The latest news on SEISS grant 5, along with information on other COVID-19 HMRC administered support schemes and other HRMC updates feature in the UK tax developments this month.

The latest news on SEISS grant 5, upcoming CJRS deadlines, changes to CJRS grant amounts and how to deal with CJRS over and underpayments feature together with news about HMRC’s COVID-19 easements review, updated extended loss carry-back guidance, the VAT treatment of COVID-19 testing services and the latest schedule of webinars.

SEISS grant 5

Eligible taxpayers can claim SEISS grant 5 any time until Thursday 30 September 2021 when the scheme closes. Taxpayers who were not eligible for SEISS grant 4 are not eligible for SEISS grant 5 as HMRC is using the same tax returns to determine eligibility for both grants.

Criteria

Find out if a claim is possible by checking all criteria in stages 1, 2 and 3 are met including the turnover test which will be required to be met by most taxpayers. This test considers how much turnover has gone down by in the 2020/21 tax year due to the pandemic.

The online claims service for SEISS grant 5 asks for the taxpayer’s turnover for the year April 2020 to April 2021 (the ‘pandemic year’) and the tax year 2019/20 (the ‘reference period’) – or the tax year 2018/19 if 2019/20 was not a normal year for their business.

HMRC has also made a minor change to the wording of the turnover test guidance as it applies to members of partnerships.

CIS subcontractors

Construction Industry Scheme (“CIS”) subcontractors calculating their turnover figure for the 12-month period starting on any date between 1 ‌April and 6‌‌ ‌April‌‌ ‌2020 (the pandemic year) should include the full amounts on their invoices, before any deductions contractors have made in the ‘CIS deductions’ box.

When finding their turnover figure on their Self-Assessment tax return for 2019/20 or 2018/19 (the reference year), subcontractors should also use the full amount, before any deductions contractors have made in the ‘CIS deductions’ box.

Delays processing 2020-21 Self-Assessment tax returns

HMRC has contacted the Institute to advise that there is a delay to processing some 2020/21 tax returns where SEISS grant payments have not been reported in the way HMRC expected. For example, where HMRC records show a different amount was paid than amount declared on the return.

From 19‌‌ ‌June 2021, HMRC automatically corrects the SEISS grant amounts entered on 2020/21 Self-Assessment returns when these are processed. HMRC is currently processing and correcting returns submitted before that date.

Amending returns

HMRC will contact taxpayers after correcting their return, and dependent on the changes made, agents or their clients may need to take further action. It’s important to check any adjustment or statement of account to make sure the changes are accurate, otherwise a taxpayer might be taxed twice for their SEISS grant.

If a taxpayer receives a statement of account and needs to make further amendments to their Self-Assessment return, the relevant guidance ‘check if you need to change your Self-Assessment return for SEISS’ sets out how to do this.

To make it easier for taxpayers to make changes to their tax returns, HMRC has recently updated their processes and can now accept amendments to SEISS grant entries over the phone. Agents can also make these amendments by phone, on behalf of their clients, where they are appropriately authorised.

SA302 calculations

HMRC is aware that some taxpayers are concerned about delays in issuing SA302 tax calculations/evidence of earnings where these are needed for mortgage applications. HMRC has written to mortgage lenders to update them on the situation and to ask that they consider accepting alternative evidence until this is resolved.

Many mortgage providers will accept a copy of the SA302 printed from a taxpayer’s online Self-Assessment account or commercial software.

The CJRS

Upcoming deadlines

The deadline to submit CJRS claims for periods in September 2021, the final month of the job retention scheme, is Thursday‌‌ ‌14 October 2021, unless reasonable excuse is available for late submission. Amendments to August 2021 CJRS claims must be made by Tuesday 28 September 2021 and amendments to September 2021 CJRS claims must be made by Thursday 28 October 2021.

Changes from August 2021

From Sunday 1 August 2021 – 30 September 2021, CJRS grants cover 60 percent of employees’ usual wages for the hours not worked, up to a cap of £1,875.

Employers need to pay the 20 percent difference in August and September so that they can continue to pay their furloughed employees at least 80 percent of their usual wages for the hours they do not work during this time, up to a cap of £2,500 per month.

Employers continue to be required to pay the associated employee tax and National Insurance contributions to HMRC in the months of July, August and September.

The employer contribution is a condition of applying for the grant; not paying this means the employer will need to repay the whole of the CJRS grant and they may not be able to claim for future CJRS grants.

For the hours not worked employers can continue to choose to top up their employees’ wages above the 80 percent level or cap for each month, at their own expense.

Employers don’t need to place all their employees on full furlough. They can use the CJRS flexibly to bring their employees back to work for some of their usual hours. Employers can claim for a portion of their usual wage costs for the hours spent on furlough.

What if an employer claimed too much in error?

If an employer has claimed too much CJRS grant and has not already repaid the overclaimed amount, they can repay this as part of their next online claim without needing to call HMRC. If they claimed too much but do not plan to submit further claims, they can let HMRC know and make a repayment online through HMRC’s card payment service or by bank transfer.

An employer must notify HMRC and repay the money by the latest of whichever date applies below:

• 90 days from receiving the CJRS money they’re not entitled to; or
• 90 days from the point circumstances changed so that they were no longer entitled to keep the CJRS grant.

If an employer does not do this, they may have to pay interest and a penalty, as well as repaying the excess CJRS grant.

What if an employer hasn’t claimed enough?

If an employer made a mistake in their claim that means they received too little money, they’ll need to amend their claim within 28‌‌ ‌calendar days after the month the claim relates to – unless this falls on a weekend or bank holiday, where the deadline is the next weekday.

COVID-19 changes

Since March 2020, HMRC has introduced numerous tax policy and process easements to help taxpayers and businesses deal with the impacts of COVID-19. As COVID-19 restrictions are lifted, HMRC is reviewing these – with some due to end and others being permanently adopted.

An example of this is the electronic process that has now been adopted for transactions which previously required physical stamps, such as stamp duty paid on shares purchased on a stock transfer form.

Extended loss carry-back

HMRC has updated the guidance note setting out the rules for the temporary extension of loss carry back for unincorporated businesses and companies contained in Schedule 2 to Finance Act 2021.

Revenue and Customs Brief 11 (2021): VAT liability of COVID-19 testing services

This newly published brief explains the rules for the VAT treatment of COVID-19 testing services, for those who make supplies of COVID-19 testing services, their advisers and those receiving these services.

Statutory Sick Pay Rebate Scheme

The statutory sick pay (“SSP”) rebate scheme continues to provide financial support to small and medium-sized employers. Employers with fewer than 250 employees who have paid SSP to employees for COVID-19 related sickness absence may be eligible for support. Any repayment of SSP covers up to two weeks of the applicable rate of SSP. For more information on eligibility and how to make a claim, check the guidance on GOV.UK.

Penalties and interest for deferred VAT

Businesses that deferred VAT payments due between 20 March 2020 and 30 June 2020 were able to either:

• pay in full by 31 March 2021;
• join the online VAT deferral new payment scheme by 21 June 2021 to spread payments of deferred VAT over smaller, interest free instalments; or
• contact HMRC to make an arrangement to pay by 30 June 2021

It is now confirmed that any business which deferred VAT and has not paid or made an arrangement to pay the deferred VAT may be charged a 5 percent penalty or interest.

Option to tax temporary time limit comes to an end

The temporary change to the time limit to notify HMRC of an option to tax during the pandemic has ended. This applied to decisions made between 15 February 2020 and 31 July 2021. HMRC temporarily extended the time limit to 90 days from the date the decision to opt was made. For decisions made from 1 August 2021 onwards, HMRC must be notified within 30 days.

In some situations, HMRC may accept notification made more than 30 days after the decision to opt was made.