The introduction of new measures and guidance from the UK Government to support businesses and individuals in these unprecedented times continues at pace. This article provides a high level overview of developments since our last edition of Tax Matters Digest.
- The Government has announced two new financing schemes targeted at those small and medium-sized enterprises which may have been unable to access the Coronavirus Business Interruption Loan Scheme (CBILS):
- Bounce Back loan scheme
The ‘Bounce Back’ loan scheme, aimed at smaller businesses, will provide loans of between £2,000 and £50,000. The Government will guarantee 100 percent of the loan and there will be no fees or interest to pay for the first 12 months. This scheme will launch on 4 May 2020; and
- Future Fund
Under the Future Fund, aimed at innovative businesses, convertible loans of £125,000 to £5 million will be issued to UK-based companies, subject to at least equally matched funding from private investors. In addition to securing matching funding, to be eligible businesses must also have previously raised at least £250,000 in equity investment from third-party investors in the last five years. This scheme will also launch in May.
- The first Job Retention Scheme (JRS) grants have been paid to employers following the system opening for claims on 20 April 2020. HMRC have also updated their guidance for employers on eligibility for the JRS, calculating furloughed workers’ reference pay, and making a claim. The changes made are mostly clarifications, but the updated guidance now confirms that JRS grants do not represent state aid, and that furloughed workers can undertake duties and activities for the purposes of individual or collective representation, provided doing so does not provide services to, or generate revenue for, their employer. The updated guidance also sets out more detail on how to submit a claim that covers 100 or more employees.
In addition, HMRC have updated their maternity, paternity, adoption and parental bereavement leave pay guidance on how to calculate Average Weekly Earnings (AWE) for furloughed employees. In short, where the relevant leave begins on or after 25 April 2020 and the employee was furloughed during any part of the eight week period over which AWE is calculated, special rules apply to ensure that the employee’s entitlement is not affected if their wages were lower than normal due to being furloughed.
- HMRC have issued a brief on the temporary VAT zero rating of personal protective equipment (PPE). This details a temporary zero rate on disposable gloves, disposable plastic aprons, disposable fluid-resistant coveralls or gowns, surgical masks, filtering face piece respirators and eye and face protection (including single or reusable full face visors or goggles). This applies from 1 May until 31 July 2020. A policy paper has also been published and a new section 3.5 has been added to Health professionals and pharmaceutical products (VAT Notice 701/57);
- As reported in a previous Tax Matters Digest article, income tax payments due to be paid to HMRC on 31 July 2020 ('payments on account') may be optionally deferred until 31 January 2021. HMRC have confirmed since our previous article that no interest or penalties will be charged on these deferred payments and that a statutory instrument will be required to give effect to the removal of the interest charge. This is not yet noted in HMRC’s guidance however this may be updated in future. The deferment is optional. Those who are still able to make July payments are encouraged to behave as 'good citizens' and pay the tax they owe on time thereby helping the Government;
- The Government has confirmed that it will extend the deadlines for responses to a number of open HMRC and HM Treasury consultations. These include the consultations on the notification of uncertain tax positions and hybrid and other mismatches which are now open until 27 August 2020 and 29 August 2020 respectively;
- HMRC have published guidance for exporters of PPE. During the coronavirus outbreak anyone wanting to export PPE to areas outside the EU and EFTA member states and certain other territories will temporarily require a PPE licence;
- HMRC have announced that the reporting and payment deadline for the PAYE Special Arrangement for Short Term Business Visitors for the 2019/20 tax year will be extended from 19 April 2020 to 31 May 2020;
- HMRC have granted a further 60 day extension to the deadline for taxpayers impacted by the recovery of state aid, on chapter nine exemption claims under the controlled foreign company regime, to respond to HMRC’s requests for further information. This is in addition to a previously granted 30 day extension. Affected taxpayers should have received a letter from HMRC to confirm this;
- HMRC recently wrote to a number of taxpayers with offshore assets, income or gains which gave a 30 day deadline for a response. In a letter to the professional institutes, HMRC have confirmed that they will not be extending this deadline. They have said however that “those who need more time to gather information should let us know, and we will continue to take a reasonable and proportionate approach to such requests”; and
- The First-tier Tribunal has announced a further general stay of all proceedings received before 24 March 2020 up to and including 30 June 2020. The dates of all hearing windows and for compliance with all time limits in those proceedings are further extended by 70 days. Time limits have not been extended for any Directions made by the Tribunal on or after 24 March 2020.