Business Tax Briefing

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

26/03/2021

Tax Day 23 March 2021

On 23 March, the government published a command paper ‘Tax Policies and Consultations (Spring 2021)’ which set out a number of tax-related announcements, including twelve new consultations, discussion documents and calls for evidence. These all close on dates between 1 June and 13 July and are available here. We have produced an alert and video commentary on the announcements.

Council of the EU adopts Directive on reporting rules for online platforms (DAC 7)

The Council of the EU has adopted DAC 7, the EU Directive which will introduce a new reporting requirement for digital platforms. From 1 January 2023, the Directive will extend the scope of the existing provisions on exchanges of tax information between EU Member States by requiring digital platforms to collect and report information on income realised by their sellers. The rules will apply in respect of platforms that allow sellers to be connected with customers for the provision of the sale of goods, the rental of immovable property (e.g. accommodation), the provision of personal services and the rental of transport. HM Treasury published a policy paper at the Budget, confirming that there will be a consultation this summer on the introduction in the UK of reporting rules for digital platforms, based on the OECD model rules.

Senior Accounting Officer: update on penalties

HMRC updated their Senior Accounting Officer (SAO) guidance on 25 March 2021, responding to the decision in Castlelaw. In Castlelaw an SAO appealed a penalty where they had erroneously omitted a dormant entity from their SAO filings. HMRC’s updated guidance now confirms that HMRC may exercise discretion in relation to the assessment of penalties in such circumstances. The guidance notes that, in exercising discretion, HMRC will consider the company’s compliance record and HMRC risk assessment.

Coronavirus Job Retention Scheme: updated guidance

HMRC have updated their guidance on the Coronavirus Job Retention Scheme (CJRS):

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

Calculate how much you can claim using the CJRS

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

Steps to take before calculating your claim using the CJRS

Claim for wages through the CJRS

Check if your employer can use the CJRS

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

Low Pay Commission consultation 2021

The Low Pay Commission, the independent body which advises government on the levels of the National Living Wage (NLW) and National Minimum Wage (NMW), is seeking evidence to help shape the recommendations it will make this autumn on the 2022 rates. Responses are invited by 18 June 2021.

Corporate Insolvency and Governance Act 2020 (Coronavirus) (Extension) Regulations

The Corporate Insolvency and Governance Act 2020 (Coronavirus) (Extension of the Relevant Period) Regulations 2021 come into force on 26 March 2021. They further extend some of the temporary measures introduced by the Corporate Insolvency and Governance Act 2020 in response to the COVID-19 pandemic, including restrictions on the use of statutory demands and winding up petitions and the provisions suspending liability for wrongful trading from 31 March 2021 to 30 June 2021, and the modifications to moratorium provisions from 30 March 2021 to 30 September 2021.

Companies House: automatic filing extensions come to an end

Companies House has confirmed that the automatic extensions granted by the Corporate Insolvency and Governance Act will come to an end for filing deadlines that fall after 5 April 2021. The Act granted automatic extensions for filing deadlines for accounts, confirmation statements, event-driven filings and mortgage charges between 27 June 2020 and 5 April 2021 in response to the COVID-19 pandemic. For accounts filing deadlines that fall after 5 April, companies can still apply for a three month extension.

Forthcoming Dbriefs

The next Dbriefs webcast is on Tuesday 30 March 2021, 12.00 BST/13.00 CEST. The title is SAP Tax Compliance – Demonstration from our SAP S/4HANA® series, hosted by Romy Mueller. During the webcast our panel will provide a demonstration of SAP Tax Compliance, detailing how your organisation can increase control over real-time tax reporting obligations.

Deloitte/CBI webinar on Trade in Services

It’s been almost 100 days since the end of the transition period, and the UK-EU Trade and Cooperation Agreement (TCA) means there are significant changes to the way UK businesses trade in services with the EU. On Monday 29 March Amanda Tickel (Deloitte’s Head of Tax Policy) joined John Foster (Director, Policy and Communications, CBI) and Peter Hogg (UK Cities Director, Arcadis) for a discussion on where next for trading in services between the UK and the EU. The webcast will be available on the CBI’s YouTube channel.

Designing insurance product not exempt from VAT: CJEU

A German insurer engaged Q-GmbH to provide it with a specialised insurance product. Q provided a complete solution – it designed the product, sold it, managed it, and handled any claims. It earned brokerage fees from licensing the product to the insurer, even where sales were set up by another broker or agent. The CJEU has suggested that Q was not providing a single supply for VAT purposes (although this was a matter for the referring court to determine). The fact that Q earned commission, even when it did not act as intermediary in selling the insurance, showed that its intermediary services were optional extras which should be considered separately. The grant of the licence for designing the product enabled the intermediation and the claims handling services, but it did not oblige the insurer to use Q as its only intermediary and there was no evidence that Q's intermediary services were better than those of other agents. The licence on its own (or, indeed, the VAT liability of a composite supply where the licence fee was the main constituent) could not be exempt under EU law. Q was not offering insurance and it was not acting as an intermediary in relation to the licence, as its activity did not involve it being in contact with insurer and insured, or require it to prospect for new customers. Q GmbH should have charged VAT on its services.

Revenue and Customs Brief 4(2021): VAT partial exemption and COVID-19

In RCB 4(2021), HMRC have set out their approach to a number of VAT partial exemption issues for businesses affected by COVID-19. The pandemic has not necessarily impacted taxable and exempt supplies in the same way, creating the possibility that partial exemption special methods (PESMs) may temporarily not be fit for purpose, and may need adjusting. If HMRC are satisfied that proposed changes to a PESM are required because of COVID-19, then they will limit their enquiries into the proposed changes rather than necessarily reviewing the whole PESM (which can be a prolonged exercise). They confirm that COVID-19 represents an exceptional circumstance which can justify backdating changes to a PESM. Requests not to adjust partial exemption calculations for cancelled sales (which might distort recovery rates) will be considered sympathetically. Businesses using the standard partial exemption method are invited to consider whether an override could be more appropriate than a PESM.

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.