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COVID–19 Inquiry Respondents Seek Relaxation of U.K. Tax Rules

Posted on Apr. 3, 2020

The U.K. Treasury Committee received a record 14,000 responses to its call for evidence on the economic impact of the coronavirus, with many calling for further relaxation of tax rules and compliance activity.

Committee chair Mel Stride said April 2 that the committee has been “working at pace” to hold the U.K. government to account over its response to the economic effects of COVID–19. The committee published a summary of the submissions it received between March 20 and March 26, before Chancellor of the Exchequer Rishi Sunak set out measures to help the self-employed in his televised address March 26.

Stride said the level of public response to the March 24 call for evidence, which followed hearings held a week earlier, was “unprecedented,” with responses from individuals, families, businesses, and other organizations. He acknowledged in a release that some of the committee’s concerns, such as support for the self-employed, may have already been addressed, “but some persist, and no doubt more will arise.”

According to the committee’s summary, many respondents called for “a relaxation of tax rules and compliance activity,” including the suspension of tax payments, VAT holidays, and a freeze of other VAT commitments. Other measures to be considered are the deferral of income tax and National Insurance payments until 2021, removal of business rates, and an employers’ National Insurance holiday.

The responses follow Sunak’s March 17 announcement of a one-year business rates holiday for all businesses in the retail, hospitality, and leisure industries; he later extended this to industries such as nurseries, estate agents, and letting agencies. A cross-party group of 23 U.K. members of Parliament wrote to the chancellor April 2 calling for an extension of the 100 percent business rates holiday to local newspapers.

Many respondents called for extending wage protections to self-employed workers on the same basis as other workers. Sunak announced March 26 a package of grants of up to £2,500 a month for three months, paid in June, for sole traders and partners with an average trading profit of less than £50,000 from the last three years, available to those who have submitted 2018-2019 tax return. He hinted at rises to self-employed National Insurance contribution rates in future, however.

Sunak had previously announced on March 20 an “unprecedented” economic relief package to support businesses and workers affected by the coronavirus, which included deferment of income tax payments for the self-employed, government reimbursement of 80 percent of absent workers’ wages, and a three-month deferment of businesses’ quarterly VAT payments.

Other topics raised by respondents include statutory sick pay, universal credit, cash flow assistance, payment of utility bills for individuals, seasonal work considerations and issues related to rents, mortgages, and debt.

“We will shortly issue a further call for evidence on the more recent measures announced by the government, the financial service sector’s actions in relation to the coronavirus, and on how the economy has been affected more broadly,” Stride said.

The committee has scheduled additional oral evidence sessions to be held virtually on April 8 and April 15. The first session will be with HM Revenue & Customs Chief Executive Jim Harra and HMRC’s COVID-19 policy coordination director, Cerys McDonald. The second session is not yet confirmed.

The Low Incomes Tax Reform Group of the Chartered Institute of Taxation launched a new section of its website April 1, which compiles all of the group’s tax and related benefit guidance related to the U.K. government’s response to the coronavirus.

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