Business Tax Briefing

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

07/01/2022

31 January: HMRC defer self-assessment late filing and payment penalty dates 

HMRC have announced that they are waiving late filing and late payment penalties for self-assessment taxpayers for one month in view of the pressure faced this year by taxpayers and their agents as a result of COVID-19. The deadline for filing the 2020/21 self-assessment tax return and paying the tax due is 31 January 2022. The penalty waivers will mean that: 

• Anyone who cannot file their return by the 31 January deadline will not receive a late filing penalty if they file online by 28 February. 

• Anyone who cannot pay their self-assessment tax by the 31 January deadline will not receive a late payment penalty if they pay their tax in full, or set up a Time to Pay arrangement, by 1 April.

HMRC point out that interest will be payable from 1 February, as usual, so it is still better to pay on time if possible. It should also be noted that a return filed in February will still be late, with the usual consequences for extended enquiry windows and certain claims/elections (i.e. some claims/elections may be out of time to be made), but there will be a valid reasonable excuse for penalty purposes. 

Finance (No 2) Bill: update 

The Public Bill Committee met twice on Wednesday 5 January 2022 to consider further those parts of the Finance (No 2) Bill not already considered in a Committee of the Whole House. No further amendments were made. The Committee will meet next on Tuesday 11 January 2022 and will conclude its work on Thursday 13 January 2022. 

COVID-19: support measures 

HM Treasury has announced a number of support measures for businesses affected by the Omicron variant of COVID-19. Businesses in the hospitality and leisure sectors in England will be eligible for one-off business grants ranging from £2,700 to £6,000 per premises (depending on the property’s rateable value). 

The scheme will be administered by local authorities. More than £100 million of discretionary funding will also be made available for local authorities to support other businesses, and a further £30 million will be made available to affected cultural organisations via the Cultural Recovery Fund. 

The government also announced the temporary reintroduction of the Statutory Sick Pay Rebate Scheme (SSPRS) which refunds the cost of Statutory Sick Pay for COVID-related absences to small and medium-sized employers across the UK. Employers will be able to make a claim through HMRC from mid-January onwards in relation to sickness periods from 21 December 2021. Regulations have since been made to implement the SSPRS changes. 

Welsh draft Budget 

The Welsh government published its draft Budget for 2022/23 on 20 December 2021. The Senedd has the power to vary rates of income tax on non-dividend, non-savings income of Welsh taxpayers, but, as in previous years, the Welsh government has proposed keeping the rates aligned with England and Northern Ireland. No immediate changes to Land Transaction Tax (LTT) rates or bands were announced, but the government is consulting on local variation of LTT rates for areas with property shortage issues associated with second homes and short-term holiday lets. On non-domestic rates, as in England, retail, leisure and hospitality ratepayers in Wales will receive 50% relief for the duration of 2022/23, capped at £110,000 per business. 

European Commission: shell companies: draft Directive 

The European Commission has published a draft Directive aimed at preventing the misuse of so-called ‘shell entities’ for tax purposes in the EU. The initiative was first announced by the European Commission on 18 May 2021. The draft Directive relates only to intra-EU situations; the Commission has already announced a new Directive to be published in 2022 to respond to the challenges linked to non-EU shell entities. Under the proposal if, after consideration of various gateway tests, substance indicators and exemptions etc., an EU company is deemed not to have at least minimum substance, it would be prevented from accessing the benefits of tax treaties and of the EU Parent/Subsidiary and Interest & Royalties Directives. The draft, once adopted as a Directive, would be required to be transposed by the Member States into their domestic legislation by 30 June 2023 and would apply as from 1 January 2024. There are further details here

Office for Budget Responsibility: forecast commissioned for 23 March 

The Chancellor has commissioned the Office for Budget Responsibility (OBR) to produce an economic and fiscal forecast for Wednesday 23 March 2022. The OBR is required to produce at least two forecasts each financial year. An updated Charter for Budget Responsibility, which sets out the new fiscal framework announced at Autumn Budget and Spending Review 2021, has also been laid before Parliament. In accordance with the Budget Responsibility and National Audit Act 2011, the Charter was first published in draft on 27 October as it includes modified guidance to the Office for Budget Responsibility. No further changes have been made to the updated Charter since it was published in draft. 

Forthcoming Dbriefs webcast 

On Monday 10 January 2022 at 13.30 GMT/14.30 CET there is a Dbriefs webcast on the topic of G20/OECD The Digitalised Economy – Model Rules For Global Minimum Tax (Pillar Two). The OECD/G20 are planning to implement a global minimum tax (Pillar Two) with the income inclusion rule due to take effect from 2023. Our Dbriefs webcast will explore the possible impact on your organisation. The presenters are Alison Lobb, Bob Stack and Lisa Shipley. If you would like to register for the webcast you can do so here

Revenue and Customs Brief 1(2022): VAT recovery on electric vehicle charging 

HMRC have updated Notice 700/64 to address the recovery of VAT on electric vehicle (EV) charging. The new guidance substantially reflects HMRC’s position as set out in Revenue and Customs Brief 7(2021) last May. For example, businesses can potentially recover VAT on electricity used by employees to charge their EVs at work, to the extent that they can provide evidence of business mileage; but VAT recovery is not permitted if an employee charges their EV at home, even if it is used for work. The Notice now confirms that businesses will be able to treat VAT on the use of public charging points by their employees as input tax. In Revenue and Customs Brief 1(2022), HMRC have also stated that they are reviewing the evidence that should be retained by businesses which reimburse employees for the actual cost of electricity used in charging an EV for business purposes, and are considering other simplification measures that may reduce administrative burdens in terms of accounting for VAT on private use. Further guidance will follow on the conclusion of the review. 

Revenue and Customs Brief 15(2021): UK VAT refund claims by overseas businesses 

Overseas businesses are required to provide a certificate of status together with claims for repayment of UK VAT. HMRC are aware that businesses in some countries are continuing to experience difficulties in obtaining the required certificates, due to measures taken in response to COVID-19.  In Revenue and Customs Brief 15(2021) HMRC have confirmed that they will continue to accept late certificates where the delay has been caused by a one-off, unavoidable event, provided that the claim has been submitted in time without the certificate, that businesses can show that they requested a certificate within a reasonable time, and that they forward the certificate to HMRC within 30 days of receipt. These conditions replace the easement announced in Revenue and Customs Brief 10(2021) last July, in which overseas businesses were permitted an additional six months (until 31 December 2021) to provide certificates.