliamentary mentions

In a note concerning their September pre-budget evidence-gathering session, the Clerk of the Scottish Parliament’s Public Finance and Administration Committee cited some of CIOT and LITRG’s feedback to the recent consultation 'Budget Scrutiny 2025-26 – Managing Scotland’s Public Finances: A Strategic Approach'.

In a stage 3 debate of the Scottish Parliament on the Aggregates Tax and Devolved Taxes Administration (Scotland) Bill, the CIOT was cited alongside ICAS for our input on Part 2 of the Bill. Part 2 contains several (unrelated) administrative amendments to Revenue Scotland Tax Powers Act 2014. Our criticism concerned the lack of consultation about these changes, but we also highlighted again the need for an annual Finance Bill in which these amendments could have been made.

Changes to guidance/interpretation/procedure

After extensive consultation with CIOT and STEP, HMRC will soon be releasing new guidance on their treatment of the remittance of foreign income and gains which are used as collateral for loan monies remitted to the UK.

HMRC have launched a VAT calculator, which incorporates several of the recommendations made by CIOT during testing. Despite this, we feel there are still some shortcomings and will continue to press HMRC for further improvements and refinements.

Following consultation between CIOT and HMRC over several years, HMRC have confirmed that remittances to the UK after a divorce will not be chargeable. This is in line with advice they had given back in 2012, but doubt had been cast as to whether this was still valid following the decision in Sehgal and Meehan; however, they have since confirmed that the 2012 advice is still valid.

Following correspondence between CIOT and HMRC on the definition of ordinary share capital with respect to fixed-rate shares, HMRC confirmed that certain entries within their manuals were incorrect, and changes will be made accordingly.

The efforts of CIOT and the other professional bodies have encouraged HMRC to make the downloadable form P1000 available online. This should be used to obtain authority to act for the personal representatives for the period up to the date of death and during the administration period rather than a 64-8.

Following sustained pressure from CIOT and the other professional bodies, HMRC have revised and updated the IHT100 suite of forms and associated guidance used for reporting lifetime and trust transfers.

HMRC have asked the professional bodies, including CIOT, to publicise the following Helpcards on aspects of the Trust Registration Service (TRS); they have been updated from the first versions:

Closing a Trust
Updating a Trust from Non-Taxpaying to Tax-Paying
Obtaining Proof of Registration

Following a suggestion from CIOT, as reported in June 2024 successes, HMRC amended their guidance to make it clearer that a UK establishment that must be registered at Companies House is different to a permanent establishment and clarify that in some circumstances a permanent establishment does not have to be registered at Companies House (see INTM 261020). In addition, HMRC incorporated the registration process for non-resident companies into the wider review of guidance and forms (focused on small business) that was announced at the Spring Budget. The bespoke guidance and registration forms for the different types of non-resident companies that are chargeable to corporation tax in the UK was published in September, including the particular circumstance raised: HMRC: Register for Corporation Tax through a dependent agent permanent establishment.

Other recognition of the CIOT’s contribution

CIOT Technical Officer Margaret Curran recently spoke to 800 compliance staff working in HMRC’s Individual and Small Business (ISBC) Directorate about the tax agent’s experience helping clients through an HMRC compliance check. This was part of an online HMRC conference 'Customers, not numbers' which also showcased the work of HMRC’s Enhanced Support team. The session was recorded so could potentially be viewed by up to 3,000 staff. Margaret described the agent’s role and talked about what can help make a check run smoothly, and conversely, what can cause it not to go well. She highlighted, amongst other things, the importance of good, accurate, relevant and timely communication on HMRC’s part and the value of progress updates. It provided a good opportunity to share our members’ insights from recent practice directly with HMRC staff. Feedback from HMRC attendees was extremely positive.

Quarter ending 30 June 2024

Changes to guidance/interpretation/procedure

Following a suggestion from the CIOT, HMRC have introduced banner messages for HMRC’s manuals to alert users to content that is under review, transitional changes or major updates yet to come. This should improve users’ awareness of the current status of the guidance and the extent to which it is current and can be relied upon to reflect HMRC’s view. See the recent (24 April) minutes of the Guidance Strategy Forum (GSF) meeting for more information.

As part of its ongoing work on guidance via the GSF, the CIOT was invited to attend a team day for HMRC’s manuals strategy team to provide feedback and ideas on how to enhance stakeholder experience. Our involvement and feedback was subsequently highlighted in HMRC’s internal manuals newsletter.

HMRC have confirmed that an example provided by CIOT concerning a volunteer office-holder's expenses accurately reflects the position with respect to allowability in relation to their duties.

Following a suggestion from CIOT, HMRC has amended their guidance to make it clearer that a UK establishment that must be registered at Companies House is different to a permanent establishment, and clarify that in some circumstances a permanent establishment does not have to be registered at Companies House (see INTM 261020). This should assist when obtaining a UTR for a permanent establishment of an overseas company that does not have to be registered at Companies House.

HMRC have agreed to update their internal guidance to reflect a change in wording for use in their one to many letters. Specifically, it concerns the wording used to explain to the recipient of a letter that HMRC have not sent a copy of the letter to their authorised agent. A CIOT volunteer told us that the standard line 'If you have an agent acting for you, you may want to show them this letter' is not accessible language for neuro-diverse readers, such as those on the autistic spectrum, because it does not specifically read as meaning that HMRC have not sent a copy of the letter to the agent. HMRC have agreed to change the wording so it is much clearer, for example 'If you have an agent acting for you, you may want to show them this letter as they have not been sent a copy'. HMRC have also advised us that our feedback has been shared with their extra support team to see if other HMRC letters might be similarly amended.

Parliamentary mentions

The Finance (No.2) Bill 2024 is now an Act, after being rushed through Parliament prior to its dissolution in May following the general election announcement. Written evidence from CIOT on property tax clauses and Transfer of Assets Abroad and from CIOT’s Low Incomes Tax Reform Group on the High Income Child Benefit Charge was cited during the session, with both the Financial Secretary and Shadow Financial Secretary thanking the Institute for its input.

Other recognition of the CIOT’s contribution

The CIOT were thanked at the April meeting of the Guidance Strategy Forum for their suggestion of a method to alert users of HMRC’s manual guidance that the guidance may be subject to change. Banner messaging is underway across the manuals (see above).

Quarter ending 31 March 2024

Changes to guidance/interpretation/procedure

HMRC will now accept voluntary VAT registrations concerning financial services which are ordinarily exempt, but which contain certain services which may treated as taxable. HMRC have been rejecting applications that include a SIC code relating to supplies of these services. Thanks to the matter being raised by the CIOT, HMRC have said that applications will now be accepted if the applicant enters the words ‘SPECIFIED SUPPLIES’ in the box marked ‘business descriptions’.
Several changes are being made to the VAT online calculator as a direct result of the CIOT’s feedback. This remains in development.
HMRC’s guidance has been updated on relief for remediation costs regarding Residential Property Development Tax following concerns raised by the CIOT.
HMRC have amended manuals (CA11145 and CA23163) concerning full expensing/super deduction for companies in a mixed partnership as a result of discussions with the CIOT.
HMRC have changed the statutory reference for the definition of R&D in letters issued under para 16 Sch 18 FA 1998 to amend R&D tax relief claims following discussions with the CIOT. Reference to s.1138 CTA 2010 will be substituted for s.1006 ITA 2007.
Following discussions with the CIOT regarding Electric Vehicle home charging and s.239(2) ITEPA 2003, HMRC have come to a conclusion that the benefit exemption does apply to electric company vehicles charged within a domestic property if it can be demonstrated that the electricity was solely used to charge the company car.

Changes to tax legislation

Following the CIOT’s 2018 proactive submission to HMRC on an anomaly in the tax treatment of alternative finance, HM Treasury’s recent consultation Tax Simplification Tax Simplification for Alternative Finance proposes legislative change to address the issue.
New regulations for the Construction Industry Scheme (CIS) came into force on 6 April 2024 to simplify the criteria for payments from landlords to tenants being excepted from the CIS. The CIOT made detailed representations on the issues in practice over a long period and worked with HMRC through its representation on HMRC ‘s Construction Forum to effect this change.
Finance (No 2) Bill 2024 Clause 8 (First-time buyers’ relief from SDLT: acquisition of a new lease on bare trust) corrects a defect in the legislation for first-time buyers’ relief removing a pitfall for buyers and is therefore to be welcomed. The amendments in clause 8 follow the representations made by the CIOT and the Stamp Taxes Practitioners Group in January.

Parliamentary mentions

During the passage of Finance Act 2024
- The CIOT was cited by Shadow FST in debates with respect to representations made;
- Also cited in committee with respect to: pension lifetime allowance, cash basis and off-payroll PAYE ‘deemed employer’ offset;
- The CIOT (along with LITRG, ATT, ICAEW) were singled out for thanks in committee by shadow FST;
- Evidence given by the CIOT and ATT before House of Lord Economic Affairs Finance Bill sub-committee; plus 60 references were made to CIOT and ATT during committee proceedings.
Several points made by the CIOT were cited by the Scottish Parliament’s Finance & Public Administration Committee as part of an evidence-gathering session on the Aggregates Bill in March 2024 – including the new wider administrative changes contained within Part 2 of the Bill. Eric Brown represented the CIOT, alongside representatives from ICAS and the Law Society of Scotland.
Three committees of the Welsh Senedd published reports calling on the Welsh Government to amend legislation currently going through the Senedd on business rates and council tax. Two of the committees drew on the CIOT’s evidence to criticise the wide powers being granted to ministers to make future changes through subordinate legislation.
The CIOT’s submission on LBTT Additional Dwelling Supplement changes was quoted on several occasions in an evidence session of Finance & Public Administration Committee of Scottish Parliament before Tom Arthur MSP (Minister for Community Wealth & Public Finance). Michelle Thomson MSP raised specific points made by the CIOT concerning executive discretion and inherited property from completion of the missives. The CIOT’s calls for separate Scottish Finance Bill were taken up by Liz Smith MSP.

Other recognition of the CIOT’s contribution

The CIOT and the Stamp Taxes Practitioners Group were thanked by HMRC for highlighting issues concerning First Time Buyers’ Relief.
The CIOT’s influence on improvements to guidance , through our participation in HMRC’s Guidance Strategy Forum, were acknowledged in Kevin Newton’s Tax Advisor article HMRC Guidance: providing information to individuals, businesses and agents.