HMRC Announcements

This Stakeholder Digest provides information on announcements made today as part of ‘L-Day’ or ‘Legislation-Day’. Many of these are relevant to the work of HM Revenue & Customs (HMRC).

There is also information relevant to your members on the Coronavirus Job Retention Scheme (CJRS), today’s PAC session with Jim Harra and how we are continuing to support customers and the economy.

• Extension to the Coronavirus Job Retention Scheme – more information available
• HMRC Chief Executive appears at Public Accounts Committee today
• Issue briefing update: How HMRC will continue to support customers and the economy
• Extending the Annual Investment Allowance provisional £1 million cap
• Raising Standards
• Tackling Promoters of Tax Avoidance
• Government Response: Tackling Construction Industry Scheme abuse
• Consultation on the design of Making Tax Digital (MTD) for Corporation Tax
• Plastic Packaging Tax consultation response and draft primary legislation
• Hybrids Rules
• R&D SME tax credit PAYE cap
• Tobacco Uprate Duty
• Tax implications of the withdrawal of the London Inter-Bank Offered Rate (LIBOR)
• Off-Payroll working rules
• Notification of uncertain tax treatment by large businesses
• Timely Tax Payments and Review of Tax Administration Framework
• Soft Drinks Industry Levy (SDIL) milk review

EXTENSION TO THE CORONAVIRUS JOB RETENTION SCHEME (CJRS)

The new Coronavirus Job Retention Scheme (CJRS) guidance is now available on GOV.UK.

Employers are now able to apply for CJRS online for periods from 1 November. They will need to submit any claims for November by 14 December.

What’s new in the support available

• CJRS has been extended to 31 March 2021 for all parts of the UK. From 1 November, the UK Government will pay 80% of employees’ usual wages for the hours not worked, up to a cap of £2,500 per month. This will be reviewed in January.
• Employers and employees do not need to have benefited from the scheme before to claim for periods from 1 November. Go to GOV.UK for full eligibility criteria.
• HMRC intends to publish details of employers who use the scheme for claim periods from December, and employees will be able to find out if their employer has claimed for them under the scheme.
• There are now monthly deadlines for claims. Claims for periods starting on/after 1 November must be submitted within 14 calendar days after the month they relate to, unless this falls on a weekend, in which case the deadline is the next week day. For further details go to GOV.UK.
• The Job Retention Bonus will no longer be paid in February 2021 and an alternative retention incentive will be put in place at the appropriate time.
• The launch of the Job Support Scheme has also been postponed.

What employers need to do now

Submit any claims for periods up to 31 October on or before 30 November. Claims for periods up to 31 October will not be accepted after 30 November. Claims are subject to eligibility and the rules in force at the time.

What employers need to do for their claims for periods from 1 November

• Read the new guidance on GOV.UK to check if they are eligible.
• Agree working hours with employees they wish to furlough for November and agree any changes to their employment contract.
• Work out how much they can claim for their employees using our CJRS calculator and examples on GOV.UK.
• Submit any claims for periods from 1 November no later than 14 December.

Employers will need to keep any records that support the amount of CJRS grant they claim, in case HMRC needs to check them. Employers can view, print or download copies of their previously submitted claims by logging onto their CJRS service on GOV.UK.

Further support

Thousands of people have viewed, and benefited from, our live webinars which now offer more support on changes to CJRS, and how they affect employers.

Our phone lines and webchat remain very busy, so the quickest way for employers to find the support they need is on GOV.UK. This will leave our phone lines and webchat service open for those who need them most.

HMRC CHIEF EXECUTIVE APPEARS AT PUBLIC ACCOUNTS COMMITTEE TODAY

Today Jim Harra, our First Permanent Secretary and Chief Executive, appeared at the Public Accounts Committee (PAC), alongside Jo Rowland, Director of HMRC’s Covid-19 Response Unit, Sir Tom Scholar, Permanent Secretary at HM Treasury and Beth Russell, Director General for Tax and Welfare. The session focussed on the National Audit Office’s recent report entitled: ‘Covid-19: Support for Jobs’. You can watch the session again on ParliamentLive.TV.

Jim welcomed the NAO’s report into our successful delivery of the CJRS and SEISS schemes and said he was very grateful for the praise which they gave both HMRC and the Treasury.

Jim outlined in considerable detail how HMRC both designed and implemented the Government’s Covid-19 support schemes and updated the Committee on our latest performance data. The design and timing of the schemes was covered, as was response to the schemes from business, trade unions and representative bodies. Both Jim and Sir Tom spoke highly of the level of collaboration we have received from our stakeholders.

Jim and Jo were questioned at length on HMRC’s approach to tackling fraud and error within the schemes. To get the level of support to people at the speed required, we had to accept considerable risk upfront – there was no other way to deliver the help in time. But Jim explained that HMRC had designed the schemes to minimise fraud from the outset, and we have rejected or blocked thousands of fraudulent claims. He said that HMRC has already begun post-payment compliance work on both schemes, helping customers to correct any mistakes made in applications but also challenging the highest risk claims. Jim updated the Committee that HMRC has already made three arrests for suspected furlough fraud and three arrests linked to fraud of the Eat Out to Help Out scheme, with additional criminal investigations underway

Jim was clear that our immediate priorities are still to help people cope with the economic impact of COVID-19 and protect the system from criminal attacks. HMRC will continue to deliver for the government, with the extension of CJRS to March next year. He said that HMRC is navigating an extraordinary set of challenges this year – and we will continue to do so, acting in the national interest and taking decisions that support our customers and deliver on the government’s urgent priorities.

ISSUE BRIEFING UPDATE: HOW HMRC WILL CONTINUE TO SUPPORT CUSTOMERS AND THE ECONOMY

We have updated our online briefing document, which details how HMRC will work with customers and stakeholders while coronavirus (COVID-19) continues to impact the country.

The document contains information about the support schemes and policy changes that HMRC has implemented and HMRC’s principles on tax collection, benefits payments, compliance checks and debt activity.

The briefing entitled ‘How HMRC will continue to support customers and the economy’ can be found on GOV.UK.

EXTENDING THE ANNUAL INVESTMENT ALLOWANCE PROVISIONAL £1 MILLION CAP

The Government has announced that it is extending the current temporary level of the Annual Investment Allowance (AIA) of £1,000,000 by one year covering 1 January to 31 December 2021. The legislation will be introduced before the end of the financial year. This extension gives enhanced tax relief and simplifies taxes on plant and machinery expenditure, as well as providing businesses with upfront cashflow support during continuing COVID-related uncertainty. From 1 January 2022, the AIA will revert to £200,000 per annum. You can find out more about the AIA on GOV.UK.

RAISING STANDARDS

The Government has published a Summary of Responses received on the call for evidence on Raising Standards in the Tax Advice Market on GOV.UK.

The call for evidence recognised that we need to raise standards in the tax advice market and ensure people have access to good quality advice.

Next steps were published alongside the Summary of Responses which includes a consultation on the requirement for all tax advisers to possess appropriate levels of professional indemnity insurance. The consultation, expected next year, will also seek feedback on the definition of tax advice and the type of activities that should be included.

TACKLING PROMOTERS OF TAX AVOIDANCE

HMRC is taking further action to tackle promoters of tax avoidance schemes by introducing a new package of measures. These will disrupt the business model of offshore promoters, directly tackle the secrecy on which promoters rely, disrupt the economics of tax avoidance by ensuring that promoters face financial consequences and give HMRC additional powers to act against companies that continue to promote schemes.

GOVERNMENT RESPONSE: TACKLING CONSTRUCTION INDUSTRY SCHEME ABUSE

The Government announced at Spring Budget 2020 a consultation to tackle abuse of the Construction Industry Scheme (CIS). A consultation document was published 19 March 2020 setting out proposals.

HMRC has published a Summary of Responses and the draft legislation which will tackle false claims being made to HMRC. The legislation, and supporting regulations, will give HMRC the power to amend the effect of certain CIS deduction claims on employer returns. Other legislative changes include modifications to the current rules on the cost of materials, deemed contractors and an expansion to the scope of the CIS false registration penalty.

The Government will continue to consider any future supply chain measures in light of the information received from this consultation, as well as other changes to the CIS scheme to protect against fraud and abuse.

The measure is published on GOV.UK alongside details of the draft legislation, and the Summary of Responses. The Government welcomes comments on the draft legislation by 7 January 2021. If you would like to provide a response, please email cisconsultations@hmrc.gov.uk.

The changes to the CIS will be legislated in Finance Bill 2021 and apply from April 2021.

CONSULTATION ON THE DESIGN OF MAKING TAX DIGITAL (MTD) FOR CORPORATION TAX

In July, the Government published ‘Building a trusted, modern tax administration system’. As part of this we announced a progressive extension of Making Tax Digital (MTD), notifying our intention to consult later in the year on the design of what the MTD system should look like for Corporation Tax (CT).

We remain committed to extending the associated benefits to businesses that have incorporated to become companies. As businesses increasingly embrace digital ways of working, we have today launched the consultation on the design of MTD for Corporation Tax (CT). This consultation will remain open for 16 weeks. Further information can be found on GOV.UK.

We invite views and engagement through various methods, including via email and post (contact details for this can be found in the consultation document). We will also be conducting a series of virtual events to understand the views of those who may be affected by MTD for CT or who have a direct interest in the consultation and further details will be available shortly.

PLASTIC PACKAGING TAX CONSULTATION RESPONSE AND DRAFT PRIMARY LEGISLATION

The Government has published a Summary of Responses to the Plastic Packaging Tax consultation which closed in August 2020 on GOV.UK. The summary document confirms positions on the detailed design and implementation of the tax.

Alongside the Summary of Responses, the Government has also published draft primary legislation for technical consultation, explanatory notes, and a Tax Information and Impact Note. You can view these documents on GOV.UK.

HYBRIDS RULES

The Government is publishing its response to the recent consultation on the rules on Hybrids and other mismatches, which includes several proposed changes to the legislation. The Summary of Responses and draft legislation relevant to some of the proposed changes can be found on GOV.UK.

These changes are intended to ensure that the UK’s hybrids rules are appropriately targeted and proportionate, with the benefit of three years of UK experience since the rules came into effect; and taking into account the international landscape as other jurisdictions implement the relevant recommendations from the OECD’s Base Erosion and Profit Shifting (BEPS) project.

The Government welcomes comments on the draft legislation by 7 January 2021. If you would like to provide a response, please email mailboxhybrids@hmrc.gov.uk.

R&D SME TAX CREDIT PAYE CAP

At Budget 18 the Government announced that a cap set at 300% of a company’s PAYE/NIC liability would be applied to payable credit claims. The Government has consulted extensively and has now published the draft legislation for this measure, and a Summary of Responses can be found on GOV.UK. The Government welcomes comments on the draft legislation by 7 January 2021. If you would like to provide a response, please email david.harris@hmrc.gov.uk or yasmin.achha@hmrc.gov.uk.

The changes to R&D SME tax relief will be legislated in Finance Bill 2021 and apply from 1 April 2021.

TOBACCO UPRATE DUTY

On 16 November 2020, tobacco duties are increasing. The Government is raising tobacco duties to help reduce the prevalence of smoking in the UK and raise vital revenue for public services. Duty on hand-rolling tobacco (HRT) is rising by the Retail Price Index (RPI) +6%, the Minimum Excise Tax (MET) for cigarettes is rising by RPI +4% and all other tobacco duties are rising by RPI +2%. The duty rise is likely to be passed onto consumers. More information on tobacco duty rates can be found on GOV.UK.

TAX IMPLICATIONS OF THE WITHDRAWAL OF THE LONDON INTER-BANK OFFERED RATE (LIBOR)

HMRC has published its response to the consultation on the tax impacts of the withdrawal of LIBOR. Draft legislation has been published to ensure that where the tax legislation makes reference to LIBOR, it continues to function as intended after the end of 2021. HMRC has also published guidance setting out its view on the taxation implications for business and individuals of changes to financial instruments in the context of reform of LIBOR and other benchmark rates.

OFF-PAYROLL WORKING RULES

The Government has announced its intention to make a technical change to the legislation relating to the off-payroll working (OPW) rules in the next Finance Bill. This corrects an unintended widening of the definition of an intermediary for the purposes of the rules. It will ensure that the legislation operates as intended from 6 April 2021 for engagements where an intermediary is a company.

Customers who are a medium or large-sized non-public sector organisation, or a contractor, need to start to prepare for the changes to the OPW rules, which will come into effect on 6 April 2021. HMRC recently published technical guidance on GOV.UK about how it will apply the legislation in practice. There is also a range of education and support resources already available on GOV.UK to help to ensure customers have time to prepare for the changes when suitable for them.

NOTIFICATION OF UNCERTAIN TAX TREATMENT BY LARGE BUSINESSES

To give affected businesses time to prepare, the government is delaying, until April 2022, the implementation of a new requirement for large businesses to notify HMRC where they have adopted an uncertain tax treatment. It is right to tackle the tax gap in this area, and important to get the detail right. Further consultation will ensure the final design tackles the tax gap in a proportionate and effective manner whilst keeping administrative burdens to a minimum.

TIMELY TAX PAYMENTS AND REVIEW OF TAX ADMINISTRATION FRAMEWORK

On 21 July, the government committed to publishing calls for evidence on Timely Tax Payments and a Review of the Tax Administration Framework. Given the continued pressures of the COVID-19 outbreak, and with other consultations in progress, the Government will now publish these documents in Spring 2021.

SOFT DRINKS INDUSTRY LEVY (SDIL) MILK REVIEW

In 2017, the Government made a commitment to review the exemption for sugary milk and milk-substitute drinks from the Soft Drinks Industry Levy (SDIL) by 2020. The Government has been clear that if industry does not make enough progress on voluntarily reformulating these drinks, the Government may extend the SDIL to include them. In light of Public Health England’s latest reformulation report (published earlier this month) that shows good progress has been made in sugar reduction of milk-based drinks, the Government will next consider the exemption for sugary milk and milk-substitute drinks in 2022 after the full reformulation programme completes.