COVID-19: pro-active tax management guidance

United Kingdom

The Chancellor announced a raft of COVID-19 support measures and tax assistance in the Budget on 11 March and further measures on 17 March in response to the novel COVID-19.

CMS has produced the table below collating the information available to date to help businesses manage their tax affairs during the COVID-19 outbreak. We will update this summary as and when further information is available.

Tax

Comments

Corporation Tax

  • No relaxation on tax filing deadlines has been announced.
  • Businesses should try to meet their tax compliance obligations to avoid penalties.
  • Where it is not going to be possible for a business to meet its tax compliance obligations, it may consider applying for relief from penalties under the Time to Pay regime (which applies to CT, VAT and PAYE).

VAT

  • No relaxation on tax filing deadlines has been announced.
  • Businesses should try to meet their tax compliance obligations to avoid penalties.
  • Where it is not going to be possible for a business to meet its tax compliance obligations, it may consider applying for relief from penalties under the Time to Pay regime (which applies to CT, VAT and PAYE).

National Insurance contributions (“NICs”) and PAYE

PAYE

  • HMRC has verbally confirmed to CMS that PAYE due to be paid for month 11 (i.e. March 2020) can be deferred for two months, subject to specific agreement with HMRC.
  • No guidance is currently available for month 12 (i.e. April 2020).

Statutory sick pay (“SSP”)

  • The Chancellor announced a reimbursement to employers with less than 250 employees (as of 28 February 2020) for up to two weeks’ SSP for each employee absent due to self-isolation as a result of COVID-19. Detail as to whether employee headcount applies on a Group or company basis is yet to be confirmed.
  • HMRC has verbally confirmed to CMS that they are expecting businesses to account to HMRC for income tax and employee and employer’s NICs on SSP in the usual way. The reimbursement that employers can claim will be of the net amount paid to employees. Businesses will therefore bear the tax cost of paying SSP.
  • HMRC has verbally confirmed to CMS that businesses will need to keep records to support their reimbursement claims but “fit notes” will not be required evidence.
  • UK Government guidance is awaited on how businesses will claim reimbursement and how long such claims will take to be processed.

Property

  • Business Rates Retail Discount of 100% applies for 2020/21 to properties used for the majority of retail, leisure and hospitality businesses.
  • No rateable value cap applies to the relief.
  • Government guidance published on 18 March 2020 included a non-exhaustive list of businesses that can benefit including:
    • shops, restaurants and cafés, including post offices, opticians, petrol stations and art galleries;
    • cinemas and live music venues;
    • museums, nightclubs, sport and leisure facilities, stately homes, theatres and gyms;
    • public halls and clubhouses; and
    • hotels, guest and board houses, holiday homes and caravan parks and sites.
  • Businesses that will not benefit include: financial, medical and professional services, other services such as letting agents, post office sorting offices and casinos and gambling clubs.
  • The eligibility for the discount will be assessed and calculated on a daily basis.

Financial support

  • Two Government-backed and guaranteed loan scheme will provide £330bn of finance to help businesses in these uncertain times.
  • The schemes are expected to be up and running by next week.
  • Coronavirus Business Interruption Loan Scheme: delivered by the British Business Bank, enabling businesses with a turnover of no more than £41 million to apply for a loan of (now) up to £5 million, with the UK Government covering up to 80% of any losses with no fees.
  • Covid Commercial Finance Facility: available to larger businesses, the Bank of England will acquire commercial paper from eligible businesses.

If you would like to discuss whether you are eligible for any of these schemes/reliefs please contact one of our team (details below).  CMS are able to support you in discussing the availability of these schemes/reliefs with HMRC and the COVID-19 helpline.

For background on the Government’s announcements please see:

https://www.cms-lawnow.com/ealerts/2020/03/coronavirus-help-for-taxpayers?cc_lang=en

https://www.cms-lawnow.com/ealerts/2020/03/covid-19-uk-governments-tax-and-financial-relief-measures