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COVID-19. HMRC guidance for corporation tax impact of Coronavirus

Update on HMRC treatment of certain corporation tax areas

16 Apr 2020

HMRC have issued updated guidance in relation to their approach to some corporation tax matters in response to the Covid-19 pandemic.

R&D tax relief

HMRC have confirmed that they are seeking to maintain the target rate of clearing 95% of claims within 28 days. They have also announced they will be sympathetic to those facing difficulties in meeting filing or amendment dates.

In respect of the going concern requirement for the relief, HMRC has noted that this cannot be overlooked. However the claimant company must be a going concern according to the last published accounts, which in many cases will be before the effects of Covid-19, so should not pose an issue for the going concern requirement.

The Coronavirus Business Interruption Loan scheme (CBILS) has been notified as State Aid. This means the restriction on other state aid potentially applies if the CBILS relates specifically to the company’s R&D expenditure on a project, rather than more generally to support the company.

Permanent establishments

As a result of travel restrictions and working remotely, you may have found that your business is taking place in the UK when it usually does not, and you may be concerned about creating a permanent establishment for UK taxation.

HMRC does not consider that a company will automatically have a taxable presence by way of a permanent establishment after a short period of time.

Company residence

Similarly, activity may be taking place in the UK which usually does not, and you may be concerned that your company will become UK tax resident as a result.

HMRC does not consider that a company will necessarily become resident in the UK because a few board meetings are held here, or because some decisions are taken in the UK over a short period of time.

If any of the above applies to you and you would like more information, please contact us for further advice.

For more information relating to COVID-19, please view our COVID-19. Information Quick Find page

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