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 | 16/10/2020

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.

Job Support Scheme

As part of his Winter Economy Plan, the Chancellor announced that a new scheme, the Job Support Scheme, would be introduced from 1 November 2020 to replace CJRS. Under the new scheme, the employee must work at least a third of their usual hours. For every hour not worked, the employer and the government will pay a third each of the usual hourly wage for that employee (the remainder being unpaid). The government contribution will be capped at £697.92 per month.

Employees must have been on the payroll on or before 23 September and may not be made redundant or put on notice of redundancy whilst on the scheme. All small and medium enterprises with a UK bank account and PAYE scheme are eligible. Large employers will only be eligible on meeting a financial assessment test to limit support to those who have lost turnover due to COVID-19. Large businesses are also expected not to make distributions whilst accessing the grant. HMRC’s factsheet is available here:

Job Support Scheme expansion

The Chancellor has further announced that the government’s Job Support Scheme will be expanded to protect jobs and support businesses required to close their doors as a result of coronavirus restriction. See The government will pay two thirds of employees’ salaries to protect jobs over the coming months up to a maximum of £2,100 a month. Cash grants for businesses required to close in local lockdowns will be increased to up to £3,000 per month.

Employers will not be required to contribute towards wages and will only be asked to cover employer NICs and pension contributions. Businesses will only be eligible to claim the grant while they are subject to restrictions and employees must be off work for a minimum of seven consecutive days.

The scheme will begin on 1 November and will be available for six months, with a review point in January. A fact sheet has been issued with further details. See

Job Retention Bonus: Treasury Direction; HMRC guidance

HM Treasury has published a Treasury Direction (see in relation to the Job Retention Bonus (JRB), the £1,000 one-off taxable payment to employers for each eligible employee furloughed and then kept employed until 31 January 2021, together with a press release explaining the JRB. See HMRC have published the following guidance on the JRB, which can be claimed between 15 February 2021 and 31 March 2021:

Self-employment income support scheme (SEISS)

As part of his Winter Economy Plan, the Chancellor also announced that there would be an extension to SEISS for six months. The financial eligibility criteria for past profits will be the same as before, but a narrower population will qualify due to the new requirements for the trade to be currently active and to have had reduced demand due to Covid-19 (rather than the more general “adversely affected” rule). The next grant will be based on 20% of profits and subject to a cap of £1,875. Further details are in HMRC’s Policy Paper here:

Coronavirus Job Retention Scheme (CJRS): updated HMRC guidance

HMRC have updated their guidance on the CJRS to reflect certain changes to the scheme. 30 November 2020 is the last day employers can submit or change claims for period ending on or before 31 October 2020 (see Guidance has also been issued in respect of paying CJRS grants back (see Advice on what to do if too much or not enough has been claimed has been moved into this guidance from the page ‘If you've claimed too much or not enough from the CJRS’, which has been withdrawn.

Winter economy plan: extensions to reduced rate and deferral repayments

The Chancellor has set out the Winter Economy Plan (see, under which the temporary reduced VAT rate for hospitality and tourism will be extended to 31 March 2021, and businesses which deferred VAT payments due between 20 March and 30 June this year will be able to repay them in 11 interest-free instalments during the 2021-22 financial year, rather than in full by 31 March 2021. A process allowing businesses to opt to pay by instalments will be introduced early in 2021. Given the focus on immediate measures required to respond to the COVID-19 pandemic, HM Treasury has confirmed that there will not be a Budget in November. 

Self-assessment: self-serve Time to Pay arrangements

Further to announcements in the Chancellor’s Winter Economy Plan, HMRC have confirmed that self-assessment taxpayers can now apply online for additional support to help spread the cost of their personal tax bill into monthly payments. The limit for the online payment plan service was £10,000. From 1 October 2020, this has increased to £30,000 for self-assessment taxpayers. Individuals who wish to set up their own self-serve ‘Time to Pay’ arrangements must have no outstanding tax returns, have no other tax debts and have no other HMRC payment plans set up. The debt needs to be between £32 and £30,000 and the payment plan must be set up no later than 60 days after the due date of a debt. Interest will be applied to any outstanding balance from 1 February 2021. Time to Pay arrangements are possible for larger debts and/or deferrals of more than a year, but these must be arranged by telephone rather than via the online service. See

Corporate Insolvency and Governance Act 2020 Extension Regulations

The Corporate Insolvency and Governance Act 2020 (Coronavirus) (Extension of the Relevant Period) Regulations 2020 SI 2020 No 1031 were laid on the 24 September 2020 and came into force on 29 September 2020. They make provision to extend the duration of some of the temporary measures introduced by the Corporate Insolvency and Governance Act 2020 beyond their current expiration date of 30 September 2020. They extend the relaxation of company annual general meeting (AGM) requirements to 30 December 2020; extend the restrictions on use of statutory demands and winding up petitions to 31 December 2020; extend the modifications to moratorium provisions and temporary moratorium rules to 30 March 2021 and extend the small supplier exemption from termination clause provisions to 30 March 2021. See

UK direct tax developments

HMRC Issue Briefing: disguised remuneration charge on loans; interest regulations

HMRC have updated their Issue Briefing on the disguised remuneration charge on loans to provide further information on payment support options and add more explanation about return filing arrangements. See

The Finance Act 2009, Sections 101 and 102 (Disguised Remuneration Repayment Scheme) (Appointed Day and Consequential Amendment) Order 2020 was laid before the Commons on 14 September 2020. The Order enables HMRC to pay repayment interest on payments made under the Disguised Remuneration Repayment Scheme 2020. See

UK indirect tax developments

VAT and e-commerce: Commission guidelines published

The European Commission has published explanatory notes which clarify the new VAT e-commerce rules that will come into force from 1 July 2021, and which provide practical examples for suppliers, marketplaces and platforms involved in e-commerce transactions. The notes provide further guidance on, amongst other things, the marketplace facilitation criteria and the use of simplification schemes. The Commission estimates that the new rules will generate an additional €7 billion annually, by ensuring that all e-commerce sales from outside the EU are subject to VAT. See

To hear more about the new rules and their implications for your business, you can view on demand our webcast which was held on Thursday 8 October 2020.

Trader Support Service launched

With fewer than 100 days until the end of the transition period, the government has launched the Trader Support Service (TSS), which will help traders moving goods that are affected by the Northern Ireland Protocol (including movements of goods between GB and NI) from 1 January 2021. As well as guidance, online training and webinars, the TSS will provide a free end-to-end support package to manage import, and safety and security declarations on behalf of traders. See

HMRC have written to businesses who might benefit from the TSS (see, and updated their online guidance (see

Customs guarantees and bulk declarations post-transition period

The Customs (Bulk Customs Declaration and Miscellaneous Amendments) (EU Exit) Regulations 2020 SI 2020 No 967 introduce a range of measures relating to the customs regime that will be in place following the end of the Brexit transition period. Amongst other things, they will allow businesses to defer import duty up to a threshold amount without providing a Customs Comprehensive Guarantee, if they meet eligibility criteria relating to compliance and solvency. Amounts over the threshold may also be deferred if businesses have sufficient financial standing.  They will also establish an authorisation framework to support traders using the bulked customs declaration process, which will allow parcel operators to declare multiple consignments of low value parcels in a single simplified customs declaration (if the value of each parcel does not exceed £135 and the goods contained in the parcel are not restricted or excise goods). See A public notice (available in draft) will be made so that postal operators who meet the eligibility criteria will be authorised without having to submit an application form to HMRC. See

Revenue and Customs Brief 15(2020): import VAT recovery by non-owners

HMRC have issued RCB 15(2020) which confirms HMRC's position that import VAT can only be recovered by owners of imported goods. This confirms a policy change (described as a clarification) which was set out in RCB 2(2019) in April 2019. The earlier RCB attracted widespread criticism from businesses and advisers, and HMRC have been undertaking a review of their policy in light of various examples that were provided together with explanations of the difficulties that it would cause. Having completed that review, HMRC's position remains unchanged. The RCB provides some further comments arising from the review, in relation to agents, customs warehousing, and goods imported for leasing or repairs. It also mentions postponed VAT accounting and customs special procedures. See

Schoonzicht: VAT clawback and the capital goods scheme – CJEU

In 2013 Stichting Schoonzicht constructed a block of seven residential apartments. It recovered VAT based on its intention to sell the apartments, but it could not find buyers and therefore rented out four of them (an exempt activity). The CJEU has ruled that the Dutch tax authorities were entitled to clawback 4/7 of the input tax on the construction. Schoonzicht argued that any input tax adjustment should be made under the capital goods scheme (CGS) over a ten-year period, but the CJEU saw no reason that the CGS should not co-exist with clawback provisions. Member States are allowed to correct the initial deduction of input tax where intended use varies from actual use (i.e. clawback), which is different from the CGS which is designed to address possible later fluctuations in the taxable use of capital assets. It was appropriate for input tax to be corrected by reference to first use (rather than intended use) and for the CGS to run from that point. See

Ocean Finance: offshore advertising structure not abusive – FTT

Paul Newey (trading as Ocean Finance) transferred his UK loan broking business to a new company in Jersey (Alabaster), which outsourced all the administration back to Ocean Finance. At the same time, Alabaster (rather than Ocean) procured TV advertising and, by virtue of being established in Jersey, avoided the irrecoverable VAT that Ocean had been incurring. The FTT originally rejected HMRC’s abuse of law challenge in 2010, since when the arguments have been considered by the Upper Tribunal, then the CJEU, and then back in the UK, progressing to the Court of Appeal before the FTT was asked to reconsider the case in light of two legal errors identified by the higher courts. It has now fixed those errors, systematically addressed various supplementary questions, and emphatically reconfirmed its original decision. For example, Alabaster was not managed by Mr Newey even though he owned it; Alabaster’s reliance on Mr Newey’s expertise was achieved through an outsourcing arrangement; and Alabaster was not simply “rubber-stamping” Ocean Finance’s decisions. Ocean Finance’s appeal was allowed. See

X: foodstuffs must have nutritional value – CJEU

Are aphrodisiacs food? X sold aphrodisiac powders and capsules from his shop in Amsterdam, and accounted for VAT at the reduced rate applicable to foodstuffs. The CJEU has ruled that he was probably wrong to do so. The question was whether the capsules contained nutrients which generated energy for the body to function and develop, not simply whether it was regulated as fit for human consumption. Provided that products had some nutritional value, they could be foodstuffs and any claims about their aphrodisiac qualities became irrelevant. This approach, focusing on nutritional value, is consistent with the EU legislature’s intention to reduce the VAT burden on essentials. It meant that X’s products, which were edible but appeared to have negligible nutritional content, probably did not qualify for the reduced rate. See

CCIL: HMRC succeed, but must pay costs in VAT appeal – Upper Tribunal

Care for the disabled is frequently provided by a personal assistant (PA) who visits them at home and helps them with a variety of everyday tasks. In 2019 the First Tier Tribunal ruled that operating the payroll for the PAs was closely linked to the their welfare services, and that Cheshire Centre for Independent Living's (CCIL) payroll services were therefore exempt from VAT. On appeal, HMRC realised that the PA provided their services to the disabled person as their employer, a relationship which was outside the scope of VAT. As there was no principal exempt supply, CCIL’s services could not be “closely linked” to an exempt supply. CCIL conceded the point and withdrew its appeal, but has now been awarded part of its costs. In the Upper Tribunal’s judgment, HMRC could have recognised the significance of the employer-employee relationship earlier and should have done so given that it was central to the dispute between the parties. Costs were awarded subject to a 30% reduction to reflect that CCIL’s advisers shared responsibility for failing to identify the critical issue. See

VAT: United Biscuits: no insurance exemption for pension fund management

In an insurance contract the insurer, in return for a premium, undertakes to indemnify the insured in the event of a particular risk occurring. The CJEU has previously noted that there is no particular reason for defining insurance differently for VAT and for insurance law purposes. UK pension funds have therefore been arguing that pension fund management should have been exempt from VAT, as HMRC accepted (until April 2019) that such services were exempt when provided by insurers whose services were treated as a regulated insurance activity in the UK. In United Biscuits the CJEU has rejected this argument. The fund managers did not indemnify the pension fund against any risk, and the Insurance Directives could not be applied to override this fundamental requirement for VAT exemption. In any event, the First Life Assurance Directive never intended pension fund management (an ‘operation’ which is ancillary to insurance, rather than ‘insurance’ in its own right) to be regarded as insurance. Based on the CJEU’s judgment, there is no scope for exempting the management of defined benefit pension schemes. See

Deloitte European VAT Refund Guide 2020

The 2020 edition of Deloitte VAT Refund Guide 2020 is now available. Businesses operating in countries in which they are not VAT-registered can incur significant amounts of VAT on expenses paid in those countries. The VAT Refund Guide covers the rules and procedures on how to reclaim VAT in 31 European countries. See

International developments

G20/OECD Inclusive Framework issues Pillar One and Pillar Two

On 12 October 2020, the G20/OECD Inclusive Framework on Base Erosion and Profit Shifting released two detailed ‘Blueprints’ in relation to its ongoing work to address the tax challenges arising from the digitalisation of the economy. The ‘Pillar One’ Blueprint sets out ‘building blocks’ for potential future international agreement on rules for taxable presence (nexus) in countries and profit allocation between countries to address tax challenges arising from digitalisation. The ‘Pillar Two’ Blueprint proposes a set of interlocking international tax rules such that that large multinational businesses pay a minimum level of tax on all profits in all countries. Our alert summarising the Pillar One Blueprint is here and our alert summarising the Pillar Two Blueprint is here.

Commission to appeal Apple State aid case to CJEU

The European Commission has decided to appeal to the CJEU against the General Court's judgment of July 2020 in the Apple/Ireland State aid case. The General Court annulled the Commission's decision of August 2016 that Ireland granted illegal State aid to Apple via tax rulings issued by the Irish Revenue on the method to determine chargeable profits in Ireland. See Ireland’s Minister for Finance Paschal Donohoe TD has issued a statement reiterating Ireland’s contention that no State aid was given. See

Other developments

Office of Tax Simplification review of capital gains tax: deadline extended

On 13 July 2020, the Chancellor asked the Office of Tax Simplification (OTS) to conduct a review of how individuals and smaller businesses are taxed on capital gains. See The OTS published a call for evidence in connection with the review. The call for evidence came in two parts. The first sought high-level comments on the principles of CGT by 10 August 2020, while the second and primary section of the document invites more detailed comments on the technical detail and practical operation of CGT by 12 October 2020. See The deadline for responses to the second part of the consultation has now been extended to 9 November 2020. See For Deloitte’s briefing document in relation to the OTS review, see

Non-Domestic Rating (Lists) (No. 2) Bill

The Non-Domestic Rating (Lists) (No. 2) Bill was introduced into the Commons and had its First Reading on 8 September 2020. See

It implements commitments made by the government (see on 21 July 2020 to ensure the next business rates revaluation takes effect from 1 April 2023. This revaluation will be based on property values as of 1 April 2021 so that it better reflects the impact of COVID-19. The Minister for Finance and Trefnydd to the Welsh Government announced on 11 August 2020 that the next non-domestic rates revaluation in Wales will also take effect in 2023 and will be based on property values as at 1 April 2021. See

Commons Public Accounts Committee session on Tackling the Tax Gap

The Commons Public Accounts Committee held an evidence session as part of its Tackling the Tax Gap inquiry on 7 September 2020. Evidence was given inter alia by Jim Harra, First Permanent Secretary and Chief Executive, HMRC. On compliance with the Coronavirus Job Retention Scheme (CJRS), Mr Harra said HMRC would normally use past evidence as a basis for any estimate of future fraud and error. In the current circumstances, they do not have this hard evidence, so have looked at the best available comparisons. On this basis, HMRC expect the level of error and fraud could range from 5-10% in CJRS, though they anticipate that compliance activity will bring this estimate down. See

HMRC debts: Priority on Insolvency Regulations

The Insolvency Act 1986 (HMRC Debts: Priority on Insolvency) Regulations 2020 come into force on 1 December 2020. They form part of the legislation to amend the Insolvency Act 1986 so as to make HMRC a secondary preferential creditor in insolvencies after 1 December 2020. The legislation provides for the priority of certain HMRC debts, namely VAT and ‘relevant deductions’ made from payments to employees. ‘Relevant deductions’ are specified as being tax deducted under the Construction Industry Scheme (CIS), employee NICs, income tax deducted under PAYE and deductions in respect of student loans. See

Update on freeports proposals

The government has published an update (see on its plans to create a number of freeports across the UK, as well as its response to the freeports consultation (see A freeport is a secured area inside a country’s land border, but where different customs rules apply. Additional elements such as tax reliefs and regulatory relaxations may be included. Sea, air and rail ports in England will be invited to bid for freeport status before the end of the year. The aim is for the first of these to be open for business in 2021. Benefits may include: streamlined planning processes; reliefs for business rates, stamp duty land tax, and employers’ NIC; and simplified customs procedures and duty suspensions on goods. The House of Commons Library has published a briefing on the proposals. See

Dbriefs webcasts

The next Dbriefs webcast is on Monday 19th October 2020 at 11.00 BST/12.00 CEST on the topic of UK Coronavirus Job Support Scheme (JSS) - An Introduction To Eligibility, Required Employer Funding And Submitting Claims. During the webcast our panel of experts will discuss how the new JSS may impact businesses (including eligibility, keeping supporting evidence, and submitting JSS claims). For more information and to view past webcasts on demand visit