Market leading insight for tax experts
View online issue

Coronavirus support schemes: draft tax rules published

printer Mail

HMRC is consulting until 12 June 2020 on draft legislation on the taxation of coronavirus business support payments. The measures are expected to be added to Finance Bill 2020 during its passage through Parliament, potentially incorporating further changes before they are formally tabled.

The new clause and schedule aim to ensure that payments made under the support schemes, including the coronavirus job retention scheme (CJRS) and the self-employment income support scheme (SEISS):

  • are treated as income where the business is within the scope of income tax or corporation tax;
  • can be recovered by HMRC where the recipient was not entitled to the grant; and
  • will be subject to penalties for deliberate non-compliance.

The draft schedule brings the support scheme payments into the charge to tax, providing that payments referable to business activities should be treated as a receipt of a revenue nature and must be brought into account in calculating profits in the normal way. Payments not referable to business activities (for example, where the business has ceased) should be treated as post-cessation receipts (for trade or property businesses).

Paragraph 8 of the new schedule will impose an income tax charge on recipients under the CJRS and SEISS who were not entitled to the grant, effectively clawing back up to 100% of the payment. This would include payments under the CJRS which have not been handed over to employees.

The provisions will also give HMRC additional compliance and enforcement powers in relation to the CJRS and SEISS.

Issue: 1490
Categories: News