One Month in a Minute: June 2020

Lee Sharpe ATT CTA

July 1, 2020

Budget news

Rumours abound that there will be an emergency Budget, ‘economic recovery package’ or similar in early July. We have not had a Budget in at least three months and, from a tax perspective, there’s precious little else to write about at the moment so, here’s hoping…

COVID-19 / coronavirus / SARS-CoV-2 updates

Summary of rules relaxed to help businesses during the pandemic

The government has published a list of the rules temporarily relaxed to make it easier for businesses to continue working through the disruption of the SARS-CoV-2 pandemic. Apparently, I can destroy spoilt beer without supervision, while enjoying a 3-month extension for filing accounts with Companies House. (Or maybe I can enjoy a beer without spoiling a 3-month filing extension?)

Coronavirus Job Retention Scheme (CJRS) – phase 2

The government announced on 12 May 2020 that it would extend the scheme, beyond the initial 3/4-month phase to 30 June, until 31 October 2020, but would start to require a minimum contribution from employers, and included further conditions to encourage return to work. Further details were published mid-June:

  • the regime has become more flexible, to allow employees to return to work part time during a period of furlough but still qualify for the CJRS (to the extent of the non-working furlough element of the pay period, calculated as a proportion of normal working hours);
  • but (aside from certain statutory leave scenarios) nobody who has not been furloughed at some point already by the end of phase 1 can be furloughed in phase 2; and
  • an employer cannot include more employees in a given claim for Phase 2 than the peak number of employees claimed at any point in phase 1.

For furlough periods beyond 1 August, the extent of government support will become progressively restricted, with the employer having to take up a larger burden:


5 Months to 31 July (all phase 1 + 1st month of phase 2)




Government contribution to ‘usual’ wages

80% but no more than £2,500

80% but no more than £2,500

70% but no more than £2,187.50

60% but no more than £1,875

Government contribution: Employers’ NICs and statutory pension contributions





Employer contribution: Employers’ NICs and pension contributions





Employer’s minimum own contribution: wages



10% up to £312.50

20% up to £625

Employee receives

80% up to £2,500 per month

80% up to £2,500 per month

80% up to £2,500 per month

80% up to £2,500 per month

Advisers of OMBs that are furloughing their directors, etc, may want to consider:

  • Keeping suitable evidence that directors/close relatives have been furloughed because of the pandemic (it is part of the definition of a ‘furloughed employee’).
  • The potential for tension between a director’s general duties on the one hand, and the need to do no productive work for the company on the other while furloughed was covered in our Coronavirus Update No 2 but note that, while the legislative directions issued since then permit a director to carry out only specified statutory duties – filing, reporting, payroll and claiming the CJRS – HMRC’s current guidance could be seen as being more permissive; however, HMRC guidance changes. This arguably becomes easier once part-time work is permitted during a furlough period under phase 2 – but only where an employee or director has already qualified under the more stringent conditions of phase 1, otherwise he or she is ineligible under phase 2
  • In the longer term, and for smaller businesses, whether substantial salaries for relatives, etc, can be justified if they were ‘easily’ furloughed during the CJRS period.

Mistakes on previous CJRS claims – LITRG guidance

HMRC has now included a facility within the online CJRS claim process, to reduce the current claim by reference to any excess included in a previous claim. Typically, there is no similar mechanism to enhance an ongoing claim where the employer has accidentally underclaimed. According to the Low Incomes Tax Reform Group, (LITRG), accidental underclaims have to be dealt with by contacting HMRC on 0800 124 122.

Self-Employed Income Support (SEISS) – grant 2

HMRC has also provided further information on the second SEISS grant. It basically follows the criteria set out for the first grant, but notable differences include:

  • It pays 70 per cent of three months’ worth of trading profits, calculated as the higher of
    • trading profits returned for 2018/19, and
    • average trading profits returned for 2016/17 – 2018/19, adjusted if not self-employed throughout
  • but no more than £6,750;
  • The trade must have been adversely affected by the coronavirus on or after 14 July 2020 (grant 1 required that the business have been adversely affected by the coronavirus on or before 13 July 2020)

Claims for grant 1 must be filed no later than 13 July. Unlike the CJRS, however, a claim for SEISS grant 2 is not conditional on having claimed for SEISS grant 1 – they are independent, and it could be either or both.

We covered what ‘adversely affected by the coronavirus’ might mean – at least to HMRC – in Mays Month in a Minute.

At the time of writing, the facility for the second grant is not yet up and running. It is expected to come online in August 2020.

Taxation of coronavirus support payments (including SEISS and CJRS)

At the end of May, the government published draft legislation (to be inserted into the current Finance Bill), to:

  • put beyond doubt that coronavirus support payments – including the Self-employed Income Support Scheme (SEISS), the Coronavirus Job Retention Scheme (CJRS) and the Small Business Grant Fund (and the equivalent grant for retail, hospitality and leisure) are to be treated as taxable income;
  • give HRMC the powers to recover such income overclaimed in error as if it were itself tax;
  • allow HMRC to charge very substantial penalties in cases of deliberate non-compliance.

Parties in receipt of any coronavirus support payments – again, including under the CJRS or SEISS – have a very brief period to notify HMRC accordingly:

  • within 30 days of becoming liable, or
  • within 30 days of Royal Assent, if later.

At the time of writing, we await Royal Assent to the Finance Bill; as the draft legislation currently stands, businesses will have 30 days from that point to notify HMRC of any excessive amounts received up to that point. See also next.

CIOT response to draft coronavirus support payments legislation

The Chartered Institute of Taxation (CIOT) has responded to the abovementioned draft legislation. The CIOT has done well to respond so quickly, given the very brief time allowed to do so.

Perhaps unsurprisingly, the CIOT’s chief concern orients around the aforementioned 30-day window to notify HMRC of an overclaim/overpayment of any of the support payments. The CIOT prefers something along the lines of 90 days, or 30 days but only after having become aware that an excess amount has been received.

Also amongst other concerns, the CIOT has also pointed out that it may be difficult to make the legislative leap from treating an SEISS grant as ‘standalone taxable income’, without reference to its being earnings of a basis period, whilst also saying it is subject to Class IV NICs as profits of the trade, which must be by reference to earnings of a basis period.

The CIOT understands that HMRC intends to apply the compliance activity and penalty regime to cases where there is reason to suspect ‘fraudulent/deliberate abuse of the schemes’; the CIOT appears to be concerned that, while the heavy penalties may have been pitched with abuse in mind, the scope of the legislation does not prevent their application in more ‘innocent’ cases.

Coronavirus and ‘early’ repayments of corporation tax and quarterly instalment payments

HMRC has updated its corporation tax guidance at CTM92090 to allow for repayment of corporation tax, even before the liability has been finally established, ‘in exceptional circumstances’. Likewise at CTM92650 for payments by quarterly instalments, or ‘QIPs’.

To paraphrase that guidance:

  • Any corporation tax paid before the normal due date is fully repayable (prior to the normal due date) without pre-conditions.
  • HMRC may consider repayment claims under TMA 1970, s 59DA (SI1998/3175 Reg6 for QIPs) where the claim is based on anticipated losses of a later accounting period, and where that later accounting period has not yet ended, in exceptional circumstances.
  • Generally, HMRC resists such claims on the basis that the losses in the later period available to be carried back to the period of the repayment claim cannot be ascertained until the results of that later period, including other incomes or gains, have been established. However, there may be scenarios where a claim can be accepted ‘early’.
  • An example might be where there is evidence that the ‘in-year losses’ are so great as to be able to comfortably exceed both:
    • any relevant income in that later accounting period (and by implication, not just to the date of the in-year claim for anticipated losses but right to the end of the accounting period),
    • and the amount of taxable profits in the earlier accounting period the subject of the repayment claim. Depending on the circumstances, HMRC may well expect more than just a set of management accounts in support of such a claim, including projections and the company’s public announcements.
  • HMRC is likely also to consider any claims in light of how much is left of the later loss-making accounting period: the sooner the claim, the more concerned HM inspector is likely to be that there might be unforeseen profits or gains to absorb losses that the directors want to carry back.


CIOT calls for government to delay CGT changes on residential property sales

The CIOT has asked the government to reconsider the implementation of its raft of changes to the ‘only or main residence relief’/ PPR regime, because of the impact of COVID-19 on the property market. For example, as regards the reduction of the so-called ‘final period exemption’ from 18 months to just 9 months:

‘We are concerned that the original assumption of an average time of four and a half months for selling a property is out of touch with the reality of the property market today because of the impact of COVID-19. We strongly suggest that the original evidence base needs review and that consideration should be given to delaying the squeeze in the final period exemption until the impact of COVID-19 on the property market is better understood.’

For more on only or main residence relief, click here.


Don’t enact IR35 as it stands in Finance Bill, ICAEW urges

The ICAEW has made representations to government that, following the latter’s announcement that the roll-out of IR35 to large and medium-sized private businesses would be delayed by 12 months until April 2021 (as reported in April’s Month in a Minute), the government should use the additional time fundamentally to rethink its next steps, and take on board the concerns of affected businesses, including the following issues:

  • contractors being made to foot the cost of employers’ secondary NICs;
  • HMRC’s strategy for dealing with certain non-compliant entities;
  • aligning employment and social security rights;
  • contractors who are deemed employees under the off-payroll working rules should be entitled to statutory payments such as statutory maternity pay.

For more on off-payroll working, click here.

VAT deferral: businesses can reclaim VAT if too late to stop direct debit…

We reported in our Coronavirus Update No 2 that VAT payments falling due between 20 March 2020 and 30 June 2020 could be deferred until 31 March 2021, but any payments by direct debit would have to be cancelled (the VAT returns still had to be submitted, and otherwise HMRC would automatically call on the payment as it would not know which businesses wished to defer payment).

The ICAEW has reported that HMRC is advising those businesses that were unable to stop their payments in time, to make a claim for repayment under the Direct Debit Indemnity Scheme; apparently there is no time limit to making this request (although the outstanding VAT will still then have to be re-paid by 31 March 2021)

However, if the business instead wants a repayment from HMRC (rather than from their bank), then they will have to make sure that their bank details are updated using the online services.

…VAT deferral: but remember to switch direct debits back on!...

Meanwhile, the Association of Taxation Technicians (ATT) has issued a reminder that businesses will need to reinstate their direct debits soon, in order for payments falling due after 30 June to be made automatically – as we warned in our Coronavirus Update No 2, businesses need to bear in mind that VAT returns for the quarter ended 31 May 2020 (and later) cannot be deferred, as they are payable after 30 June, on 7 July. HMRC recommends that direct debits be set up at least three working days before submitting a VAT return in order to ensure that the payment is taken correctly.

…VAT deferral: HMRC promises NOT to take deferred VAT immediately direct debits reinstated

The ICAEW pointed out in its aforementioned article that reinstating the VAT direct debit could result in the already-deferred VAT being collected immediately: ‘a change in the way that HMRC collects direct debits for those in MTD for VAT makes this a possibility and HMRC needs to ensure that does not happen’. Not ‘arf.

Fortunately, the ICAEW has since confirmed with HMRC that it will not collect the deferred VAT automatically, immediately that the VAT direct debit is reinstated. ‘HMRC has made the necessary systems change to avoid this happening for businesses in MTD for VAT’. We await further details from HMRC on how it intends for the deferred VAT to be collected on or before 31 March 2021.

VAT reverse charge on construction: further delay announced

HMRC announced in Revenue & Customs Brief 7 (2020) that the new VAT reverse charge on construction regime will be delayed by a further 5 months, to 1 March 2021, to allow the construction industry more time to adapt (in particular to the negative cashflow implications) while/after contending with the coronavirus pandemic.

This represents a further significant delay to the new regime. Readers will recall that the reverse charge on construction regime was originally scheduled to apply from October 2019, but was then delayed to 1 October 2020, as reported in our September 2019 Month in a Minute.

The Brief also mentions that the legislation will be amended so that:

‘For businesses to be excluded from the reverse charge because they are end users or intermediary suppliers, they must inform their sub-contractors in writing that they are end users or intermediary suppliers’ [emphasis added].

For more information on how the reverse charge will work for construction services, click here.

Delay to notifying option to tax

HMRC has also announced a temporary change to the rules governing options to tax an interest in land or buildings.

Usually, a business must notify HMRC within 30 days of having decided to tax its interest in land or buildings.

But, for decisions made between 15 February 2020 and 31 October 2020, the notification period has been extended to 90 days.

HMRC usually insists on a wet signature of a scanned copy of the signed notice but, under the current circumstances, will accept an e-mail of the form with suitable electronic signature (or chain of e-mails tracing back authorisation) from an authorised signatory of the business. As per the announcement, there are further possible submission scenarios which will be acceptable, including from authorised agents.

For more information on options to tax land and buildings, click here.

HMRC to repay VAT on gaming machines

HMRC has also published guidance in Revenue & Customs Brief 5 (2020) covering how businesses can progress claims for repayments of VAT previously and incorrectly assessed on fixed odds betting terminals (FOBTs), etc.

This follows up on the long-running saga of the Rank Group and Done Brothers cases (see [2020] UKUT 117 (TCC)). Apparently, the Rank Group is also now taking forwards the case on non-FOBTs originally appealed by Colaingrove Limited, due to be heard at the First-tier Tribunal in November 2020.


Trust Registration Service

Taxpayers and agents can now use the Trust Registration Service, (TRS), to register a trust:

  • set up after the settlor died;
  • created during the settlor’s lifetime to gift or transfer assets;
  • for a building or building with tenants;
  • for the repair of historic buildings.

Also, to

  • view data held by HMRC;
  • notify HMRC that no changes have been made (declare no change);
  • add/remove trustees or change trustee details;
  • add/remove beneficiaries or change beneficiary details;
  • add or change a settlor’s name;
  • add or change a protector’s details;
  • close a trust; also
  • clients can claim a trust (where trust is registered by agent);
  • clients can authorise an agent (establish a relationship with the agent – handshake).

Trusts created through a deed of variation or family agreement, or for the employees of a company, can currently be registered only using the iForm; this functionality will be added to the TRS soon.

Surprisingly, this information was included in HMRC’s Agent Update 78, but not in its Trusts and Estates June Newsletter (see both below)

For more information on the Trust Register requirements, click here.

Probate time limits and coronavirus

The ATT has provided further information on a written response by the Financial Secretary to the Treasury on 18 May, in relation to probate administration:

  • the 6-month deadline for paying IHT is unaffected;
  • however, in the context of the 12-month deadline for filing a return, HMRC will allow that COVID-19-related issues may potentially amount to a reasonable excuse when appealing late filing penalties.

The ATT says that this is not a blanket approach to reasonable excuse: HMRC has confirmed that personal representatives will have to demonstrate how the pandemic hindered the delivery of the return in their particular circumstances; also, if they are unable to compile a complete picture of the estate’s liability at the 6-month mark, then they should simply make a payment on account, to prevent the accrual of interest.

Solicitors for the elderly: warning not to release large sums BEFORE probate

The Society of Trust and Estate Practitioners (STEP) has relayed that the specialist body, Solicitors for the Elderly, is warning that some financial institutions are releasing estate funds as large as £125,000 to the deceased’s relatives without insisting on a grant of Probate.

Apparently, banks and building societies have started to drift away from what was agreed in 2017 between members of UK Finance and the Building Societies Association (broadly, sums between £5,000 and £30,000, depending on the member institution’s own policies and the merits of the case). The pandemic has forced institutions to dispense with face-to-face meetings with relatives, etc, as used to be the norm.

However, the new approach is open to abuse by people making false claims to being an executor or administrator, perhaps by producing a will that is out of date; also to problems with subsequent declarations to HMRC regarding the size of the estate.

Stamp duty land tax – the 3 per cent surcharge and exceptional delays with selling former homes

The ATT has reported that the government has announced its intention to change the legislation governing the 3 per cent higher rate for additional dwellings, so that taxpayers may yet claim for a refund of the extra 3 per cent charged on buying a replacement main residence, even when it has taken more than three years to sell their former main home, ‘in exceptional circumstances’.

Readers will be aware that, at the point of buying their next main residence, the regime requires the buyer to suffer the extra 3 per cent if they have not yet managed to sell their (about to be) previous main residence. There then follows a three-year period in which HMRC promises to refund the 3 per cent charged if the buyer does indeed sell their previous home.

In order to qualify:

  • the new main residence must have been purchased on or after 1 January 2017;
  • the taxpayer must be prevented from selling their previous main residence before the expiry of the three-year time limit due to ‘exceptional circumstance beyond their control’; and
  • they must sell the previous main residence as soon as they reasonably can, after the exceptional circumstances no longer apply.

Interestingly, this is clearly not being introduced simply to deal with temporary problems during the pandemic: HMRC says that those exceptional circumstances may include, but will not be limited to:

  • the coronavirus pandemic;
  • action taken by a public authority preventing the sale.

The SDLT Manual has been updated at SDLTM09807 to reflect the government’s new position.

For more on the 3 per cent SDLT charge for acquiring additional dwellings in England and Northern Ireland, click here.

Land and buildings transaction tax (LBTT) – temporary extension to replacement dwelling period

The ICAEW has reported that – as we noted in April’s Month in a Minute – the Scottish Parliament has temporarily extended the 18-month time period allowed under the LBTT legislation to reclaim the 4 per cent surcharge, when a buyer acquires a replacement main residence in Scotland, but has not yet managed to sell their previous home, to 36 months.

For now, this temporary extension applies only where the replacement main residence has been acquired between 24 September 2018 and 24 March 2020, although the Coronavirus (Scotland)(No 2) Bill apparently also provides the power to extend that purchase interval, and/or the time allowed to sell the previous home, if deemed necessary.


Agent Update Issue 78

HMRC has issued Agent Update 78, running to 22 pages. Understandably, it contains mostly information and updates on coronavirus-related matters:

  • Maternity and other parental pay: a change made to calculation of average weekly earnings (AWE) for employees who are furloughed under the Coronavirus Job Retention Scheme on or after 25 April 2020.
  • Lifetime ISA rules changed to help people whose incomes have been affected by coronavirus, so that the ‘unauthorised withdrawals’ penalty is reduced from 25 per cent to 20 per cent, backdated to 6 March 2020.
  • Agreed tax postponements automatically ended until the end of June 2020 – HMRC will be contacting taxpayers with amounts still outstanding.
  • Deferring payment of the second 2019/20 Self Assessment Payment on Account, due 31 July, to any time up to 31 January 2021, without incurring interest or penalties.
  • Changes to top slicing relief on life insurance policy gains – a promise to be a good tax authority and to observe the findings established in Silver v Commissioners for Revenue and Customs [2019] UKFTT 263 (TC) and subsequently endorsed by draft legislation in the current Finance Bill; also to update IPTM3820-3850. The correct treatment will be applied from 11 March 2020 but also – ‘by concession’ – to all gains realised in 2019/20. HMRC’s appeal against Silver has been quietly withdrawn.
  • Application deadline date for short-term business visitors (STBV) under regulation 141 PAYE special arrangement applying for Appendix 8.
  • Customs Declaration Service (CDS) Update: CHIEF/CDS dual running.

Trusts and Estates Newsletter

HMRC has issued its June Trusts and Estates Newsletter, which includes the following:

  • confirmation that the deferral of the second 2019/20 self-assessment payment on account applies also to trusts;
  • moving to electronic payments/repayments and away from ‘wet’ signatures for certain forms (as outlined in Month in a Minute for April and May;
  • where certain assets have been given IHT relief under the conditional exemption tax incentive scheme, dependent on public access, HMRC recommends that ‘customers’ who own national heritage property should follow the relevant health authority’s social distancing guidance and this will not disqualify the property, although HMRC expects customers to adapt (re-open, etc ) as advice changes, as the pandemic progresses.

For more information on the conditional exemption tax incentive scheme for national heritage assets etc, click here.

Employer Bulletin 84

HMRC has published its Employer Bulletin for June 2020, which includes the following:

  • flexible furlough from July (CJRS);
  • statutory sick pay rebate scheme for ‘small’ employers;
  • returning office equipment used at the employee’s home – we covered this issue in some detail in May’s Month in a Minute, but:
    • Where the employer provides equipment, for an employee’s use in his or her home, there is no benefit in kind unless ownership is transferred to the employee, at which point a BIK is triggered.
    • When the employee returns such equipment to the employer, there is no tax charge.
    • Where an employer reimburses an employee for the specific cost of home office equipment for the purposes of working from home as a result of the coronavirus pandemic, then there is no benefit charge on the reimbursement. ‘There is also no benefit charge if you allow your employee to keep the equipment, as it is something they already own.’
  • Cyber Fraud, cyber security, etc (we shall overlook the irony of such advice, given HMRC’s propensity for misplacing millions of taxpayers’ data on CDs on the basis that some younger readers may not actually know what CDs are).
  • Special arrangements for short-term business visitors.
  • Updates to the disguised remuneration loan charge online form.
  • The UK’s new immigration system – from 1 January 2021, anyone coming to the UK to work will need to have a job offer from an approved employer sponsor. And, according to HMRC, to speak English (I am no expert but it seems to me that, if true, this criterion could be more of a problem for so-called ‘Premier League football’ than the coronavirus).
  • Spotlight 55, highlighting questionable tax avoidance umbrella scheme arrangements

Employment-Related Securities Bulletin

HMRC published its Employment-Related Securities Bulletin 35 on 8 June 2020. It included:

  • Enterprise management incentive schemes – Apparently, stakeholders have raised coronavirus-related issues: HMRC is looking into matters and will provide updates as soon as possible.
  • Save as you earn – Where participants are unable to contribute because they are furloughed or on unpaid leave during the coronavirus pandemic, HMRC will allow payment holiday terms beyond the standard 12 monthly occasions (although this will also extend the maturity date).
  • Share incentive plans – In a similar vein, employees can make SIP contributions from furloughed salary (SIP participants are already allowed to stop deductions from salary). However, participants will not be allowed to make up missed deductions, if they stop due to the coronavirus pandemic.
  • Company share option plans – HMRC says it will allow employees and full-time directors granted options before the pandemic, but who are now furloughed, to treat the options as still qualifying, so long as they were full-time directors and qualifying employees at the time of the grant.

Pension Schemes Newsletter (revised)

HMRC has updated its latest Pension Schemes Newsletter 119, (covered in May’s Month in a Minute) to include that the protected pension age easement has been extended up to 1 November 2020.

Delay in cross-border DAC6 reporting

Following on from the EU-wide delay we included in May Month in a Minute, STEP has noted that the UK has delayed implementation of the Council Directive (EU) 2018/822 (DAC6) on compulsory reporting of cross-border tax arrangements. The European Council of Ministers had agreed to delay the commencement date of 1 July by up to 6 months (and a further 3 months, if required).

STEP reports that HMRC has said the already-enacted International Tax Enforcement (Disclosable Arrangements) Regulations 2020, made in January 2020, will be amended to give effect to the deferral.

Advisory fuel rates from 1 June 2020 – significant rate reduction

Advisory fuel rates have been published, for use from 1 June. The previous rates can be used for up to a month from the date from which the new rates commence. Rates have fallen significantly across the board, reflecting an overall decrease in the price of fuel.

Engine size



Up to and including 1,400cc



1,401 – 2,000cc



More than 2,000cc





Up to and including 1,600cc


1,601 – 2,000cc


More than 2,000cc


These rates may be used either to:

  • reimburse employees for their fuel costs for business journeys in company cars, such as where the employee initially pays for all fuel so as to avoid a private fuel benefit in kind tax charge;
  • reimburse employers for the fuel cost of any private journeys.

There is also an advisory electricity rate of 4 pence per mile; however, electricity is not considered to count as ‘fuel’ for the purposes of the car fuel benefit in kind tax charge.

Higher rates can and should be used in some circumstances – please see chapter 7 of Taxation of Employments, by Robert Maas.

Lee Sharpe ATT CTA