HMRC publish a briefing paper setting out how they will continue to support the UK economy during the ongoing pandemic.
On 27 August 2020, HMRC published a briefing paper setting out how they will provide continuing support to the UK economy during the ongoing pandemic. The briefing is consistent with previous communications from HMRC and does not contain any real surprises, however it gives further clarity on HMRC’s approach and indicates the beginning of a shift in focus away from the initial scramble to provide urgent support to resuming debt collection and compliance activity. Taxpayers should nonetheless be re-assured by the briefing as it emphasises that HMRC remain sympathetic to taxpayers facing difficulties and encourages taxpayers to engage with them. Alongside this briefing, HMRC released their performance data for April to June 2020 commenting that in spite of the pandemic and the challenges it presented, there were notable successes including a customer satisfaction score on digital services of 85.6 percent (compared to 79.5 percent in the same quarter in the prior year).
Key takeaways from the briefing paper included the following:
Job Retention Scheme (JRS) and Self-employed Income Support Scheme (SEISS)
HMRC’s priority in administering JRS and SEISS to date has largely been driven by getting cash out to those who need it as quickly as possible, however their briefing paper confirms HMRC are now turning their attention to investigating claims in depth. We have begun to see this in respect of JRS and discuss it further in our separate article.
Temporary administrative arrangements
As reported in previous editions of Tax Matters Digest, throughout the course of the pandemic, HMRC have made a range of temporary administrative changes, for example, allowing electronic ‘stamping’ of documents and removing the need for ‘wet signatures’.
HMRC have confirmed that these temporary changes in policy will be withdrawn only when HMRC are confident they are no longer required. HMRC also indicated that if some of the administrative easements provide an opportunity for modernisation, they will aim to make these permanent. This is welcome news as many of the measures have made communication with HMRC smoother and easier.
Return filing and tax collection
HMRC have re-iterated that taxpayers should continue to file their tax returns and make tax payments on time however, they remain sympathetic to the difficulties faced by businesses and for the time-being they are prepared to accept COVID-19 related disruption as a reasonable excuse for late filing. HMRC state that “It is vital that people contact us if they can’t meet the deadlines; these penalties are sometimes automated, so we will only know if a customer has a reasonable excuse if they inform us.”
HMRC will work or pause existing cases as circumstances dictate. For the time-being, HMRC will generally only open new enquiries into those badly affected by COVID-19 if they think these taxpayers can engage and resolve the enquiry. HMRC will only visit taxpayers in person when necessary and they will follow all social distancing guidelines.
In specific situations, HMRC will open tax enquiries even if a taxpayer has been severely affected by COVID-19, including where they suspect criminal activity, fraud or significant deliberate non-compliance, and to protect employees for instance to enforce national minimum wage compliance. In light of this, with respect to minimum wage it is essential that employers ensure their employees are paid for all working time and reflect any changes made to operations as a result of COVID-19. For example, where employees are required to arrive early to put on personal protective equipment or clean their work areas after their shift this forms part of their working day.
Finally, HMRC note that debt collection activities have resumed and are initially targeted at the taxpayers least affected by COVID-19. They have also promised to provide “timely, targeted information about what taxpayers need to do next” if they have deferred self-assessment and/or VAT payments.
HMRC have already started contacting businesses with new debts who have yet to speak to them, as well as businesses where payment deferrals were agreed, so that they can be supported into ‘Time to Pay’ arrangements where needed. Late tax payments will attract late payment penalties and interest, so taxpayers are encouraged to contact HMRC if they don’t think they will be able to pay.
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