Business Tax Briefing

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

21/05/2021

Finance Bill: Report stage

The government has tabled a number of amendments and new Clauses for the Report stage of the Finance Bill, which is scheduled for Monday 24 May. The changes include amendments to the rules on super- deductions and other temporary first-year allowances in Clause 9 of the Bill; these will inter alia relax a restriction to enable expenditure on most qualifying fixtures within leased buildings to qualify for the super-deduction/first year allowances. There are technical changes to Schedule 16, which provide for new increased rates of stamp duty land tax for acquisitions by non-residents of residential property in England and Northern Ireland. A minor technical error in Schedule 7 on hybrid and other mismatches is corrected. There are a number of VAT changes, including two new clauses and a new schedule on distance selling and Northern Ireland. These will implement the ‘One Stop Shop’ and the ‘Import One Stop Shop’ as required by the Northern Ireland Protocol. Other new clauses will ensure that the correct amount of VAT is charged on works of art, antiques etc when they are imported in a low value consignment and the continuing application of the principle of EU law preventing abuse of the VAT system in the UK post-Brexit. There are also changes on penalties for deliberately withholding information and to the duty rules applicable to red diesel and rebated biofuels (Schedule 20). Explanatory notes and Tax Information and Impact Notes have been published for all the government amendments. The Lords will consider the Bill on 8 June, though no further changes can be made after the Bill leaves the Commons. There is no date yet for Royal Assent.     

Coronavirus Job Retention Scheme: updated HMRC guidance

HMRC have updated their guidance on the Coronavirus Job Retention Scheme (CJRS) to reflect that claims for furlough days in May 2021 must be made by 14 June 2021:

Reporting employees' wages to HMRC when you've claimed through the CJRS

Calculate how much you can claim using the CJRS

Steps to take before calculating your claim using the CJRS

Check which employees you can put on furlough to use the CJRS

Pay CJRS grants back

Check if you can claim for your employees' wages through the CJRS

Claim for wages through the CJRS

Check if your employer can use the CJRS 

European Commission: communication on business taxation for the 21st century

The European Commission has published its Communication on Business Taxation for the 21st century. The communication builds on the roadmap set out in the tax Action Plan presented by the Commission in July 2020 as part of its tax package for fair and simple taxation. Among the short-term proposals is a newly adopted recommendation on the domestic treatment of losses. The Commission is recommending that Member States allow businesses to offset their 2020 and 2021 losses against the profits of at least the previous fiscal year, with a recommended limit of EUR 3 million per loss-making fiscal year. Other measures, to be put forward by the Commission in 2021 and 2022, include legislative proposals to address aggressive tax planning opportunities linked to the use of shell companies, to remove the bias between debt and equity funding, and to require large companies to publish effective tax rates. The Commission’s long-term plans includes the revival of a proposal for a new framework for business taxation – now named the ‘Business in Europe: Framework for Income Taxation’ or ‘BEFIT’. There is further Deloitte comment here

Office of Tax Simplification: Capital Gains Tax: second report

The Office of Tax Simplification (OTS) has published its second report on Capital Gains Tax (CGT) following the review of CGT requested by the Chancellor in July 2020. It covers a wide range of areas, including moving house, getting divorced, running a business and issues affecting land transactions. It also highlights concerns about the low level of public awareness of CGT, and the extent to which the administrative systems could do more to support taxpayers. Recommendations include:

  • Integrating CGT into the Single Customer Account.
  • Extending the reporting and payment deadline for the UK property tax return.
  • Reviewing the practical operation of Private Residence Relief nominations.
  • Extending the operation of the rule whereby married couples/ civil partners can transfer assets to each other  without triggering an immediate CGT charge.
  • Reviewing the treatment of deferred proceeds when a business is sold.

Public Accounts Committee report on low emission cars

The Public Accounts Committee (PAC) has published its report on low emission cars. The PAC observes that government has set ambitious targets to phase out new petrol and diesel cars by 2030, and for all new cars to be zero-emission from 2035, but that, with just 11% of new car registrations being ultra-low emission cars in 2020, it will be a 'huge challenge' to get this to 100% in the next 14 years. It goes on to say that achieving this ambition will require convincing consumers of the affordability and practicality of zero-emission cars. Echoing its recent report on environmental taxes, which concluded that the Treasury and HMRC seemed focussed on tax revenues rather than the way they must be used to drive the transition to net zero, the PAC says that government will need to do more to consider the practical application of this change. They will also need to deal with other consequences arising from the transition, including the impact on the tax yield due to the loss of fuel duties. 

Forthcoming Dbriefs

The next Dbriefs webcast is on Tuesday 25 May 2021, 12.00 BST/13.00 CEST. The title is Tax Transparency: Communicating Taxes With Clarity. Our panel will discuss how pressures for increased tax transparency are rising and how tax can best be reflected in the external narrative of a business.

On Wednesday 26 May 2021, 12.00 BST/13.00 CEST there is a webcast SAP S/4HANA®: Tax Reflection. Our panel will summarise the benefits SAP S/4HANA® can provide for tax, and how these can build a business case for integrating tax into your organisation's SAP S/4HANA® programme. 

Revenue and Customs Brief 6(2021): VAT liability of juice cleanse programmes

HMRC’s response to the Upper Tribunal’s confirmation that juice cleanse programmes sold by The Core café in Swindon were zero-rated has been published in Revenue and Customs Brief 6 (2021). The liability of similar products will depend on a multifactorial assessment of all relevant evidence, including their ingredients, how they are made, how they are packaged and marketed, and when they are consumed. Although the Tribunal in The Core conducted just such a multifactorial assessment, the Revenue and Customs Brief suggests that many similar juice programmes should be subject to VAT. 

VAT: HMRC guidance on the one stop shop

HMRC have issued guidance on the application of the EU’s VAT e-commerce package (which takes effect from 1 July 2021) insofar as it relates to Northern Ireland. The guidance does not therefore (unlike the European Commission’s guidance) address supplies of services, but does set out the new rules on distance sales, imports, and for online marketplaces facilitating such supplies. It acknowledges that businesses making distance sales over £8,818 annually that wish to use the UK’s One Stop Shop (OSS) will have to register for UK VAT (even if the annual value of their taxable supplies is below £85,000). Further guidance will be issued before 1 July on how to ensure that VAT will not be due automatically on domestic supplies in these circumstances. The guidance also states that the UK’s OSS or Import One Stop Shop (IOSS) registration portals are not expected to be available for use by 1 July, in which case further guidance will be issued.