The financial support offered during the coronavirus pandemic has been a lifeline for many and with the very first tentative steps now being made following the easing of lock down restrictions, attention has turned to getting the economy back on the road to recovery.

One issue which doesn’t appear to have been publicised much is the tax position for those individuals and businesses who have received payments from the various coronavirus support schemes.  Whilst the payments made through the job retention scheme have been taxed at source through employers’ payroll schemes, the position regarding other payments has not been quite so clear cut.

However, new legislation is to be included in Finance Bill 2020 which will put beyond doubt that a coronavirus support scheme payment will be within the scope of UK tax.    Any individuals, businesses, members of partnerships or employers who have received a payment, at any time, from the following will be within the scope of tax.

  • Self-Employment Income Support Scheme
  • Coronavirus Job Retention Scheme
  • the Small Business Grant Fund (SBGF), the Retail, Hospitality and Leisure Grant Fund (RHLGF), the Discretionary Grant Fund (DGF), or their parallel schemes in the devolved administrations
  • other payments made by public authorities to businesses in response to COVID-19
  • any other COVID-19 support scheme specified or described in regulations made by the Treasury.

The payments are considered to be revenue in nature and will be chargeable to income tax or corporation tax accordingly.

Additional powers have been provided to HMRC to ensure that they can use their inspection powers to check claims and payments, raise an assessment on anyone who may have received a payment they are not entitled to and charge penalties for deliberate behaviour in making an incorrect claim.  The penalty will not apply if the person has notified HMRC of the incorrect position within 30 days of making the claim or 30 days following the Bill receiving Royal Assent if the claim arose before that time.

It is proposed that HMRC also have specific powers to make a company officer jointly and severally liable for any charge raised in relation to the job retention scheme if the officer is culpable for making a deliberate claim and there is a serious risk that the company will be unable to pay.

It would be prudent to check any historical claims to ensure that everything is considered to be correct and if not, tell HMRC now!  Otherwise, don’t forget to ensure that you’ve considered the overall tax position and set aside amounts to be able to settle the tax in the future.

For further advice or support on the above or any other matters please contact any of the team at Wells Associates.

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