Since our previous edition of Tax Matters Digest, we have seen a number of updates from the Government and HMRC including in relation to the Job Retention Scheme and the Self-Employment Income Support Scheme. Most significantly, following the approval of the Council of the European Union, the UK Government has announced a welcome six-month delay to the filing deadlines for EU mandatory disclosure of reportable cross-border tax planning arrangements (DAC6).
- The Council of the European Union has adopted an amendment to the Directive on Administrative Cooperation (DAC). In relation to DAC 6 it has agreed an optional six-month deferral of reporting deadlines under the EU Mandatory Disclosure Rules which the UK Government has confirmed it will implement – see our separate article for further details. In relation to DAC 2, the Council of the European Union has agreed an optional three-month deferral of the reporting and exchanging of information deadlines for financial account information under the EU Common Reporting Standard. Consequently, a number of EU jurisdictions (e.g. Ireland, Luxembourg and Belgium) are extending their deadlines, however the UK Government chose not to;
- HMRC have confirmed a change in policy designed to help businesses that have made corporation tax payments assuming they will be profitable in 2020 but, due to the impact of COVID-19, are now expecting significant losses to arise this year that will be available to carry back to 2019. Customer Compliance Managers and other HMRC officers will now be able to consider claims for repayment of corporation tax before the end of the accounting period in which losses are anticipated to arise where there are ‘exceptional circumstances’. This is discussed further in our separate article;
- On 25 June 2020, the Government published a number of new clauses in response to COVID-19 which will be introduced as government amendments to Finance Bill 2020. As expected, this includes the legislation for taxing coronavirus support payments including Job Retention Scheme (JRS) grants which was published in draft on 29 May. Also, of note is the modification of the statutory residence test so that days on which an individual is required to be in the UK in order to undertake work specifically related to COVID-19, will be disregarded for the purposes of determining UK tax residence. There were a number of further clauses including: modification of the tax rules for Enterprise Investment Scheme (EIS) and Seed Enterprise Investment Scheme (SEIS) so that investors in these schemes who also support the investee company using a Future Fund convertible loan note, will not lose relief on any previous EIS or SEIS investments when that loan is redeemed, repaid or converted; disapplication of interest and surcharges on the optional VAT and income tax deferrals previously announced by the Government; extension to the three-year time limit in which to dispose of a previous main residence, and so qualify for a refund of the SDLT three percent higher rate where exceptional circumstances prevent the sale of a previous main residence within that period; an amendment to allow individuals to retain their protected pension age if they return to work in the public sector to support the COVID-19 response after becoming entitled to all their pension benefits; and finally, the suspension of the charging and collection of the Heavy Goods Vehicle Road User Levy for 12 months from 1 August 2020 to 31 July 2021;
- HMRC have published a new template for businesses to use when making claims under the Job Retention Scheme (JRS) for 100 or more employees and guidance on how to pay all or some of the grant back where taxpayers have overclaimed but will not be correcting the error in another claim. The Government also announced that military reservists returning to their day job in the coming months after a period of active military service will be eligible for the scheme. A further Treasury Direction to provide the legislative framework for the JRS as it will be operating from 1 July 2020 has also just been published. The direction is 34 pages long which reflects the complexity of JRS. We will be working through the detail over the coming days;
- Under the VAT payment deferral scheme all VAT-registered businesses have had the option to defer VAT payments due between 20 March and 30 June 2020. Any deferred VAT is due to be paid by 31 March 2021 however further guidance is awaited from HMRC on the mechanism for this. Those businesses who cancelled their direct debit payments to HMRC in order to take advantage of the deferral should reinstate their direct debit arrangements ahead of their next payment falling due;
- HMRC have published a brief to update businesses on the current delay in processing and refunding VAT claims submitted under the Overseas Refund Scheme. HMRC expect to pay valid 2018-2019 claims by 30 September 2020 and will contact businesses if they need further information on any such claims before they are approved. There is also information on the procedure where businesses are unable to obtain required certificates of status for 2019-2020 claims;
- As reported previously in Tax Matters Digest HMRC have temporarily extended the deadline for making a notification of an option to tax land and buildings from 30 to 90 days from the date of the decision to opt. This extension now applies to decisions made from 15 February to 31 October 2020 (previously it was to 30 June);
- In their latest Employment Related Securities (ERS) Bulletin 35 HMRC have confirmed there will be no extension of the 6 July filing deadline for ERS returns however they will consider COVID-19 a reasonable excuse for missing the deadline as per their recent guidance. The bulletin also provides guidance on the impact of COVID-19 on various employee share schemes including:
- EMI schemes and the valuation of EMI options;
- Extended payment holidays for SAYE schemes;
- The treatment of employee contributions to SAYE and SIP arrangements when calculating reference pay for employees furloughed under JRS;
- Options granted under CSOP arrangements to employees subsequently placed on furlough; and
- Electronic contact details for submitting queries to HMRC.
- HM Treasury has announced that self-employed parents whose trading profits dipped in 2018/19 because they took time out to have children will be able to claim a grant under the Self-employed Income Support Scheme (SEISS), as will military reservists currently ineligible for the Scheme due to their service;
- The First-tier Tribunal has published a ‘frequently asked questions’ document in response to COVID-19 which includes an update on the status of its proceedings and details of how and when appeals can be made;
- The Government has laid regulations to make payments made under the Coronavirus Life Assurance Scheme non-taxable. Under the scheme, NHS England and NHS Wales will pay a lump sum of £60,000 in respect of the deaths of NHS and social care staff. The regulations are due to take effect from 13 July 2020 however they will apply to deaths that occurred before these schemes are established. These payments will be made where it can reasonably be concluded that the person’s death was caused by COVID-19; and
- HMRC have published guidance for health authorities, hospital departments and medical research institutions on claiming relief for customs duty and VAT when importing donated medical equipment from outside the UK and EU.
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