Contractors get respite from HMRC, thanks to COVID-19 putting tax checks on hold

Contractors can expect a respite from the taxman, partly as HMRC is having to take some officers off compliance activity and onto the covid-19 support schemes, the CJRS and SEISS.

Although the transfer, disclosed by a tax enquiry expert, does not mean that the Revenue is stopping compliance activity, it is pausing all corporation tax and VAT compliance checks.

“I know this [suspension] has been extended to the other taxes as well [because of resources needing to focus on covid-19],” says the enquiry expert, Tax Resolute’s Jesminara Rahman.

“HMRC is suspending all compliance activities…apart from cases where the customer is actively engaged and communicating [plus] some exceptions…[like] COP 9 tax fraud cases”.

'Extremely difficult'

Officially, the most HMRC will confirm the suspension is saying it is doing “everything possible to protect individuals [and] businesses” amid an “extremely difficult” time.

A Revenue spokesman also told ContractorUK: “This includes prioritising work to support businesses and individuals. [But] HMRC will always take tough action against fraudsters”.

The latter warning is code for the Revenue not only wanting to maximum funds to support services to fight the pandemic, but also suggests it is aware of schemes to exploit the crisis.

'Reduced resources on all fronts'

However, according to Rahman, HMRC caseworkers have been told not to issue any new Schedule 36 notices, which let them obtain materials to check a taxpayer’s position.

“HMRC understands that this is distressing time for all and there are reduced resources on all fronts,” the tax investigations expert added.

“ There will be no new cases opened by HMRC in the next few weeks until the coronavirus situation is alleviated so in general…there is a postponement in…tax investigation activities.”

'Inspectors gone quiet'

There will also be no court hearings, at least for some taxpayers. “A tax Tribunal case scheduled for two months’ [time] was just cancelled by email,” reflected a chartered accountant Naeem Shareef.

Writing on LinkedIn, where Ms Rahman also made her disclosures about the suspended HMRC checks, he added: “Some [tax] inspectors are active while others have gone quiet.

“Currently appears there is not a uniform policy. A senior inspector advised [us that ] he is working from home, so it is ‘business as usual,’ but [he] understands if there are delays.”

The same understanding approach from HMRC, suggested this week to be a coronavirus-inspired change of heart which PSCs should act on, has been flagged up by an IT contractor.

'Breathing space before the BA market hopefully picks up'

The PSC contractor reflected: “I have just come off the phone with HMRC to discuss the possibility of deferring [my limited company’s] corporation tax payment due next month.

“The lady I spoke to – Abbi -- couldn't have been more helpful. The call was easy and friendly and no hassle at all.

“Payment has now been deferred for three months, which buys me a bit of breathing space in the hope that the Business Analysis market will pick up soon.”

'No new compliance checks'

In her own comments online, Tax Resolute’s Ms Rahmen said the breathing space from HMRC does not extend to VAT repayment issues or cases, outside of the official VAT deferral.

“But there will be no new compliance checks”, she advised. “Resources [at HMRC] will be taken from compliance activity to deal with the Job Retention Scheme and the Self-Employed Income Support Scheme. Then there is the impact on [HMRC directly from] coronavirus as staff will be off sick. [And] then Brexit to deal with afterwards."

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Written by Simon Moore

Simon writes impartial news and engaging features for the contractor industry, covering, IR35, the loan charge and general tax and legislation.
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