Tax administration

Latest updates:
13/05/2020
Whether the COVID-19 crisis will affect the EU Mandatory Disclosure Rules DAC6 and the reporting deadlines which commence in the summer, and whether HMRC and the EC are going to consider any relaxations?
Common Reporting Standard (CRS) and Foreign Account Tax Compliance Act (FATCA) reporting
Country by Country (CbC) Reporting
Will the deadline for a Senior Accounting Officer (SAO) to provide a certificate to HMRC after the end of a financial year of a qualifying company be relaxed or extended?

07/05/2020
Code of Practice 9 (COP9) update
If a taxpayer is unable to meet a tax obligation due to the impact of COVID-19, will HMRC accept that as a reasonable excuse?
Will HMRC allow taxpayers more time to seek a review of, or appeal against, an HMRC decision if they or their business have been affected by coronavirus?

We are mindful that businesses and individuals may struggle to meet their compliance obligations during the COVID-19 crisis. We have made a number of suggestions to mitigate these difficulties with HMRC and HMT, and discussions continue. In particular, we have made suggestions around:

  • Deferring deadlines, for the submission of returns, submitting claims and elections and appeals, and responding to HMRC enquiries.
  • Allowing estimated returns to be submitted, where it is not possible to locate or prepare accurate figures.
  • Accelerating tax refunds, in order to provide much needed funds back into the hands of businesses and individuals.
  • Provide clearer guidance around time to pay, such as when to call, the type of information businesses will be required to supply, and the extent of the support HMRC is authorised to provide.
  • Authorising an agent, so that businesses and individuals can authorise an agent in a manner consistent with their circumstances.

Specific measures will be set out below, and we have highlighted a number of particular issues which we have raised with HMRC.

If a taxpayer is unable to meet a tax obligation due to the impact of COVID-19, will HMRC accept that as a reasonable excuse?
Yes, where a taxpayer is unable to meet an obligation due to the impact of COVID19, HMRC will accept that as a reasonable excuse, provided they managed to remedy the failure as soon as they were able to do so. GOV.UK guidance has been updated – see here.
Will HMRC allow taxpayers more time to seek a review of, or appeal against, an HMRC decision if they or their business have been affected by coronavirus?
Yes, HMRC will allow taxpayers further time for seeking a review of, or appealing against, an HMRC decision, (including to not oppose an application where only the Tribunal may accept a late appeal) if they or their business has been affected by coronavirus. For more details see here and here.
We have received some reports that HMRC have paused outward facing compliance activity. Is this happening across the board?
HMRC are, understandably, unable to share their compliance strategy with us, particularly in the light of recent reports of scams targeted at returning NHS workers, and potential abuse of the new government support schemes.
Will HMRC consider relaxing their 30 day deadline for responding to their letters to taxpayers with offshore income assets and gains.
For HMRC’s response see here.
Code of Practice 9 (COP9) Will HMRC consider moving the fixed 60 day deadline for taxpayers to complete and submit the initial forms at the start of a COP9 investigation if taxpayers cannot respond in that time due to issues connected to the COVID-19 outbreak?
HMRC have responded as follows, 'We know that this is a difficult time for many of our customers, including those customers who have been offered the opportunity of the Contractual Disclosure Facility (CDF) under COP9. HMRC will consider any request for an extension to the 60-day response period under the extenuating circumstances provision and in line with the published guidance at  Fraud Civil Investigation Manual (FCIM204030). To request an extension, the customer or their agent should contact HMRC as follows:
For customers who have received the CDF offer from HMRC, please contact the Fraud Investigation Service Investigator, who wrote to them offering the CDF. 
For customers who have requested the CDF through the voluntary CDF facility, and who have not yet provided their Outline Disclosure, please contact HMRC at centre.cop9 [at] hmrc.gov.uk'. 
Whether the COVID-19 crisis will affect the EU Mandatory Disclosure Rules DAC6 and the reporting deadlines which commence in the summer, and whether HMRC and the EC are going to consider any relaxations?
HMRC have produced additional guidance to provide clarity on how reasonable excuse will apply to obligations under DAC6. This guidance can be found in the International Exchange of Information Manual IEIM800000
HMRC advise that if you believe you will be unable to meet your reporting obligations, you should keep a contemporaneous record of the difficulties you face and remediation plans. If you have a Customer Compliance Manager in HMRC, you should contact them in advance to agree an action plan including estimated revised filing dates.
The EU Commission has proposed amendments to the EU directive to change the time limits in 2011/16/EU. As and when the amendment is final, HMRC will confirm how this will apply to UK’s rules – see here and here.
Will HMRC consider relaxing their 30 day deadline for responding to their educational campaign letters sent on 12 March 2020 to taxpayers who made a Venture Capital Trust (VCT) investment in 2015/16?  
HMRC have responded to the CIOT as follows: “The letters were issued before the sudden escalation in the Government’s response to COVID-19. We recognise the difficulties and uncertainties faced by individuals at this time and therefore we are no longer asking for responses to be provided by 13 April 2020. If individuals wish to make contact with us regarding their VCT investment, they can do so using the email address provided on the letter response.tldletter [at] hmrc.gov.uk”. For further information regarding HMRC’s VCT Campaign Letter please see our website post here.
From 1 December 2020, when a business enters insolvency, HMRC will become a secondary preferential creditor in respect of VAT debts owed at that date (clause 95 Finance Bill 2020). Presumably this will include any VAT that has been deferred under the COVID-19 relaxation measure (see here) because it won’t be payable until 31 March 2021, and so in many cases will be unpaid at 1 December 2020?
HMRC have responded as follows, 'If a business becomes insolvent on or after 1 December 2020, any VAT that has been deferred under the VAT deferral measure will become a debt'. 
Common Reporting Standard (CRS) and Foreign Account Tax Compliance Act (FATCA) reporting 
HMRC have published an update in the International Exchange of Information Manual (IEIM 800000) concerning reasonable excuse in the context of CRS and FATCA reporting. This says:  'For Common Reporting Standard and Foreign Account Tax Compliance Act, reports for the calendar year 2019 are due to be filed by 31 May 2020. HMRC recognises that because of Covid 19, financial institutions may not be able to meet this deadline. In these unprecedented circumstances, HMRC accepts that any financial institution that files a return late because of Covid 19 difficulties will have a reasonable excuse (and so will not be liable to any penalties for that delay) provided the report is made without unreasonable delay after they are resolved.'
Country by Country (CbC) Reporting
HMRC have published an update in the International Exchange of Information Manual (IEIM 800000) concerning reasonable excuse in the context of CbC reporting. This says: 'The CbC report filing deadline will depend on the financial year end of the filing entity. HMRC recognises that the impact of Covid 19 may mean that businesses will not be able to meet their filing deadline. HMRC accepts that any business that is unable to file a CbC report by the deadline because of these difficulties, will have a reasonable excuse and therefore not be liable to a penalty for late filing. This will remain the case provided the CbC report is filed without unreasonable delay following the resolution of the difficulties.
Will the deadline for a Senior Accounting Officer (SAO) to provide a certificate to HMRC after the end of a financial year of a qualifying company be relaxed or extended? (Usually, the SAO must give HMRC the certificate before the end of the period that the company has after the end of its financial year for filing its accounts with Companies House or at any later time as allowed by HMRC.)
HMRC has responded as follows: 'we believe that if an extension is granted by Companies House for the filing of accounts with Companies House then that extension will therefore also apply to the tax returns, otherwise HMRC expect the usual time-limits will apply'.