Tax Update

Tax Update March 2021

Self Assessment Tax Liability

This week we bring some good news if you were unable to settle your 31 January Self Assessment liability by 28 February. Self Assessment taxpayers will not be charged a 5% late payment penalty if they pay their tax or set up a payment plan by 1 April 2021.

The payment deadline for Self Assessment is 31 January and interest is charged from 1 February on any amounts outstanding. Normally, a 5% late payment penalty is also charged on any unpaid tax that is still outstanding on 3 March. But this year, because of the impact of the COVID-19 pandemic, HMRC is giving taxpayers more time to pay or set up a payment plan.

Taxpayers can pay their tax bill or set up a monthly payment plan online at GOV.UK. They need to do this by midnight on 1 April to prevent being charged a late payment penalty. The online Time to Pay facility allows taxpayers to spread the cost of their Self Assessment tax bill into monthly instalments until January 2022.

Employed or Self Employed

One case in particular caught our eye this week. This one covered employment status appeals and the result of two was determined, not by any written contract, but by hypothetical contracts constructed by the courts.

The Taxi-tech company Uber lost its appeal in the Supreme Court against three drivers who had claimed they were workers and not self employed. The court found that Uber exerted considerable control over its drivers, and as a result there was no way that a driver could realistically make a profit under the arrangement; a test of the ability to make a profit (or loss) being one of the most useful measures in many employment status cases. A key feature of the case was the lack of contractual documentation between the parties. This meant the court could only establish the working relationship through the facts it was presented with. There is a twist to the story, VAT. The company’s US accounts indicate that Uber is also facing a large VAT bill as a result of this outcome. Paid fares are the company’s taxable turnover and not that of its drivers.

SEISS

HMRC’s SEISS statistics make quite grim reading. 65% of the self-employed population who were eligible to make a claim did so. That means 2.2 million people made a claim, 1.1 million could have claimed but did not, and a further 1.7 million were ineligible to claim and so we cannot tell if they wanted to or not. Covid-19 has not been fair on many levels.

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