New regulations to exempt payments made to employees for coronavirus antigen tests from NICs

The Social Security Contributions (Disregarded Payments) (Coronavirus) (No. 2) Regulations 2020 will come into force on 25 January 2021 to provide that payments made by employers to employees to cover or reimburse the costs of coronavirus (COVID-19) antigen tests are to be disregarded for NICs purposes, and so there will be no NICs liability for either the employer or the employee. The Government has also stated that a corresponding Income Tax exemption for such payments is to form part of the Finance Bill 2021. Antibody tests, which detect whether the employee has previously been infected with COVID-19, are not covered by these provisions. 

The regulations apply to payments made to employees on or after 25 January 2021 but before 6 April 2021, but HMRC will exercise its management discretion in relation to payments made earlier in the 2020/21 tax year and will refrain from collecting any Income Tax or NICs due, provided the conditions set out in the legislation (other than the timing of the payment) are met.

The regulations follow the provisions previously made in relation to the Income Tax and NICs exemption for employer-provided COVID-19 antigen tests. 

Tax Diary January/February 2021

1 January 2021 – Due date for Corporation Tax due for the year ended 31 March 2020.

19 January 2021 – PAYE and NIC deductions due for month ended 5 January 2021. (If you pay your tax electronically the due date is 22 January 2021)

19 January 2021 – Filing deadline for the CIS300 monthly return for the month ended 5 January 2021. 

19 January 2021 – CIS tax deducted for the month ended 5 January 2021 is payable by today.

31 January 2021 – Last day to file 2019-20 self-assessment tax returns online.

31 January 2021 – Balance of self-assessment tax owing for 2019-20 due to be settled on or before today unless you have elected to extend this deadline by formal agreement with HMRC. Also due is any first payment on account for 2020-21.

1 February 2021 – Due date for Corporation Tax payable for the year ended 30 April 2020.

19 February 2021 – PAYE and NIC deductions due for month ended 5 February 2021. (If you pay your tax electronically the due date is 22 February 2021)

19 February 2021 – Filing deadline for the CIS300 monthly return for the month ended 5 February 2021. 

19 February 2021 – CIS tax deducted for the month ended 5 February 2021 is payable by today.

Furlough extended to end April 2021

During an announcement to Parliament today, 17 December 2020, the Chancellor confirmed the following:

  1. An extension of the furlough scheme until the end of April 2021,
  2. The date for Budget 2021 has been fixed as 3 March 2021, and
  3. Businesses will have until the end of March 2021 to apply for Government backed, Bounce-Back and other loan schemes.

In a following press release it was confirmed:

The furlough scheme has been extended until the end of April 2021, with the Government continuing to contribute 80% towards wages – giving businesses and employees across the UK certainty into the New Year, the Chancellor announced today. The eligibility criteria for the UK-wide scheme will remain unchanged and these changes will continue to apply to all Devolved Administrations. Extending the scheme until the end of April means businesses across the country will have certainty about what support will be available to them.

Businesses will also be given until the end of March to access the Bounce Back Loan Scheme, Coronavirus Business Interruption Loan Scheme, and the Coronavirus Large Business Interruption Loan Scheme. These had been due to close at the end of January.

The Government has already announced that more support will be available beyond March, through a successor loan scheme. More details of the scheme will be announced in due course, with the Government providing a further update on wider Covid-19 economic support at the Budget on 3 March 2021.

Sharing costs

Independence is a cultivated concern. We all want to be self-sufficient.

In a business environment this might manifest as having a separate Wi-Fi source even though it may be possible to share Wi-Fi with a number of business neighbours and divide the cost between you?

There will always be what-ifs to this type of co-operative effort but if the cost sharing made a joint contribution to cost savings wouldn’t it be worth exploring your options?

Retail outlets in a common location could club together to promote their mall or street.

Could you share a group-branded delivery van?

Practically, it may be necessary to form an umbrella management company to deal with the costs and recharge members for their share of costs. But as long as there are overall cash savings to be had why not at least consider this as an option?

Disruption in 2020 has taught us that flexibility is a key element if you want to stay afloat. For many businesses, the stresses and strains have proved too much and cherished family businesses have been forced to close. But those businesses that have survived are leaner and better able to cope.

It may well be that co-operation of this sort may not be an option for your business, but you have nothing to lose by considering your options to cost share. 

Just as we have all at some time in 2020 directed staff to work at home – an unlikely option in normal times – surprise, surprise the strategy has worked. In fact, many staff now prefer working from home.

Sharing costs may be one of a number of strategies that you could consider. If your business has survived thus far we should not only count our blessings but constantly be on the lookout for options to make our continued success more likely.

Too good to be true?

Right now, any reference to a return to 2019 trading conditions seems to echo the title of this short article, too good to be true.

Common sense tells us that we are unlikely to emerge largely, COVID-free until the end of 2021 and additionally, many traders and consumers are apprehensive of the coming EU exit.

Never-the-less, we would be wise to be on the lookout for signs of optimism.

In a year when the truth has been labelled as fake and fake is pedalled as truth, it is difficult to know who to believe. Even if you rely on your own judgement these judgements have to be based on interpretations of fact.

The end of each calendar year is culturally a time to reflect and consider your options; set new year resolutions. But based on our experience of disruption and anxiety created by COVID – and to a lesser extent Brexit – seeing the wood of what could be when it is made up of the trees of uncertainty and misfortune is to be blunt, difficult.

However, it is a wise person that keeps their eyes open and plans for change.

Maybe we should view the end of 2020 as a time for reflection on how we cope with our immediate problems, business or otherwise, and create plans so as circumstances allow a more positive approach, we are ready to go…

This may well entail giving serious consideration to what may appear to be too good to be true, but that may not always be the case.

Deadlines for paying deferred VAT

The coronavirus VAT payment holiday gave businesses the chance to defer the payment of any VAT liabilities between 20 March 2020 and 30 June 2020. The option for businesses to defer their VAT payments ended on 30 June 2020.

There are two options available for repaying this VAT.

  • The first option is to pay the deferred VAT in full on or before 31 March 2021. No interest or penalties will accrue on deferred payments that are paid by the new due date and there is no requirement to contact HMRC.
  • The second option is to further defer the amount of VAT due. The new VAT deferral payment scheme will allow businesses the option to pay the deferred VAT in smaller payments over a longer period. Instead of having to repay the full amount by 31 March 2021, businesses will now be able to make smaller interest-free payments during the 2021-22 financial year and pay the VAT due by 31 March 2022. 

Businesses will need to opt-in to the new payment scheme by the end of March 2021. The opt in process will be available in early 2021. Businesses will also need to opt in themselves and will not be able to use an agent to do this for them.

The new payment scheme will allow businesses to pay their deferred VAT in instalments without adding interest and select the number of instalments from 2 to 11 equal monthly payments. Businesses must meet certain conditions to use the scheme including being up to date with the submission of their VAT returns.

UK VAT claims by non-EU businesses

There are special rules for businesses established outside the EU submitting a claim for VAT incurred on goods or services bought in the UK. The exact rules of what VAT is refundable can be complex. There are also a number of conditions which must be met in order for a claim to qualify.

The deadline for the submission of a refund request for expenses incurred in the UK by non-EU businesses during the period 1 July 2019 – 30 June 2020 is 31 December 2020. However, HMRC has published a new Revenue and Customs Brief setting out actions HMRC is taking to support businesses who have been having difficulties in obtaining a certificate of status. One of the conditions for making a claim is for the claimant to obtain the required certificate of status from their official issuing authorities. This may not be possible due to measures taken by jurisdictions in response to coronavirus.  

HMRC has agreed that due to this specific circumstance, they will allow overseas businesses an additional 6 months to submit a valid certificate of status, which means the certificate of status must be submitted on or before 30 June 2021.

Businesses must still submit their application for VAT refunds and all other documentary evidence required to process their claims on or before 31 December 2020.

What is Tangible Moveable Property?

A chattel is a legal term that defines an article which is a tangible moveable property. A tangible object is one that you can touch. The asset has to be a physical asset such as household furniture, paintings, antiques, items of crockery and china, plate and silverware, motor cars, lorries, motorcycles and items of plant and machinery not permanently fixed to a building.

There is no specific meaning for the term 'moveable' in the relevant legislation. However, HMRC’s guidance states that the definition is simply based on whether the asset can be moved easily and without damaging its surroundings. Small items of plant or other easily moved items will satisfy the test.

A charge to Capital Gains Tax usually arises after an asset is sold. However, there are special rules concerning the sale of chattels. That is because chattels with a predictable useful life of 50 years or less are normally exempt from Capital Gains Tax.

Export finance for smaller businesses

UK Export Finance (UKEF) is the export credit agency and a ministerial department of the UK government.  The UKEF helps UK companies by providing insurance to exporters and guarantees to banks to share the risks of providing export finance. In addition, it can make loans to overseas buyers of goods and services from the UK that can protect UK exporters facing delayed payments or transit restrictions.

A new General Export Facility scheme has been launched by the UKEF in partnership with the UK’s five largest commercial banks. The new scheme has been designed to give exporting SMEs access to working capital encouraging them to export and take advantage of new free trade agreements. Under the new scheme, the government can provide an 80% guarantee on financial support from lenders to support general exporting costs, up to the value of £25 million.

The Minister for Exports, Graham Stuart, commented that:

'UKEF’s support for smaller businesses is shifting up a gear. The new General Export Facility will make a huge difference for entrepreneurs who need the financial backing to go global and benefit from our free trade agreements. It will help us bring genuine optimism back to exporters.'

Consultations to crack down on fraud announced

The government has unveiled three new consultations to help combat fraud by reforming the UK’s register of company information. This follows an announcement earlier this year that Companies House will be reformed to clamp-down on fraud and money laundering, with directors unable to be appointed until their identity has been verified.

One of the consultations will seek views on how the new discretionary power for the registrar to query new, submitted information will work in practice. The proposals will help close loopholes that lead to abuse of the register, facilitating a crack down on the misuse of corporate structures by criminals.

The 3 consultations are as follows:

  • Improving the quality and value of financial information on the UK companies register. This consultation will examine how companies might be able to file accounts once only with government, instead of separately to Companies House, HMRC and other agencies. It will also look at other areas including the filing options available to small companies and digital filings.
  • Powers of the registrar. This consultation will examine the new discretionary power for the register to query information on a risk-based approach. The proposals will help close loopholes that lead to abuse of the register, facilitating a crackdown on the misuse of corporate structures by criminals.
  • Implementing the ban on corporate directors. Finally, this consultation will look at tackling opaque corporate structures. This would mean that corporate directors would be prohibited unless their own boards comprise all natural persons, and those natural persons have their identities verified.