Here you will find interesting and worthwhile information on the subject of tax consultancy and entrepreneurial interests as well as legislative changes and industry-specific developments.
21 September 2020
Leaked documents involving about $2tn of transactions have revealed how some of the world’s biggest banks have allowed criminals to move dirty money around the world.
They also show how Russian oligarchs have used banks to avoid sanctions that were supposed to stop them getting their money into the West.
The FinCEN files are more than 2,500 documents, most of which were files that banks sent to the US authorities between 2000 and 2017.
FinCEN is the US Financial Crimes Enforcement Network. These are the people at the US Treasury who combat financial crime. Concerns about transactions made in US dollars need to be sent to FinCEN, even if they took place outside the US.
Banks uses the files to report suspicious behaviour, but they are not proof of wrongdoing or crime.
They were leaked to Buzzfeed News and shared with a group that brings together investigative journalists from around the world, which distributed them to 108 news organisations in 88 countries.
- HSBC allowed fraudsters to move millions of dollars of stolen money around the world, even after it learned from US investigators the scheme was a scam.
- JP Morgan allowed a company to move more than $1bn through a London account without knowing who owned it. The bank later discovered the company might be owned by a mobster on the FBI’s 10 Most Wanted list.
- Evidence that one of Russian President Vladimir Putin’s closest associates used Barclays bank in London to avoid sanctions which were meant to stop him using financial services in the West. Some of the cash was used to buy works of art.
- The husband of a woman who has donated £1.7m to the UK’s governing Conservative Party’s was secretly funded by a Russian oligarch with close ties to President Putin.
- The UK is called a “higher risk jurisdiction” and compared to Cyprus, by the intelligence division of FinCEN. That’s because of the number of UK registered companies that appear in the SARs. Over 3,000 UK companies are named in the FinCEN files – more than any other country.
- Chelsea owner Roman Abramovich once held secret investments in footballers not owned by his club through an offshore company.
- The United Arab Emirates’ central bank failed to act on warnings about a local firm which was helping Iran evade sanctions.
- Deutsche Bank moved money launderers’ dirty money for organised crime, terrorists and drug traffickers.
- Standard Chartered moved cash for Arab Bank for more than a decade after clients’ accounts at the Jordanian bank had been used in funding terrorism.
22 July 2020
HMRC Making Tax Digital
HMRC’s flagship Making Tax Digital online quarterly reporting is to be significantly extended, with legislation in the Finance Bill 2020-21 bringing all VAT-registered businesses into the system from April 2022, and plans to include income tax self-assessment from April 2023
The Treasury has set out a roadmap for Making Tax Digital, alongside its long-term plans for tax administration reform, as part of the package of measures to be included in Finance Bill 2020-21.
At present, businesses above the VAT threshold of £85,000 are covered by the system, which requires them to keep digital records and provide VAT returns through software. Since it was introduced in 2019 more than 1.4m businesses have joined the programme, submitting over 6m returns.
From April 2022, the programme will be extended to all VAT registered businesses with turnover below the VAT threshold, and from April 2023, it will apply to taxpayers who file income tax self-assessment tax returns for business or property income over £10,000 annually.
EU Council Directive in relation to cross-border tax arrangements (DAC6)
The EU Council Directive 2011/16, amended by Directive 2018/822/EU (DAC6), in relation to cross-border tax arrangements has been in force since 25 June 2018. DAC6 aims at transparency and fairness in taxation.
DAC6 applies to cross-border tax arrangements, which meet one or more specified characteristics (hallmarks), and which concern either more than one EU country or an EU country and a non-EU country. It mandates a reporting obligation for these tax arrangements if in scope no matter whether the arrangement is justified according to national law.
HMRC have announced that the first reporting deadlines under the UK implementation of the EU mandatory disclosure rules (DAC 6), which come into force on 1 July 2020, will be deferred by six months in order to provide taxpayers and intermediaries dealing with the impacts of COVID-19 additional time to ensure they can comply with their obligations. This article sets out the revised reporting deadlines and key points to note.
The reporting dates will be deferred as follows:
- Arrangements, where the first step was implemented between 25 June 2018 and 30 June 2020 (i.e. the look back period) must now be reported by 28 February 2021 (originally 31 August 2020);
- For arrangements made available for implementation, ready for implementation, or where the first step in the implementation takes place between 1 July 2020 and 31 December 2020, reports must be made by 30 January 2021 (originally this was within 30 days of the relevant trigger point after 1 July 2020);
- For arrangements in respect of which a UK intermediary provides aid, assistance or advice (i.e. secondary intermediary) between 1 July 2020 and 31 December 2020, reports must be made within the period of 30 days beginning on 1 January 2021 (originally this was within 30 days of the of the aid, assistance or advice being provided);
- Arrangements which become reportable on or after 1 January 2021 must be reported within the 30-day window as originally proposed; and
- Where periodic reports are required in relation to marketable arrangements, the first such report must be made by 30 April 2021.
The UK Government will amend the International Tax Enforcement (Disclosable Arrangements) Regulations 2020 to give effect to this deferral and HMRC have advised that, as the amendment may not be in force by 1 July 2020, no action will be taken for non-reporting during any period between 1 July and the date that the amended Regulations come into force. There is therefore no expectation that reports will be made in July 2020.
Republic of Ireland
In light of the restrictions imposed on businesses during the Covid-19 pandemic, Ireland is exercising an option given to Member States in Council Directive (EU) 2020/876 to postpone by six months the filing dates for the first returns of information in relation to reportable cross-border arrangements. This means that reporting to Revenue will not commence until January 2021 at the earliest.
Here is an overview of the deferral situation in the different countries as per August 2020
EU Anti-Tax Avoidance Directive Council Directive ATAD
On 28 January 2016, the Commission presented its proposal for an Anti-Tax Avoidance Directive (ATAD) as part of its Anti-Tax Avoidance Package.
The EU Council adopted the ATAD (Directive (EU) 2016/1164) (ATAD I) on 20 June 2016 which provides for five specific anti-avoidance measures to be transposed into the national laws of each Member State within the timelines set out by the Directive.
ATAD contains the following five anti-abuse measures:
- Interest deductibility: limited tax deductibility of net financing expense
- Exit taxation: mandatory taxation of hidden reserves upon relocation of entities/assets
- General Anti-Avoidance Rules (GAAR): disregarding of non-genuine arrangements
- CFC Rules: mandatory inclusion of certain types of non-distributed income of foreign subsidiaries/Pes in tax base of parent/head office
- Hybrid Mismatches: mandatory add-back (denial of deduction or requirement for inclusion) of double deductions or deductions without inclusion due to differing qualification of payments, entities, financial instruments, etc.
On 29 May 2017, the EU Council adopted a Directive to amend the hybrid mismatch measures in the ATAD. This Directive (EU) 2018/822 (ATAD II), extends the scope of ATAD to hybrid mismatches involving third countries (i.e. non-EU countries).
Most of the ATAD measures were required to be enacted into domestic legislation by 1 January 2019.
However, Member States may derogate on the adoption of two measures;
- Member States can opt to defer the introduction of the exit taxation rules until 1 January 2020.
- Member States that have targeted rules which are “equally effective to the interest limitation rule set out in the Directive” may continue to use these rules until 1 January 2024.
Member States have until 1 January 2020 to enact the hybrid mismatch measures in ATAD II into their domestic legislation and 1 January 2022 for the implementation of the rules relating to reverse hybrid mismatches
The rules are, in fact, all already part of UK law. A small number of them will not come into effect until 1 January, but that would have happened anyway whether or not the UK was a member of the EU.
Republic of Ireland
The anti-hybrid rules into Irish tax law will take effect from 1 January 2020.
On 24 March 2020, the Federal Ministry of Finance (BMF) submitted a revised draft law for the implementation of the Anti-Tax Avoidance Directive (ATAD-UmsG) to internal departmental coordination. It is understood that the continuing delay in the legislative process is due to the remaining need for coordination between the ministries.
As things stand at present, it is planned to apply the provisions of the AStG – as far as possible – for the first time for the 2021 assessment period. The provisions on documentation requirements also apply to financial years beginning after 31 December 2020. The provisions on preliminary consultation procedures apply to applications submitted after the date of promulgation of the amending act.
23 July 2020
GOVERNMENT ANNOUNCES €7.4B BUSINESS & JOBS STIMULUS PACKAGE
On 23rd July, the Irish Government announced a €5.2B Stimulus Package in addition to the €2B Credit Guarantee Scheme announced earlier this year. The package aims to revive the economy and protect jobs. The following key points relate to Irish businesses:
- VAT Cut – The standard rate of VAT will be reduced from 23% to 21% starting from September 2020 and lasting for a 6-month period.
- Employment Wage Support Scheme – This new scheme will succeed the Temporary Wage Subsidy Scheme and run until April 2021 to help businesses through this period of restricted trading.
- Restart Grant – The maximum payment is increased from €2,000 to €10,000 to assist businesses to cover the cost of reopening and re-employing staff.
- Employment Supports – incentives include €3,000 for each apprentice taken on as well as 10,000 funded work experience places and recruitment subsidies.
16 July 2020
SELF-EMPLOYMENT INCOME SUPPORT SCHEME
The scheme has been extended. If you were eligible for the first grant and can confirm to HMRC that your business has been adversely affected on or after 14 July 2020, you’ll be able to make a claim for a second and final grant from 17 August 2020.
The scheme allows you to claim a second and final taxable grant worth 70% of your average monthly trading profits, paid out in a single instalment covering 3 months’ worth of profits, and capped at £6,570 in total.
01 July 2020
Changes to the Coronavirus Job Retention Scheme
The Coronavirus Job Retention Scheme will close on 31 October 2020.
From 1 July, employers can bring furloughed employees back to work for any amount of time and any shift pattern, while still being able to claim CJRS grant for the hours not worked.
From 1 August 2020, the level of grant will be reduced each month. To be eligible for the grant employers must pay furloughed employees 80% of their wages, up to a cap of £2,500 per month for the time they are being furloughed.
The timetable for changes to the scheme is set out below. Wage caps are proportional to the hours an employee is furloughed. For example, an employee is entitled to 60% of the £2,500 cap if they are placed on furlough for 60% of their usual hours:
- there are no changes to grant levels in June
- for June and July, the government will pay 80% of wages up to a cap of £2,500 for the hours the employee is on furlough, as well as employer National Insurance Contributions (ER NICS) and pension contributions for the hours the employee is on furlough. Employers will have to pay employees for the hours they work
- for August, the government will pay 80% of wages up to a cap of £2,500 for the hours an employee is on furlough and employers will pay ER NICs and pension contributions for the hours the employee is on furlough
- for September, the government will pay 70% of wages up to a cap of £2,187.50 for the hours the employee is on furlough. Employers will pay ER NICs and pension contributions and top up employees’ wages to ensure they receive 80% of their wages up to a cap of £2,500, for time they are furloughed
- for October, the government will pay 60% of wages up to a cap of £1,875 for the hours the employee is on furlough. Employers will pay ER NICs and pension contributions and top up employees’ wages to ensure they receive 80% of their wages up to a cap of £2,500, for time they are furloughed
Employers will continue to able to choose to top up employee wages above the 80% total and £2,500 cap for the hours not worked at their own expense if they wish. Employers will have to pay their employees for the hours worked.
The table shows Government contribution, required employer contribution and amount employee receives where the employee is furloughed 100% of the time.
Wage caps are proportional to the hours not worked.
|Government contribution: employer NICs and pension contributions||Yes||No||No||No|
|Government contribution: wages||80% up to £2,500||80% up to £2,500||70% up to £2,187.50||60% up to £1,875|
|Employer contribution: employer NICs and pension contributions||No||Yes||Yes||Yes|
|Employer contribution: wages||–||–||10% up to £312.50||20% up to £625|
|Employee receives||80% up to £2,500 per month||80% up to £2,500 per month||80% up to £2,500 per month||80% up to £2,500 per month|
27 June 2020
Extension of deadlines for filing accounts from 27 June 2020
From 27 June 2020, more companies will get an extension to their accounts filing deadline. We’ll extend your company’s filing deadline if it falls any time from 27 June 2020 to 5 April 2021 (including these dates).
|Company type||Company has not had an extension or shortened their accounting reference period|
|Public limited companies (PLCs)*||Filing deadline extended from 6 to 9 months|
|Private company||Filing deadline extended from 9 to 12 months|
|LLP||Filing deadline extended from 9 to 12 months|
|Overseas companies who are required to prepare and disclose accounts under parent law||Filing deadline extended from 3 to 6 months|
|SEs*||Filing deadline extended from 6 to 9 months|
*For PLCs and SEs whose original accounts filing deadline fell on or after 30 June 2020 before it was extended by the Corporate Insolvency and Governance Act 2020, this extension will apply and supersede the extension under the Act.
Companies and other types of business registered at Companies House will get more time to file their confirmation statement.
The current 14-day deadline (from the end of your review period) will be extended to 42 days. It will apply to:
- Scottish limited partnerships (SLPs)
- Scottish qualifying partnerships (SQPs)
It’s an automatic extension – you do not need to apply for more time.
The extension applies to the time allowed to file your confirmation statement at the end of your review period (the period that your confirmation statement covers). It does not alter the review period, so you should not amend the confirmation date on your confirmation statement.
SMALL BUSINESS GRANT FUND (SBGF)
Small businesses in England which pay little or no business rates are entitled to a one-off cash grant of £10,000 from their local council.
You’re eligible if your business:
- is based in England
- occupies property
- was eligible for small business rate relief (including tapered relief) or rural rate relief on 11 March 2020
BOUNCE BACK LOAN SCHEME (BBLS)
The scheme helps small and medium-sized businesses to borrow between £2,000 and up to 25% of their turnover. The maximum loan available is £50,000.
The government guarantees 100% of the loan and there won’t be any fees or interest to pay for the first 12 months. After 12 months the interest rate will be 2.5% a year.
You can apply for a loan if your business:
- is based in the UK
- was established before 1 March 2020
- has been adversely impacted by the coronavirus
If your business was classed as a business in difficulty on 31 December 2019, you’ll need to confirm that you’re complying with additional state aid restrictions.
Coronavirus Business Interruption Loan Scheme (CBILS)
The scheme helps small and medium-sized businesses to access loans and other kinds of finance up to £5 million.
The government guarantees 80% of the finance to the lender and pays interest and any fees for the first 12 months.
You can apply for a loan if your business:
- is based in the UK
- has an annual turnover of up to £45 million
You need to show that your business:
- would be viable were it not for the pandemic
- has been adversely impacted by the coronavirus
If you want to borrow £30,000 or more, you also need to confirm that your business wasn’t classed as a business in difficulty on 31 December 2019.
Extension of payment deadlines due to COVID-19
If you’re a UK VAT-registered business that deferred VAT payments between 20 March 2020 and 30 June 2020, you now need to:
- set-up cancelled Direct Debitsin enough time for HMRC to take payment
- continue to submit VAT returns as normal, and on time
- pay the VAT in full on payments due after 30 June
Any VAT payments you have deferred between 20 March and 30 June should be paid in full on or before 31 March 2021.
CRO (COMPANIES REGISTRATION OFFICE) Update Regarding Filing Date for Annual Returns
The Registrar of Companies has decided to extend the current arrangement in relation to the filing of annual returns. The Registrar had announced in March that all annual returns due to be filed by any Company between 18th March and 30th June 2020 would be deemed to have been filed on time if all elements of the annual return were completed and filed by 30th June. Following a review of the situation, the Registrar has now decided to extend this arrangement for a further period until 31st October 2020.
The Registrar has also decided to extend the arrangement in relation to entities (industrial and provident societies, friendly societies and trade unions) that are required to file with the Registry of Friendly Societies until 31st December 2020.
Filing obligations will be deemed to have been met provided that all elements of the relevant returns have been submitted by the aforementioned dates. However, entities are encouraged to file as normal during this period if in a position to do so.