Business Tax Briefing

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


31 January tax return filing deadline: no penalties for returns filed up to 28 February

HMRC have announced that they will not issue late filing penalties for 2019/20 tax returns for ‘self- assessment customers’ filed online by 28 February 2021. The extension relates only to the filing deadline. Filings that contain claims and nominations with a 31 January deadline must still be filed on time. The 2019/20 enquiry window will also be extended from the first anniversary of the tax return being filed to 30 April 2022 if 2019/20 returns are filed between 1 and 28 February. Any tax payable is still due on 31 January, and interest will be levied on late paid tax. Furthermore, 2018/19 tax return amendments must still be filed by 31 January.  

It is clear from HMRC’s announcement that this easement would apply to forms SA100 (the tax return for individuals). HMRC have since confirmed their position in relation to penalties and other self-assessment returns to the Chartered Institute of Taxation.

Scottish Budget

The Scottish Budget was presented on 28 January 2021, including the proposed Scottish income tax bands and rates for 2021/22. There will be no change to Scottish income tax rates, with starter, basic and intermediate bands increasing at the same rate as inflation. Based on the changes as announced, there are modest tax savings for all Scottish taxpayers. However, the overall position depends on any changes to the personal allowance and tax rates and bands made in the UK Budget on 3 March 2021. No changes were announced to Land and Buildings Transaction Tax rates and bands, aside from confirming that the temporary COVID-19-related increase to the nil-rate band ceiling will lapse, as planned, from 1 April. Increases to Scottish Landfill Tax were announced in line with inflation, also with effect from 1 April 2021. Changes were announced to business rates, together with a commitment to extent 100% business rates relief for retail, hospitality and leisure businesses for at least the first three months of 2021/22. The Scottish government is a minority administration, so votes from at least one of the other parties will be needed to pass the proposals.

Coronavirus Job Retention scheme: Treasury Direction; new, updated HMRC guidance

HM Treasury has published a new Treasury Direction under sections 71 and 76 of the Coronavirus Act 2020. This covers the extension of the Coronavirus Job Retention Scheme (CJRS) for the period 1 April 2021 to 30 April 2021. The schedule to the Direction sets out the CJRS as it applies for the period beginning on 1 February 2021 and ending on 30 April 2021.

HMRC have started to publish details of employers who have made claims under the CJRS since 1 December 2020. New HMRC guidance has also been published which tells employers what to do if publishing their CJRS claim details could leave individuals at risk of violence or intimidation.

The following HMRC CJRS guidance has been updated:

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

Find examples to help you calculate your employees' wages

Calculate how much you can claim using the CJRS

Steps to take before calculating your claim using the CJRS  

Pay Coronavirus Job Retention Scheme grants back

Office of Tax Simplification: making tax easier via use of third party data: call for evidence

The Office of Tax Simplification (OTS) has published a call for evidence in connection with its review of ways to make tax easier for people through the better use of third party data. This follows publication of the OTS scoping document issued on 17 December 2020. The aim is to reduce the need for taxpayers and agents to submit additional information to HMRC that HMRC either already hold or could verify themselves. For example, instead of individuals having to provide to HMRC details of potentially taxable income and gains on their investments, the review will consider whether these could be uploaded by the taxpayer’s investment or wealth management company and reflected in the online tax account or self-assessment return. Responses are invited by 9 April 2021.

Call for input: review of the UK funds regime

HM Treasury have issued a new call for input on a review of the UK funds regime. The call is wide-ranging and encompasses many non-tax areas. Chapter 2 of the Treasury document deals with tax issues, and includes questions inter alia on neutrality via tax exempt funds, on potential REIT reforms, on treaty issues and on limited partnership funds. The deadline for submissions is 20 April 2021. A separate review is being conducted by the Treasury, focussed on the taxation of asset holding companies in the funds industry. The second stage of this review opened in December 2020.

Forthcoming Dbriefs

The next Dbriefs webcast is on Tuesday 9 February 2021, 12.00 GMT/13.00 CET. The title is UK Tax Monthly Update, from our UK Tax Focus series. During the webcast our panel will provide an update on corporate tax, employment tax, and indirect tax. To register, please click here. There will be a webcast from our International Tax series on Thursday 11 February 2021, 12.00 GMT/13.00 CET Permanent Establishments And Corporate Tax Residence. The panel will discuss the recent OECD guidance on the interpretation of tax treaty provisions on the creation of permanent establishments, and the tax residence of companies in light of the specific challenges that have arisen due to the COVID-19 pandemic. For more information, and to register for the webcast, click here.

News Corp: online newspapers subject to VAT pre-May 2020: Court of Appeal 

In News Corp, the Court of Appeal has ruled that online newspapers, including The Times, despite being a faithful reflection of the zero-rated print edition, were subject to VAT at 20% (until May 2020). The court had to resolve two conflicting principles: on the one hand, zero-rating should not be denied simply because online newspapers did not exist when the rules were written; on the other hand, the zero rate was subject to standstill provisions, and could not be extended under EU law. In the court’s judgment, both principles needed to be taken into account in a single exercise of statutory construction. The language originally used in the zero-rating provisions specifically refers to goods (such as printed music, and covers or cases for printed matter), and later changes assumed that the relief applied only to goods, whereas online newspapers are digital news services. The Upper Tribunal had allowed itself to imagine what Parliament might have done had it contemplated online newspapers when it introduced VAT, and paid insufficient attention to the wording of the provisions and the need to construe VAT reliefs strictly. HMRC’s appeal was allowed.

VAT: update on compensation and termination payments

HMRC have updated the webpage which introduced Revenue and Customs Brief 12(2020) concerning HMRC's new policy on VAT on early termination and compensation payments. It confirms that, following representations by businesses and advisers, the new policy will only apply with future effect. A new Revenue and Customs Brief is to be published, as well as revised versions of HMRC's manuals. For the moment, however, Revenue and Customs Brief 12(2020) and the VATSC manuals remain unchanged.

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.