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 | 13/11/2020

COVID-19 measures and announcements

COVID-19: help and information

A reminder that we are running a weekly 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.

Coronavirus Job Retention Scheme and Self-Employment Income Support Scheme extended

The Chancellor announced on Thursday 5 November that the Coronavirus Job Retention Scheme (CJRS) will remain open until 31 March 2021 (although the funding level will be reviewed in January to consider whether it remains at an appropriate level). Employees will receive 80% of their usual salary for hours not worked, up to £2,500 a month (with any reduction in government funding following the review taking effect from 1 February 2021 at the earliest).

This supersedes the Chancellor’s announcement made following the Prime Minister's confirmation of new COVID-19 restrictions in England that the CJRS, which had been due to end at midnight on 31 October, would be extended by one month. See  It follows that the original purpose of the Job Retention Bonus, i.e. to incentivise employers to keep people in work until the end of January, falls away, so this will not proceed as planned. Instead, the government 'will redeploy a retention incentive at the appropriate time.'  

Guidance has been published for CJRS claims for periods starting on or after 1 November 2020 to 31 January 2021, when there will be a review of the policy. See HMRC have now updated their guidance pages. See and related pages.

The Chancellor also announced changes to the Self-Employment Income Support Scheme (SEISS), to mortgage holidays and to business grants. The third SEISS grant covering November to January will now be calculated at 80% of average trading profits, up to a maximum of £7,500 (instead of 55% of profits up to a maximum of £5,160, the figures announced earlier in the week). The government had already announced that there will be a fourth grant covering February 2021 to April 2021. See Further details, including the level of the fourth grant, will be set out in due course.

HMRC’s factsheet covering the changes indicates that claims for the extended CJRS can be made from 8am on Wednesday 11 November. Claims made for November must be submitted to HMRC no later than 14 December 2020. The window for claiming a third SEISS grant will open on 30 November, two weeks earlier than originally announced. See

Options to tax: further extension to period for notifying HMRC

HMRC have confirmed that decisions to opt to tax property for VAT purposes which were or are made between 15 February 2020 and 31 March 2021 can be notified to HMRC within 90 days, rather than the customary 30 days. Previously, this concession was only going to apply to decisions made by 31 October. See

HMRC guidance on payments on account

HMRC have updated their guidance on the deferral of the July 2020 payments on account. This includes clarification of the entries that taxpayers should expect to see on their statements of account, depending on submission date for the 2019/20 return, and further information on Time to Pay arrangements. See

UK direct tax developments

Office of Tax Simplification: Capital Gains Tax review

Following a request from the Chancellor on 13 July 2020 and a call for evidence published on 14 July 2020 (see, the Office of Tax Simplification (OTS) has published its first report on the design of Capital Gains Tax (CGT) and the principles underpinning CGT. A second report will explore key tax technical and administrative issues and is due to be published in early 2021. The key recommendations of the first report are:

  • more closely aligning income tax rates and CGT rates or addressing boundary issues between CGT and income tax;
  • reducing the Annual Exempt Amount in conjunction with considering inter alia reforms to the current chattels exemption and improving the real time capital gains service;
  • considering removing the capital gains uplift on death and instead providing that the person inheriting the asset is treated as acquiring it at the historic base cost of the deceased; and
  • consider replacing Business Assets Disposal Relief (formerly known as Entrepreneurs’ Relief) with a relief more focused on retirement.

The OTS first report can be accessed at Our briefing document summarising the key points in the report. See

Unallowable purpose and transfer pricing: First-tier Tribunal

The First-tier Tribunal has published its decision in BlackRock Holdco 5 LLC v HMRC. BlackRock Holdco 5 LLC, a UK tax resident US LLC, entered into loans of US$4 billion with its parent company to fund an acquisition of the US business of a third party seller. The use of a UK borrower in a US chain of businesses was challenged by HMRC under the legislation on loan relationships for unallowable purposes and under transfer pricing legislation. HMRC argued that the effect of both sets of provisions was to reduce the UK finance cost deductions to nil. The Tribunal found in the taxpayer’s favour in respect of both challenges. See

Hopscotch Ltd: ATED; badges of trade: taxpayer's appeal dismissed by Upper Tribunal

The Upper Tribunal has dismissed the taxpayer's appeal in Hopscotch Limited, in which the central issue is whether a company had a trade. The taxpayer company, struggling to sell an expensive residential property it had owned since 1993, spent two years redeveloping and improving the property to market standards, before eventually re-listing it for sale in 2017. The company argued that during the period of redevelopment, it qualified for a statutory relief from the Annual Tax on Enveloped Dwellings (ATED) on the grounds that it was carrying on a 'property development trade'. Applying the case law to the facts, the First-tier Tribunal decided this activity could not be considered a trade.

The Upper Tribunal held that the First-tier Tribunal correctly stated the core issue. The critical question was whether there was sufficient evidence that the company had resolved to hold the property for a trading purpose. In answering that question, it was open to the First-tier Tribunal, citing the Marson case, to consider whether the transaction was carried through in a manner typical of a trade of property development. As a specialist tribunal, it was entitled to use its experience to assess the way in which trades are ordinarily carried on. Nor did the First-tier Tribunal make a legal error in its evaluation of those findings, as the taxpayer argued. In relation to each of the findings, the First-tier Tribunal considered whether there was any evidence of a change of intention; it was looking for evidence to establish whether the company was doing more than merely improving the property to facilitate its sale and found none. The submission that the taxpayer was a 'commercial' company and, as it was not an 'investment' company must therefore be a 'trading' company, was also rejected. There was no evidence that the company was a 'commercial' company; in any case the notion that tax legislation necessarily distinguishes between trading companies and investment companies is false. A further argument that there was a series of findings of fact that 'unequivocally' pointed to trading was simply a disguised attempt to reargue the First tier Tribunal's factual findings. See

Indirect tax developments

Combinova: ‘use’ of goods when applying inward processing relief: CJEU

Combinova imported goods into Sweden on 23 November 2017, processed them, and re-exported them on 11 December. It relied on inward processing relief (IPR) for relief from import VAT and duty, but was two weeks late in submitting the required bill of discharge. A customs debt arose because of this non-compliance, but that debt would be extinguished by Article 124 of the Union Customs Code if Combinova could demonstrate that the goods had not been ‘used or consumed’ and had in fact been re-exported. The CJEU has now ruled that ‘use’ referred to use which went beyond the processing which was authorised under IPR. If ‘use’ meant any sort of processing (as the Commission argued), then Article 124 would never have any effect on goods which were imported under IPR. Provided that Combinova had simply processed the goods as expected, had in fact re-exported them, and there was no suggestion of deception by the taxpayer, the import VAT and duty debt should be extinguished. See

Weindel Logistik: recovering VAT on imports owned by others – CJEU

Weindel Logistik imported goods belonging to a Swiss company from Hong Kong, China, and Switzerland into Slovakia. It reconditioned and repackaged the goods before exporting them again or dispatching them around the EU, and charged the Swiss owner for repackaging services. The CJEU has now issued a reasoned order that Weindel Logistik was not entitled to recover VAT on importing the goods unless it both had the right to dispose of the goods as owner, and could demonstrate that the imports had a direct and immediate link to its economic activity. In its view, the tests for whether a business can recover input tax on purchases (i.e. whether they have a direct and immediate link to its outputs or its business as a whole, and whether the cost of the goods is incorporated in the price of the business’ supplies) apply to imports just as much as to domestic purchases. The Order is of particular interest given the recent publication of RCB 15(2020) (see confirming HMRC’s revised policy on recovery of import VAT by non-owners. See

Combined Nomenclature: new version published

In Commission Implementing Regulation 2020/1577 the European Commission has published the latest version of the Combined Nomenclature (CN), which will apply from 1 January 2021. The CN forms the basis for the declaration of goods which are being exported from the EU, and sets the customs duty rate for imports into the EU. It is also relevant to the collection of intra-Union trade statistics. The CN is therefore a vital working tool for business and the Member States' customs administrations. See

Brexit announcements

Guidance on movements of goods between Northern Ireland and Great Britain

HMRC have published guidance on the VAT arrangements for movements of goods between Great Britain (GB) and Northern Ireland (NI) under the Northern Ireland Protocol. Although the guidance does not always align with the European Commission’s approach to NI, it provides further detail on some practical considerations. In the main, goods supplied between GB and NI will be chargeable to UK VAT in the normal manner.  However, for goods sold between GB and NI that are subject to certain customs regimes or the domestic reverse charge, the customer (rather than the supplier) will account for UK VAT. VAT will be due on movements of own goods from GB to NI, but not from NI to GB. HMRC consider that there will be no requirement for a new VAT registration for sales of goods in NI (albeit the European Commission expects NI businesses that trade with the EU to use an ‘XI’ prefixed VAT registration). Intra-EU rules and simplifications (such as triangulation) will not be available for movements of goods involving GB, but will be available for movements of goods involving EU Member States and NI. See

Guidance on the end of the transition period

HMRC have written to VAT-registered businesses (see and issued a news release (see about trade with the EU from 1 January 2021. The latest letter advises businesses trading with the EU to consider obtaining professional assistance with the required declarations. It reminds businesses that the Transitional Simplified Procedures that they might have registered for have been replaced by a simplified declaration procedure, that the Trader Support Service can assist with declarations relating to moving goods to Northern Ireland, and that Intrastat declarations will still be required for exports from NI and imports into the UK next year. For further information about handling customs declarations, see Deloitte’s Global Trade Bureau ( HMRC have also updated guidance relating to XI EORI numbers for trade with Northern Ireland (see and issued new guidance relating to duty deferment (see  

End of the transition period – developments

The government has updated the Border Operating Model which provides further detail for businesses on how the GB-EU border will operate after the end of the transition period. See Amongst other things, the Model now maps out the intended locations of inland border infrastructure and provides details of a Kent Access Permit that will be mandatory for HGVs using the short strait channel crossings in Kent. The government has also announced that it will be increasing the support that businesses can access from the Customs Grant Scheme. See The Customs (Transitional Arrangements) (EU Exit) Regulations 2020 SI 2020 No 1088 amends various transitional customs regulations in line with the Model. See In relation to Northern Ireland, the UK has published a draft SI (The Definition of Qualifying Northern Ireland Goods (EU Exit) Regulations 2020) setting out the definition of qualifying Northern Ireland goods (see; and the Commission has published a draft Directive explaining how businesses in Northern Ireland will need an “XI” VAT registration number in order to continue trading with the rest of the EU under the Northern Ireland Protocol (see

Other developments

New Finance Bill draft clauses, consultations, policy announcements

The government has published responses to a number of consultations the deadlines for which were extended due to COVID-19, together with draft legislation for the measures concerned. These cover the proposed plastic packaging tax, measures to tackle construction industry scheme abuse, the R&D SME tax credit PAYE cap, the tax implications of the withdrawal of the London Inter-Bank Offered Rate (LIBOR) and the rules on hybrid and other mismatches. The consultation on draft clauses will close on 7 January 2021. Also published were a summary of responses to the call for evidence on the market for tax advice, and a new consultation on Making Tax Digital for corporation tax. Other announcements have been made on extending the temporary £1 million cap set at Budget 2018 for the Annual Investment Allowance for capital expenditure on plant and machinery until 1 January 2022, on tobacco and vehicle excise duties, on measures to tackle promoters of tax avoidance, on a technical change to off-payroll legislation, and on delaying other measures and reviews, including a deferral of the requirement to notify uncertain tax treatment by large businesses to April 2022. HMRC’s consultation tracker has been updated following these announcements.

Office of Tax Simplification: Claims and Elections review

Following the launch of its review of claims and elections (see, and a call for evidence published on 11 February 2020 (see, the OTS has published a report on ways in which the administrative processes for making claims and elections could be simplified across income tax, corporation tax, capital gains tax and VAT. The key recommendations are: increased functionality of the personal tax account and the business tax account; changes to employee expenses to improve the process of making a claim, as well reducing the number of different levels of flat rate expenses; and improvements to HMRC online forms. See

Spending Review will be delivered on 25 November 2020

The Chancellor has announced that he will deliver the 2020 Spending Review on 25 November 2020. See As previously confirmed, this was originally meant to be a comprehensive spending review, setting departmental budgets for the next three financial years, but COVID-19 has caused the government to limit it to 2021-22 only. The Office for Budget Responsibility has confirmed that it will publish its latest outlook for the economy and public finances in the economic and fiscal outlook alongside the Spending Review. See

Institute for Fiscal Studies:  Green Budget 2020

The Institute for Fiscal Studies (IFS) launched its Green Budget 2020 report on 13 October 2020. The IFS report analyses the economic developments since the March Budget, the uncertainty over the path of the economy in coming years, and the decisions faced by the Chancellor as he decides how policy should respond to support households, business and public services. See A briefing summary is also available (see, together with a recording of the launch and the slides from the presentations (see

Draft non-resident stamp duty land tax regulations: consultation

HMRC have published draft regulations which set out proposed changes to the 2003 stamp duty land tax (SDLT) return regulations for public consultation. The proposed changes reflect the planned introduction of a 2% SDLT surcharge on non-residents purchasing residential property in England and Northern Ireland with effect from 1 April 2021. The consultation closes on 23 November 2020. See

UK property rich CIVs: draft regulations for consultation

Finance Act 2019 expanded the scope for taxing gains made by non-UK residents on UK property, including specific rules for ‘UK property rich’ collective investment vehicles (CIVs) and their investors. HMRC have published for consultation draft regulations to amend those rules, specifically to address instances where disproportionate burdens can arise for certain investors, and to correct minor drafting errors. The changes mainly affect non-UK residents, but they may also affect investors resident in the UK. The deadline for responses is 16 December 2020. See

Dbriefs webcasts

The next Dbriefs webcast is on Thursday 17th November 2020 at 11.00 GMT/12:00 CET on the topic of UK Coronavirus Job Retention Scheme Extended. During the webcast our panel of experts will discuss the latest developments and what organisations should consider, including eligibility criteria, the claims process, and looking ahead. For more information and to view past webcasts on demand visit