Weekly tax brief | 12 January 2021

Will Budget tax increases become Covid-19 casualties?
George Bull
The current Covid-19 lockdown has heaped further uncertainty on Budget tax increases. If the Chancellor puts off increasing taxes until a later Budget, he will exacerbate pressures on the public finances, so prolonging the agony. But if he is too quick to impose tax increases which affect a significant proportion of the population, he risks creating further despair among an already disillusioned electorate.

Falling service levels: does the taxman need a 31 January tax return deadline extension as much as the taxpayer?
Sarah Saunders
Latest statistics suggest HMRC’s service levels are falling. Does the department have the resources to deal with Brexit, Covid-19 and its usual work? Perhaps the taxman too needs the 31 January tax return deadline to be extended, to avoid having to deal with an extra wave of penalty appeals.

Many small businesses are struggling financially; can effective use of tax losses help?
Jackie Hall
It is reported that as many as 250,000 businesses in the UK are expecting to close this year, with many more facing severe financial difficulties, having to reduce their workforce and take on more debt. We look at how to use tax losses to help businesses through financial difficulties in the coming year.

HMRC issues record money-laundering fine
Justin Stevenson
HMRC issued a record £23.8m fine to a money transfer company for “significant breaches” of the 2017 Money Laundering Regulations. This single penalty alone is more than double the £9.1m penalties HMRC issued in total for breaches in the previous year.

Tribunal decision threatens further education colleges’ VAT status
Gillian McGill
The Upper Tribunal has ruled that grant-funded education by further education colleges is a business activity for VAT purposes. If the case is not appealed further, this could potentially jeopardise current and past VAT recovery by state-funded educational bodies and perhaps also the wider not-for-profit sector.