Highlights from the broader tax news week ending 21 July, which includes: HMRC clarification on working from home deduction, confirmation that CJRS and SEISS grant claimants cannot participate in MTD ITSA pilot and new VAT1 form for manual registrations, as well as HMRC's priorities for 2021/22 and its plans for dealing with tax debt.
HMRC clarifies employees’ working from home deduction
HMRC has confirmed ICAEW Tax Faculty’s interpretation that eligible employees can claim the full year’s entitlement to the £6 per week (£26pcm) working from home deduction against earnings for 2020/21 and 2021/22 if they have been told to work from home because of coronavirus by their employer, even if it has been for only one day during the tax year(s). The best way to claim is via HMRC’s online portal. However, the portal cannot be used by agents, and employees in self assessment must claim via their tax returns. At 27 June 2021, 794,819 claims had been made for 2021/22 via the portal. Read more in "Working from home tax relief continues but new claims required" (7 April).
MTD ITSA pilot closed to SEISS and CJRS claimants
Taxpayers that have claimed grants under the Self-Employment Income Support Scheme (SEISS) or the Coronavirus Job Retention Scheme (CJRS) will not be able to join the Making Tax Digital for income tax self assessment (MTD ITSA) pilot for 2021/22. HMRC had intended to deliver the functionality to allow such taxpayers to join the pilot for 2021/22 (having excluded them for 2020/21) but has now decided to prioritise functionality needed for the longer term.
How HMRC plans to deal with tax debt
HMRC has set out its approach to recovering tax debt from individuals and businesses and via company voluntary arrangements as government measures relating to the coronavirus pandemic come to an end and economic activity increases. It pledges to continue supporting viable businesses where it can, making sure they are accessing other government support available to them, such as the Bounce Back and Recovery Loan schemes. HMRC reminds businesses that where they need more time to pay their tax, it will continue to take a flexible approach to Time to Pay, providing them with bespoke affordable payment plans following a review of their financial affairs. It also recommends calling its dedicated Payment Support Service as soon as a business requires assistance.
HMRC introduces new ‘pay by bank account’ payment method
Taxpayers and agents who pay HMRC via debit or corporate credit cards now have the option to make payments straight from their bank accounts, HMRC confirmed in Agent Update 86. After logging into an HMRC online account, taxpayers can be connected to their online banking to authorise a secure payment and then returned to HMRC. All payment details will be pre-populated to ensure that the correct payment reference number will be used. HMRC has confirmed the payment method is currently only available to customers using their HMRC online accounts, but it plans to extend the service to those who do not wish to use an online account and other regimes. Find out more.
New HMRC tool to help decide whether IHT is due
HMRC has launched a tool to assist with calculating the value of an estate. It is designed to work out the approximate value of the estate and help to decide whether any inheritance tax (IHT) is likely to be due. It does not, however, provide an estimate of the amount of IHT due.
New VAT1 form for manual applications for VAT registration
HMRC has requested that businesses wishing to register for VAT by post should use the new “print and post” version of the VAT1. It appears that a significant number of older versions of VAT1 are still being used by agents. HMRC claims that using the new form should help with the correct and efficient processing of the manual applications. All businesses registering by post must print out, complete and post the VAT1 form.
GAAR: Providing employee rewards via contributions to a trust ‘unreasonable’
The GAAR Advisory Panel has concluded that a scheme involving the transfer of company profits for the benefit of employees via a trust was a not a reasonable course of action in relation to the relevant tax provisions. On 14 July, the Advisory Panel published an opinion relating to the scheme made on 11 May 2021. Following the transfer to the trust, for which the company claimed a corporation tax deduction, funds were subsequently made available to employees of the company by way of loans. These were purported not to carry any liability to income tax or national insurance contributions. Read the opinion in full.
HMRC publishes delivery plan for 2021/22
Jim Harra, HMRC’s Chief Executive, has confirmed that the organisation’s “immediate priority” for 2021/22 is the continued administration of the government’s COVID support schemes. In his introduction to HMRC’s latest outcome delivery plan, he also highlighted its efforts to support businesses following the end of the transition period with the EU and the work needed to build a tax systems that is “fully digital and works closer to real-time”. The delivery plan, the first to be published since June 2019, outlines HMRC’s priority outcomes and its strategies for achieving them. The document confirms that alongside delivering Budget and legislative announcements, priority one outcomes include implementing anti-evasion measures and managing time to pay. Read the plan in full.
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