Agent Update: May 2021

HMRC have issued their Agent Update for May 2021. We have summarised the key content for you with links to our detailed guidance on the topics covered.

Updates & reminders

Coronavirus

See COVID-19: Government support tracker

Coronavirus: how HMRC is continuing to support customers and the economy

  • HMRC have updated the HMRC issue briefing on support for customers and the economy, which sets out the support schemes and policy changes that HMRC have implemented.
  • It also includes our principles for the next steps on:
    • Tax collection.
    • Benefits payments.
    • Compliance checks.
    • Debt activity.
  • HMRC acknowledges the continuing impact of the Coronavirus pandemic and will continue to collect the tax due in a way that recognises the needs and challenges that businesses and individuals face. The updated issue briefing now includes government announcements made since November 2020.

Coronavirus Job Retention Scheme (CJRS)

  • The deadline for Coronavirus Job Retention Scheme (CJRS) claims for periods in May is Monday 14 June 2021.
  • You can claim before, during or after your client’s payroll is processed.
    • It’s best to encourage your clients to provide the exact number of hours their employees will work, so you do not need to amend the claim later.
  • Remind your clients that if they do not pay the associated employee tax and National Insurance Contributions (NICs) to HMRC, they’ll need to repay the whole of the CJRS grant to HMRC.

CJRS: how much employers can claim

  • The UK Government will continue to pay 80% of furloughed employees’ usual wages for the hours not worked, up to a cap of £2,500 per month, to the end of June 2021.
  • In July, CJRS grants will cover 70% of employees’ usual wages for the hours not worked, up to a cap of £2,187.50. In August and September 2021, this will then reduce to 60% of employees’ usual wages up to a cap of £1,875.
  • Employers will need to pay the difference from July 2021, so that they continue to pay their furloughed employees at least 80% of their usual wages for the hours they do not work during this time, up to a cap of £2,500 per month.

CJRS eligibility from May

  • Employers can now claim for eligible employees who were on their PAYE payroll on 2 March 2021.
    • This means they must have made a PAYE Real-Time Information (RTI) submission between 20 March 2020 and 2 March 2021, notifying HMRC of earnings for that employee.
  • If your clients have employees who have previously been ineligible for the CJRS, as they were not on their payroll on 30 October 2020, they may be eligible for periods from 1 May 2021 onwards.
  • Your clients and their employees do not need to have benefitted from the scheme before making a claim, as long as they meet the eligibility criteria.

See COVID-19: Coronavirus Job Retention Scheme (CJRS) from 1 November 2020

Continued support for businesses: Statutory Sick Pay Rebate scheme 

  • The UK Government’s Statutory Sick Pay Rebate scheme continues to provide financial support to small and medium-sized employers.  
  • Employers with fewer than 250 employees who have paid Statutory Sick Pay (SSP) to employees for Coronavirus-related sickness absence, could be eligible for support. You can also make claims on your clients’ behalf.
  • The repayment will cover up to two weeks of the applicable rate of SSP.
  • More guidance and information on eligibility and how to make a claim is available.

VAT deferral new payment scheme

  • The VAT deferral new payment scheme is open for all businesses that deferred VAT due between 20 March 2020 and 30 June 2020 and were unable to pay in full by 31 March 2021.
  • Your clients can spread these payments over several months: businesses that join by 19 May 2021 will be able to benefit from up to nine monthly instalments. The later a business joins, the fewer instalments will be available to them up to:
    • Nine instalments if they join by 19 May 2021.
    • Eight instalments if they join by 21 June 2021.
  • Businesses can join the easy-to-use scheme quickly and simply without needing to call HMRC.
  • Before joining, businesses must:
    • Have their VAT registration number.
    • Create their own Government Gateway account (if they do not already have one).
    • Submit any outstanding VAT returns from the last four years, otherwise, they will not be able to join the scheme.
    • Correct errors on their VAT returns as soon as possible.
    • Make sure they know how much is owed, including the amount originally deferred and how much they may have already paid.
  • Businesses may be charged a 5% penalty and interest if they do not either pay in full, sign up to the scheme online by 21 June 2021 or get in touch with HMRC to make an arrangement to pay by 30 June 2021. 

See COVID-19: VAT deferred payments

Reminder about claiming tax relief for working from home

  • Employees may be able to claim tax relief for additional household costs if they have to work at home on a regular basis, either for all or part of the week.
    • This includes having been told to work from home because of Coronavirus.
  • Additional costs include things like heating, metered water bills or business calls, that employees can demonstrate have been incurred wholly, exclusively and necessarily as a direct result of working from home.
    • They do not include costs that would stay the same whether they are working at home or in an office.  
  • Your clients or their employees can apply quickly and easily using the HMRC online service, which is now open for claims that relate to periods up to 5 April 2022.

See COVID-19: Employees working from home and Working from home (employer/ee)

UK Transition: changes to exports process for merchandise in baggage

  • From 1 July 2021, there will be changes to how your clients export commercial goods out of Great Britain (England, Scotland and Wales) in their accompanied baggage or small vehicle (also known as merchandise in baggage).
    • This only applies when making a full export declaration.
  • The goods will be automatically ‘arrived’ when a full export declaration is submitted.
    • This means traders will no longer need to present their goods to a Border Force officer at airports or ports of departure with red channels.
  • Ports without red channels will no longer require the completion of a C1601 for the National Clearance Hub (NCH) to land the goods.
  • This change only applies to Customs Handling of Import and Export Freight (CHIEF) users.
    • The process for traders on the Customs Declaration Service will remain the same for the time being, however, these changes will be made for Customs Declaration Service later.
  • You must submit a full export declaration before you leave Great Britain if your goods:
    • Have a value of more than £1,500.
    • Weigh more than 1,000kg.
    • Are restricted goods.
    • Are alcohol, tobacco or fuel (excise goods).
    • Need a licence (controlled goods).
    • Ae being put into a customs special procedure.
  • If you do not need to make a full declaration, you can make an online declaration in the five days before you leave with your goods.
  • You can also add goods to a declaration you’ve already made if all the goods combined do not exceed the total value of £1,500, weigh less than 1,000 kilograms and are not controlled goods.
  • More information on merchandise in baggage is available.

Self Assessment

  • HMRC have seen a growing trend in customers submitting their Self Assessment returns early.
  • In the last five tax years, the number of customers choosing to file on the first day of the new tax year has almost trebled from 22,885 in 2017 to 63,521 in 2021.
  • With almost 950,000 online Self Assessment returns received so far this tax year, HMRC are urging others to do the same, and have published online information covering things like:
    • How to get help with your tax return.
    • What to do when declaring furlough payments, Self-Employed Income Support Scheme grants or other Coronavirus support measures.
    • What information you need before you can start your tax return.
    • Help with paying your bill.
    • What to do if you have paid too much tax.
  • Further Information can be found at ‘File your tax return early’.

Potential medical benefits refunds for 2020 to 2021 tax year

  • If you use a medical benefits company and there are potential refunds, HMRC encourage employers to engage early.
  • If there are to be refunds, then these need to be submitted timely ahead of the deadline below to avoid subsequent amendments.

See Medical benefits and health checks

Reminder for reporting expenses and benefits for the tax year ending 5 April 2021

  • The deadline for reporting any expenses and benefits is 6 July 2021.
  • Your clients need to do this for every employee they’ve provided with expenses or benefits.
  • If your client’s report is late, their employees could end up paying the wrong tax and be out of pocket.
  • If you’re an authorised agent registered with the PAYE for Agents online service and you still need to send your client’s report, you can do this online, saving you and your client’s time.
  • The quickest way to complete this is online. If you cannot do it online then you can still print off the paper forms P11D and P11D(b).
  • You’ll also need to complete form:
    • P11D(b), if your client has a Class 1A National Insurance contribution liability because they payroll their expenses and benefits.
    • P11D to declare any non-payroll expenses or benefits.
  • If HMRC have asked your client to submit a form P11D(b) and they did not provide any employee expenses or benefits, complete this declaration.

See Benefits, share schemes & incentives

Trust Registration Service (TRS)

  • HMRC are now able to provide some further information around the forthcoming changes to the Trust Registration Service (TRS).
  • HMRC expect the TRS to be open to all non-taxpaying trusts in summer 2021.
  • In preparation for opening TRS to non-taxable trusts registrations, HMRC have changed the service.

Taxable trusts

  • Taxable trusts are now required to provide additional data to confirm if:
    • The trust is, or not, an Express Trust.
    • A non-UK trust has a business relationship in the UK.
    • The trust has purchased any UK land or property.
    • The trust has a controlling interest in a non-European Economic Area (EEA) company (and if so, provide company details).
  • Trustees are also able to supply additional data about the individuals involved in the trust. Information can also be provided about:
    • Country of residence.
    • Country of nationality.
    • Whether the person has mental capacity at the time of registration.
  • The Register a trust as an agent guidance has been updated to include information about the additional data.
  • HMRC have also made some changes to the way they check individual’s names, National Insurance numbers and date of birth are correct.
    • The details are checked on input and Service Users have three attempts to enter the correct details.
    • After three attempts, Service Users are asked for alternate details instead (name, address, passport number, expiry date, country of issue).
    • It is now also possible to obtain a PDF output from the service to demonstrate proof of registration.

Non-taxable trusts

  • HMRC have also started to allow non-taxable trusts to register and make changes to their trust details.
  • Use of the service is only currently available on a limited basis to allow for service development and enhancement, so will only be accessible to those who have been invited to use the service.
  • If you have a non-taxable trust and are willing to participate in this initial registration period contact This email address is being protected from spambots. You need JavaScript enabled to view it..
    • Requests will be logged and HMRC will be in touch with an invitation.
  • HMRC ask that you do not contact the HMRC Trusts helpline in relation to the registration of a non-taxable trust.
  • The full service will be available on a public basis for all customers at a later point in Summer 2021.

See Trust Registration Service

Extended loss carryback: claims information for companies

  • The extended loss carryback measure announced at Budget enables companies to make claims to carry back losses for a further two years than current rules allow.
  • This temporary extension applies for losses arising in accounting periods ending between 1 April 2020 and 31 March 2022.
  • A guidance note setting out further information on Extended loss carryback for businesses is available.
  • Claims for the extended relief cannot be made until the Finance Bill receives Royal Assent, which is expected to happen in mid-July.
    • Any claims received before Royal Assent will not be processed and claimant companies will be asked to re-submit their claims in July 2021.

Claims process following Royal Assent.

  • Claims that exceed the de minimis of £200,000 must be made in a company tax return.
  • Box 45 (claim or relief affecting an earlier period) on the CT600 should be completed and details of the carryback claims included in the computations that accompany the CT600 and accounts.
  • There is no need to submit amended returns for the earlier periods to which the extended relief applies as the claims will be treated as amendments to those returns.
    • Amended returns for these periods will be rejected for online submission as, in most cases, they will be out of time for amendment.
  • Claims below the de minimis limit of £200,000 may be made outside of the company tax return via a letter to the company’s usual HMRC Corporation Tax point of contact. The letter should contain the following information:
    • Company name and Unique Taxpayer Reference.
    • Detail of the accounting period during which the loss was incurred.
    • Evidence of the loss incurred in the form of draft management accounts.
    • Details of the amount of the loss to be carried back to the relevant periods.
    • Company bank details for repayment purposes.

See Losses: Trading and other losses

VAT reverse charge on construction and building services

  • VAT registered construction businesses should note that this reverse charge, which was explained in a Revenue and Customs Brief issued in June 2020 came in on 1 March 2021.
  • In January 2021, a letter was sent to every VAT-registered construction business.
    • This followed letters previously sent out in February 2020 and September 2020, advising them to check if they’re liable for the reverse charge.
    • If they’re liable, they need to apply these rules going forward.
  • Find more information on the scope and operation of the reverse charge.
  • The key aspects are:
    • It applies to standard and reduced-rate supplies of building and construction services made to VAT registered businesses, who in turn also make onward supplies of those building and construction services.
    • The contractor is responsible for paying the output VAT due rather than the sub-contractor and can continue to reclaim this amount as input tax.
    • The scope of supplies affected is closely aligned to the supplies required to be reported under the Construction Industry Scheme (CIS) but does not include supplies of staff or workers for use by the customer.
    • The legislation introduces the concept of ‘end users’ and ‘intermediary suppliers’.
  • This covers businesses or groups of associated businesses that do not make supplies of building and construction services to third parties and, as such, are excluded from the scope of the reverse charge if they receive such supplies. Examples include:
    • Landlords.
    • Tenants.
    • Property developers.
    • Public bodies that are deemed contractors for CIS purposes.
  • In order to be treated as end-users and intermediary suppliers, the customer needs to notify the supplier in writing.
  • This can be done by correspondence or as part of terms and conditions. 

See CIS: Construction Industry reverse charge

Check you are taking the correct Student and or Postgraduate Loan Deductions

  • Where HMRC identify the wrong student and or postgraduate loan deductions recorded on the employee’s full payment submission, they will contact you or your client by:
    • Generic Notification Service (GNS) reminder message.
    • Post: for example a change of loan or plan type letter or start and stop letter.
    • Telephone: HMRC always ask security questions before disclosing any client information.

Scottish student loans plan type 4

  • Payroll software should now be updated to include new student loan Plan 4.
  • Speak with your software provider if Plan 4 is not included.
  • It is important that you check your online notifications and start notices to make sure you are using the correct plan type as this will impact the employee’s take home pay and student loan balance.

Umbrella company guidance

  • HMRC have recently published information on Working through an umbrella company to help contractors engaged through umbrella companies understand how they work and how they are paid.
  • This might be particularly useful for any clients you have, who are working through an umbrella company for the first time or may be considering working through one.
  • This may include contractors who have previously been working through their own limited company but are changing the way they work following changes to the Off-Payroll Working rules.
  • You can help your clients by sharing this guidance, so they understand how umbrella companies work, and what to look out for when choosing an umbrella company.

See Mini-umbrella company fraud exposed

Employers providing medical benefits

  • Your clients who report medical benefits through Payrolling Benefits in Kind, or the legacy P11D process, may find that the 2020 to 2021 taxable value has changed.
  • HMRC has been made aware that some medical providers may make refunds to employers if services were not provided as originally specified.
  • The reportable value of the Benefits in Kind is the cost less any refund related to that year, regardless of when it is received.
  • For your clients who are currently payrolling Benefits in Kind, you may need to adjust the taxable value by way of an amended FPS, and the correct value on the P11D(b) submission.
  • To ensure that your clients who utilise the legacy P11D process are not overtaxed, make sure they have any discussions with their medical benefits provider before the P11D deadline and report the correct taxable value on P11D submissions and on the P11D(b).

See Medical benefits and health checks

Plastic Packaging Tax: initial guidance published on GOV.UK

  • Initial guidance to help businesses prepare for the new Plastic Packaging Tax is now available on GOV.UK.
  • The guidance provides a high-level overview of the tax and is designed to help manufacturers and importers of plastic packaging, and businesses that buy plastic packaging (or goods contained in plastic packaging), understand:
    • If they will need to register for the tax.
    • What records they will need to keep.
    • What steps they will need to take to begin preparing for the introduction of the tax in April 2022.
  • There is also further information for businesses around the tax’s key definitions, exemptions and reliefs.
  • More information, including detail and examples of items caught by the tax, will be published later in the year.
  • Agents representing businesses who may be affected by the tax should familiarise themselves with this guidance.

See Get your business ready for the Plastic Packaging Tax and Plastic Packaging Tax

Small acorn
If you like our content come and join us.

Thousands of accountants and advisers and their clients use www.rossmartin.co.uk as their primary TAX resource.

Register with us now to receive our receive our FREE SME Topical Tax Update & newletter