News Round-Up – July 2024

HMRC CONTACTS PENDING ROR CLAIMANTS

Provisional claimants are urged to make
a valid claim by 31 January 2025.

HMRC is writing to taxpayers who made a
provisional business asset roll-over relief
(ROR) claim on asset sales in 2020/21
and haven’t replaced it with a valid claim.
The deadline for making a valid claim
is 31 January 2025. If a valid claim isn’t
made by then, HMRC will withdraw the
provisional claim, making the deferred
capital gains tax (CGT) payable.

Taxpayers may claim ROR when selling
a business asset if they buy a qualifying
asset within a set period. This claim defers
CGT on the sale. If taxpayers intend to buy
a qualifying asset but haven’t done so when
needing to claim ROR, they can make a
provisional claim. They must replace this
with a valid claim once they buy the asset.

HMRC advises taxpayers to respond if
they have bought or will buy a qualifying

asset by 31 January 2025 and notify
HMRC by completing form HS290 for
2020/21. If unable to use the form, they
should reply to HMRC’s letter with the
requested information.

HMRC has also urged claimants to
contact HMRC now if they haven’t
bought a qualifying asset and don’t
intend to by 31 January 2025. HMRC
will withdraw the provisional claim and
send an assessment for any owed tax
and interest. Prompt action will reduce
the interest payable.

HMRC may extend the period to acquire
the qualifying asset, with conditions
outlined in their letter. Claims made after
31 January 2025 will be considered on a
case-by-case basis.

Later in the year, HMRC will write
to taxpayers who haven’t replaced
provisional claims for 2021/22.
The deadline for valid claims for
2021/22 is 31 January 2026.

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HOUSE PRICES RISE SLIGHTLY AGAIN

The average cost of a home now stands
at £264,249, marking a 1.3% increase
year-on-year.

The housing market is showing signs
of resilience, with Nationwide reporting
a 0.4% rise in house prices in May
compared to April. The average cost of a
home now stands at £264,249, marking a
1.3% increase year-on-year. According to
Nationwide’s index, this rebound follows
month-on-month price drops of -0.4% in
April and -0.2% in March.

Other lenders have also observed modest
falls in recent months, reflecting concerns
over subdued demand due to higher
mortgage rates. Despite these worries,
the recent figures indicate a potential
stabilisation in the market.

Inflation fell to 2.3% in April, the lowest
level in nearly three years. However,
this rate was higher than anticipated by

economists and the Bank of England,
leading analysts to suggest that an
interest rate cut is now less likely in
June or August.

Nationwide’s chief economist, Robert
Gardner, said:

“The market appears to be showing
signs of resilience in the face of ongoing
affordability pressures following the
recent rise in longer-term interest rates.

“Consumer confidence has improved
noticeably over the last few months,
supported by solid wage gains and
lower inflation.”

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MEDIA SECTOR FACES SCRUTINY FROM HMRC

A survey by RSM revealed that 40% of
media firms had filed an R&D claim in
the past year, but only 24% of these were
approved without dispute.

A recent crackdown on the abuse of the
research and development (R&D) tax
relief regime has significantly impacted
the media sector, with HMRC questioning
three out of four claims. A survey by RSM
revealed that 40% of media firms had
filed an R&D claim in the past year, but
only 24% were approved without dispute.

One-third of these claims were eventually
approved after an initial challenge
by HMRC, while another third were
outright refused in the last 12 months.
This contrasts sharply with the overall
statistic that only 20% of R&D claims are
challenged by HMRC,

The media industry encompasses various
sectors, including audio, music, film and
TV companies, marketing, advertising
and communications agencies,
publishers, and gaming companies.

In the 2021/22 tax year, 90,315 R&D
claims resulted in £7.6 billion in tax
relief. However, less than 1,000 R&D
claims came from the entire arts,
recreation, and recreation sector,
totalling approximately £100 million.
In comparison, the manufacturing
sector had around 21,000 claims and
received over £1.5bn in tax relief.

Notably, 95% of media industry
respondents reported making a
claim for some form of tax relief.

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ONLY 13% OF BOUNCE BACK LOANS PAID OFF

£46.9 billion was lent during Covid under
the scheme. While nearly three-quarters
of borrowers are on track to repay, a
significant £40.9bn remains outstanding.

The amount of bounce-back loans fully
repaid is just 13% of the £46.9bn handed
out to companies during the pandemic.

Despite £46.9bn being handed out in
bounce back Loans during the pandemic,
only 13% have been fully repaid. While
nearly three-quarters of borrowers are
on track to repay, a significant £40.9bn
remains outstanding. Across all three
Covid loan schemes, totalling £76.9bn,
£21.5bn has been fully repaid.

The Government has banned 831
company directors for fraudulent
Covid loan applications, an 80%
increase from the previous year. Banks
refused £2.2bn worth of loans due to
concerns about repayment, preventing
further potential losses.

While bounce back loans accounted
for most of the loans, fraud was
more prevalent in smaller business
loans. Larger businesses utilising the
Coronavirus Business Interruption Loan
Scheme (CBILS) and the Coronavirus
Large Business Interruptions Loan
Scheme (CLBILS) saw less fraud. Of the
£25.8bn lent through CBILS, 38% has
been repaid, with 1.49% in arrears and
1.2% defaulted. CLBILS, with £4.5bn lent,
saw no reported fraud.

Dean Beale, chief executive at the
Insolvency Service, said:

“Tackling bounce back loan
misconduct is a key priority for
the Insolvency Service, and we are
determined to use all our available
powers to remove rogue company
directors from the corporate arena.”

Contact us about your finances.