A round up of other news this week.
The Offshore Receipts in respect of Intangible Property (ORIP) provisions, charge UK income tax on UK-derived amounts received in respect of intangible property by a foreign entity unless it is resident in a full tax treaty territory. Income tax is charged at a rate of 20 percent on gross income to the extent that income arises as a result of the sale of goods or the provision of services in the UK. Groups that have determined they are within the scope of the ORIP rules will be aware that 5 October 2020 is the deadline for notifying chargeability, being six months after the end of the 2019/20 fiscal year. The return filing deadline for the year ended 5 April 2020 is 31 January 2021. An increase in HMRC activity on the ORIP provisions over the coming weeks seems likely and we would recommend that any groups potentially affected by ORIP who have not already evaluated their compliance obligations do so now. Please speak to your usual KPMG contact if you would like to discuss this further.
UK parent companies receiving dividends from EU resident subsidiaries currently qualify for relief from withholding tax under the terms of the EU Parent-Subsidiary Directive but this will cease to apply at the end of the transition period. In response to this, the UK and Austrian Governments have agreed a new competent authority agreement whereby UK holding companies that qualify for relief from dividend withholding tax under the UK/Austria 2018 double tax treaty (basically UK companies which control directly or indirectly 10 percent or more of the votes in the company paying the dividend), will be able to claim for this relief at source using existing Austrian domestic procedures. Whilst this is a welcome development, the number of UK businesses that can benefit may be limited because the form that needs to be completed contains “a declaration by the recipient of the income that confirms that the recipient carries out business activities going beyond the scope of enjoyment of capital assets, that the recipient employs its own employees and that the recipient has its own business premises to carry out business activities“. In practice, many multi-national groups with UK holding companies may fail this test as it is common for the UK activities to be carried on by a UK subsidiary operating company (effectively a ‘sister subsidiary’ to the Austrian company) and the holding company itself may have neither premies nor employees.
New regulations, which come into force on 22 October 2020, will exempt payments made under the Test and Trace Support Payment Scheme from employer’s and employee’s NIC. Under this scheme, from 28 September lump sum payments of £500 will be made to low income individuals in England who test positive for COVID-19 (or are told by NHS Test and Trace to self-isolate), cannot work from home, and so lose income. HMRC will use their administrative powers to exempt payments made under the scheme from NIC for a limited period before the regulations come into force.
Andy Pyle, UK Head of Real Estate at KPMG, comments on the recent quarterly rent date for commercial properties.
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