Much has been published about these support schemes for employers and the self-employed.
New legislation is being introduced in relation to the tax treatment of these payments:
Businesses will need to carefully monitor the detailed rules of the schemes to determine whether they have been fully compliant and whether they may be liable to tax under these rules.
Residence and permanent establishment: There could be more of a risk that companies are regarded as resident in the UK or as having a PE here because of directors/employees being stuck in the UK. HMRC have issued guidance on this with the overall message that if decisions or actions are taken in the UK over a relatively short, temporary period of time, that will probably not be enough for the company to be regarded as resident or as having a PE in the UK.
R&D: There are a number of implications for R&D claims as result of COVID-19.
In brief:
Crisis-driven changes to trading activities: HMRC have published guidance on how they will treat certain changes in trade and activities for tax purposes (e.g. commencement of a new trade; providing discounted goods).
QIPs: HMRC has stated that companies can, in exceptional circumstances, make earlier claims for repayment of quarterly instalment payments
Deferral of VAT payments: payments arising from returns due to be paid between 20 March 2020 and 30 June 2020 can be deferred until 31 March 2021. This includes periodic and annual payments due. Ad hoc payments can be made before the deadline, and taxpayers must make their own arrangements to pay. Returns must still be submitted on time.
Other measures:
Coronavirus Statutory Sick Pay Rebate Scheme: introduced to reclaim employees’ SSP if they are sick due to coronavirus
HMRC has published:
New IR35 rules: delayed until April 2021, which will be a welcome temporary relief for many businesses.
Employment related securities bulletin 35 provides various updates on the impact of coronavirus on share schemes e.g.
EMI and furloughing: an amendment to the Finance Bill 2020 will be introduced to ensure that furloughing does not give rise to a disqualifying event for EMI options (in connection with the working time requirement).
SDLT refunds for 3% additional rate: HMRC have issued guidance to say that where the taxpayer has not been able to sell their main residence within the required 3 year period due to exceptional circumstances as a result of COVID-19, they may still be able to claim a refund. HMRC will assess applications made on a case by case basis.
Stamp duty: a temporary electronic process has been introduced, meaning no documents are physically stamped, and everything is dealt with by email via stampdutymailbox@hmrc.gov.uk (post should not be sent to the Birmingham Stamp Office). (This contrasts with any correspondence to be sent in relation to SDLT, which must still be posted).
Income tax: Payments on account due on 31 July 2020 may be deferred until 31 January 2020 (this applies to all taxpayers within self-assessment, not just the self-employed)
IHT: HMRC published a Trusts and Estates Newsletter on 12 June 2020 containing updates including:
Statutory residence test: temporary changes have been made to this test so that time spent in the UK on COVID-19 activities between 1 March and 1 June 2020 will not count towards the residence tests. HMRC have also published guidance stating that a number of COVID-19 related circumstances will be regarded as exceptional when deciding whether days in the UK can be disregarded.
Extension of time limits:
DAC6 new mandatory disclosure rules relating to tax avoidance: Following the recommendation from the European Commission, HMRC will extend the deadline for the first reporting requirements under these disclosures rules (due 1 July 2020) by six months.
For more information on the article above please contact Angus Bauer.
