Welcome to the July 2021 Newsletter from Certax Accounting
Finance Act 2021 received Royal Assent on 10 June, prompting the issuing of commencement orders to bring into effect some of the provisions outlined within the Act, such as the Plastic Packaging Tax, penalties for the late filing of tax returns and penalties for the late payment of tax.
Meanwhile, many small businesses are now required to start paying back Bounce Back Loan Scheme (BBLS) loans taken out during the coronavirus (COVID-19) pandemic. The BBLS closed to new applications and top-up applications on 31 March 2021.
Finance Act 2021 receives early Royal Assent
Royal Assent of Finance Act 2021 was granted on 10 June, bringing the extended loss carry-back, super-deduction and other measures into force.
The Act had not been expected to become law until July, but now Royal Assent has been granted it prompts the issue of commencement orders for provisions, including the 130% capital allowances super-deduction for companies; the Plastic Packaging Tax; penalties for late filing of tax returns; penalties for late payment of tax; and VAT late payment and repayment interest.
The extended loss carry back provisions apply to trading losses arising in company accounting periods ending between 1 April 2020 and 31 March 2022 and trading losses of unincorporated businesses of the 2020/21 and 2021/22 tax years.
HMRC is expected to update its guidance on the mechanism for making de minimis claims (standalone or group company with losses capable of providing relief up to a maximum of £200,000).
Royal Assent also triggered amendments to HMRC's civil information powers by introducing a Financial Institution Notice (FIN), which makes it easier for HMRC to obtain information about a taxpayer from a third party, such as the taxpayer's bank or building society.
Bounce Back Loan repayments due for many small businesses
Many small businesses are now required to begin repaying loans taken out under the government's Bounce Back Loan Scheme (BBLS).
The BBLS helped to support businesses during the coronavirus (COVID-19) pandemic, and permitted firms to apply for a minimum of £2,000, up to a maximum of £50,000, or 25% of business turnover, with the government paying the interest for the first 12 months.
The BBLS closed to new applications and top-up applications on 31 March 2021.
Many businesses have asked banks for more time to repay their BBLS loans. Some of these businesses have opted to extend the loan term from six years to ten years. However, for those firms who have stuck to the original terms, they are required to begin repaying after the 12-month payment holiday.
Businesses can choose to use the government's Pay as You Grow initiative, which gives firms the option to extend the length of their loan from six to ten years; make interest-only payments for six months; or pause repayments entirely for up to six months.
The Federation of Small Businesses (FSB) has urged banks to contact their customers 'in order to make them aware of Pay as You Grow' and how to make best use of it.
QUOTE OF THE MONTH
'Consensus on corporation tax means that a real sense of momentum can now build ahead of the G20 later in the year, helping to pave the way forward for an international tax system that is simpler, more sustainable and easier to comply with.'
Rain Newton-Smith, Chief Economist at the Confederation of British Industry (CBI), commenting on the international global tax agreement struck by finance ministers for the G7.