Business Tax Briefing

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

19/02/2021

Tax announcements to be made on 23 March 2021

Financial Secretary to the Treasury Jesse Norman has written to the Chair of the Commons Treasury Committee Mel Stride to say that, while announcements with fiscal implications need to be made on Budget day on 3 March, further tax announcements will be made on 23 March 2021. A Command Paper will be laid on 23 March which will contain further tax policy announcements, including consultations. Some documents which are announced in the Budget, which the government would usually have published alongside the Finance Bill, will also be published on 23 March.

Institute for Fiscal Studies pre-Budget event

The Institute for Fiscal Studies (IFS) held its pre-Budget event on 16 February 2021. The recording and slides are here. The IFS suggests that, in the medium run, sizeable net tax rises will be needed, but that substantial tax rises should not be part of the coming Budget.

Social Security (Contributions) (Rates, Limits etc.) Regulations 2021

The Social Security (Contributions) (Rates, Limits and Thresholds Amendments and National Insurance Funds Payments) Regulations 2021 come into force on 6 April 2021. They give effect to the annual re-rating of various National Insurance contributions (NICs) rates, limits and thresholds for the tax year beginning 6 April 2021. The rates, limits and thresholds are summarised here.

Judicial review applications challenging the SEISS fail in High Court

The High Court has dismissed applications for judicial review challenging the Self-Employment Income Support Scheme (SEISS). The claimants were a charity the aims of which include ending discrimination faced by pregnant women and mothers, and a self-employed energy analyst with three young children who took maternity breaks after the birth of her two youngest children in 2017 and 2018, with the result that her business income reduced significantly in 2017/18 and 2018/19. The claimants argued that the terms of the SEISS were discriminatory under the European Human Rights Convention, and that the Treasury had breached its Public Sector Equality Duty under the Equality Act. The Treasury defended the design of the SEISS on a number of grounds, including policy delivery, the need to minimise fraud and on value for money grounds. The judge held that the Treasury's decisions in designing the scheme were reasonable, especially when judged in context. She also held that there was no discrimination under the Human Rights Convention and that, even if there had been discrimination, it was legally justified. The judge finally held that the Chancellor did not breach the Public Sector Equality Duty, as he had had due regard to the position of women who had recently been on maternity leave.

Tax policy in the real world: in conversation with former Chancellors

Deloitte is delighted to co-host an event, hosted by the Institute for Government, which will bring together three former Chancellors to discuss their experiences of tax policymaking, the challenges they faced and how they made progress.  The event will take place virtually on Tuesday 9 March 2021, from 1-2pm. The panel comprises The Rt Hon. the Lord Lamont of Lerwick (former Chancellor of the Exchequer 1990 – 1993), The Rt Hon. the Lord Darling of Roulanish (former Chancellor of the Exchequer 2007 – 2010) and The Rt Hon. George Osborne CH (former Chancellor of the Exchequer 2010 – 2016).  The event will be chaired by Bronwen Maddox, Director of the Institute for Government with an introduction by Matt Ellis, Managing Partner for Tax at Deloitte. To register for this event please click here.  The live-stream link to join the event will be sent to you by the Institute for Government closer to the date of the event (please check your spam).

Can you help HMRC improve the Corporate Interest Restriction return?

Corporate Interest Restriction (CIR) applies to corporate entities and can restrict a group’s deductions for interest expense and other financing costs for corporation tax purposes. Following feedback from users of the existing CIR online form, HMRC are building a new digital service, and are looking for help from users to help them develop this service. If all the following statements apply to you, it would be really helpful to HMRC if they could talk to you and show you their latest prototype:

  • I have prepared or submitted a Corporate Interest Restriction return in the past two years;

  • My business does not have an HMRC customer compliance manager;

  • I have not participated in any research with HMRC in the past three months.

The research will take place on 8 and 9 March, with further sessions available later in March and April.

You can sign up to talk to HMRC researchers through Help make GOV.UK better here.

Forthcoming Dbriefs webcast

The next Dbriefs webcast is on Wednesday 24 February 2021, 12.00 GMT/13.00 CET. The title is The M&A Market In EMEA And Practical Considerations For Transactions In 2021, hosted by Melissa Magee Page. Our panel will provide an update on the M&A market in EMEA and considerations for transactions in 2021.

EU fiscal representation for UK businesses

The UK-EU Trade and Cooperation Agreement (TCA) includes a protocol on administrative cooperation and combating fraud in the field of VAT, as well as mutual assistance for the recovery of claims relating to taxes and duties. As a result, businesses established in the UK should, in principle, be able to register for VAT in EU Member States without having to appoint a fiscal representative. However, the European Commission is reviewing this and is expected to confirm whether fiscal representation is required in April. Until then, the requirement for UK taxpayers to appoint a fiscal representative continues to be determined by individual EU Member States. Some (including Poland and Hungary) currently require UK businesses to appoint a fiscal representative, others do not, and some Member States have not yet clarified their position. The position is continuing to evolve, and UK businesses with VAT registration obligations around the EU will need to monitor developments and appoint fiscal representatives where appropriate.

Tower Bridge: carbon emission trading and VAT fraud: Upper Tribunal

In 2010, a domestic reverse charge was introduced for carbon emission trading, in response to a surge in suspected fraudulent activity. In some cases, however, the damage had already been done. The fraudsters vanished, leaving a question about whether their customers should be entitled to input tax recovery. In Tower Bridge GP Ltd, the Upper Tribunal has ruled that defects in invoices provided by one supplier (which did not show a VAT registration number (VRN) because the supplier had never registered) could not be overlooked. The Upper Tribunal (UT) examined a long line of CJEU cases on the role of invoices, noting in particular that a valid VAT invoice performs an ‘insurance function’ for tax authorities by allowing them to verify and monitor that tax has been paid. Although some errors on invoices might be forgiven, the omission of the supplier’s VRN and address prevented HMRC from verifying that the supplier had accounted for output tax. Consequently, Tower Bridge did not have any directly effective right under EU law to recover input tax in the absence of a VAT invoice. For similar reasons, the UT held that HMRC were entitled not to exercise their discretion to accept alternative evidence. Tower Bridge’s appeal was dismissed. 

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.