The final VAT deferral deadline, changes to the CJRS from July, CJRS guidance changes and deadlines and SEISS grant 5 feature this month.

VAT deferral potential penalty

The VAT deferral new payment scheme was available to businesses who deferred VAT due between 20 March 2020 and 30 June 2020. This scheme closed last month on Monday 21 June 2021.

HMRC guidance sets out what businesses were required to do by Wednesday 30 June 2021. Failure to have paid the deferred VAT in full or to have made an arrangement to pay by Wednesday 30 June 2021 may result in a 5 percent penalty, according to the guidance.

The CJRS

The deadline to submit CJRS claims for periods in July 2021 is Monday 16 August 2021, unless reasonable excuse is available for late submission. Amendments to July 2021 CJRS claims must be made by Tuesday 31 August 2021.

Changes from 1 July 2021

From Thursday 1 July 2021, CJRS grants cover 70 percent of employees’ usual wages for the hours not worked, up to a cap of £2,187.50. In August 2021 and September 2021, this will then reduce to 60 percent of employees’ usual wages up to a cap of £1,875.

Employers need to pay the 10 percent difference in July (20 percent in August and September), so that they can continue to pay their furloughed employees at least 80 percent of their usual wages for the hours they do not work during this time, up to a cap of £2,500 per month. Employers continue to be required to pay the associated employee tax and National Insurance contributions to HMRC in these months.

The employer contribution is a condition of applying for the grant; not paying this means the employer needs to repay the whole of the CJRS grant and they may not be able to claim for future CJRS grants.

For the hours not worked employers can continue to choose to top up their employees’ wages above the 80 percent level or cap for each month, at their own expense.

Furloughing flexibly

Employers don’t need to place all their employees on full furlough. They can use the CJRS flexibly to bring their employees back to work for some of their usual hours. Employers can claim for a portion of their usual wage costs for the hours spent on furlough.

Reasonable excuse for late CJRS claims

You may have a reasonable excuse if for example:-

• your partner or another close relative died shortly before the claim deadline;
• you had an unexpected stay in hospital that prevented you from dealing with your claim;
• you had a serious or life-threatening illness, including COVID-19 related illnesses, which prevented you from making your claim (and no one else could claim for you);
• a period of self-isolation prevented you from making your claim (and no one else could make the claim for you);
• your computer or software failed just before or while you were preparing your online claim;
• service issues with HMRC online services prevented you from making your claim;
• a fire, flood or theft prevented you from making your claim;
• postal delays that you could not have predicted prevented you from making your claim;
• delays related to a disability you have prevented you from making your claim; or
• an HMRC error prevented you from making your claim.

New template

From last month, if employers want to make CJRS claims for 16 or more employees they can use HMRC’s updated templates, making it easier to add the details of multiple employees.

If employers are claiming for between 16–99 employees they should use this template, if they are claiming for 100 or more employees they should use one of these templates. You must enter all of the information in the right format before uploading the completed template.

HMRC has updated these templates to help employers get their claim right the first time and provide all the information needed to ensure their claims aren’t delayed or stopped. For example, if employers can’t provide a National Insurance number for an employee, they can now select a reason for this.

If employers use one of HMRC’s two templates and make a mistake, the file will not be accepted, and mistakes will be highlighted to help them put it right before they can resubmit their claim.

Mistakes that will be highlighted include if they:

• input details in the wrong format;
• give incorrect details; or
• duplicate or fail to give required information.

Employers are reminded not to change the format of the template before they submit them, as they won’t be accepted by HMRC’s system.

The CJRS guidance was also updated recently as set out on GOV.UK.

SEISS grants

Claims for SEISS grant 4 closed last month on Tuesday 1 June.

Grant 5

The claims window for SEISS grant 5 is expected to open later this month. The latest information on this grant is available on GOV.UK, with more detailed guidance due to be published including more details of the turnover test which will determine the level of grant (80 percent or 30 percent) an individual will receive:

• if their turnover has reduced by 30 percent or more in the year April 2020 to April 2021, they will receive a grant worth 80 percent of three months’ average trading profits (capped at £7,500); or
• if their turnover has reduced by less than 30 percent in the year April 2020 to April 2021, they will receive a lower grant worth 30 percent of three months’ average trading profits (capped at £2,850).

From mid-July, HMRC has been contacting taxpayers who may be eligible to let them know their personal claim date which is the earliest date they can make their claim.

If a taxpayer previously heard from HMRC that they were not eligible for SEISS grant 4, according to HMRC they will not be eligible for SEISS grant 5 either. This is because the same tax returns have been used to determine eligibility for both grants.

HMRC also contacted a number of taxpayers before claims opened for SEISS grant 4, to get more information to check their eligibility. Where HMRC contacted someone and they did not provide the requested details, they will need to provide the information asked for if they would like their eligibility to be checked for SEISS grant 5. These taxpayers will receive details on what to do when they access the online SEISS claims service.

Reporting SEISS grants correctly on Self-Assessment (“SA”) tax returns

Taxpayers should be aware that SEISS grants are taxable and subject to income tax and self-employed National Insurance contributions, which means they need to report their grants on their tax returns.

If your clients received any of the first three SEISS grants, these should be included in their 2020/21 SA tax return, due to be submitted by 31 January 2022. For how to return grant payments made to a partner, who then distributed the grant amongst the partnership, more information can be found in the partnership tax return guide.

HMRC has received a number of 2020/21 tax returns where SEISS grants have been reported incorrectly, causing delays in processing them.

Although taxpayers remain responsible for the accuracy of their returns, HMRC has developed a solution which will automatically populate the right box on these returns with the correct amount of SEISS grant(s) received. This means most incorrect returns should have been resolved by 5 July 2021. Your clients do not need to take any action in the meantime, as HMRC will let taxpayers know if their return has been corrected.

If you have clients who are preparing their own tax returns, please help them with the reporting of coronavirus support payments. HMRC has produced guidance on correctly reporting SEISS grants. In summary, the following boxes should be used to report their SEISS grants on their 2020/21 return:

• box 70.1 on the Self-Employment (Full) page of the tax return;
• box 27.1 on the Self-Employment (Short) page of the tax return;
• box 9.1 of the partnership supplementary pages of the tax return; or
• box 3.10A of the SA200 (Short) tax return.

SEISS grants 4 and 5 should be included in 2021/22 SA tax returns, due to be submitted by 31 January 2023. The exception regarding partners who distribute the grant amongst their partnership still applies.

Paying back overpaid grants

If your client has made an amendment to their tax return on or after 3 March 2021, they will need to check if their eligibility for SEISS grant 4 has been affected. This new requirement applies to claims for SEISS grants 4 and 5 only, and to amendments made on or after 3 March 2021 to SA returns for tax years 2016/17 to 2019/20.

Once a taxpayer has made an amendment, they can tell HMRC if they need to pay back some or all of a SEISS grant by completing a simple form online. HMRC will then contact them with details of how much they need to repay, and how to do this.

Authorisation to discuss SEISS grants on behalf of your clients

HMRC has advised us that they may not be able to talk to you about your clients’ SEISS grants unless additional consent is received from them. This is because HMRC’s existing process – the 64–8 agent authorisation – was not designed to cover the support provided in response to coronavirus, such as SEISS grants, so the usual taxpayer confidentiality rules apply. The requirement for consent is explained in more detail below.

Before a SA tax return is filed:

• SEISS grant information cannot be disclosed to an agent without specific consent from their client;
• written consent is HMRC’s preferred option, although HMRC can record consent if your client calls 0300 200 3310; and
• written consent should include your client’s name, address, tax reference number (for example their Unique Taxpayer Reference (UTR)) and signature, in addition to the name and address of the agent they wish to authorise. This should be posted to: National Insurance contributions and Employers Office, HM Revenue and Customs, BX9 1AN.

After a SA tax return is filed:

• as an authorised agent, HMRC can talk to you about anything that your client entered on their return;
• HMRC can discuss any boxes on a return that have no entry (for example where HMRC knows a SEISS grant was paid but the return does not include this);
• where HMRC has corrected a SEISS grant amount following a mismatch between the taxpayer’s SEISS figure and the figure HMRC holds, HMRC can discuss this with too.

If you plan to contact HMRC regarding your client’s SEISS grant, please speak to them and make sure the relevant consent is in place where necessary, and allow time for required authorisation to be processed. HMRC understands that this is an additional workload for agents, your clients and HMRC, but ensuring the security of taxpayer information remains a priority.