Finance Bill 2021 and deferred tax

Under FRS 102 deferred tax must be measured using the tax rates and laws that have been enacted, or substantively enacted, by the reporting date, and that are expected to apply to the reversal of the timing difference. For revalued non-depreciable assets and investment properties, this is the rate expected to apply to the sale of the asset). Finance Bill 2021 had its third reading on 24 May 2021 and is now considered substantively enacted. This means that the 25% main rate of corporation tax and marginal relief will be relevant for any asset sales or timing differences expected to reverse on or after 1 April 2023. For more detail, see the Financial Reporting Faculty’s Factsheet on deferred tax.

VAT treatment of public funds received by FE institutions

HMRC has reiterated its position on the VAT treatment of public funds received by further education institutions to fund education of 16-19-year olds. In Revenue and Customs Brief 8, published on 26 May, HMRC confirmed that it will continue to treat such funds as outside the scope of the VAT system, despite an Upper Tribunal decision in the Colchester Institute Corporation case (UT/2019/0006) that such funds were within the system, but exempt from VAT. As HMRC was successful on other grounds in the Colchester case, it is pursuing another appeal which will test the UT decision. In the meantime, FE institutions can choose to apply the UT decision. Read Brief 8 in full.

HMRC updates on live CCO investigations

HMRC has confirmed it now has 14 live corporate criminal offences (CCO) investigations and has a further 14 opportunities under review. The update, published on 26 May, comes 10 months after HMRC revealed it had 10 live CCO investigations and 22 opportunities. In the latest information, HMRC confirms that it has reviewed and rejected 40 opportunities. Find out more.

PAYE RTI: guidance on FPS vs EYU

HMRC has updated its guidance on submitting an earlier year update (EYU) using basic PAYE tools (BPT) alongside other software. It explains when a full payment submission (FPS) should be made and when an EYU should be used and how to submit an EYU using BPT (eg, where payroll software does not have a facility to submit an EUY). It confirms, for example, that from April 2021, if a correction is needed to an amount submitted in real time for a closed year an FPS will need to be completed. For tax years 2019/20 or before, an EYU will need to be completed. Read the guidance in full.

New corporate interest restriction returns API

HMRC has confirmed that a new API for submitting interest restriction returns and for reporting company appointments and revocations will be available for use from June 2021. In a post on its Tax Agents blog, HMRC stated that software developers had been provided with a “roadmap to begin updating their products” to work with the new system and that the existing system will remain available until April 2022. Read the blog.