How HMRC intends to continue to support taxpayers and the economy
12 November 2020
HMRC has published a policy paper, which discusses how it intends to carry on supporting both taxpayers and the economy over the coming months as coronavirus continues to cause economic disruption across the country. There are a variety of different areas of focus, and detail has been provided about each one.
Support schemes and policy changes
HMRC has administered the new support schemes proposed by the Government to help businesses through the pandemic. Under the Coronavirus Job Retention Scheme (CJRS), 1.2 million employers have claimed approximately £41.4 billion in relation to their furloughed staff. Additionally, roughly 2.7 million self-employed people have claimed £13.7 billion in grants. Eligible employers have also had access to reimbursements relating to the cost of Statutory Sick Pay (SSP), and restaurants were refunded for customer discounts granted under the Eat Out to Help Out scheme.
HMRC points out that for the CJRS and the Self-Employment Income Support Scheme (SEISS), payments have been made within six working days of claims being submitted, and reimbursements relating to the Eat Out to Help Out scheme were made within five working days.
HMRC has also had to protect the schemes from abuse and is taking tough action on deliberate fraudulent activity, but also states that where honest mistakes have happened, it wants to help claimants to put them right. The message is that they do not have to worry, and that they have 90 days from the date of receiving the grant in which to correct any mistakes. HMRC is now beginning to investigate claims in detail, and particular attention will be focused on claims under the CJRS that are out of sync with PAYE data it holds. In addition to this, nearly 15,000 calls have been made to fraud hotline services.
As well as these schemes, there have been over 60 other temporary policy changes or clarifications implemented in response to coronavirus, including measures to:
- Reduce demands placed on taxpayers – e.g. a three-month extension to appeal deadlines for customers impacted by Covid-19
- Keep goods flowing at borders – operational measures to allow businesses to carry out some customs clearances from their business premises, removing the need to present goods in other locations
- Ensure that the tax system continues to operate throughout lockdown
- Provide cashflow support to those who need it - allowing those in Self-Assessment to defer Income Tax payments on account due on 31 July 2020, to 31 January 2021, and allowing UK businesses to defer VAT bills due between 20 March and 30 June, to 31 March 2021. Additionally, a new scheme was introduced allowing the deferred VAT to be split out into 11 even monthly instalments
Taxpayers are reminded that they can contact HMRC through a variety of digital channels – so through their personal or business tax account, the HMRC App, or webchat.
Reforming the tax system
The outbreak of coronavirus has highlighted the fact that the tax system needs to be more adaptable, resilient and responsive. The government has confirmed it has a ten-year strategy for building a trusted, modern tax administration system.
The intention of the reforms is to provide greater flexibility and the ability to provide targeted support to people and businesses should any future national crises arise, which will in turn increase the resilience of the tax system. It is hoped that modern digital systems and real-time information will assist people in getting their tax correct the first time, making it much more difficult for people to avoid paying the tax that they owe.
Next steps
As the threat of the virus diminishes, the country will eventually return to a steady state, which many are coining the ‘new normal’. HMRC has confirmed that it will follow some key principles to ensure that it continues to support both individuals and businesses in the UK. They are as follows:
- To collect the tax due in a manner that recognises the needs and challenges faced by both businesses and individuals
- To communicate openly and transparently, to provide people with as much certainty as possible
- To remain professional, fair and even-handed in interactions with taxpayers
- Where temporary administrative arrangements have been introduced, which have resulted in an enhanced customer experience or created improvements, HMRC will try to build on those changes to deliver long-term sustainable solutions
- HMRC will continue to make tackling serious fraud and criminal attacks on the tax system a priority, increasing wider activity to ensure that individuals and businesses pay the correct tax
HMRC states that it is important that the tax system continues to work efficiently, as it funds essential public services, such as the NHS. Tax returns should be filed, and tax paid on time where possible.
Tax collection and benefit payments
Taxpayers and claimants are reminded to continue to file their tax returns and claim forms or renewals on time. Penalty notices are being issued to those businesses and individuals who have not met their obligations, but HMRC will take a sympathetic approach to those who are struggling to file their returns or pay their tax on time. The impact of Covid-19 can be accepted as a reasonable excuse, but as time goes on, customers will be expected to meet the deadlines, and appeals where Covid-19 has been cited as an excuse will be looked at more closely.
Anyone who can’t meet the deadlines should contact HMRC.
Compliance checks
Compliance checks allow HMRC to investigate someone’s tax affairs if they suspect that they are not paying the correct amount of tax. A customer-first approach will be taken where there are existing ongoing compliance checks, and during this period, new enquiries will only be opened into those badly affected by coronavirus or anyone leading the fight against the virus, if HMRC believes that they can engage and resolve the enquiry.
Tax enquiries may be opened even if a taxpayer has been severely affected, in situations where:
- Criminal activity, fraud or significant deliberate non-compliance is suspected
- Not doing so would mean missing a deadline preventing HMRC from ever collecting unpaid tax
- Employees need to be protected, for example, with the National Minimum Wage (NMW)
- A mandatory check must be carried out
Debt
When lockdown measures were relaxed in some areas, HMRC debt collection activities were restarted. HMRC has confirmed that the focus will be on collecting tax debts from those customers least impacted by coronavirus, and most able to pay their debts.
Businesses who have agreed a payment deferral with HMRC have been contacted so that they can be supported into Time To Pay arrangements. HMRC has also begun making contact with businesses with new debts that have arisen since March 2020.
If businesses or individuals are worried about payment of tax bills, then they should call the Payment Support Service as soon as possible.
The information in this article is accurate at the time of publication. For all the latest information, news and resources on how the COVID-19 pandemic is affecting payroll professions, visit our Coronavirus hub.