Blog

MPs on the Treasury Committee questioned a minister and two of the Treasury’s most senior civil servants in the latest session of its inquiry into the economic impact of coronavirus, held on Wednesday 29 April.

The Finance Bill had its second reading in the House of Commons on Monday 27 April.  The Bill includes measures such as a Digital Services Tax, changes to the controversial Loan Charge and retaining corporation tax at 19 per cent (rather than implementing a previously legislated cut to 17 per cent). It makes some business reliefs more generous to encourage investment but introduces restrictions on the availability of two capital gains tax reliefs - entrepreneurs’ relief and private residence relief.

The Treasury Select Committee held an evidence session on Tuesday 21 April on the economic impact of Coronavirus. Two evidence sessions were conducted over a two-hour period:

By Alan Powell, a member of the CIOT's Indirect Taxes Committee

After HM Customs and Excise's (HMCE) gentlemen’s agreement with the British wine industry in 1996 and some tumultuous events since, the curtain was quietly brought down earlier this month on the UK practice of dilution of wine or made-wine after the duty point (post duty point dilution – “PDPD”). 

Guest blog by Gemma Tetlow, chief economist at the Institute for Government

When Chancellor Rishi Sunak announced a generous package of support to help the self-employed weather the storm of coronavirus, he hinted there would eventually be a quid pro quo: higher taxes. This reform has long been needed – the self-employed have always paid lower taxes than employed people generating the same income but this tax advantage is no longer matched by lower entitlement to state benefits, as once it was. Philip Hammond tried and failed to implement a similar reform three years ago.

The UK is set to face a significant economic shock, regardless of how long the Coronavirus lockdown lasts, with higher taxes and the tax treatment of different forms of work likely to dominate post-outbreak discussions on how to rebuild the economy. 

By Tarlochan Lall, Barrister, Monckton Chambers

  • Owing to the national emergency which has shut most businesses, the approach adopted in the CJRS is essentially pay and check later.
  • Although the scheme is generous, it comes with conditions attached.
  • Breaking the conditions will create disputes, when HMRC can demand repayments.
  • There is no easy dispute resolution mechanism.
  • Businesses must take care to avoid breaking the conditions; and keep records.

When the Chancellor of Exchequer adopted the ‘whatever it takes’ mantra and announced the Coronavirus Job Retention Scheme (“CJRS”), he estimated expenditure of circa £10billion to protect the jobs of circa three million workers over three months.  The Resolution Foundation and the British Chamber of Commerce estimate costs of £30 billion to £40 billion owing to the existing and expected take up of the Job Retention Scheme with up to ten million workers expected to be furloughed.

Guest blog by Andrew Hubbard, Editor in Chief, Taxation magazine

You hardly need me to tell you that these are extraordinary times for tax advisers.  Ever since the Chancellor’s initial announcements of support for business through the tax system phones have not stopped ringing as clients, some in dire financial straits, press for information about how much they are entitled to and when will they get it. And therein lies the problem. How do advisers get hold of the information that they need to do their job in these unprecedent circumstances, when all of the tax rules we have grown up with seem to have been thrown out of the window?

 

There are very strict rules regarding the waiver of both salary and bonuses. If the rules are not followed an employer may find themselves being pursued by HM Revenue and Customs for PAYE and NICs.


The Treasury Select Committee met remotely today (Wednesday 8 April) to take evidence from HMRC on the economic impact of coronavirus. The witnesses were Jim Harra, First Permanent Secretary and Chief Executive of HMRC, and Cerys McDonald, Director of HMRC’s COVID-19 policy co-ordination. Mel Stride, Conservative, is chair of the committee.