Frank Haskew, ICAEW’s Head of Tax, has written to Jesse Norman, Financial Secretary to the Treasury, to offer up a range of policies that – if adopted by HMRC – could make a ‘substantive difference’ to the UK economy as it battles the COVID-19 pandemic. Key policy suggestions include a deferral or suspension of measures due to start in April and December 2020. These include suspending the proposed introduction of preference for tax debts, a proposal about which ICAEW has already raised concerns
While the start date has been deferred from 6 April 2020 to 1 December 2020, Haskew suggests that as a minimum, the start date should be suspended with a further review about the measure given its potentially harmful impact to the economy.
And while welcoming the delay to off-payroll working changes in the private sector to 2021, the letter asks HMRC to go further and asks for additional policy changes back due to come into effect from 6 April 2020 to be kicked back. These include 30-day reporting for CGT on sales of UK property and the requirement to adopt digital links as part of the government’s Making Tax Digital (MTD) for VAT programme, “an expensive requirement in terms of time and cost which should be deferred for a year” according to the correspondence. The letter goes on to ask for no further extension to MTD in 2021 but, in the meantime, ICAEW commits to continue working with HMRC on MTD development which ensures services are easy to use for taxpayers and any appointed agent. ICAEW Tax Faculty recommends that the Government explores providing further support to businesses to keep employees on the payroll, for example through the use of employment grants. Other suggestions to consider are to increase employers’ NICs thresholds and/or implement an employers’ NICs holiday for all businesses for the 2020/21 financial year. Other, less expensive alternatives include a reduction in employers’ NICs rate of 13.8% and/or a further increase in the employment allowance.
While acknowledging that such measures will impact Exchequer’s revenue, they would reduce the number of workers laid off and ensure the UK economy retains the skills vital for economic recovery. Another key recommendation is the reintroduction of a temporary extension of the carry back of losses rules to the previous year, as was provided after the 2008 financial crash. The relevant legislation was set out in the Finance Act 2009 and provides a suitable model to follow. In the last financial crisis, HMRC accepted provisional loss carry back claims and the faculty stressed its support it should do the same again and ensure it is widely publicised.
Consideration should be given to whether a cap is imposed: if the 2009 cap was updated for inflation it would be £70,000 today. While supporting the Government’s proposals in respect of time to pay, the establishment of a dedicated helpline and the waiving of interest and penalties, the faculty said they may need to be extended, especially as a way of providing immediate relief for the self-employed.
Possible options range from increasing the current £10,000 limit for making online time to pay applications (and making it available to the taxpayers’ agents) through to an immediate suspension of debt enforcement activity (as the Irish Revenue announced this week). As part of this, ICAEW recommends that HMRC should immediately announce that any written requirements for taxpayers to respond to HMRC letters, etc., is extended from 30 days to 90 days. Finally, the Faculty said that it would welcome discussions about how the 5MLD rules can be framed to prevent money laundering while not damaging the UK’s ability to provide trust services to international clients. Alongside the policy suggestions, ICAEW’s Tax Faculty gave its commitment to support HMRC in ensuring that all its critical messaging is disseminated to the Institute’s memberships.
Haskew and the Tax Faculty are also keen to hear from members about their experiences in the field so that they can feed these back to HMRC contact us at firstname.lastname@example.org
Further support from ICAEW on the coronavirus outbreak.