Highlights from the broader tax news for the three-week period ending 5 January 2022, including: an increase to late payment interest rates; the Welsh Budget; the Spring Statement date; refunds of VAT for businesses established outside the UK; COVID easements for heritage assets; and updated IHT forms.
HMRC increases late payment interest rates
As HMRC interest rates are linked to the Bank of England base rate, the increase in the base rate from 0.1% to 0.25% on 16 December 2021 has triggered an increase in rates for late payments. The rate is increased from 1.1% to 1.25% from 27 December 2021 for quarterly instalment payments. Late payment interest for other payments is increased from 2.6% to 2.75% from 4 January 2022. The rate of interest paid by HMRC on repayments remains unchanged at 0.5% as this rate is calculated as the higher of:
- 5%; and
- the Bank of England base rate minus one.
The Welsh Government published its draft Budget for 2022-23 on 20 December 2021. Parity was retained with England and Northern Ireland on income tax rates, Welsh Landfill Tax (Landfill Disposals Tax) will rise with RPI inflation, similar to the rest of the UK, and no immediate changes were made to the rates and bands of Land Transaction Tax (LTT). However, a consultation was launched on local variation to (LTT) rates for second homes, short term holiday lets and potentially other additional residential properties and the Tax Policy Report promises a consultation on a tourism levy in autumn 2022.
Spring Statement 2022
The Chancellor of the Exchequer has commissioned the Office for Budget Responsibility (OBR) to produce an economic and fiscal forecast for Wednesday 23 March 2022.
Refunds of VAT for businesses established outside the UK
Some non-EU businesses claiming refunds of VAT from HMRC for the year 1 July 2019 to 30 June 2020 have encountered difficulties obtaining a certificate of status to enable the refund. The deadline for submitting a certificate of status had been extended to 31 December 2021. In Revenue and Customs Brief 15 (2021), HMRC has stated that it will allow overseas businesses more time to submit a valid certificate of status in specific exceptional circumstances, caused by a one-off, unavoidable event (eg, a global pandemic, national epidemic, national emergency or government shutdown). However, the certificate must be supplied within a reasonable time after it was issued (usually within 30 days). Businesses may need to give evidence of the delay, and that they requested the certificate within a reasonable time. Read HMRC’s guidance.
COVID easements for heritage assets
Heritage assets (including buildings, land, works of art and other objects) are exempt from inheritance tax and capital gains tax provided certain conditions are met, including allowing public access to view them. HMRC has updated its guidance on the easements in place during the coronavirus pandemic, to reflect that measures for closing or delaying the opening of a property have been extended until 1 April 2022.
Updated IHT forms
Following changes made to the excepted estates rules that came into force from 1 January 2022, forms IHT205 (return of estate information), IHT217 (claim to transfer unused nil rate band for excepted estates), C5 (SE) (2006) (information about small estates if the deceased was a permanent resident of Scotland) and C5 (2006) (return of estate information if the deceased was a permanent resident of Scotland) should not be used for deaths on or after 1 January 2022. New versions of forms C1 (applying for confirmation if the deceased lived in Scotland) and C4 (corrective inventory and account (Scotland)) are available for deaths on or after 1 January 2022 and form IHT207 (return of estate information where the deceased had their permanent home abroad and limited assets in England, Wales or Northern Ireland) notes that there is a change to the residency requirements of the person who died from 1 January 2022. Read more about excepted estates from 1 January 2022.
ICAEW Know-How from the Tax Faculty
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