HMRC Stakeholder Digest – 16 June
Please see the following message which we are sharing on behalf of HMRC:
This HMRC Stakeholder Digest provides a round-up of our latest news and updates, which we’d be grateful if you could share with your clients, customers or members.
The government has set up a dedicated support page where businesses can find the right support, advice and information to help with the impact of coronavirus (COVID-19).
Delay to Step 4 COVID-19 restrictions
As Coronavirus restrictions remain in place, information on what people can and cannot do is available on GOV.UK.
VAT deferral – final chance to join online
The VAT deferral new payment scheme is open for all businesses who deferred paying VAT due between 20 March and 30 June 2020, and were unable to pay in full by 31 March 2021.
The last day businesses can join this scheme online is 21 June. If they join by this date they can spread their payments across up to eight instalments.
If businesses have deferred paying VAT and have not yet joined the VAT deferral new payment scheme, they may be charged a 5% penalty and/or interest if they do not join online by the deadline of 21 June or pay in full by 30 June.
Businesses can join quickly and simply online without needing to call us. To find out more, including what they need to join online, go to VAT deferral on GOV.UK.
If they're still unable to pay and need more time, they should contact us to make an alternative arrangement by 30 June 2021.
Self-Employment Income Support Scheme
Thank you for continuing to support your networks with the Self-Employment Income Support Scheme. More detailed guidance will be published ahead of the scheme opening, but in the meantime, here are the latest SEISS updates.
Calculating the fifth SEISS grant
The amount of the fifth grant will be determined by a turnover test, which details how much the eligible customer’s turnover has reduced in the 2020-21 tax year compared to pre-coronavirus trading.
Eligible customers do not need to have submitted their 2020-21 Self Assessment tax return to be able to calculate their turnover to claim the fifth SEISS grant. However, they should ensure their records are up to date so that turnover for the year April 2020 to April 2021 is readily available.
If an eligible customer’s turnover reduced by 30% or more, they will receive a grant worth 80% of three months’ average trading profits (capped at £7,500). If their turnover reduced by less than 30%, they will receive a grant worth 30% of three months’ average trading profits (capped at £2,850).
Eligibility for the fifth grant
To be eligible, self-employed people (including members of partnerships) must:
- have submitted their 2019-20 tax return on or before 2 March 2021
- have trading profits that are no more than £50,000 and at least equal to their non-trading income, based on their 2019-20 tax return or an average of relevant tax years between 2016-17 and 2019-20
- declare that they intend to continue to trade and are either:
- currently trading but are impacted by reduced activity, capacity or demand due to coronavirus, or
- have traded previously but are temporarily unable to do so due to coronavirus (if the only reason a customer is temporarily unable to trade is because they have to quarantine or self-isolate after going abroad, this does not meet the requirement).
- declare that they have a reasonable belief that there will be a significant reduction in their trading profits between May and September 2021 due to reduced business activity, capacity, demand or inability to trade due to coronavirus.
If a customer previously heard from us that they were not eligible for the fourth grant, they will not be eligible for the fifth grant either. This is because the same tax returns have been used to determine eligibility for both grants.
Customers ineligible for SEISS may still be eligible for other UK Government support, including Restart Grants, the Recovery Loan scheme, business rates relief and other business support schemes. More details are available on GOV.UK.
SEISS pre-claim checks
To protect against error and fraud, we are continuing the work we carried out ahead of the fourth SEISS grant opening, by contacting up to 27,000 potentially eligible customers to undertake a pre-claim check before the fifth SEISS grant opens.
We will write to affected customers to let them know we’ll phone them on the number they provided in their 2019-20 Self Assessment tax return to check their identity and business activity.
Customers will need to provide one form of identity and three months’ worth of UK bank statements from the 2019-2020 tax year in order to claim under the SEISS scheme.
If a customer has changed their telephone number and we are unable to reach them, they should contact us on 0800 024 1222, and we will update their records with the new telephone number and arrange for a call back. Please note, this 0800 number can only be used to provide us with a new telephone number. Our advisors will not be able to transfer customers to another department or talk to them about the letter they have received.
Tax agents are not able to claim SEISS or submit these documents on their clients' behalf. Customers can find more information on how to recognise genuine HMRC contact and how to avoid and report scams on GOV.UK.
Reporting SEISS grants on Self Assessment tax returns
SEISS grants are taxable and subject to self-employed National Insurance contributions, which means customers need to report the grants on their tax returns.
We have received a number of 2020-21 tax returns where the first, second and third SEISS grants have been reported incorrectly, or not at all, causing delays in processing them. From 19 June, we’ll be automatically correcting returns and issuing a notice to the customers to tell them that we have done this. However, incorrect returns received before that date will need to be corrected by us separately; we’ll share details of any actions customers need to take, as soon as we can.
Customers can find more guidance on filing their tax return early on GOV.UK. As a reminder, customers should only use the following boxes to report their SEISS grants on their 2020-21 return:
- box 70.1 on the Self Employment (Full) page of the tax return
- box 27.1 on the Self Employment (Short) page of the tax return
- box 9.1 of the partnership supplementary pages of the tax return
- box 3.10A of the SA200 (Short) tax return.
We know that some customers are incorrectly reporting their SEISS grants as turnover, or 'any other income'. Customers should not report their SEISS grants in any other boxes than those listed above.
Paying back overpaid SEISS grants
If an amendment has been made to a customer’s tax returns for 2016-17 to 2019-20 on or after 3 March 2021, they will need to check if their claim for the fourth SEISS grant has been affected. This requirement applies to claims for the fourth and fifth SEISS grants only.
Customers can tell us if they need to pay back some or all of a SEISS grant by completing a simple form online. Customers will not have to calculate the impact on the SEISS grant themselves as we will then contact them with details of how much they need to repay, and how to do this. More information can be found on GOV.UK.
Submit CJRS claims for June
CJRS claims for periods in June can now be submitted and must be made by Wednesday 14 July.
Employers can claim 80% of their furloughed employees’ usual wages for the hours not worked, up to a cap of £2,500 per month.
Employers can claim before, during or after they process their payroll. If they can, it’s best to make a claim once they’re sure of the exact number of hours their employees will work so they don’t have to amend their claim later.
Conditions of claiming CJRS grants
Employers must pay the associated employee tax and National Insurance contributions to HMRC. This is a condition of claiming the grant, and not doing so will mean they’ll need to repay the whole of the CJRS grant and they may not be able to claim future CJRS grants.
If employers are having difficulty paying any of their tax liabilities to HMRC, we can work with them to explore affordable payment options – for example, through a payment plan where they can pay in instalments. More information is available on GOV.UK.
Flexibly furloughing employees
If a business continues to be affected by coronavirus, they don’t need to place all their employees on full furlough. Employers can also use the CJRS flexibly if they bring their employees back to work for some of their usual hours. They can claim a portion of their employees’ usual wage costs, but only for the hours spent on furlough.
Employers must not claim under the CJRS for any hours that their employees work. We are carrying out compliance checks to identify error and fraud in claims.
What employers need to do now:
- If they haven’t submitted their claims for May but believe that they have a reasonable excuse for missing the deadline (14 June), go to claim for wages on GOV.UK to check if they can make a late claim.
- Submit any claims for June no later than Wednesday 14 July.
- Keep records that support any CJRS grant amounts they claim, in case HMRC needs to check them.
- Make sure they’re paying employee tax and National Insurance contributions to HMRC and contact us if they're struggling to pay.
Changes to the CJRS from July
In July, the UK Government will pay 70% of employees' usual wages for the hours not worked, up to a cap of £2,187.50. In August and September, this will reduce to 60% of employees’ usual wages up to a cap of £1,875.
Employers will need to pay the 10% difference in July, and 20% in August and September, so that they can continue to pay their furloughed employees at least 80% of their usual wages for the hours they do not work during this time, up to a cap of £2,500 per month.
Employers can still choose to top up their employees' wages above the 80% level or cap for each month if they wish, at their own expense.
To help employers plan ahead for future claim periods, the CJRS calculator is available to help them work out how much they can claim for employees up to the end of September. To find this and everything they need to know about the CJRS, go to claim for wages on GOV.UK.
Use our updated CJRS templates to make claiming for multiple employees easier
We’ve updated our claims process for employers who have 16 or more employees, making it easier to add their details. Different templates are available if they are claiming for between 16-99 employees, or for 100 or more employees.
If employers were already using our previous template to claim for 100 employees or more, they can carry on using it. Third-party software incorporating this will still work.
Employers must enter all the information in the right format before uploading the completed template so that their claim is processed quickly and successfully.
We’ve also updated the process to help employers get their claim right first time and provide all the information needed so that their claims aren’t delayed or stopped. For example, if employers can't provide a National Insurance number for an employee, they can now select a reason for this.
If employers make a mistake, the template will highlight it to help them put it right before the claim is submitted. Employers should not to change the format of the template before they submit it, as that won’t be accepted by our system.
Employers can find everything they need to help them make a claim, including our updated templates, go to claim for wages on GOV.UK.
Small businesses encouraged to apply for Brexit Support Fund before 30 June deadline
With two weeks to go before the deadline, small and medium sized businesses are being encouraged to apply for funding to help them adapt to new customs and tax rules when trading with the EU.
The £20m Brexit Support Fund, which closes 30 June, enables businesses who trade with the EU to access up to £2,000 of funding for practical support including training and professional advice on new customs, rules of origin and VAT processes.
More information on the fund and how to apply can be found on GOV.UK.
HMRC can help towards the cost of children’s summer holiday activities
HMRC is reminding working families that they can use Tax-Free Childcare to help pay for their childcare costs over the summer.
Tax-Free Childcare – a childcare top-up for working parents – can be used to help pay for accredited holiday clubs, childminders or sports activities – giving parents and carers that extra peace of mind that their child is having fun during the school summer holidays and it can save them money.
Tax-Free Childcare is available for children aged up to 11, or 17 if the child has a disability. And for every £8 deposited into an account, families will receive an additional £2 in government top-up, capped at £500 every 3 months, or £1,000 if the child is disabled.
Parents and carers can check their eligibility and register for Tax-Free Childcare on GOV.UK.