HM Revenue and Customs (HMRC) is urging tax agents and accountants to remind their clients that COVID-19 support grants or payments are taxable and should be declared on their company tax returns.

The deadline for customers or agents filing company tax returns (CT600) is 12 months after the end of the accounting period it covers. The deadline to pay Corporation Tax will depend on any taxable profits and when the end of the accounting period occurs.

If companies received taxable COVID-19 support grants or payments they should make sure it is recorded as income when calculating taxable profits.

Taxable grants include:

  • test and trace or self-isolation payments in England, Scotland and Wales
  • Coronavirus Statutory Sick Pay Rebate
  • Coronavirus Business Support Grants (also known as local authority grants or business rate grants)

Guidance on how to complete a company tax return can be found on GOV.UK.

If a company received a Coronavirus Job Retention Scheme (CJRS) grant or an Eat Out to Help Out payment, they will need to do both of the following on their CT600 tax return:

  • include it as income when calculating their taxable profits in line with the relevant accounting standards
  • report it separately on their Company Tax Return using the CJRS and Eat Out to Help Out boxes

Myrtle Lloyd, HMRC’s Director General for Customer Service, said:

“We want to make sure companies are getting their tax returns right, first time, including any COVID-19 support payment declarations. Support and guidance is available on GOV.UK, just search ‘file my company tax return’.”

Information on which support payments need to be reported to HMRC and any that do not is available on GOV.UK.

The deadline for Self Assessment customers to complete their 2020/21 tax return and pay any tax owed is 31 January 2022.

Last week, HMRC announced they would waive penalties for one month for late filing of tax returns and late payments. The changes mean:

  • anyone who cannot file their return by the 31 January deadline will not receive a late filing penalty if they file by 28 February
  • anyone who cannot pay their tax liabilities by the 31 January deadline will not receive a late payment penalty if they pay their tax in full, or set up a time to pay arrangement, by 1 April

Interest will be payable from 1 February on outstanding balances.

It is important that customers check and make any changes to their tax return to make sure any Self-Employment Income Support Scheme or other COVID-19 support payments have been reported correctly in their Self Assessment.

HMRC urges everyone to be alert if they are contacted out of the blue by someone asking for money or personal information. Customers should always type in the full online address www.gov.uk/hmrc to get the correct link for filing their tax return online securely and free of charge. HMRC sees high numbers of fraudsters emailing, calling or texting people claiming to be from the department. If in doubt, HMRC advises not to reply directly to anything suspicious, but to contact them straight away and to search GOV.UK for ‘HMRC scams’.

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