The Next Financial Year: Supporting Business Through Recovery

For the next financial year, to support businesses as they emerge from the unprecedented economic challenges of the Covid-19 pandemic, our key proposals include:

Ireland

• The facility for directors and company secretaries to use verifiable electronic signatures throughout the company compliance system.
• Making permanent the Companies Act provisions allowing general meetings and creditors’ meetings to be held virtually.
• Removing the audit requirement penalty for small and micro companies late in filing annual returns and replacing this with a system of fines.
• A cost/benefit analysis to consider the reduced interest rate of 3% on unpaid tax debt available under the Tax Debt Warehousing Scheme being applied on a permanent and general basis.
• A new ‘super-deduction’ capital allowance regime for a limited period (two years), providing companies a 130% capital allowance deduction for investments in plant and machinery.
• A temporary legislative remedy to allow proprietary directors to claim a full credit for PAYE tax already in the Tax Debt Warehousing Scheme.
• Reforming tax rules to align with remote working practices and fairly reflect the costs for businesses and employees of working from home.
• The commercial rates waiver for businesses whose trade is impacted by the public health restrictions should continue until at least the end of 2021.
• Considering lower capital tax rates (CGT and CAT) to drive a surge in business and personal transactions.
• A consistent long-term strategy for the State Pension, including eligible age increases, which should be communicated 10 years in advance.
• Allocating all revenues from increasing carbon taxes to climate action initiatives.
• An enhanced R&D Tax Credit to fast track the development of technology making renewable energy cheaper and more readily available.

Northern Ireland

• The Northern Ireland Executive should revisit the potential to set a regional corporation tax rate and assess the potential to set other rates of taxation locally.
• Continuing HMRC-administered Covid-19 supports for businesses as they reopen – extending the Coronavirus Job Retention Scheme and the Self-Employed Income Support Scheme to the end of 2021.
• The automatic deferral of self-assessment tax debt for amounts up to £30,000 should also be available for 2020/2021 and extended to other taxes to allow self-employed businesses breathing space to focus on survival as they reopen.
• The reduced VAT rate of 5% for the hospitality sector should remain until at least 31 March 2022, when it should then move to an interim level of 12.5% for at least six months.
• Developing fairer and more accessible tax rules for remote workers, including a re-evaluation of ‘normal place of work’ for tax purposes and the rules for tax deductible expenses of employment.
• Doubling the cash basis threshold for unincorporated property businesses from £150,000 to £300,000 for 2020/2021 and 2021/2022.
• A new HMRC advisory service (‘helpline’) should be set up for insolvency practitioners seeking clarity on whether HMRC will accept voluntary arrangements or Part 26A restructuring plans.
• Fully relaunching and improving the service levels of HMRC’s Agent Dedicated Line.
• HMRC’s approach to tax debt management through bespoke schemes and agreed Time to Pay should continue to be empathetic to businesses struggling with public health restrictions.
• Maintaining the current rates of capital gains tax.
• Reviewing Business Asset Disposal Relief, including an evaluation of the impact of the reduced lifetime limit (£1m from £10m) on entrepreneurial behaviour.
• Tailoring R&D Tax Relief to facilitate the economic recovery of SMEs by expanding the categories of qualifying expenditure and accelerating the payment of the tax credit to claimants.