Other news in brief

Finance (No.2) Bill 2021-22 (referred to here as Finance Bill 2022) has continued its progress through the House of Commons with the Committee of the whole House taking place on 1 December 2021. During the Committee of the whole House the Chancellor’s proposed amendments to Clause 28 of Finance Bill 2022 were agreed to. Clause 28 includes provisions to ensure that the interaction between Diverted Profits Tax (DPT) review periods and what happens when a corporation tax (CT) enquiry is closed, functions as intended. The amendments will prevent the issue of a CT closure notice (in respect of a company tax return of a non-UK resident entity carrying on trading activity in the UK) during a DPT review period of that foreign company, where that return is capable of being amended to bring into account amounts that would otherwise be taxable diverted profits of the foreign company. No other amendments were passed during the Committee of the whole House. The Finance Bill now moves to the next stage in the parliamentary process which is consideration of the remaining clauses by the Public Bill Committee. This stage is expected to be completed by Thursday 13 January 2022.

We reported on 25 October that HMRC had updated their guidance on repaying overclaimed Coronavirus Job Retention Scheme (CJRS) grants. In summary, HMRC now accept that in limited circumstances, certain historical underclaims can be deducted by employers when calculating any repayments due to HMRC for overclaimed CJRS grants. However, HMRC’s updated guidance was silent on what employers should do where, prior to that update being published, they repaid an overclaimed grant without offsetting any eligible underclaims. HMRC have now confirmed to us that they will not refund any repayments made to them before their guidance changed on 11 October which did not offset any relevant underpayments. This appears to be on the basis that HMRC regard the change made to their guidance on 11 October to be a concession, and that repayments made without offsetting any relevant underpayments have, strictly, been made on the correct basis.

HMRC have announced that their corporation tax and VAT phonelines (with the exception of the bereavement line) will be closed on the first three Fridays in December 2021. The reduction in hours comes as part of a trial being run by HMRC to allocate more time to work through stocks of post that have accumulated during the past year while COVID-19 support schemes, the smooth running of Brexit and essential services have been prioritised. As this is a trial HMRC are planning to monitor the position and provide an update on next steps in early January so it is not clear at this stage whether the intermittent closures will continue in the new year. HMRC have stated that they expect to return to delivering normal pre-pandemic performance on their core service lines by April 2022.

Earlier in the autumn, the House of Lords Finance Bill Sub-Committee announced a new inquiry on the implementation of the off-payroll rules (IR35) in the private sector, and how these rules are working in practice. Oral evidence sessions have been scheduled to take place on 6 December 2021, when a number of representatives from trade and professional bodies will attend including Colin Ben-Nathan, Chair of the CIOT’s Employment Taxes Committee, and then on 13 December when Lucy Frazer QC MP, the Financial Secretary to the Treasury will attend.

The OECD 2020 Mutual Agreement Procedure (MAP) statistics were recently released confirming that new cases are rising and the inventory of transfer pricing MAP cases continues to grow at a global and UK level despite an increase in the number of cases being closed. In a recent LinkedIn article, Phil Roper, Transfer Pricing Technical Leader at KPMG UK comments further.