Tax Update 31/7/2020

Keep up to date with the key announcements made this past week.

Covid-19 support scheme overpayments

HMRC has published two new compliance check factsheets, these factsheets cover assessments, interest and penalties where grants under the coronavirus support schemes have been over paid and fail to notify HMRC about the overpayment.

CC/FS48 Job Retention Scheme – The guidance covers the 90 day period for notification of overpayments, assessment of Income tax charge to recover up to 100% of the overpayment, along with Interest and penalties, as ever the amount of penalty levied will depends on the taxpayers behaviour with the most serious charge being up to 100% penalty for deliberate and concealed behaviour. Deliberate defaulters will also have their details published under the Publishing details of Deliberate Defaults regulations CC/FS13

CC/FS47 Self-Employment Income Support Scheme – Just like for the Job Retention scheme this guidance covers the equivalent points around assessments, interest and penalties in relation to the self-employment income support scheme.

Top Slicing Relief

Following on from the Silver case the Finance Act (FA) 2020 laid out changes to the way top slicing relief will be calculated. The Association of Taxation Technicians (ATT) have recently confirmed that following consultation with HMRC that the top slicing relief will be applied to any gain in both 2018/19 and 2019/20.

Under the changes brought in by FA 2020 individuals are able to retain the benefit of their personal allowance when calculating the amount of available top sliding relief.

HMRC have confirmed that they have already started the automatic process to identify taxpayers from 2018/19 returns who are affected by the change. HMRC estimate around 2,000 Taxpayers will be affected and HMRC will contact those taxpayers directly.

Where this is the case for taxpayers on their 2019/20 returns, at present HMRC are requesting that taxpayers send in a paper return. From 2020/21 HMRC’s SA calculator should have been amended to produce the right results and affected returns should not need to be filed manually.

What was the Silver case?

The taxpayer’s argument was that when calculating the tax on the ‘top-slice’ of the gain (being the total event gain divided by the complete number of years held) as part of the process of calculating the relief, the taxpayer should be entitled to calculate their personal allowance based on their total income with only the slice considered. HMRC’s position was that the abated personal allowance calculated when taking account of the full gain should be used at this stage. HMRC’s approach would result in less relief and more tax. The tribunal sided with the taxpayer which caused the changes which were included in the Finance Act 2020.

Trust Registration Service (TRS)

Following a technical consultation, the UK government has published its proposed changes to the scope of the Trust registration services as a result of the EU’s Fifth Anti-Money Laundering Directive.

Exempt Trusts

After considering the responses the government recognised that in some areas there was a good justification for expanding the categories of trusts that will not be required to register on that basis that they are regulated elsewhere. As a result, the following types of trusts will be exempt from registration.

• Trusts imposed by statute, where these do not result from the clear intention of the settlor. For example, the statutory trust arising on intestacy

• UK registered pension trusts

• Charitable trusts regulated in the UK

• Pure protection life insurance policies and those paying out on critical illness or disablement, including group policies

• Trusts used by government and other UK public authorities

• Trusts for vulnerable beneficiaries or bereaved minors

• Personal injury trusts

• Save as you earn schemes and share incentive plans

• Maintenance fund trusts

• Certain trusts incidental to commercial transactions

• Certain trusts used as part of financial markets infrastructure

• Authorised unit trusts

• Co-ownership trusts, where the trustees and beneficiaries are the same persons

• Will trusts created on death that only receive assets from the estate and trusts that only receive death benefits from a life insurance policy and are wound up within 2 years of death

• Existing trusts holding assets valued at less than £100 unless or until further assets are added

Offshore Trusts

The government also confirmed that offshore trusts entering into business in the UK will only be required to register if one of the trustees is UK resident.

Accessing TRS information

The consultation also confirmed that third parties will be able to submit a legitimate interest request the personal details of beneficial owners of a trust if this relates to an investigation into Money Laundering or Terrorist Financing.

VAT and customs duties relief extension for medical equipment imports

The European commission have announced an extension to the temporary relief for VAT and customs duties on importing mask, protective equipment testing kits, ventilators and other medical equipment.

The extension now gives relief for imports into the UK until 31st October.

A Further £20 million in new grants to boost the recovery of small businesses

On 30th July the minister for regional growth and local government announced £20 million in new funding to help businesses across England get back on track.

Small and medium sized businesses in England will be able to access grants of between £1,000-£5,000 for new equipment and technology along with specialist advice.

Simon Clarke, the minister for regional growth and local government said:

“We have always said that we would stand behind our businesses and communities as we rebuild following the coronavirus pandemic. This new funding does exactly that.”

“Businesses will be able to use these new grants to pay for the expertise, equipment and technology they need to adapt, recover and rebuild.”


Source – Lexis Nexis via Tolley Guidance