Business Tax Briefing

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

23/04/2021

Finance (No 2) Bill:  progress; call for written evidence

A Committee of the Whole House considered selected parts of the Finance (No 2) Bill on 19 and 20 April.

The government amendments to Clause 111 and Schedule 22 on relief from stamp duty land tax (SDLT) for freeport tax sites, designed to ensure that SDLT relief applies to property purchases made through alternative finance arrangements, were passed on 19 April. The government amendments to Clause 36 and Schedule 7 (hybrid and other mismatches) were passed on 20 April. No further amendments were made to the Bill by the Committee of the Whole House. The debates are here (19 April) and here (20 April).

The remainder will be debated in a Public Bill Committee, which began its scrutiny of the Bill on Thursday 22 April and which must conclude its proceedings by Thursday 6 May. Amendments tabled as at 22 April for the Public Bill Committee are here. They include government amendments to Clause 18 and Schedule 2 (temporary extension of periods to which trade losses may be carried back), Clause 29 and Schedule 5 (pension schemes: collective money purchase benefits) and Clause 116 and Schedule 28 (late payment interest and repayment interest: VAT).  Explanatory notes have been published for these as follows: temporary extension of periods to which trade losses may be carried back – here;  pension schemes: collective money purchase benefits – here;  late payment interest and repayment interest: VAT – here. The Financial Secretary to the Treasury has written to the Committee Chairs to explain these amendments.

The Committee held its first two sessions on 22 April 2021 and reached Clause 85 and Schedule 15 (plastic packaging tax). The transcripts of the Public Bill Committee published so far are here. The government amendments on temporary extension of periods to which trade losses may be carried back and on pension schemes: collective money purchase benefits were passed; no non-government amendments were passed. The Committee will sit again on Tuesday 27 April and may conclude on that day.

The Public Bill Committee has invited written evidence on the Bill. Although the Committee is scheduled to finish by Thursday 6 May, as it may conclude earlier, and cannot consider written evidence after it concludes its consideration of the Bill, those wishing to submit evidence should do so as soon as possible.

Self-Employment Income Support Scheme: updated guidance

HMRC have updated their guidance for the Self-Employment Income Support Scheme (SEISS):

Check if you can claim a grant through the SEISS - the online service for the fourth grant is now available.

Tell HMRC and pay the SEISS grant back  - new guidance ‘If amending your return affects your grant amount or eligibility’ added.

The House of Commons Library has updated its research briefing on the SEISS.

Office of Tax Simplification:  update on guidance review report

The Office of Tax Simplification (OTS) has published an evaluation update paper following its 2018 review of HMRC guidance for taxpayers, and its report Guidance for taxpayers: a vision for the future published on 5 October 2018. The OTS concludes that HMRC have made considerable progress in achieving the twelve recommendations outlined in its 2018 report. In particular, HMRC:

  • have committed significant resource to their guidance team;
  • have made progress in implementing the guidance model put forward in the OTS report;
  • are making extensive use of external feedback to improve guidance; and
  • are consulting with a Guidance Strategy Forum, which has a wide membership.

The evaluation also sets out HMRC’s commitments in working towards better guidance for taxpayers.

HMRC's Guidance Strategy Forum brings together external stakeholders to inform and influence the direction of HMRC’s strategy on guidance, and was introduced following the 2018 recommendation by the OTS.  Its first set of minutes indicates inter alia that HMRC are looking at improving their statement on when taxpayers can rely on information or advice provided by HMRC.

BEPS Action 14: dispute resolution: Stage 2 peer reviews

Under BEPS Action 14, jurisdictions have committed to implement a minimum standard to improve the resolution of tax-related disputes between jurisdictions. The OECD has released new stage 2 peer review monitoring reports for Australia, Ireland, Israel, Japan, Malta, Mexico, New Zealand and Portugal. The reports evaluate the progress made by these jurisdictions in implementing any recommendations resulting from their stage 1 peer review. They take into account developments in the period 1 January 2018 to 31 August 2019.

Forthcoming Dbriefs webcast

The next Dbriefs webcast is on Tuesday 27 April 2021, 12.00 BST/13.00 CEST. The title is Tax And The Road To Net Zero from our new ESG series, hosted by Helen Thompson. Climate change is the defining issue of our time. Government policies, customer, employee and consumer demands, investor pressure and technology are all converging to drive decarbonisation. This webcast will help you to learn more about how your tax teams can help navigate the road to net zero. To register, click here.

VAT: the importance of invoices in Directive claims: Advocate General  

In 2012, Wilo Salmson (based in France) bought tooling from ZES Zollner Electronic in Romania, as part of an agreement for ZES to manufacture goods for Wilo Salmson there. The Romanian tax authorities rejected a Directive claim for VAT of €92k on the tooling, as ZES had not apparently been paid (a requirement in Romania at the time) and because its invoice was defective. In 2015 ZES therefore cancelled and reissued the invoice, and Wilo Salmson submitted a second Directive claim. In the Opinion of AG Julianne Kokott, invoices are essential in showing how much VAT can be claimed, and so there can be no VAT recovery before an invoice is issued. If the invoice issued in 2012 was valid (there have been several CJEU judgments confirming the validity of invoices even if they breach certain formal requirements) then Wilo Salmson should have contested Romania’s decision to reject the first Directive claim, and its second Directive claim was time-barred. However, if a valid invoice was only issued in 2015, then that was the first occasion on which Wilo Salmson was entitled to reclaim the VAT, and its second Directive claim would be in time.

VAT: do fast food outlets provide food or catering?:  CJEU

In Poland, ready meals are subject to a reduced VAT rate of 5% whereas catering and restaurant services are subject to a reduced rate of 8%. The difference between the two classifications is not as stark as in the UK (zero-rated or 20%) but was sufficiently important for one fast food franchisee to seek a reference to the CJEU. The CJEU has provided further guidance on how to distinguish between food and catering, drawing on the definition of catering for place of supply purposes, as well as from previous CJEU judgments. In its view, food accompanied by ‘sufficient support services intended to enable immediate consumption’ is a supply of catering. The national court should consider whether waiters served customers at their tables, whether customers ate in an enclosed room, and whether the franchise provided access to toilets, as well as use of crockery, furniture and cutlery. Such factors should be assessed from the customer’s perspective (i.e. if they did not use the facilities but decided to take their meal away, then it was a good indicator that the service element of the frachisee’s supply was not important and a supply of food was taking place).

COVID-19: help and information

A reminder that you can access a wide range of information, help and advice on responding to and recovering from COVID-19 here and also at our Deloitte global COVID-19 webpage.