Over the last two weeks we have continued to see HMRC’s guidance be updated to provide further clarification and support to individuals and businesses navigating this difficult time. Most notably the Government has provided an update on the future of the Job Retention Scheme following the Chancellor’s recent announcement that the Scheme would be extended. There has also been a welcome extension of the Coronavirus Large Business Interruption Loan Scheme to increase the size of the loans on offer. This article provides a high level update on developments since our last edition of Tax Matters Digest.
The key developments include:
- Following his earlier announcement that the Job Retention Scheme (JRS) would be extended until the end of October, but with increased flexibility and employers asked to bear some of the costs, on 29 May 2020 the Chancellor set out the detail of those changes, which will start to come in from 1 July, rather than from the start of August as was expected. Please see our separate article for further details, in particular on what practical steps employers can take now to get ready for the new scheme;
- A consultation was published on 29 May 2020 on draft legislation concerning the taxation of coronavirus support payments. The purpose of the legislation is to give HMRC powers to recover payments to which recipients were not entitled to under the Self-Employment Income Support Scheme (SEISS) or the JRS, or where a JRS grant was not used for a permitted purpose. In such cases, HMRC would be able to raise an income tax assessment or require the taxpayer to submit a Self Assessment return. HMRC will be able to charge penalties in cases of deliberate non-compliance. The legislation also gives HMRC powers to make a company officer jointly and severally liable for any income tax charge raised in relation to the JRS. The consultation closes on 12 June 2020;
- With effect from 26 May 2020 the maximum loan size available under the Coronavirus Large Business Interruption Loan Scheme increased from £50 million to £200 million. Under the expanded scheme, companies with loans in excess of £50 million are subject to restrictions on dividend payments, senior pay and share buy-backs during the period of the loan;
- The Future Fund loan scheme opened for applications on 20 May 2020. Alongside the opening of the scheme the British Business Bank published further guidance including detailed eligibility criteria;
- HMRC have updated their guidance on the treatment of expenses and benefits provided to employees during the COVID-19 outbreak to provide information on the treatment of employee car ownership schemes. Where employees have been unable to return their car at the end of the loan period for its final assessment due to the ongoing lockdown restrictions there may be an income tax charge due on the amount of the loan still owing. This applies in cases where the loan term, including any extension, exceeds four years;
- HMRC have published guidance for individuals on the tax implications of waiving income, such as salary and dividends, to support their business or employer and for individuals donating to charity. For more information on bonus and salary waivers please see our separate article in this edition of Tax Matters Digest. Please also see our earlier article for more information on the tax considerations of charitable giving;
- As reported previously, during the coronavirus outbreak, exporters of personal protective equipment (PPE) to areas outside the EU and EFTA member states and certain other territories temporarily required a PPE licence. This export authorisation requirement expired on 25 May 2020 and has not be extended;
- HMRC have confirmed that they will donate the VAT on donations of PPE made between 1 March 2020 and 30 April 2020, prior to the introduction of a temporary zero rate, to charity.
- The Statutory Sick Pay (SSP) rebate scheme opened for claims on 26 May 2020. In summary, the scheme allows businesses with fewer than 250 employees (as at 28 February) to reclaim up to two weeks of SSP in relation to employees who are absent from work on or after 13 March 2020 because they have coronavirus, its symptoms, or are self-isolating because a member of their household has symptoms. Claims may also be made in relation to individuals absent from work, from 16 April 2020, where they are shielding as a precautionary measure in line with public health advice;
- On 20 May 2020 the Scottish Parliament passed the Coronavirus (Scotland) (No.2) Bill, which includes a ban on businesses and individuals based in tax havens or their subsidiaries/owners, from receiving COVID-19 support grants from the Scottish Government. This follows the decision of the Welsh Government to prevent businesses owned by a company or individual living in a tax haven from accessing its £500 million economic resilience fund on 15 May 2020. This does not impact access to UK-wide Government support measures;
- The Government has introduced the Corporate Insolvency and Governance Bill to Parliament, which will put in place a series of previously announced measures to amend insolvency and company law to support business including a new moratorium to give companies breathing space from their creditors while they seek a rescue and temporarily easing burdens on businesses by enabling them to hold closed annual general meetings, conduct business and communicate with members electronically;
- A statutory instrument, which legislates for the new temporary income tax and NIC exemption where employees acquire home office equipment as a result of the coronavirus outbreak and are subsequently reimbursed by their employer, has been laid before the House of Commons. This new exemption will apply to amounts reimbursed on or after 11 June 2020 and prior to 6 April 2021. However, when the new exemption was announced, the Financial Secretary to the Treasury indicated that HMRC would exercise their collection and management discretion to apply this exemption to relevant expenses reimbursed on or after 16 March 2020 and prior to the new regulations taking effect. In order for this exemption to be available:
- The employer must reimburse the cost of acquiring home working equipment for its employees generally on similar terms (this is because the relevant regulations were made under the Treasury’s power to exempt minor benefits – we are seeking clarification of how HMRC expects this to be done in practice so that employers can develop appropriate policies);
- The equipment must be obtained for the sole purpose of enabling the employee to work from home as a result of the coronavirus outbreak; and
- The provision of the equipment would have been exempt from income tax by virtue of ITEPA 2003, section 316 had it been provided directly to the employee by or on behalf of the employer, which in summary means that any private use by the employee, their family or household is not significant and the employer’s sole motive in making the reimbursement is to enable the employee to carry out the duties of their employment;
- As reported previously HMRC have announced that they will temporarily extend the deadline for businesses to notify them of an option to tax land and buildings (for VAT purposes) from 30 to 90 days. This will now apply to decisions made between 15 February and 30 June 2020 (previously it was decisions to 31 May);
- HMRC have updated their notes on inheritance tax forms including the main IHT400 and also IHT100 to confirm that, until further notice, HMRC will accept such forms that are not physically signed from unrepresented taxpayers/trustees or from professional agents. The notes include guidance as to what is required for HMRC to be able to accept such forms. The forms have been updated, for example IHT100 now includes a repayments box as HMRC are no longer able to issue repayments by cheque. Those submitting such forms therefore need to ensure they are using the most up to date forms published on the Gov.uk website;
- HMRC have updated their guidance on making returns for and paying Climate Change Levy. The postal address for returns has been updated and payments can no longer be accepted by cheque; and
- HMRC have announced that any businesses that are due to renew money laundering supervision with HMRC and have an annual fee due between 1 May and 30 September 2020 may either defer their payment for six months or, if they have stopped trading due to coronavirus, temporarily de-register for supervision.
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