Business Tax Briefing

A weekly round-up of corporate, employment and indirect tax news

15/01/2021

Coronavirus Job Retention Scheme: updated guidance

HMRC have updated their guidance on the Coronavirus Job Retention Scheme (CJRS) as follows:

Find examples to help you calculate your employees' wages. Two new examples have been added about how to calculate employees' wages if they are paid a fixed annual amount.

Calculate how much you can claim using the CJRS. A new section has been added about claiming the Employment Allowance.

Partial closure notices: HMRC win in Upper Tribunal

The Upper Tribunal has allowed HMRC's appeal in HMRC v Epaminondas Embiricos. The case concerns self-assessment provisions, introduced in 2017, that allow for a partial closure notice (PCN) to be issued by HMRC. A PCN allows for discrete matters to be settled, or to be determined by the Tribunal, while allowing others to remain under enquiry. HMRC opened enquiries into claims by the taxpayer in his self-assessment tax returns for the years ended 5 April 2015 and 5 April 2016 that he was domiciled outside the UK and entitled to the remittance basis of taxation. HMRC concluded as a result of their enquiries that he was domiciled in the UK. The taxpayer sought a closure notice from HMRC for those years so that he would be able to appeal against HMRC’s decision. HMRC considered that they could not issue a closure notice until they had also quantified the amount of tax which would be due if the remittance basis was denied. They therefore issued the taxpayer with an information notice request. The First-tier Tribunal agreed with the taxpayer that a PCN could and should be issued in these circumstances. The Upper Tribunal has now reversed that decision, holding that it was necessary for the amount of tax to be ascertained. The Upper Tribunal’s decision in this case is in line with Levy, a First-tier Tribunal decision concerning PCNs.

National Insurance contributions exemption for employers of veterans: consultation

At Spring 2020 Budget, the Chancellor announced the introduction of a National Insurance contributions (NICs) ‘holiday’ for employers of veterans to support former service personnel into employment. HMRC have published for consultation draft legislation which will enable employers to apply a zero rate of secondary Class 1 Employer NICs on the earnings of veterans in their first year of civilian employment since leaving the regular armed forces. This follows a public consultation on this measure held in summer 2020. The zero rate will apply up to the Upper Secondary Threshold. The measure is due to take effect from 6 April 2021. The consultation closes on 8 March 2021.

HMRC organisation chart updated

HMRC have updated their organisation chart showing their senior management as at January 2021.

Cycle to work benefit exemption: COVID-19: 'main use' test

Where an employer lends or hires bicycles or cyclist safety equipment to employees, the benefit received can be exempt from tax on employment income due to a statutory exemption (section 244 ITEPA 2003). Further to a written ministerial statement given on 17 December 2020, HMRC have updated their guidance on the exemption. One of the conditions that must be met for it to be available is that the cycling equipment provided should be used ‘mainly for qualifying journeys’, e.g. journeys between an employee’s home and workplace. The changes to the guidance reflect the fact that, as a result of the COVID-19 pandemic, it may not be possible for employees to meet that condition. Provided employees have joined a scheme with a cycle or cyclists’ safety equipment provided to them on or before 20 December 2020, that condition will not be applied until after 5 April 2022. Employees who have a cycle or cyclists’ safety equipment provided after 20 December 2020 will need to meet all the conditions for the exemption to apply.

Review of BEPS Action 14 (dispute resolution): public comments

On 18 November 2020, as part of the ongoing work of the OECD/G20 Inclusive Framework on BEPS, the OECD secretariat invited public comments on the 2020 Review of BEPS Action 14 (making dispute resolution mechanisms more effective). The OECD has now published the public comments received so far. Additional comments can be submitted by 25 January 2021.

Forthcoming Dbriefs webcasts

The next Dbriefs webcast is on Monday 18 January 2021, 15.00 GMT/16.00 CET. The title is Brexit: Tax Impacts Of The Deal from our International Tax series, hosted by Amanda Tickel. Our team will discuss the tax impacts of the UK-EU Trade deal following Brexit, including practical tips and insight on the key VAT, customs and workforce considerations. To register for the webcast, click here.

There is another webcast on Tuesday 19 January 2021, 12.00 GMT/13.00 CET Key Court Of Justice Of The European Union Decisions Of 2020: Interpreting VAT In Europe from our Indirect Tax series, hosted by Johan Van Der Paal. Our panel will discuss the significant VAT cases reaching the CJEU in 2020 from across the EU. To register for the webcast, click here.

Lastly, there is a webcast from our International Tax series, on Thursday 21 January 2021, 12.00 GMT/13.00 CET entitled The M&A Market In EMEA And Practical Considerations For Transactions In 2021, hosted by Melissa Magee Page. Our team will discuss the M&A market in EMEA and some of the practical tax considerations and other legal aspects to keep in mind for transactions in 2021. To register, please click here.

VAT on imported goods to private individuals

It has been widely reported in the media that changes to the UK VAT rules from 1 January have resulted in some overseas suppliers suspending sales of goods direct to UK consumers. Suppliers are now required to register for UK VAT if they supply goods directly to UK consumers in consignments worth up to £135. This measure does not directly relate to the end of the Brexit transition period, and similar rules will be introduced by the EU from 1 July 2021. Instead, it forms one of the measures intended to prevent overseas businesses which take orders online from selling goods to UK consumers without charging UK VAT. Until 31 December 2020, EU suppliers selling goods to UK consumers would have had to register for UK VAT once their annual UK turnover reached £70,000 under the distance sales rules, so the change, from an EU supplier perspective, is likely to only impact smaller EU businesses. Further complications can, however, arise in relation to online marketplace sales (which can involve deemed supplies by the marketplace) and when goods are supplied to consumers in Northern Ireland.  

VAT on sales of second-hand cars to Northern Ireland

The VAT treatment of goods moving to Northern Ireland under the NI Protocol is not straightforward, and this complexity has produced some unexpected results. Initially, HMRC considered that sales of second-hand vehicles in NI which had been sourced from GB could not qualify for the margin scheme. This meant that a UK dealer with sites in both NI and GB would have to charge more VAT when selling a car from its Belfast site to a NI customer, if that car had been sourced from GB, than it would if they sold the same car from its Merseyside site to a customer in Liverpool. In an update to Notice 718/1 and new guidance on the sale of second-hand motor vehicles in NI, HMRC have found a way around this problem, and have confirmed that the margin scheme should now apply to all sales within the UK.  

COVID-19: help and information

To help inform our clients and to enable them to understand how businesses can respond, recover and thrive in these times we are running a series of webinars focused on the economy, on particular sectors and on key roles within an organisation. You can register for future webcasts and view archived webcasts here. You can access more information here and also at our Deloitte global COVID-19 webpage. You can also sign up to our Deloitte Tax Atlas COVID-19 Tax and Fiscal Measures microsite, which provides a high-level summary of tax and fiscal coronavirus measures that have been announced by governments, and our COVID-19 Signal Topic email alerts, here.