TAXline News: March 2021

COVID-19-related matters continue to dominate the national headlines. At the time of writing, there is no clear end in sight. It still dominates much of the Tax Faculty’s work and we continue to engage with HMRC and HMT on the Coronavirus Job Retention Scheme: in particular, the proposal to publish details of claims made, as well as the additional conditions for the third Self-Employment Income Support Scheme grant. On 20 January 2021, Caroline Miskin gave oral evidence to the Treasury Select Committee on how the gaps in support might be addressed, which we followed up with a letter.

The other major concern was whether taxpayers and their agents would miss the 31 January self assessment fi ling deadline. Many members reported that, although they were working flat out, they would not be able to meet it in all cases. We recommended to HMRC that it should waive penalties for returns filed in February 2021. We were therefore delighted that, on 25 January 2021, HMRC announced automatic penalties for returns filed online in February 2021 would be waived. We hope that this relaxation will have helped many members and I would like to thank my colleague Caroline Miskin for pressing the case.

Given that we are likely to still be in lockdown, it is difficult to know what the Budget on 3 March will contain. Nevertheless, we submitted some representations to the Financial Secretary to the Treasury, Jesse Norman, which we followed up with a meeting in early February. We will be posting our usual detailed Budget commentary on our website, so please keep an eye open for further details.

Now that the UK has left the EU, we are receiving many reports and questions from members, both about the VAT implications and the changes to the trading arrangements and customs procedures. In respect of the latter, we are working with colleagues across ICAEW about how we can help and support members in these areas as the new arrangements bed down.

We held a regular quarterly catch up with HMRC’s Director of Customer Policy and Design where we raised concerns including current service standards and how they can be improved. We participated in a meeting of the Reward and Employment Engagement Forum, which was also attended by representatives of the Administrative Burdens Advisory Board, who discussed its work on RTI and making tax digital (MTD). We attended some regular HMRC stakeholder forums including HMRC’s guidance Strategy Forum, the Virtual Communications Group and the Issues Overview Group.

During the month, there were virtual meetings of the Tax Faculty Board, the Technical and Oversight Committee and the Tax Policy and Reputation Committee. We also attended a meeting of the pan professional group that oversees our professional conduct in relation to taxation rules and guidance.

We continued to engage with HMRC on the MTD for income tax (MTD for ITSA) proposals. We submitted a formal representation on the draft MTD for ITSA regulations and also held several informal discussions with HMRC on the changes needed before the regulations are laid before parliament. We have also gathered comments from members on the MTD for corporation tax consultation and we participated in a round table to discuss the next steps on HMRC’s tax administration strategy.

In addition to the representations mentioned above, we submitted comments on the proposed reform of arrangements to obtain permission to appeal from the Upper Tribunal to the Court of Appeal, draft legislation on changes to the Construction Industry Scheme and changes to the R&D tax relief regime for SMEs. We also wrote to HMRC querying the policy of charging basic rate tax in PAYE settlement agreements in respect of employees who are non-taxpayers. Finally, we also sought clarification from HMRC about the benefit in kind position of COVID-19 tests funded by employers from 6 April 2021.

On 13 January, Anita Monteith presented a popular webinar on HMRC’s proposals on MTD for corporation tax. On 19 January, Jo Myers and Ariana Kosyan from EY gave a presentation on DAC 6 in the light of the changes to the rules that were announced following the UK’s departure from the EU.