Monthly Archives: December 2020

The New COVID-19 Tier System

The rules around the various tiers continue to change. To help you understand what you can and cannot do under England’s tiered system, please use our helpful chart:

Tier 1 – Medium

Tier 2 – High

Tier 3 – Very High

Tier 4 – Stay at Home

Socially mixing Indoors

Permitted but rule of six applies

Not permitted (unless part of support bubble)

Not permitted (unless part of support bubble)

Not permitted (unless part of support bubble)

Socially mixing outdoors

Permitted but rule of six applies

Permitted but rule of six applies

Not permitted in private spaces, but rules of six can be observed in public areas, such as parks

Not permitted (unless part of support bubble). You must have a ‘reasonable excuse’ to leave your home. A full list of reasons can be found by clicking here.

Businesses and venues

Businesses and venues can remain open, in a COVID secure manner, other than those which remain closed by law, such as nightclubs

Businesses and venues can remain open, in a COVID secure manner, other than those which remain closed by law, such as nightclubs

Businesses and venues can remain open, in a COVID secure manner, other than those which remain closed by law, such as nightclubs

Most non-essential businesses and venues must close. A full list of sectors and businesses affected can be found clicking here.

Hospitality

Pubs, cafes, bars and restaurants can remain open until 11pm, but must do table service and last orders at 10pm

Takeaways and delivery permitted after 11pm

Pubs, cafes, bars and restaurants serving food can remain open until 11pm. Table service only and last orders at 10pm.

Alcohol can only be served with a substantial meal (where meals aren’t served the venue should close)

Takeaways and delivery permitted after 11pm

Bars, pubs, cafes and restaurants must close

Bars, pubs, cafes and restaurants must close

Entertainment venues i.e. casinos, bingo halls, bowling alleys etc

Must close by 11pm

Theatres and cinemas can remain open longer where a performance begins before 10pm and doesn’t conclude until after 11pm

Must close by 11pm

Theatres and cinemas can remain open longer where a performance begins before 10pm and doesn’t conclude until after 11pm

All indoor entertainment venues must close, including indoor attractions at mostly outdoor entertainment venues

All indoor entertainment venues must close, including indoor attractions at mostly outdoor entertainment venues

Weddings and funerals

Permitted with limited attendance

Permitted with limited attendance

Permitted with limited attendance

Permitted with limited attendance

Sporting events, music performances and business events

Attendance permitted in limited numbers

Attendance permitted in limited numbers

No public attendance permitted (elite sport events to go ahead without spectators)

No public attendance permitted. Organised outdoor sport for under 18s and disabled people will be allowed.

Leisure and outdoor activities

Indoor leisure permitted and organised outdoor sport, physical activity and exercise classes can continue

Indoor leisure permitted and organised outdoor sport, physical activity and exercise classes can continue

Leisure and sports facilities may continue to stay open, but group exercise classes are not permitted.

Organised outdoor sport, physical activity and exercise classes can continue, unless they involve high-risk contact

You can exercise or meet in a public outdoor place with people you live with, your support bubble (or as part of a childcare bubble), or with one other person.

Personal care i.e. barbers, hairdressers and beauty salons

Can remain open

Can remain open

Can remain open

Facilities such as hair, beauty, tanning and nail salons. Tattoo parlours, spas, massage parlours, body and skin piercing services must close.

Travel

All non-essential travel to Tier 3 areas should be avoided and the rules in Tier 2 areas followed when visiting

Travel to a Tier 1 area must observe Tier 2 rules. All non-essential travel to Tier 3 areas should be avoided.

Travel to venues or amenities which are open is permitted, but non-essential journeys limited

People are advised not to travel into and out of Tier 3 areas

People should stay local – meaning avoiding travelling outside of your village, town or the part of a city where you live – and look to reduce the number of journeys you make overall. You may only leave home if you have a reasonable excuse.

If you are concerned that ongoing restrictions in your area could affect your ability to trade and you require support, please speak to our team.

Coronavirus furlough and loan schemes further extended

As businesses prepare to enter a new year, the Chancellor Rishi Sunak has confirmed a further extension to the Government-backed loans and Coronavirus Job Retention Scheme (CJRS).

In a move that the Chancellor said would provide “certainty for millions of jobs and businesses”, the Government has extended the furlough scheme until the end of April 2021.

Under the latest extension, workers will continue to receive payments equal to 80 percent of their wage, while employers will only be required to pay wages, National Insurance Contributions (NICS) and pensions for hours worked, and NICS and pensions for hours not worked.

The eligibility criteria for the UK-wide scheme will remain unchanged, meaning that those currently benefitting from the scheme can continue to do so.

The Government has said that by extending the scheme “businesses across the country will have certainty about what support will be available to them”.

The Chancellor had intended to review the furlough scheme in January but is said to have brought this date forward to help businesses plan for the year ahead.

During his announcement, Rishi Sunak also confirmed that he would be extending all of the Government-guaranteed COVID-19 business loan schemes, including the Bounce Back Loan and Coronavirus Business Interruption Loan Scheme, until the end of March 2021.

Applications for these loan schemes, which has seen more than £68 billion in guaranteed loans delivered to businesses, had been due to close at the end of January 2021.

As well as announcing extensions to the current financial support measures, the Chancellor said that he would hold his next Budget on 3 March 2021.   This budget will deliver the next phase of the plan to tackle the virus and protect jobs.

If you require support with these business support loans or help administering the furlough scheme, please speak to our experienced team.

Scammers are targeting Self-Assessment taxpayers, says HMRC

HM Revenue & Customs (HMRC) is calling on Self-Assessment taxpayers to keep a look out for scammers posing as the tax authority.

HMRC has said that scammers are using calls, emails and texts to contact individuals in the run-up to the tax return deadline on 31 January 2021.

During the last year, HMRC responded to more than 846,000 reports of suspicious HMRC contact from the public and uncovered 15,500 malicious webpages.

In many cases, fraudsters offer a fake ‘tax rebate’ or ‘tax refund’ to individuals, often using language and content designed to convince taxpayers to hand over personal information, including bank details, to claim the ‘refund’. Almost 500,000 of the referrals from the public offered bogus tax rebates.

The imposters use this information to access a person’s bank account, trick them into paying fictitious tax bills or sell on their personal information to other criminals, HMRC has warned.

Taxpayers are encouraged to report suspicious activity to HMRC at phishing@hmrc.gov.uk and texts to 60599. They can also report phone scams online on GOV.UK.

Alongside its warning, HMRC has said that taxpayers can usually spot a scam if the communication:

  • is unexpected
  • offers a refund, tax rebate or grant
  • asks for personal information, such as bank details
  • is threatening
  • tells you to transfer money.

Further details regarding scams and HMRC’s policies can be found by clicking here.

Link: Self-Assessment customers warned about scammers posing as HMRC

Eat Out to Help Out compliance checks underway

More than 84,700 food and drink establishments took part in the Eat Out to Help Out (EOTHO) scheme, according to the Treasury’s latest figures.

This resulted in 130,000 claims at the end of the scheme and is estimated to have cost the Treasury around £522 million.

The claims system was set up quickly by HM Revenue & Customs (HMRC), which did its best to prevent and address potential fraud.

However, HMRC now has announced that it is beginning post-payment compliance checks to recover money paid out incorrectly to businesses.

It is understood to be writing to around 4,000 businesses who it believes may have incorrectly claimed for the scheme.

These companies are being asked to check their claims are correct and could be asked to repay any money they weren’t eligible for.

As part of this check, some claimants are being asked to provide evidence of eligibility and their EOTHO calculations.

Claimants are being given just 60 days to respond to the letter before HMRC begins a formal compliance check, which could include having to pay statutory interest and penalties.

However, anyone who voluntarily repays any overpaid EOTHO payments, will not be charged a penalty. To report an overpayment, a claimant will need to complete an online disclosure form so that HMRC can calculate the amount that is owed.

If a business has been contacted but believes its EOTHO claims were correct they still need to contact HMRC in the allotted time or they may face a formal compliance check.

Link: Eat Out to Help Out scheme post-payment checks begin

Businesses face legal action over unpaid business rates

Local authorities have begun to take legal action against businesses that fail to pay their business rates bills.

A new report from property consultancy Colliers has shown that an increasing number of businesses have begun to receive letters demanding payment and/or a court summons.

In response, many businesses have started to appeal their business rates assessments on the grounds of a Material Change of Circumstance (MCC) to their business operations as a result of the Coronavirus crisis.

Data shows that around 183,000 businesses began the appeal process in the six months between 1 April and 30 September 2020. That is equivalent to 1,000 appeals per day.

John Webber, Head of Business Rates at Colliers, said: “It is ironic that the Government is preventing private landlords from taking recovery action against tenants not paying rent, while at the same time turning a blind eye to billing authorities acting on recovery action as if COVID-19 didn’t exist!”

Although businesses operating in the retail and leisure sectors were granted a business rates holiday during lockdown, office occupiers and some other businesses have not been given the same support.

John Webber added: “We appealed to the Government to introduce a business rates holiday for the period of lockdown and to introduce some reliefs for the disruption to businesses seen since.

“In the meantime, we have been negotiating on our client’s behalf with local billing authorities requesting them to show leniency to businesses that are struggling to pay their bills. We are finding that attitudes vary greatly depending on where businesses are based and the attitudes of the individual billing authority.

“There is a total lack of consistency – some clients for example with properties across boundaries find they are granted reliefs for some of their properties by certain local billing authorities but not from others.

“And recently there has certainly been a step-up of enforcement activity via the courts. We believe we’ll see more court summonses and enforcements as we go forward.”

Link: Councils pile pressure on firms over unpaid business rates during pandemic

HMRC publishes consultation on MTD for Corporation Tax

A new consultation has been published by HM Revenue & Customs (HMRC) which explores how the core principles of Making Tax Digital (MTD) can be applied to Corporation Tax (CT).

Within the new consultation document, HMRC has made it clear that MTD for CT is a means of tackling the underpayment of tax, especially among SMEs, where HMRC believes these are significant issues with errors. The tax authority has indicated that as much as £2.1 billion of the tax gap relates to CT.

Along similar lines to the existing MTD for VAT system, the proposals put forward a process that would require companies to maintain their records digitally and the submission of quarterly updates and a year-end tax return using MTD compatible software.

These quarterly submissions will focus on accounting data, with the option of including indicative changes to tax treatment. However, the usual annual tax return will be retained to allow HMRC to take a final decision on tax treatment.

The change will also affect business groups who may be allowed to operate their digital record-keeping on a group basis to manage obligations under quarterly updates and year-end tax returns.

This change would affect the majority of businesses, apart from the very largest and most complex companies with annual profits above £20 million, who will be exempt from making quarterly submissions. HMRC has indicated that other compliance procedures should ensure they pay the correct amount of tax without this measure.

Under the current proposals, it will be necessary to link accounting data directly to the tax return submission for all businesses.

The consultation states: “The digital records kept within the entity’s software may also form the prime record for their accounts. To comply with the obligations of MTD, accounting and tax adjustments relating to the period will need to occur either in that software or alternatively in linked software.”

It also indicates that it expects far more to be done via MTD compatible software, rather than by currently accepted processes, such as iXBRL tagging.

If implemented the changes explored in the consultation document would have a significant effect on the tax compliance process for companies, which is why HMRC has confirmed that MTD for CT will not become mandatory before April 2026.

Instead, it plans to hold a voluntary pilot from April 2024 to test the effectiveness of the system, before rolling it out more widely.

Although the current consultation ends on 5 March 2021, the tax authority has promised a further simplified consultation document for smaller companies in the months to come.

Link: Making Tax Digital for Corporation Tax

HM Revenue & Customs issues Capital Gains Tax reminder

HM Revenue & Customs (HMRC) has issued a reminder of recent changes to Capital Gains Tax (CGT) to taxpayers and the impending deadline for reporting profits from sales of residential property in the 2019-20 tax year.

Various changes to how CGT is reported and paid came into effect at the start of the current tax year on 6 April 2020. The changes mean that UK residents disposing of UK residential property that is not their main home and where there is tax to pay should use the online service to declare gains to HMRC and pay the tax within 30 days of completion.

Gains should also be included on a Self-Assessment tax return, but where the tax has already been paid, it will not count towards the Self-Assessment tax liability.

Meanwhile, HMRC is reminding people who made taxable gains in 2019-20 that these must be declared on a Self-Assessment tax return by 31 January 2021.

Karl Khan, Interim Director General for Customer Services at HMRC, said: “The 2019-20 tax year is the last year UK residents will be required to pay the CGT for the sale of properties as part of the Self-Assessment process and we want to make sure they are aware of the new requirements.

“We’re making it easier for customers to pay any tax that is owed. UK residents, including property developers and landlords, should now use the online service to make any CGT declarations immediately after selling a residential property.”

Link: Capital Gains Tax changes that Self-Assessment customs need to know about

Virtual Christmas parties eligible for £150 annual function exemption

HM Revenue & Customs (HMRC) has confirmed that virtual Christmas parties will be eligible for the £150 annual function exemption that employers often put towards in-person festivities at this time of year.

Typically, employers can make use of the exemption for a Christmas party, as long as it is open to all employees, or all employees in a particular location and costs less than £150 per head.

The £150 exemption can cover entertainment, food and drink, transport and accommodation and VAT, as well as some other costs.

The amount applies to everyone attending, whether or not they are an employee, and is based on the average per person and not the actual amount spent on each person.

Because this is an exemption and not an allowance, the whole amount will come taxable if an employer spends more than £150 per head and not just the amount above £150.

In recognition of the substantial obstacles to holding an in-person function this Christmas, HMRC has now updated its manuals to confirm that the exemption can be put towards virtual events, such as where a hamper is provided to enjoy during the event.

Link: HMRC confirms virtual Christmas party exemption

Grandparents set to increase gifting following pandemic and families set to inherit more than expected

A pair of studies have revealed that UK grandparents are reconsidering their plans following the Coronavirus pandemic, which may mean that many families are set to inherit more than they expected to.

A survey of 2,006 grandparents, carried out by an investment firm, found one in seven are reassessing how they will pass on their assets to their families. 40 per cent said they planned to increase gifting as a consequence of the pandemic.

It would seem that grandparents feel more pressure to help their grandchildren since the outbreak of COVID-19. However, experts recommend balancing gifting against a person’s retirement plans.

Meanwhile, a separate study by a wealth management firm, found that many UK adults are set to inherit much more than they expect.

The study found parents expect to leave 60 per cent more than their children expect to receive. On average, they expect to leave £124,000, while baby boomers expect to leave £174,000 and over-75s will leave £275,000.

Families should carefully consider the Inheritance Tax implications of making gifts and leaving more wealth to the next generations to reduce any potential liabilities.

Link: Inheritance tax: Grandparents to pass on more money to their families in the wake of Covid-19

HMRC updates Statutory Residence Test due to COVID-19

New guidance has been issued by HM Revenue & Customs (HMRC) which alters how the Statutory Residence Test (SRT) for tax will operate as a result of the COVID-19 pandemic.

The latest COVID-19 guidance is likely to affect taxpayers’ ability to move freely into and out of the UK, which could affect their status under the SRT.

The SRT came into effect in April 2013 and allows a taxpayer to work out their residence status for a tax year.

For day counting under the SRT, HMRC has confirmed what it considers exceptional circumstances that would allow a taxpayer to disregard up to 60 days spent in the UK. This includes where a taxpayer is:

  • Quarantined or advised by a health professional to self-isolate in the UK as a result of the virus;
  • Advised by official Government advice not to travel from the UK as a result of the virus;
  • Unable to leave the UK due to the closure of international borders; or
  • Asked by an employer to return to the UK temporarily as a result of the virus.

Guidance was also issued earlier this year in August, but there has been no extension to the maximum limit to the number of days which can be disregarded, which remains at 60 days, despite the scale of the pandemic.

The existing rules surrounding a “significant break” from overseas work will also remain unaltered, according to HMRC.

Days worked in the UK by a non-resident due to COVID-19 imposed restrictions will also not be taxed for employment income related to periods starting from the day the non-resident intended to leave the UK and the date they eventually left, if:

  • The income is taxable in the individual’s home country, and
  • The individual left the UK as soon as they possibly could.

However, individuals may be required to provide evidence for the above to HMRC. Any days spent in the UK. where the individual worked more than three hours, whilst not taxable, will still count towards the 30 UK work days allowed as part of the SRT.

The Finance Act 2020 has enacted changes to the day count for those non-resident individuals in the UK between 1 March 2020 and 1 June 2020 working on COVID-19 related activities. These activities will not count towards the residence test.

If you are affected by changes to the SRT due to COVID-19 you must seek advice at the earliest opportunity.