Sundry Tax Updates

 

 

 

29 May 2020 – Some sundry tax updates

 

As we await the chancellors announcement about the extension of furlough today with bated breath, a quick update on a few sundry covid/tax related announcements this week. 

Issues covered below being: 

·         Application for probate and IHT filing limits 

·         Additional Dwelling Supplement on purchase of replacement properties in Scotland

 

·         Coronavirus sick pay rebate scheme 

·         Corporation Tax quarterly instalment payments refunds 

·         R&D tax credits and various covid support packages 

·         R&D tax credits and offset against other Crown debt

 

IHT Time limits
The Financial Secretary to the Treasury delivered a Written Answer on 18 May relating to the  potential merits of extending probate for people who have experienced bereavement during the covid-19 lockdown and who therefore cannot meet the six month deadline for inheritance tax submission.

 

The government’s response is that while  there is no statutory deadline for making probate applications, the Government is aware of concerns about the six-month deadline for paying inheritance tax and the twelve-month deadline for filing a return. Where a taxpayer is unable to file their return on time because of COVID-19, HMRC will consider that within the scope of a reasonable excuse and as grounds for appeal against late filing penalties. The Government continues to explore all avenues to help those affected. 

HMRC have confirmed that personal representatives will have to demonstrate how, in their specific circumstances, Covid-19 related issues amount to a reasonable excuse for their delay in filing an IHT return after the statutory limit (12 months after the end of the month of death). The 6-month limit for payment of IHT is unaffected. If personal representatives are unable to file an account at the 6 month point, they should estimate the IHT due and make a payment on account to prevent interest accruing.

 

Additional Dwelling Supplement repayment claims

This only applies to Scotland, but it is worth noting that Revenue Scotland has increased the timeframe by which some buyers can dispose of their previous main residence and still be eligible for a repayment of ADS from 18 to 36 months. It will apply to buyers who purchased a new main residence prior to 25 March 2020, with an effective purchase date of between 24 September 2018 and 24 March 2020.

 

More information is available on the Revenue Scotland website: COVID-19 ADS Repayment Claims.

 

Coronavirus Sick Pay Rebate Scheme 

As the Coronavirus Statutory Sick Pay Rebate Scheme launches, there are compiled three key pieces of information required in order to make a claim under the Coronavirus Statutory Sick Pay Rebate Scheme (CSSPRS).

 

These are: 

  1. Bank details
    Unlike the Coronavirus Job Retention Scheme, the CSSPRS requires claimants to enter the bank account name, as well as the bank account number and sort code.
  2. System functionality
    The system times out after 15 minutes and there is currently no save and continue functionality.
  3. Information required
    The system only requires the total number of employees covered by the claim and the total value of the coronavirus-related statutory sick pay being claimed. The system does not require employee names and national insurance numbers, although employers will need to ensure that they retain records that include this information.

 

Corporation Tax Quarterly Instalment Payments

 

Certain company’s make payments of corporation tax in advance of the normal due date and have to estimate their likely liability. 

In its latest Agent Update, HMRC flagged that companies may find that their forecast corporation tax liability may be less than previously expected due to the impact of the coronavirus pandemic. It advises that companies could make a reclaim if quarterly instalment payments (QIPs) paid to date were considered excessive. 

It is quite possible that  some companies are finding that forecast losses in the current period are so great that they are clear QIPs paid in respect of the prior period were also excessive. In certain cases, companies are comfortable of this even before the current period has concluded. 

HMRC is currently considering whether repayment of prior year QIPs (in the absence of a formal loss carry-back claim) can be made.

 

R&D tax credit claims and various Covid-19 Support Measures

 

There are a number of support measures that companies can apply for by way of grant or loan : 

·         Bounce Back Loans (BBL).  

·         Coronavirus Business Interruption Loan Scheme (CBILS) 

·         Coronavirus Large Business Interruption Loan Scheme (CLBILS)

 

All of the above schemes are all notified State aid, meaning that receipt of them may potentially prevent a claim for R&D SME relief. We would only expect this to happen where the loan relates specifically to the company’s expenditure incurred on an R&D project rather than providing general support for the company. The effect will, as ever, depend on the facts. If the R&D SME claim cannot be made, the company may still make a claim under the less valuable RDEC R&D scheme. 

We also now have the Future Fund. This funding is delivered by way of a convertible loans, which HMRC has confirmed is a commercial transaction.  Therefore this is not State aid and is not caught by s1138 CTA 2009 and so does need not be considered when looking at the State aid cumulation rules and so should not impact on the R&D SME tax credit claim.

 

Loand and Grants :Innovate UK; Continuity Grants and Loans;  

Some of these support measures are still under development, but any provided through the Temporary Framework) or through the Grant Block Exemption Regulations are likely to be state aid and so impact on any potential R&D SME claim. 

R&D Payments 

Historically R&D tax credit repayments have been offset against any outstanding crown liabilities (VAT, PAYE etc).

 

HMRC have confirmed their current position re this practice. 

Deferred liabilities 

Where Ministers have agreed that tax can be deferred for a specific regime to support businesses in the COVID-19 period, i.e. the self assessment personal payment on account and VAT quarterly payment deferrals, RDEC or payable tax credit will not be set against any of those amounts before the revised due date.

 

Time to pay arrangement (TTP)s 

Where tax has been deferred as part of a Time to Pay (TTP) arrangement, HMRC will follow existing policy and set any R&D tax credit off against any TTP liability, not just the amount owing at the point in time the credit is paid. This would include informal deferrals offered in advance of TTP arrangements being put in place.

 

RDEC large scheme tax credits 

It is a legislative requirement that any RDEC remaining is set-off against any liability owed to the Commissioners for HMRC. HMRC does not have the power to provide for a temporary relaxation of this rule and there are no plans at present to legislate to provide a temporary relaxation of this rule. 

For information on any of the topics outlined above please contact our Tax Director Mary Tierney