TAX UPDATE HMRC have kindly informed R3’s tax working group of their current position with regards to Time To Pay (‘TTP’) proposals and the collector’s position on interest and penalties. HMRC – TTP proposals A TTP proposal should be made in writing as it allows those submitting the opportunity to provide as much supporting detail as necessary to obtain approval.
Standard information to be provided would include –
- Description of the business;
- Annual total liability to tax;
- Details of the nature and amount of tax to be deferred by instalment;
- A short-term cashflow forecast (particularly if the request is for an amount greater than £750,000);
- The reasons why the request is being made (specifically the direct link to COVID-19)
Additionally, to support a TTP proposal, HMRC would want to see the following in some form –
- Details of the measures the company has implemented to allow it to pay the debt as quickly as possible (in particular, if the company has applied for and received support via any other government scheme);
- An explanation of the parts others have played in ensuring the company presents the best proposal possible;
- An explanation of the other funding options explored before seeking TTP (e.g. via banks, other lenders, shareholders, directors etc);
- Any information to support why HMRC should provide support and take an element of risk when others are not willing to invest or inject capital into the company.
- HMRC appreciate that the trading and the financial landscape has altered due to the COVID-19 crisis. HMRC recognise that work remains to be done by them to determine what kind of TTP proposals they would find acceptable in this changed landscape. Further announcements to be made in due course.
- HMRC – Collector’s position on interest and penalties Self-Assessment Deferred Payments
- HMRC will make the necessary adjustments to automated systems to prevent any late payment interest from accruing;
- Individuals will not be charged late payment interest provided the deferred payment on account is paid in full on 31 January 2021;
- If the individual’s deferred payment on account is not paid by 31 January 2021 they may incur late payment interest from that date;
- Penalties will not be applied. VAT Deferred Payments
- Interest will not be charged on the deferred VAT payment;
- If the payment has been deferred as a result of the VAT deferrals announcement, interest will not be charged. Supply VAT
You cannot defer payment of supply VAT as part of the VAT payments deferral due to COVID-19, you must pay VAT in line with existing rules;
As supply VAT is paid via duty deferment the duty deferment support is available for supply VAT. The COVID-19 VAT deferral scheme is available for VAT declared on VAT returns. This does not apply to any other form of VAT declarations, i.e. CHIEF declarations nor VAT accounted for through VAT 908s. Supply VAT is not import VAT, but it is declared on a VAT 908 and the form does not distinguish between the two. Payments are subject to duty deferment arrangements and payment is made via direct debit on the 15th day of the month following the transaction (import or supply). This means that the arrangement announced for duty deferment is available.
Duty deferment account holders who are experiencing severe financial difficulty as a result of COVID-19 and who are unable to make payment of deferred customs duties and import VAT due on 15th of a month can contact HMRC –
- They can contact HMRC for approval to enter into an extended period to make full or partial payment, without having their guarantee called upon or their deferment account suspended;
- The account holder should contact one of the following:
- Duty Deferment Office 03000 594243
- Email: email@example.com
- COVID-19 helpline on 0800 024 1222
- Import VAT The Government has introduced a relief for import duty and VAT for some goods imported from non-EU countries to combat the impact of COVID 19.
This relief will initially be in place until 31 July 2020. Who can claim this relief? You can claim this relief if you are –
- State organisations, including state bodies, public bodies and other bodies governed by public law;
- Other charitable or philanthropic organisations approved by the competent authorities. Goods the relief can be claimed on –
- The relief will apply to imports of protective equipment, other relevant medical devices or equipment for the COVID-19 outbreak.
- If your goods are lent, hired out or transferred to an organisation eligible for the relief it will remain in place, so long as you meet the relief conditions. Relief can be claimed on imported goods for free circulation that are
- For distribution free of charge to those affected by the COVID-19;
- Be made available free of charge – while remaining the property of the organisations importing them;
- For donation or onward sale to the NHS;
- By disaster-relief agencies for free circulation to meet their needs during the COVID-19 outbreak.
Excise Duty The default for all Excise duty debts is enhanced TTP (if appropriate). If the Excise debt has arisen as a result of a failed Duty Deferment direct debt (29th March due date) –
- HMRC won’t inhibit the duty deferment account or call on any guarantee;
- HMRC will discuss TTP with any debtor that contacts them (once the debt is on the system) but won’t be actively contacting these debtors in the short term (due to Coronavirus helpline priorities);
- TTP offered will be in line with that announced at the budget. Customs Duty (and import VAT) (May be split into C18 Misdeclaration and C18 Not paid at port)
There has been some movement on Customs Duty/Import VAT for people who pay their Customs and Import VAT via a Duty Deferment account.
We continue to discuss how to treat Customs Duty and Import VAT debts not paid via Duty Deferment accounts.