COVID-19: HMRC Guidance on Taxpayers facing Assessments and Penalties

During the current uncertainty brought about by coronavirus (COVID-19), HMRC has issued advice to individuals and companies. In particular, HMRC have issued guidance on taxpayers requesting time to pay. It is important to seek legal advice if you have any penalties or assessments against you as soon as possible as these are subject to strict time limits.

HMRC’s Advice for Small Businesses 

How will furloughed workers be supported?

All UK employers with a PAYE scheme will be able to access support to continue paying part of their employees’ salaries that otherwise would have been laid off due to the crisis. This will be done through the Coronavirus Job Retention Scheme

‘Furloughed workers’ will be workers who have been asked to stop working, however will be kept on payroll. These workers will be paid 80% of their regular wages up to £2,500 per month which will be reimbursed by HMRC. The purpose of this scheme is to safeguard workers from being made redundant.  

The scheme will apply to:

  • Businesses
  • Charities
  • Recruitment agencies whose workers are paid through PAYE
  • Public Authorities. 

The PAYE payroll scheme must have been started and created before 28 February 2020 and have a UK bank account. 

Furloughed employees must have been on payroll on 28 February 2020 on any type of contract. The scheme covers employees who were made redundant by their employer if they have been rehired since. To be eligible, the employee can not undertake work for or on behalf of the organisation. The employees wage will still be subject to usual income tax and other deductions. 

Will businesses still have to make tax payments? 

UK VAT registered businesses will be able to differ value added tax (VAT) payments for three months. 

Income Tax Sef-Assessment payments due on 31 July 2020 may be deferred until 21 January 2021. The deferral is optional and the government has advised that if you are able to make the payment it should be made. To further this, if the payment is deferred until January 2021 no interest or late payment fees will be charged.  

How will the self-employed be supported?

The self-employment income Support Scheme (SEISS) will support self-employed individuals who have lost income due to coronavirus. 

The scheme will allow those self employed to to claim a grant worth 80% of trading profits up to a maximum of £2,500 per month for the next 3 months, which may be extended if needed. 

To qualify for the SEISS annual trading profits must be less than £50,000 and at least 50% of income must be derived from self-employment. the determination of trading profits will be determined from reference to profits in the year 2018/2019, or your average profits in the three years up to 2018/2019.

Time to pay Service

All businesses and those who are self-employed who are in financial distress with outstanding tax liabilities may be eligible to receive support with their tax affairs from HMRC

Support from HMRC will depend on individual circumstances and liabilities to be eligible for the service the business must pay tax to the UK government and have outstanding tax liabilities. 

Controlled Foreign Company Rules – State Aid Recovery

Due to disruption caused by Covid-19, Group companies which benefited from the Finance Company Exemption (FCE) under the UK’s Controlled Foreign Company (CFC) rules whoare required to pay HMRC, have been allowed a further 30 days to the 60 day deadline for responding to information requests.

Book your Initial Consultation with our Specialist Tax Solicitors

Our specialist Tax Solicitors and Barristers deliver expert technical knowledge, strong negotiation skills and advice which can make a pronounced difference to eventual tax penalties, charges and liability.  

We provide tax advice and representation against HMRC. Get in touch with our expert tax solicitors and barristers so we can get you a result. We provide a quick no cost initial telephone case review to establish whether or not we can help you; just call one of our team on 02071830529.

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