Business Tax Briefing

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


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COVID-19: Job Support Scheme, Self-Employed Income Support Scheme, grants extended

The Chancellor has announced increased support for taxpayers affected by COVID-19 through changes to the Job Support Scheme (JSS) and the Self-employed Income Support Scheme (SEISS), and by expanding business grants in high-alert level areas.

JSS. As originally announced, the JSS, which will come into effect on 1 November, required employers to pay a third of their employees’ wages for hours not worked, and required employees to be working 33% of their normal hours. The new changes mean the employer’s contribution for unworked hours is reduced to 5%, and the minimum hours requirement is reduced to 20%. An updated factsheet on this scheme (the JSS Open) has been published. The JSS for businesses legally required to close (the JSS Closed) remains unchanged. Detailed HMRC guidance on the JSS has also been published.

SEISS. Grants via the extended SEISS will be paid in two lump sum instalments each covering three months. The first grant will cover a three-month period from the start of November 2020 until the end of January 2021. The government will now pay a taxable grant based on 40% (previously 20%) of three months’ average trading profits, paid in a single instalment and capped at £3,750 (previously £1,875). The second grant will cover a three-month period from the start of February until the end of April 2021. The level of the second grant will be set in due course. HMRC have published updated guidance on the SEISS.

Business grants. Local authorities in England will be provided with additional funding to provide cash grants, primarily for businesses in the hospitality, accommodation and leisure sectors adversely affected by the restrictions in high-alert level areas. The amounts, to be determined by local authorities, are expected to be in the region of up to £2,100 per month. These grants will be available retrospectively for areas which have already been subject to restrictions. There is a factsheet with further details.

HM Treasury: one year spending review to conclude late November

The Treasury has announced that the Chancellor and the Prime Minister have decided to conduct a one-year spending review, setting departments' resource and capital budgets for 2021-22, and the devolved administrations’ block grants for the same period. The focus will be on the response to COVID-19. The precise date for the review is yet to be confirmed but it will be ‘in the last weeks of November.’

NAO report on implementing COVID-19 employment support schemes

The National Audit Office (NAO) has published a report on the implementation of the Coronavirus Job Retention Scheme (CJRS) and the Self-Employment Income Support Scheme (SEISS). It concludes that HM Treasury and HMRC met their objectives in rapidly implementing the schemes. However, the NAO states that the scale of fraud and error appears to be considerable, particularly for the CJRS, and HMRC could have done more to make clear to employees whether their employer was part of the CJRS. The NAO recommends that HM Treasury and HMRC should consider how to ensure that reliable information can be used to determine eligibility, so that fewer people are excluded from similar schemes in the future. They should also accelerate programmes to assess the total value of fraud and error, and commit sufficient resources to recovering overpayments and fraudulent payments, where it is cost-effective to do so.

Office of Tax Simplification: Claims and Elections review

Following the launch of its review of claims and elections, and a call for evidence published on 11 February 2020, the Office of Tax Simplification (OTS) has published a report on ways in which the administrative processes for making claims and elections could be simplified across income tax, corporation tax, capital gains tax and VAT. The key recommendations are: increased functionality of the personal tax account and the business tax account; changes to employee expenses to improve the process of making a claim, as well reducing the number of different levels of flat rate expenses; and improvements to HMRC online forms.

HMRC online portal: tax relief on COVID-19 homeworking expenses

HMRC have launched an online portal to process tax relief on additional expenses for employed workers who have been told to work from home by their employer to help stop the spread of COVID-19. HMRC are encouraging taxpayers claiming tax relief for working from home to apply directly through GOV.UK. Employees do not need to provide evidence to show their bills have increased unless they are applying for tax relief on costs above the applicable flat rate (£6 per week for 2020-21).

Forthcoming Dbriefs webcasts

The next Dbriefs webcast is on Tuesday 27 October 2020, 13.00 GMT/14.00 CET. The title is Overview Of The Implementation Of Anti-Hybrid Rules In Response To ATAD II hosted by Kate Ramm. Our panel will discuss the implementation of anti-hybrid rules introduced in response to the EU Anti-Tax Avoidance Directives, and what these rules could mean for your organisation.

There is another Dbriefs webcast on 28 October 2020, 14.30 GMT/15.30 CET. The title is US Tax Policy: 2020 Election Update And 2021 Preview from our International Tax series, hosted by Marek Krawczyk. Our panel will discuss the possible tax changes in the United States following the 2020 US elections and the potential implications for multinationals with operations in EMEA and the US.

VAT on use or enjoyment of phones in Austria: Advocate General Opinion

SK Telecom (SKT), a mobile phone provider based in South Korea, incurred Austrian VAT on fees charged by an Austrian network operator, and passed them on to its customers (South Koreans visiting Austria) as roaming charges. The Austrian tax authorities rejected SKT’s Directive claim on the basis that effective use and enjoyment of its services took place in Austria, and SKT should have accounted for Austrian VAT on the roaming charges. Advocate General (AG) Henrik Saugmandsgaard Oe agreed. In his view, the roaming service was clearly ‘used’ in Austria, and it was unnecessary to consider whether it was also ‘enjoyed’ there (although some language versions of the Principal VAT Directive refer to ‘use and enjoyment’, the correct phrase is ‘use or enjoyment’). The AG also considered that the fact that the roaming service might be subject to VAT in South Korea was irrelevant. The application of use and enjoyment provisions for the prevention of double taxation (or non-taxation or distortion of competition) is only by reference to VAT in the EU. SK Telecom’s roaming charges should have been subject to Austrian VAT. (Contact: Jonathan Anderson).

VAT on nutrition advice provided by gym: Advocate General Opinion

Frenetikexito runs fitness studios in Portugal, and offers fitness and nutrition plans for a monthly fee. Where customers signed up to both plans, Frenetikexito allocated 60% of the payment to the fitness plans and 40% to the nutrition advice service (which it treated as exempt). In Advocate General Julianne Kokott’s Opinion, the two plans should be treated as separate supplies. She concluded that there was no single complex supply; the fitness and nutrition plans were provided by different staff at different locations and different times, were invoiced separately, and could be signed up for separately. In her view, the nutrition plans were not dependent ancillary supplies either, as the charges were more than a marginal part of the overall fee, and nutrition advice and fitness plans are different ways of achieving a healthy lifestyle. However, she doubted whether the nutrition services were VAT exempt, so allocating consideration to nutrition plans may not affect the VAT which Frenetikexito should have charged to its customers. (Contact: Nicole Brook).

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.