The government has announced that the 2021 Budget will be held on 3 March 2021. In addition to producing our usual Budget briefing, we plan to hold a webinar on 5 March, which will explore some of the developments. Please keep an eye on our website for further details.

COVID-19-related matters continue to dominate much of our work, with further announcements made that included an extension of the existing furlough scheme from the end of March 2021 to the end of April 2021. Members continue to raise concerns with us about whether taxpayers and their agents will be able to meet the 31 January self assessment filing deadline, not least because they have been busy assisting clients with furlough grant claims. We have raised these problems with HMRC and recommended that it should waive penalties for returns fi led in February 2021.

At the time of writing, HMRC has confi rmed that there will be no automatic waiver of penalties for returns submitted in February, but that “no one will have to pay a penalty if they cannot file on time because of the impact of the COVID-19 pandemic”. HMRC also undertook to keep the position under review.

Although similar problems are also occurring in the completion of corporation tax returns, in these cases it appears that HMRC’s practice is to grant extensions in line with its existing practice.

On 15 December, we attended a roundtable meeting of the professional bodies chaired by the Financial Secretary to the Treasury, Jesse Norman MP, to discuss the next steps set out in the government’s response to the call for evidence on raising standards in the tax services market. HMRC discussed the proposed publication of a consultation document early in 2021 in relation to a new requirement that anybody giving tax advice must have compulsory professional indemnity insurance (PII) in place.

It was apparent from the discussion that, while a requirement for compulsory PII has the potential to improve standards among unaffiliated agents, it also raises many questions that will need to be addressed, including: the need for HMRC to understand the PII market forces and drivers; the need for adequate insurance to be held; who will monitor compliance; and that no further compliance burdens should be imposed on professional advisers who must already hold PII.

The professional bodies also discussed this matter at a scheduled meeting of the Professional Conduct in Relation to Taxation (PCRT) group on 16 December, where it was agreed that the PCRT bodies should engage with HMRC to ensure that any PII regime that is introduced works as intended and does not impose unreasonable burdens.

During the month there were virtual meetings of the Tax Faculty Board, the Tax Policy and Reputation Committee, the Practitioner Tax Committee and the Employment Taxes and NIC Committee.

As part of our consideration of HMRC’s digital agenda, we held a meeting with HMRC’s MTD team about progress on the income tax and corporation tax proposals. We agreed to hold regular meetings with HMRC staff  so that we can provide more timely input as these strands of the project develop. 

We had further discussions with members and colleagues from the Chartered Institute of Taxation (CIOT) about the potential impact of the DAC 6 provisions. Along with CIOT colleagues, we also attended a meeting with HMRC’s policy lead on DAC 6. We discussed the forthcoming release of the reporting templates and explained some of the more difficult situations that members may face if a personal reporting obligation arises.

HMRC has subsequently confirmed that the UK will no longer be applying DAC 6 in its entirety following conclusion of the Free Trade Agreement with the EU. Only arrangements that would have fallen within Category D of DAC 6 will now need to be reported, in line with the Organisation for Economic Co-operation and Development’s (OECD) mandatory disclosure rules.

We submitted a response (ICAEW Representation 113/20) to the Pillar One and Pillar Two Blueprints, which were published by the OECD on 12 October 2020. 

On 9 December, Neil Warren presented our final webinar of 2020 on practical VAT saving tips for SME businesses. Topics covered included business splitting, the flat rate schemes, and compensation and termination fees. He fi nished with 10 top tips. My thanks to Neil and to Anita Monteith for moderating the session. If you missed the webinar, or would like to watch any again, you will find them on the webinars page of our website.