Alphatax UK Enterprise Release Notes - Version 21.1.1 - Tax Computer Systems
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Alphatax UK Enterprise Release Notes Version 21.1.1 Public T: 01784 777 700 | E: enquiries@taxsystems.com | W: www.taxsystems.com
Contents 1. Introduction ............................................................................................................ 3 About version 21.1.1 .............................................................................................. 3 Technical support .................................................................................................. 3 2. Finance Act 2022 ..................................................................................................... 4 3. Returns and e-filing ................................................................................................. 5 Company tax return CT600 (2022) .......................................................................... 5 Partnership tax return SA800 (2022) ..................................................................... 12 Miscellaneous returns and e-filing changes ............................................................. 13 4. Interest restriction return API ................................................................................. 15 5. Miscellaneous changes ........................................................................................... 16 6. Optional modules .................................................................................................. 16 Accounts analysis ................................................................................................ 16 Tax accounting .................................................................................................... 16 7. Templates ............................................................................................................ 17 Public 2
1. Introduction About version 21.1.1 Welcome to the version 21.1.1 patch edition of Alphatax UK. This release includes the following features: Table file changes following Finance Act 2022 Support for the CT600 2022 and associated e-filing schema Updates for the latest versions of forms SA700 and SA800 Further amendments in relation to the introduction of the Interest restriction return API Minor changes to resolve customer issues Technical support We provide a technical support help desk for users requiring assistance. The help desk can be contacted by telephone between the hours of 9.00 am and 5.30 pm, Monday to Friday excluding public holidays. If you require help or further information, please contact the support team on: UK: Tel: +44(0) 1784 777 666 Email: support@taxsystems.com Ireland: Tel: +353 (0) 1661 9976 Email: support@taxsystems.ie Please note: We recommend that you use the E-mail Support option from the Help menu in Alphatax to send copies of the computation directly to Support. Public 3
2. Finance Act 2022 We have made the following amendments to the table file held in Alphatax for this release. The more involved tax rules changes required in response to Finance Act will be included in the following V22.0 release. The temporary increase in the rate of the annual investment allowance to £1 million had been due to end on 31 December 2021 but Finance Act 2022 has extended this to 31 March 2023. Legislatively, this change has been made by amending Finance Act 2019 where the provisions for the temporary increase are held. S51A CAA 2001 itself – which provides for the annual investment allowance – is unchanged. Note that the FA 2022 legislation does not specify any different date for income tax rules. Museums and galleries exhibition tax relief had been due to be withdrawn on 31 March 2022, but this relief has been made available for a further two years to 31 March 2024. This sunset date is held within the definition of “qualifying expenditure” in s1218ZCG CTA 2009. As a revenue raising measure, Finance Act 2022 has increased the rate of income tax applicable to dividend income by 1.25% – from 32.5% to 33.75% – from 6 April 2022. This rate is shared by the corporation tax rules of CTA 2010 Part 10 Chapter 3 which apply a charge on loans made to participators of close companies, with s455 referring to ITA 2007 s8(2). For accounting periods straddling this date, Alphatax provides a Date of loan input in the accessory statement of the Loans to participators statement to allow the correct rate to be applied to any loans made. Public 4
3. Returns and e-filing Company tax return CT600 (2022) HMRC have issued new versions of the forms CT600, CT600B and CT600L for 2022 which have been included in this edition of Alphatax. These forms all act as direct replacements for the preceding version and are used for accounting periods starting on or after 1 April 2015. In addition, a new supplementary form CT600M has also been introduced in relation to freeport capital allowances. The changes to these forms are described below. Exporter information A new information question During the return period, did the company export goods and/or services to individuals, enterprises or organisations outside the United Kingdom (UK)? has been added to page 7 of the form. Tick boxes are provided for answers: Goods; Services; or Neither. A corresponding drop down input has been added to the Return details input statement. Note however that the e-filing schema does not consider this box to be mandatory and we have confirmed with HMRC that it may be left blank, which accordingly is the default applied by Alphatax. Information about capital allowances and balancing charges Page 8 of the form CT600 2022 includes new boxes for trade or non-trade allowances or charges in respect of: Machinery and plant – super deduction, and Machinery and plant – special rate allowance. Corresponding fields have also been added in the Qualifying expenditure section on page 8. Super deduction and Special rate allowances would previously have populated the Main pool and Special rate pool allowance boxes on the form. Alphatax will now automatically populate the new boxes as appropriate. Public 5
Losses, deficits, and excess amounts The Company Tax Return guide 2022 has clarified that amounts entered in the Losses, deficits and excess amounts arising boxes on page 9 of the form should include current period amounts only and not any amounts brought forward from previous periods. In the case of Management expenses and Non-trading losses on intangible fixed assets, in earlier editions Alphatax included brought forward amounts which was in line with guidance we had previously received from HMRC. We have now applied the relevant changes needed to reflect the updated company tax return guide. Boxes 830 and 850 will now return current period amounts arising only. These changes will be applied by Alphatax for periods of account ending on or after 31 March 2020, with the intention of covering all live submissions going forwards without unnecessarily affecting older, settled returns. CT600B The supplementary form CT600B has been extended for 2022 to include a new page 3 for Hybrids and other mismatches. The boxes present a series of indicators for certain aspects of how the hybrids rules having impacted the computation period, followed by numerical amounts relating to certain hybrid adjustments that may have been brought into account: Public 6
For this release we have made the following changes to our existing Hybrid and other mismatches statement to support population of this form: The input statement has been moved to appear within the CT600 supplementary forms section of the contents tree and may now be enabled in computations via a new flag on the Supplementary form summary input statement. A new Additional CT600B analysis section is presented on the input statement with fields that can be used to tick boxes B40 and B45 on the return. Boxes B50 to B75 will all be derived automatically by Alphatax from existing entries on the statement. We have added a new Surplus dual inclusion income allocation sub-statement which allows for the allocation of any dual inclusion income surplus between group companies. The relevant legislation here was inserted as a new Chapter 12A within Part 6A TIOPA 2010 by Finance Act 2021, and entries made for any surplus allocated to or from the company will feed boxes B80 and B85 respectively. CT600L The research and development-related supplementary form CT600L has been amended for 2022 to include new sections of boxes for the following amounts: Pre-step 1 restriction A new section has been added to the form to now reflect the correct legislative treatment of Step 2 restriction amounts brought forward which, under CTA 2009 s104O(5), are offset against the corporation tax liability of the following period in priority to any set off amount of the later period. The new boxes present the amount of any Step 2 restriction brought forward – including amounts claimed from a group company under s104O(3) – and the offset against the corporation tax liability for the period as taken from box 475. Any remaining Step 2 restriction carries forward in box L65, whilst any remaining corporation tax liability feeds into the Step 1 offset of current period set-off amounts. Alphatax will automatically populate these new fields from existing entries in the computation. Public 7
Note that in previous editions, as part of application controls to not change older periods, we had included a flag Apply changes to the order of RDEC credit offset against CT liability made in e-filing taxonomy applicable from 1 April 2022? on the Submission options input statement. This flag may now need to be removed if it had been used before to allow a re-submission. Step 7 – Amounts extinguished by s104S A new box L123 has been added within the Step 7 section for Amounts extinguished by s104S (2)(b) CTA 2009. This section of the legislation extinguishes any entitlement to a payable R&D expenditure credit under Step 7 where a company is not a going concern at the time of the claim. We have re-introduced our associated input on the Research and development expenditure credits (CT600L) input statement. Small and medium-sized enterprise (SME) R&D The existing SME section of the form has been considerably extended to capture additional information relating to any claim. The amount of R&D expenditure is now included, along with details of the tax credit calculation. As part of this, an amount for PAYE and NIC liabilities and an employer PAYE reference number for the company are now required entries. For this edition, we have now added a new Research and development SMEs (CT600L) input statement to draw together the entries that will be populated in these boxes, including highlighting where inputs should be made in existing inputs elsewhere in the computation. The main example of this is the PAYE and NIC liabilities for payment periods ending in accounting period input which has always been located on the Income tax summary input statement. Note that the SME area of the form continues to only be relevant where a tax credit is being claimed in the computation, and not for the 130% enhanced deduction, in accordance with the Company Tax Return guide. Public 8
CT600L e-filing issues HMRC have introduced a new XML e-filing schema V1.97 to reflect the 2022 updates to the CT600, and this includes additional validation rules relating to the CT600L. These rules resolve certain issues from the previous schema but have introduced new ones. We have been in discussions with HMRC on these issues, and they have acknowledged some (but not all) of them on their Changes and issues affecting the Corporation Tax online service page. The following issues with the population of the CT600L remain unresolved at the time of this release. Note that in every case we have kept the existing, correct presentation in the computation unchanged. Pre-step 1 restriction • Validation rule 9631: For periods beginning before 1 April 2022, the HMRC schema does not allow box L65 to be populated for current period Step 2 amounts arising (box L55) unless there is also an existing brought forward amount present (based on box L9). This issue then affects box L70 onwards, and ultimately the claim in box 880. We have reviewed this and determined that there is no way that we can populate the form in this case that does not break the amount of the claim in both the computation and the tax return form. We have made HMRC aware of this issue and await a resolution. In the meantime, customers may need to discuss paper filing with HMRC (this is not a scenario they have listed on their issues page). Public 9
• Computations with only a Step 2 brought forward amount being offset against corporation tax (with no current period R&D claims) are not able to complete the relevant Pre-step 1 restriction section on the form CT600L. This is because validation rule 9710 requires that one of either the Step 1 or SME sections must be included (and various other validation rules within those sections mean that we cannot print zero entries to get past this). To enable e-filing to succeed, we have removed the amount offset from box 530 in such a scenario, and the CT600L will not be printed. • For computations with a Step 2 brought forward amount which exceeds corporation tax of the period, the remaining amount to carry forward in box L8 feeds into the RDEC carried forward section of the form in box L129. Validation rule 9775 however, via box L140, requires this amount to be double counted for the purposes of box L150. To allow e-filing to pass, Alphatax will follow the validation rules and apply this double counting. However, HMRC have advised that they intend to resolve this issue in the future and so we have also added a flag Remove double counting of box L129 value in box L150 on CT600L on the Submission options input statement (we will remove the need for this flag in a future release once HMRC have addressed the issue). Income tax deductions • Validation rule 9630: This rule requires that box L62 is the positive-only difference between boxes L15 and L30. In our view though, this does not correctly consider income tax being offset against the corporation tax liability within the Step 1 calculation in box L35. Alphatax will populate this box in line with the required validation rules. • Validation rule 9631: This error can also arise where income tax suffered is being offset against corporation tax of the period, and Step 2 restriction brought forward is present. The new Pre-step 1 restriction section does not account for the income tax deduction in the way that the Step 1 section does. HMRC have advised that they intend to amend their validation rule to cater for this scenario and recommend waiting to file affected returns. Note that where there are Step 2 brought forward amounts present, this error code will not appear, but the offset of Step 2 amounts brought forward against corporation tax will still be presented incorrectly on the CT600L and in box 530. Small and medium-sized enterprise (SME) R&D • Computations for accounting periods beginning on or after 1 April 2022 claiming an enhanced expenditure deduction, but not a tax credit, cannot complete the form CT600L, or accordingly box 660 of the CT600. This is because of the combination of validation rules 9604 – which states that box 660 may only be completed where box L166 is completed – and 9780 – which states that L166 may only be completed where you are claiming a tax credit in box L170 or SME RDEC in boxes L185 and L190. We have advised HMRC of this issue and the have said they will be removing validation error 9604 (and the related 9605) in a future update. • Validation error 9635: We believe that box L168 - PAYE/NIC’s for which the company is liable in this accounting period - is intended for the purposes of applying the cap on payable SME R&D tax credits under s1058 CTA 2009, however validation rule 9635 also makes this a required entry where an SME RDEC claim is being made for subcontracted or subsidised work in boxes L185 or L190. • Validation error 9635: Similarly, the PAYE/NIC entry is also required for periods of account beginning before 1 April 2022, even though the legislative cap does not apply. HMRC have advised that they will be adding an application control to this rule in a future update. Public 10
• Validation error 9638: Companies claiming SME RDEC for subcontracted or subsidised work in boxes L185 or L190 cannot complete the CT600L for periods beginning on or after 1 April 2021. This is because validation error 9638 requires that box L166 is completed where the SME section of the form is used. We have advised HMRC and await their response. CT600M HMRC have introduced a new supplementary form CT600M in relation to freeport capital allowance qualifying expenditure. The form presents two tables to capture details of the freeport rules in relation to structures and buildings allowances or 100% first year allowances. These allowances were recently introduced by Schedule 21 of Finance Act 2021. Enhanced structures and buildings allowances in Freeports Freeport qualifying expenditure benefits from a higher structures and buildings allowance rate of 10% under CAA 2001 s270(2A)(a). Page 2 of the CT600M must now be completed for each building or structure for which a claim is being made. Our V21.0 edition introduced a new Freeport qualifying expenditure? to the accessory statement of the Structures and buildings allowances statement to allow this rate to be claimed. Alphatax will now complete the details of the Total amount of qualifying expenditure and Total Structures and Building Allowance (SBA) claim amount on the CT600M for each item of expenditure based on the existing fields. Note that the Company Tax Return guide and rubric on the form indicate that the allowance box should be populated for each period in which an allowance is being claimed. However, HMRC’s e-filing validation rule 9654 does not allow for this. We have raised this with HMRC, and they have advised that they will be removing this rule in the future, but for this release Alphatax will only populate these boxes in the period in which the building if first brought into qualifying use (refer to box 771). For this edition, we have introduced further accessory statement inputs to allow the Address of business operation to be completed. We have also amended the narrative for the existing Name of freeport field, which was previously used for XBRL tagging only but is now also returned on the CT600M (with the name converted to an index number as listed in the Company Tax Return guide). In addition, we have reversed a change that we had made in the previous edition which meant that the Date of first non-residential use field was not needed where the Date of qualifying expenditure was completed instead. As was the case previously, the Date of first non-residential use will now be a required entry for allowances to be claimed, in line with the wording of s270(2A) and as captured on the form CT600M. Enhanced capital allowance (ECA) for plant machinery in Freeports Expenditure on plant and machinery for use primarily in a freeport tax site qualifies for a 100% first year allowance under CAA 2001 s45O. Page 3 of the CT600M must now be completed for each item of expenditure for which a claim is being made. Our V21.0 edition introduced a new Expenditure on which FYAs at 100% are claimed (freeport tax sites) input on the trade Plant and machinery main pool input statement to allow for this allowance to be claimed. Public 11
For this edition, we have now introduced a new Summary of freeport assets sub-analysis statement, nested under the Plant and machinery main pool input statement, which requires users to reconcile any freeport 100% FYA claimed to items of expenditure for the purposes of the CT600M. The form captures details of the freeport location (as an index), the address, the FYA claimed, and any disposal value. There is also a tick box to state whether an Enterprise Zone claim has been made. Non-resident company tax return SA700 (2022) This edition of Alphatax includes the recently released form SA700 (2022) – Tax return for a non-resident company or other entity liable to Income Tax. There are no changes to the boxes on this year’s edition of the form. Miscellaneous non-resident company tax return changes We have resolved an issue with a carried forward calculation which stopped transitional rules being applied correctly in some circumstances for the period after a non-resident company had transitioned to corporation tax rules from 5 April 2020. The For companies with no rental income, additional information field had been removed from the Additional information input statement in a previous edition, reflecting property income being removed from the form for 2020-21 onwards. This input was being hidden where it already contained a value however, so we have now resolved this issue to allow users to remove any existing entry. Partnership tax return SA800 (2022) This edition of Alphatax include the recently released form SA800 (2022) – Partnership Tax Return and all supplementary pages. The associated e-filing schema is also included. The changes to this year’s edition of the form are: A new information question During the return period did the partnership export goods and or services to individuals, enterprises or other organisations outside the UK? has been added to page 2 of the form. Tick boxes are provided for answers: Goods; Services; or Neither. A corresponding drop down input has been added to the Return details input statement. Note however that the e-filing schema does not consider this box to be mandatory and we have confirmed with HMRC that it may be left blank, which accordingly is the default applied by Alphatax. New boxes have been added in the capital allowances summary for Zero-emission car allowance across the main pages and all supplementary forms (UK property, foreign, and extra trading), and for Freeport Structures and Buildings Allowance on the trading and UK property pages. Alphatax already provided inputs for these allowances to be claimed in the computation and will now feed these amounts into the relevant boxes on the return. The tick box for declaring disguised remuneration income (also referred to as the loan charge) has been removed from this year’s edition of the form, reflecting the fact that – aimed at loans outstanding on 5 April 2019 – this was a temporary settlement scheme. The corresponding input has been removed from the trade Accounts adjustments input statement in Alphatax. Public 12
Similarly, tick boxes for declaring that capital allowance claims include enhanced capital allowances for designated environmentally beneficial plant and machinery have been removed from the form. Enhanced capital allowances were previously available under Schedule A1 CAA 2001 which was abolished by FA 2019 in relation to expenditure incurred on or after 1 April 2020. Miscellaneous partnership tax return changes The 2020-21 edition of the SA800 introduced a declaration box for the nominated partner to confirm that any coronavirus support scheme payments received have been included as taxable income. To draw attention to this new field, we included a diagnostic test to confirm that users had entered either Yes or No for this question. HMRC guidance subsequently confirmed that this box did not need to be considered where the partnership had not received any such payments. We have accordingly now removed the diagnostic test and removed No as a possible entry for the input provided by Alphatax. Users will not be able to leave this entry as blank where it is not relevant for their partnership. Miscellaneous returns and e-filing changes The 2021 detailed profit and loss account taxonomy introduced three new ‘sub-tags’, which sat below existing tags in the structure of the taxonomy: Revenue from off payroll working which is a sub-tag of Turnover/revenue; and Coronavirus Job Retention Scheme income and Other Coronavirus grants which are sub-tags of Government grant income. As the tags defined in the taxonomy do not provide a complete reconciliation for the corresponding parent, and to retain compatibility with older Alphatax periods or any links or templates that may be in use, we added the corresponding new inputs as standalone fields meaning that any amounts entered need to also be included within the corresponding parent tag as well. In this release we have now added an additional narrative to clarify this: Public 13
When populated correctly, the input statement will appear to not cast. In report mode however, these sub-tags are separated out and returned outside of the main profit and loss account. We have resolved a rounding issue in the calculation of the 50% SR allowance which was leading to an Inconsistent duplicate facts error when e-filing in some scenarios. HMRC’s XBRL schema allows for a maximum of 40 iterations of the same item tag, which leads to filing failures for computations where a large number of footnotes have been entered. We have now added an error message that will appear during assembly to warn users of this issue. Users are able to control which footnotes are tagged via the existing Footnote XBRL tagging dialog which also appears during assembly. Further to a change in the previous release, we have included an additional fix to resolve an e-filing failure related to the UKResidentDefault dimension being applied to the AdjustmentsExemptDividendsOrDistributionsPerAccounts tag. This tag is included on the trade Accounts adjustments report statement where exempt ABGH dividends have been entered. This dimension relates to property business items only but was incorrectly appearing for trades in some circumstances. We have further resolved a more general issue, also introduced as part of this previous fix, which in some limited cases would cause dimensions from different hypercubes to be applied to a tag, which would lead to an e-filing failure. Public 14
4. Interest restriction return API In July 2021, HMRC made available a new API that can be used to submit interest restriction returns, as well as nominated company appointments and revocations, electronically via tax software. At the time, it was proposed that this would become the mandatory submission mechanism for returns submitted from April 2022 onwards. HMRC modified their position in the March 2022 agent update however. The proposal is now that electronic submission of these returns is to be made mandatory from September 2022, but this will involve a choice of two routes: using either the API from tax software, or the existing 'G-form' provided online by HMRC. From September 2022 though, HMRC will no longer accept returns that are sent by email, post or attached to company tax returns. In Alphatax, we included full support for this API submission mechanism in our Group module in the preceding V21.1 release. We default to assuming that the API will be used, and this enables a small number of additional inputs or report statement disclosure changes, in line with HMRC’s API schema. A flag Disable API disclosure on the Interest restriction return? flag is provided on the Group configuration options input statement that allows users to revert to the previous disclosure where the G-form route is being used for submission. The switch to API disclosure was applied in Alphatax for group periods of account ending on or after 1 April 2021 in line with the timeline originally announced by HMRC. To not change existing computations, we have left this application date as it was. However, in this release, we have made the following changes to reflect the latest proposals: The Disable API disclosure on the Interest restriction return? flag was previously designed to be hidden after April 2022 on the basis that the API route was to become mandatory, but we have now amended the display rule so that this flag will be available indefinitely going forward, reflecting the continued availability of the g-form as an alternative route for submission. The HMRC API schema closely follows the legislative requirements of TIOPA 2010 Sch 7A para 20, but there are certain notable deviations. The Alphatax reports have been designed to accurately reflect this schema to provide clarity over the contents of the return. Accordingly, we have now added a heading “API facsimile” to the report statements produced by Alphatax where this filing approach is in use, reflecting the fact that these statements should not be submitted as an IRR under the g-form route. We have also added an FAQ to the Interest restriction return Help page which explains some of these differences in more detail. Similarly, for all group periods, the Interest restriction return statement is now titled Interest restriction summary initially, until the Interest restriction return ready for submission? flag has been set to Yes. Miscellaneous corporate interest restriction changes We have resolved a display rule issue, created by the API disclosure changes introduced in the previous release, which caused the statement Worldwide group is not subject to interest restrictions in the return period to not display for abbreviated returns. We have resolved an issue whereby the View – Submissions menu was not available for Enterprise users who had not submitted the API interest restriction return themselves. Public 15
5. Miscellaneous changes Following changes by the Bank of England to their base rate, there have been three changes in recent months to the HMRC interest rates for late payment and repayment of corporation tax. This edition of Alphatax includes these latest rates affecting the Interest on tax payments report statement, which is produced by Alphatax where the Date for interest calculations field is populated on the Corporation tax payments input statement. For the previous edition, as part of changes introduced to correct the tax treatment of SME R&D tax credits, we replaced the various RDEC flags on the accessory statement for Corporation tax payments with a single drop-down input. An error with the display rules though meant that certain categories were not displaying in some circumstances, the main example being for investment companies claiming RDEC credits from group members. We have now resolved this issue. 6. Optional modules Accounts analysis • A new Right of use assets per accounts statement had been introduced in the previous release to allow separate disclosure of leases following changes introduced by IFRS 16. This change was previously only available for computations applying IFRS but has now also been enabled for companies applying FRS 101. • We have introduced new diagnostics where the Enable reordering of accounts analysis brought forward balances? option has been set in the Accounts analysis options statement and the reordered brought forward balances entered do not equal the amounts brought forward from the previous period. Tax accounting We have resolved a recently introduced issue which stopped users from being able to enter negative amounts in certain brought forward input cells, primarily on the Tax account summary input statement. Public 16
7. Templates Capital allowance updates We have resolved a minor presentation issue on certain templates whereby recently introduced columns for super-deduction capital allowances were incorrectly using the display rule dates that apply to the also recently introduced freeport structures and buildings allowances for the underline and currency column headings. The following statement templates have now been corrected: 1. Assets – Fixed asset trading additions.tut 2. Assets – Additions with pre-trading capital expenses.tut 3. Division – Fixed asset trade additions.tut Public 17
Alphatax® software may not be copied, photocopied, reproduced, translated, or reduced to any electronic medium or machine-readable form, in whole or in part, without the express written permission of: Tax Computer Systems Limited Magna House, 18 – 32 London Road, Staines-Upon-Thames, TW18 4BP T: 01784 777 700 E: enquiries@taxsystems.com W: www.taxsystems.com Registered Office: Magna House, 18-32 London Road, Staines-Upon-Thames, TW18 4BP Registered in England & Wales number 05347048 Copyright © 2022 Tax Computer Systems Limited Public 18
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