As the impact of the Coronavirus on the Island increases, the Government of Jersey has announced a series of measures which seek to support businesses and lessen the economic impact. This alert summarises the tax related measures announced by Government to date and also highlights some of the broader tax considerations.
Announced tax related measures
Deferral of payment of Social Security contributions
Businesses with fewer than 80 employees and self-employed individuals are automatically eligible to defer their Social Security contribution payments for the first two quarters of 2020 (known as quarters A and B). These payments, ordinarily due in April and July, have been deferred.
Businesses with more than 80 employees may seek to claim the deferment by emailing Social Security firstname.lastname@example.org.
Social security contribution schedules should be submitted in the normal way with the next schedule (for quarter A) due to be submitted by 15 April 2020. This is particularly important in order to maintain employees’ contribution records and their entitlement to social security benefits.
Deferral of payment of Goods and Service Tax
GST-registered businesses have been offered the option to defer their GST payments due in relation to any GST returns for periods ending 31 March, 30 April, 31 May and 30 June (this includes both monthly and quarterly GST returns ending on these dates). Currently payments may be deferred by up to 12 months after the original payment deadline.
For the avoidance of doubt:
— GST-registered businesses must continue to charge GST to their customers in the normal way.
— GST returns must be submitted in the normal way – indeed Revenue Jersey’s guidance states that the deferral is “conditional on returns continuing to be filed on time”.
— It does not appear that this deferral has been extended to the payment of ISE fees which are due on or before 31 March 2020.
What the measures do not cover
Government has been clear that the above-mentioned deferrals do not absolve businesses of their Social Security contributions and GST liabilities. They will still be required to pay their liabilities, albeit at a later date.
Currently there are no measures in relation to the Income Tax Instalment Scheme (ITIS) and businesses should continue to deduct ITIS and remit it to Revenue Jersey in the normal way – the next filing and payment date being 15 April 2020.
Employers should prepare for the fact that employees experiencing a reduction in their income might approach Revenue Jersey in order to reduce their “effective rate”; employees will expect these new effective rates to be processed promptly from a payroll perspective.
There have also been no announcements in relation to the upcoming income tax payments on accounts due from companies. As a reminder, “large companies” (broadly those that have paid over £500k in income tax for the previous two years of assessment) are due to make a payment on account by 31 March 2020, whereas all other tax paying companies are due to make a payment on account by 31 May 2020 – these payments going towards settling the income tax due for the 2019 year of assessment. Companies should currently plan to make these payments as normal.
Payments on account from individuals outside ITIS (such as the self-employed) are also due by 31 May, although blanket deferral has not been announced, Revenue Jersey has stated that such individuals may make a request to defer the payment on account if current circumstances prevent them from making the payment on time. Revenue Jersey has released an online form to help individuals to make such a request.
Other tax comments
Whenever possible, businesses should continue to submit their tax returns (income tax, GST, ITIS, Social Security contributions) as normal. Revenue Jersey has stated that they will utilise their statutory discretion regarding the late filing of GST and ITIS returns in “grave and exceptional circumstances”. Again, an online form has been released to facilitate such requests.
Unsurprisingly, Revenue Jersey has requested that wherever possible, returns are filed electronically rather than on paper.
Revenue Jersey has also announced that where a GST registered business supplies staff to others in response to the impact of the current Coronavirus outbreak, that supply may be treated as a zero-rated supply for GST purposes. This zero rating applies to such supplies of staff that take place between 19 March 2020 and 30 September 2020 inclusive.
Individuals concerned about the impact of spending additional days in Jersey as a consequence of the Coronavirus on their tax residence position will be reassured that Revenue Jersey has confirmed that they will ignore days spent in the Island where there are “exceptional circumstances”, which include:
— quarantined or advised by a health professional or public health guidance to self-isolate in Jersey as a result of the virus;
— following official Government advice not to travel from Jersey as a result of the virus;
— unable to leave Jersey as a result of the closure of international borders; and
— asked by your employer to return to Jersey temporarily as a result of the virus.
Any individual concerned about their residence position in Jersey should maintain any specific evidence applicable in their circumstances.
KPMG in the Channel Islands has already released an alert on the impact of the Coronavirus on the application of the economic substance rules and company tax residence rules; this alert can be found here.
We will continue to monitor the tax measures announced by Government over the course of the outbreak and produce alerts. We will also provide guidance on the existing measures within the tax system to help businesses cope with the outbreak (e.g. utilisation of tax losses, relief of costs associated with working from home) and we encourage you to join our #askKPMG Webinar Series.