Business Tax Briefing

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

26/02/2021

Budget 3 March; Finance Bill 11 March

A reminder that the Chancellor will be presenting his Budget on Wednesday 3 March at 12.30. For our Budget coverage please visit our dedicated website and follow us on Twitter.

The Financial Secretary to the Treasury has announced that the Finance Bill will be published on 11 March.

Self-assessment taxpayers: late payment penalties

HMRC have announced that self-assessment taxpayers will not be charged a 5% late payment penalty if they pay their tax or set up a payment plan by 1 April 2021. There is no change to the payment deadline and other obligations are not affected. This means that:

  • The payment deadline remains 31 January and interest will be charged on late payment. The current rate of late payment interest is 2.6%.
  • A 5% late payment penalty will be charged if tax remains outstanding, and a payment plan has not been set up, by midnight on 1 April 2021. Further late payment penalties are charged at 6 and 12 months (August 2021 and February 2022 respectively) on tax outstanding where a payment plan has not been set up.

This is addition to the announcement made on 25 January 2021 that HMRC will not charge late filing penalties for returns filed online by 28 February, which is unaffected.

HMRC updated guidance on Coronavirus Job Retention Scheme

HMRC have updated their guidance on the Coronavirus Job Retention Scheme (CJRS), including to state that claims for furlough days in February 2021 must be made by 15 March 2021:

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

Claim for wages through the CJRS

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

Steps to take before calculating your claim using the CJRS

Check if your employer can use the CJRS

Pay CJRS grants back  

Calculate how much you can claim using the CJRS

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

Protocol to UK/Sweden Double Taxation Convention

A new protocol to the 2015 UK/Sweden Double Taxation Convention was signed on 23 February 2021. The protocol will enter into force when both countries have completed their legislative procedures and exchanged diplomatic notes. The accompanying Written Ministerial Statement states that the protocol will give effect to certain OECD/G20 Base Erosion and Profit Shifting (BEPS) recommendations that protect tax treaties against avoidance activities, ensuring that the UK’s double taxation agreement with Sweden meets the minimum OECD/G20 recommended standards.

New advisory fuel rates from 1 March 2021

HMRC have announced new advisory fuel rates from 1 March 2021. The previous rates from 1 December 2020 can be used for up to one month from the date the new rates apply. Compared to the previous rates, some of the rates have increased by 1 pence.

EU non-cooperative jurisdictions list updated

The European Council has adopted conclusions on a revised EU list of non-cooperative jurisdictions for tax purposes. The Council has added Dominica to the list of non-cooperative jurisdictions and removed Barbados from the list. Dominica has been added as it received a ‘partially compliant’ rating from the OECD Global Forum for Transparency and Exchange of Information (Global Forum) and has not yet resolved this issue. Barbados was added to the EU list in October 2020 after it received a ‘partially compliant’ rating from the Global Forum. It has now been granted a supplementary review by the Global Forum and has therefore been moved to a state-of-play document pending the outcome.

Forthcoming Dbrief webcast

On Thursday 4 March 2021 at 13.00 GMT/14.00 CET there is a Dbriefs webcast on the topic of the UK Budget 2021. Our panel will analyse the key tax measures announced in the UK Budget 2021, and how the UK’s economy is changing. The presenters are Amanda Tickel, Mark Saunderson, Gareth Pritchard, James Warwick and Nicola Roberts. You can register for the webcast here.

BEPS MLI: Croatia and Malaysia deposit instruments of ratification

Croatia and Malaysia deposited their instruments of ratification for the Multilateral Convention to Implement Tax Treaty Related Measures to Prevent Base Erosion and Profit Shifting (the BEPS multilateral convention or the BEPS MLI) with the OECD on 18 February 2021. Croatia’s final list of reservations and notifications is here. Malaysia’s final list of reservations and ratifications is here. There is a list of all countries' provisional or ratified MLI positions as at 18 February 2021 here.

VAT: community cricket club not a charity: Court of Appeal

The Court of Appeal has determined that community amateur sports clubs (CASCs) such as Eynsham Cricket Club cannot be treated as charities for VAT purposes. Consequently, the construction of Eynsham CC’s new pavilion did not qualify for zero-rating. Following the Charities Act 2009, a club registered as a CASC could no longer also be a charity – foregoing some charitable reliefs in return for avoiding the administrative burden of operating as a registered charity. The following year Finance Act 2010 introduced a new EU-law compliant definition of ‘charity’ for tax law purposes. However, in the Court of Appeal’s judgment, there was no indication that the Finance Act change was also meant to allow CASCs to enjoy charitable tax reliefs. The Court also rejected arguments that treating Eynsham differently from nearby Charlbury Cricket Club (a charity, not a CASC) breached the EU law principles of equal treatment or fiscal neutrality.

VAT: accommodation essential to welfare services: Upper Tribunal

The Lilias Graham Trust runs residential assessment centres that support parents (many of whom have mental health issues) in learning how to care for their children (e.g. getting them to school on time, recognising if they are hungry or dirty, and keeping their homes clean and tidy). In 2019 the First-tier Tribunal (FTT) ruled that the Trust’s services were exempt as they were directly connected to welfare services, and dismissed the Trust’s appeal (it is one of those infrequent cases where a taxpayer wants to charge VAT in order to improve input tax recovery). The welfare exemption, however, only covers a supply of accommodation if it is ancillary to welfare services. The Trust appealed, arguing that it made a ‘supply’ of accommodation as part of its welfare services, which was an essential part of those services and could not be regarded as ‘ancillary’. The Upper Tribunal (UT) has ruled that the Trust could not carve out a discrete supply of accommodation from its single exempt supply of welfare services. It also considered that essential accommodation should be more likely to qualify for exemption than ancillary accommodation. The UT decided that the FTT had correctly ruled that the Trust’s services were exempt and dismissed its appeal.

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.