Monthly Tax Update

Private Markets

This monthly briefing note summarises some tax and other news items of interest to UK-focused private companies and their management teams and shareholders.

United Kingdom  | Deloitte Private | 11/12/2020

COVID-19 measures and announcements

COVID-19: help and information

A reminder that we are running a fortnightly webinar chaired by Ian Stewart, our Chief Economist, with contributions from experts across the firm. We will be sharing our insight on the global economic impact of COVID-19, the challenges organisations are facing, how they are responding and recommendations on the actions they can take. The webinars take place every Thursday 1:00-1:30pm BST. You can register for the webinars 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. You can keep up to date with all of the accounting considerations relating to COVID-19 on Deloitte’s accounting resources page here.

Extension of Coronavirus Job Retention Scheme

Further to the Chancellor’s announcement on 4 November 2020 that the Coronavirus Job Retention Scheme (CJRS) will remain open until 31 March 2021, HMRC have published updated guidance on the CJRS with details of how to claim for periods after 1 November 2020 as follows:

HMRC have also updated their guidance on the CJRS to confirm that each month, after the deadline for making amendments to claims, an indication of the value of an employer's claim within the banded ranges set out will be published, together with the employer’s name and Companies House number, where applicable. See

Self-Employment Income Support Scheme: Treasury Direction; guidance

The Treasury has made a Direction in relation to the extension of the Self-Employment Income Support Scheme (SEISS) for the three months to the end of January. See The main difference from the first two grants is that there is a narrower rule for determining eligibility.  For the first two grants, it was sufficient to show that the business had been ‘adversely affected’ by COVID-19. The third grant is only available if the business has suffered ‘reduced activity, capacity or demand from that which could reasonably have been expected but for the adverse effect on the business of coronavirus’. The following guidance has been updated:

VAT: temporary reduced rate extended to 31 March 2021

HMRC have updated a number of their Notices with an announcement that the temporary reduced rate for tourism and hospitality, which was scheduled to expire on 12 January 2021, has been extended to 31 March 2021. See The Value Added Tax (Reduced Rate) (Hospitality and Tourism) (Extension of Time Period) (Coronavirus) Order 2020 (SI 2020/1413), which will give legal effect to the extension, has also now been published. See

Brexit announcements

Brexit: help and information

We have a wealth of information regarding Brexit, including a series of industry insights, guidance on preparing for Brexit, details of forthcoming and recordings of past webcasts and our blog series, all available on our dedicated Brexit website: We also have Brexit Pulse Alerts our series of short, action-orientated alerts which are designed to help you identify clear business actions to be taken with each government update. See

End of transition period: customs declarations from 1 January 2021

The Customs (Declarations) (Amendment and Modification) (EU Exit) Regulations 2020 (SI 2020/1234) provides further details about the phased introduction of border controls, which will allow some goods to move without full customs controls for the first half of 2021. For example, it sets out how advance declarations of goods imported from the EU into certain listed locations will be deemed to have been notified by the importer and accepted by HMRC automatically. If declarations for export through the listed locations are submitted before the goods have left the trader’s premises, then (unless inspection or examination is required), goods will be deemed to have been presented at the border location and released for export. SI 2020/1234 also amends the rules for simplified declarations, and widens the scope of declarations made orally and by conduct. See If you need help preparing and submitting customs declarations, our Deloitte Global Trade Bureau will be pleased to help you.

End of transition period: Binding Tariff Information decisions

HMRC have also published guidance reminding businesses that Binding Tariff Information (BTI) decisions issued by the UK (or for EORI numbers starting GB) will not be valid in the EU from 1 January 2021. The UK will be converting BTIs into Advance Tariff Rulings, but businesses should consider whether a fresh BTI is also required. See

End of Transition Period: HMRC VAT guidance

HMRC have published various guidance on how VAT should be accounted for at the end of the Transition period. In relation to Northern Ireland (NI), existing guidance on accounting for VAT on goods moving between Great Britain (GB) and NI has been updated with new sections on sales between the UK and the EU which move through NI, the retail export scheme, personal exports of vehicles from NI to GB, and fiscal warehousing. See

New guidance has also been published on imports into NI, trading under the NI protocol, and claiming EU VAT refunds (see, and HMRC have also published research into preparations made by customs intermediaries for the end of the Transition Period. It is estimated that the sector will need to process an additional 90-135 million customs declarations annually, on top of the current annual requirement of 29-39 million. See For information about how Deloitte can help, see our Global Trade Bureau.  

Links to other HMRC guidance can be accessed through two new Brexit transition communications resources relating to imports and exports. See Amongst the new developments, VAT-registered business trading in NI or between NI and the EU have been advised to contact HMRC via a form on the Government Gateway, so that they can continue to account for VAT on acquisitions and dispatches. See This is in addition to the Trader Support Service (which over 7,000 businesses have signed up for) which will assist businesses moving goods under the NI Protocol. See

UK direct tax developments

SDLT - HMRC change in guidance; 3% surcharge, mixed use transactions

HMRC have updated their guidance on multiple dwellings relief (MDR), which allows stamp duty land tax (SDLT) rates to be fixed by the average value of dwellings rather than total deal price. The guidance suggests that HMRC now accept that the 3% surcharge on residential property does not apply to mixed use transactions. This means that beneficial rates previously applying only to student accommodation should now apply across the board as long as there is a commercial element (which is not ‘negligible’ or ‘artificially contrived’). The value of the reclaims can therefore be up to 3% of the purchase price. See

Virtual Christmas parties

HMRC have confirmed that the exemption from a taxable benefit arising when an employer provides an annual party (e.g. a Christmas party) to its employees will apply to the costs associated with virtual parties in the same way that it would for traditionally held parties. This is subject to the usual conditions being met, including making the party available to employees generally, and keeping the average cost below £150 per head. HMRC have updated their manual accordingly. See

Disguised remuneration: guidance on late elections

HMRC have published a statement of practice on late elections to spread outstanding disguised remuneration loan balances evenly across three tax years. See Help on this has also been added to their disguised remuneration guidance pages. See

IR35/off-payroll working/intermediaries - NIC regulations

The Social Security Contributions (Intermediaries) (Miscellaneous Amendments) Regulations 2020 (SI 2020/1220) were made on 5 November 2020 and laid before parliament on 6 November 2020. The explanatory note explains that the regulations “make provision about social security contributions payable in relation to employed earner’s employment where services are provided through an intermediary to public authority clients, small and medium or large clients”. See An explanatory memorandum has also been published, see

Loan Charge review: HMRC report on implementation; interest review

HMRC have published their report on the implementation of the disguised remuneration loan charge review. This fulfils one of the recommendations in the review conducted by Sir Amyas Morse, who was asked to consider whether the loan charge policy was an appropriate response to the tax avoidance behaviour in question, and related issues. Suggestions for the future include doing more to counter disguised remuneration schemes and scheme promoters early and better communication with taxpayers. See

Making Tax Digital for Corporation Tax: Consultation Document

The government is consulting on how the principles established for Making Tax Digital (MTD) could be implemented for corporation tax. Comments are invited by 5 March 2021. See

UK indirect tax developments

RCB 19(2020): legislative changes for salary sacrifice schemes and cars

In RCB 19(2020), HMRC have announced that the statutory instrument (SI 1992/630) which treats supplies of cars under a salary sacrifice scheme as outside the scope of VAT will be repealed in the next 12 months. As considered in the Court of Appeal case of Northumbria NHS Trust (see, the SI allowed the Trust to treat the provision of cars to NHS workers as outside the scope of VAT, even though it could recover VAT on procuring the cars under the rules for contracted out services (COS). The RCB considers that it is only government departments and the NHS who will be affected by this change, but businesses operating salary sacrifice arrangements involving cars should satisfy themselves that the operation of their scheme does not depend on SI 1992/630. See

VAT recovery on supplies of financial and insurance services to the EU

Earlier this month, the Chancellor of the Exchequer confirmed that, with effect from 1 January 2021, businesses will be entitled to recover VAT incurred in relation to specified supplies of financial services and insurance made to counterparties outside the UK (compared to outside the EU at present), a move which is expected to allow UK businesses to recover an additional £800m of input tax each year. See This approach was originally set out in the VAT (Input Tax) (Specified Supplies) (EU Exit) (No. 2) Regulations 2019, which is expected to be the mechanism for achieving this objective. See We understand that HMRC will be issuing guidance on how the change will apply, which may address how to calculate recovery rates for VAT quarters and partial exemption years which straddle 1 January, and whether taxpayers can re-attribute input tax already incurred to future specified supplies. Any business currently making exempt supplies of financial or insurance services to EU clients should review the potential impact of this change on their partial exemption calculations.

Sonaecom: input tax recovery on aborted acquisition – CJEU

In 2005, Sonaecom incurred costs trying, unsuccessfully, to acquire Cabovisão, a Portuguese telecoms provider. The CJEU has confirmed that, on the basis that Sonaecom planned to provide management services to Cabovisão (and was not therefore a pure holding company), it could recover VAT on consultancy services as residual input tax. Complications arose, however, over VAT incurred on commission paid to BCP Bank for arranging a €150m bond placement. When the intended acquisition fell through, Sonaecom temporarily loaned the funds to its parent. This gave rise to an exempt supply to which the bank’s services were directly linked, and this actual exempt use trumped Sonaecom’s original intended use. The parent returned the funds to Sonaecom in due course to finance other acquisitions, but AG Kokott had considered that this was irrelevant, and the CJEU did not comment further on this point. Sonaecom was not entitled to recover VAT on the commission. See

The Core (Swindon) Ltd: juice cleanse programmes are not beverages – Upper Tribunal

The Core, a cafe in Swindon, sold four-packs of freshly prepared vegetable and fruit juices as daily meal replacements (“juice cleanse programmes” or JCPs). The Upper Tribunal has now endorsed the First-tier Tribunal’s decision that liquidising the ingredients created a drink that was not a “beverage”, and that the JCPs were therefore zero-rated as supplies of food. The First-tier Tribunal’s reasoning depended partly on how the product was marketed, and the Upper Tribunal was satisfied that this was an appropriate part of the First-tier Tribunal’s multifactorial assessment (alongside factors such as taste and texture, ingredients, and manufacturing process). Marketing can be an important indicator in food liability cases (not just as a tie-breaker where there might be different ways of using food), but it does not have special significance. A beverage is a drink which might slake someone’s thirst, or might be offered as a drink to a guest. The First-tier Tribunal had been entitled to find that the JCPs were not beverages, and HMRC’s appeal was dismissed. See

Safestore: block insurance policies and self-storage – Upper Tribunal

Insurance taken out by customers using Safestore’s self-storage facilities is generally provided by its captive insurer (Assay, based in Guernsey). If Safestore was acting as Assay’s intermediary as it contended, then it might (under the rules in force at the time) have suffered no input tax restriction on this activity on the basis Assay was outside of the EU, and would only have included its commission (30% of the premium) in its partial exemption calculations. However, the Upper Tribunal has dismissed its appeal, concluding (as the First-tier Tribunal had done) that the similarities to the block insurance policy arrangements considered in Card Protection Plan were inescapable. As illustrated by its approach to Financial Services and Markets Act regulation, Safestore was providing the insurance to its customers under a block policy, and should therefore treat the entire premium as its exempt turnover. See

London Clubs: no gaming duty on free bets – Supreme Court

Gaming duty is calculated by reference to “gross gaming yield” which is partly based on “bankers’ profits” which in turn depends on “stakes staked” less the value of prizes paid out. Casinos sometimes hand out free bet vouchers or chips which cannot be exchanged for cash (known as non-negotiable chips, or “Non-Negs”) to incentivise regular customers to play more. The Supreme Court has unanimously ruled that Non-Negs should not be treated as stakes staked for duty purposes. The calculation of bankers’ profits is by reference to the real world value of the stakes from the perspective of the banker. In the case of Non-Negs, the customer is essentially enjoying a free bet, which should not be subject to duty. By a majority, the Court also ruled that Non-Negs awarded as prizes could not be deducted from the gross gaming yield for duty purposes. See  

International developments

Extending EU tax transparency rules to digital platforms

The European Commission has welcomed the recent compromise reached by Member States to extend EU tax transparency rules to digital platforms. This follows the proposal made by the Commission in July as part of the Action Plan for Fair and Simple Taxation Supporting the Recovery. The agreed proposal on administrative cooperation (DAC 7) will ensure that Member States automatically exchange information on the revenues generated by sellers on digital platforms, whether the platform is located in the EU or not. This will not only allow national authorities to identify situations where tax should be paid, but will also reduce the administrative burden placed on platforms, who often have to deal with several, different national reporting requirements. The proposal also strengthens and clarifies the rules in other areas in which Member States work together to fight tax abuse, for example through joint tax audits. See

Formal adoption will follow once the European Parliament and the Economic and Social Committee give their opinion. The new rules will apply as from 1 January 2023 onwards.

Other developments

Wealth Tax Commission: Final Report

On 9 December 2020 the Wealth Tax Commission (WTC) published their final report on UK wealth tax. The WTC:

  • Consider that a one-off wealth tax would be feasible, but do not recommend the rate(s) at or threshold from which wealth tax could or should be applied;
  • Do not recommend the introduction of an annual wealth tax, and consider that existing taxes on wealth should be reformed and an annual wealth tax only pursued if the government have a policy of redistributing wealth; and
  • Make various recommendations for government to consider if a wealth tax is introduced, including in relation to the assets that should be in scope, and how to apply a wealth tax to new or recent arrivals and those who have recently departed from the UK.


Freeports - Prospectus published; bidding process open in England

On 16 November 2020, HM Treasury published its Freeports bidding prospectus. The prospectus is a guide for bidders competing for Freeport status in England. It provides additional detail on the UK’s Freeports model, including how Freeport levers relating to customs, tax, planning, regeneration and innovation will work. In addition to the customs-related benefits, the tax-related measures include:

  • Stamp Duty Land Tax relief
  • Enhanced Structures and Buildings Allowances
  • Enhanced Capital Allowances
  • Employer National Insurance Contributions Rate Relief
  • Business Rates Relief


The prospectus outlines what bidders are expected to set out in their proposals and how they can take full advantage of each measure. The prospectus also explains how Freeports should be delivered, and provides details of the selection process, with successful Freeport locations to be announced in the spring. Bidders wanting to apply for Freeport status should complete the Freeports Bidding Portal form by noon on 5 February 2021 (see

Spending Review 2020

The Chancellor delivered his spending review for 2021-22 to Parliament on 25 November 2020. There were no significant tax policy announcements. See

The main documents published were:

The Office for Budget Responsibility published its Economic and fiscal outlook – November 2020 (see together with an Overview (see and Executive Summary (see

National Living Wage (NLW) and National Minimum Wage (NMW) rates from April 2021 were confirmed. The NLW will increase by 2.2% to £8.91, and will be extended in scope to apply to 23- and 24-year-olds for the first time. See

Dbriefs webcasts

The next Dbriefs webcast is on Tuesday 15th December 2020 at 12.00 GMT/13:00 CET on the topic of UK Tax Monthly Update. During the webcast our panel of experts will provide an update on changes to UK business taxation (including corporate tax, VAT, payroll taxes and other taxes and duties). For more information and to view past webcasts on demand visit