Archive May 2021

LONG COVID

With more and more businesses re-opening across the UK and a greater number of employees returning to the workplace, how can I support my staff with long Covid and what could the symptoms be?

 

Given that the Office for National Statistics (ONS) has estimated that over one million people have reported experiencing long Covid, the conciliation and mediation service, Acas, has issued an advice note that may be useful to you.

Firstly, the advice highlights that the symptoms of long Covid are varied and can include:

  • extreme tiredness
  • shortness of breath
  • chest pain or tightness
  • problems with memory and concentration (also known as a ‘brain fog’)
  • difficulty sleeping
  • heart palpitations
  • dizziness
  • pins and needles
  • joint pain.

Other patients have reported depression and anxiety; tinnitus; earaches; feeling sick; diarrhoea; stomach aches; loss of appetite; a high temperature; headaches; sore throat; changes to sense of smell or taste; and rashes.

The advice note also offers practical tips on how employers like yourself can manage the various effects of the condition in a sensitive way, as well a range of options that can help staff get back to work safely. It suggests that employers should:

  • apply the usual rules on sickness absence and sick pay where necessary
  • arrange and offer occupational health assessments
  • look into reasonable adjustments, which can vary from changed hours, to adapted physical workspaces, and
  • discuss flexible working as an option as well as phased returns, which may mean coming back part-time initially to build back up to working usual hours.

As long Covid is a new illness, Acas is also hesitant to state whether it will be considered a disability. However, what is clear is that it may lead to conditions that do fall into this category and you should be mindful of this, alongside the danger of discrimination. The guidance therefore advises employers not to focus on whether long Covid should/can be considered a disability, but instead to prioritise the ways they can help staff to combat the symptoms and return to work safely. To this end, it also cautions against capability procedures until all other options have been considered.

Finally, although disability discrimination may not be a clear result of neglecting to take action, the guidance states that certain groups of people in particular are suffering most from long Covid – including those who are older, from ethnic minority backgrounds, or women – and poor treatment of them in this regard could lead to claims of constructive unfair dismissal.

Company Rental Losses

I am a trading company and due to trading difficulties in the current year, I have made a loss in my trade, which I will carry back to the profitable previous year. I also have a rental property in the company that also made a loss, can I carry that loss back against the profits of the trade in the previous year too? If not, how else can I relieve the rental loss?

 

The short answer is you cannot carry back the rental loss. The rules for the use of corporate rental losses are found in s62 CTA2010 s.62. This covers loss relief in the current year and states the unused loss is carried forward and treated as a rental loss for the following period, providing the rental business continues. There is no provision to carry it back to previous accounting periods.

Therefore, as there is no profit in the current year to relieve, and your company is not part of a group, the loss is simply carried forward.

The loss can be carried forward and, subject to a claim being made, offset against the total profits including gains of the company in subsequent accounting periods – providing the rental business continues.

If there is a rental loss in the next period, it will be relieved against the total profits including gains of the company in that period, but any brought forward loss requires a claim.

A claim for relief for the carried forward loss to be offset against total profits needs to be made within 2 years of the end of the period where relief is claimed – s62(5C).

For the practicalities of obtaining relief, see the notes re boxes 190 and 250 in HMRC’s Guide to completing a CT Return and HMRC’s comments at PIM4236.

Can veterinary medicines be zero rated?

My husband is a vet and makes charges for animal medicines, sometimes as part of their treatment, like vaccinations and anaesthetics, and sometimes for aftercare or ongoing treatment of conditions at home.  He has always accounted for VAT at the standard rate on treatments and medicines, but a donkey sanctuary has opened up nearby which will give my client a significant amount of business, and they have suggested that medicines should be zero rated. Is there really a zero rating for this?

 

If the donkey sanctuary is a charity, then it may be correct that they are able to receive medicines zero rated.  VATA1994 Schedule 8, Group 15, Item 9 is the relevant legislation, which zero rates:

“The supply to a charity, providing care or medical or surgical treatment for human beings or animals, or engaging in medical or veterinary research, of a medicinal product where the supply is solely for use by the charity in such care, treatment or research.”

The relevant conditions here are that:

  • The charity provides care or medical or surgical treatment for animals, and
  • The supply is solely for use by the charity in such care or treatment.

VAT notice 701/1 explains in paragraph 6.1.8 the meaning of ‘medicinal product’ for the purpose of this provision.

Assuming that the donkey sanctuary is a charity, it would appear that the first condition is satisfied as its function would be to provide care for the animals.

In relation to the second point, if your husband administers medicine as part of the treatment, this will be part of the standard rated supply of veterinary treatment.  However, where medicine is provided for the charity to administer to the animals in its care, this would be zero rated.

The charity would need to provide an eligibility declaration for your husband to retain as his evidence to support zero rating, but none of the example certificates in Notice 701/6 apply to this particular item in the legislation.  Certificate A could be used as a template or basis for a letter confirming eligibility, but the charity would need to:

  • amend the customer category ‘a charitable institution providing care or medical or surgical treatment for handicapped persons’ to ‘a charitable institution providing care or medical or surgical treatment for animals’;
  • add ‘medicinal products’ as a category to the type of goods;
  • Declare the goods are to be used in care or treatment of animals, and
  • Apply for zero rating of the supply under Group 15, item 9 of the zero rate schedule.

Company Rental Losses

My client is a trading company and due to trading difficulties in the current year, they have made a loss in their trade, which they will carry back to the profitable previous year. They also have a rental property in the company that also made a loss, can they carry that loss back against the profits of the trade in the previous year too? If not, how else can they relieve the rental loss?

 

The short answer is they cannot carry back the rental loss. The rules for the use of corporate rental losses are found in s62 CTA2010 s.62. This covers loss relief in the current year and states the unused loss is carried forward and treated as a rental loss for the following period, providing the rental business continues. There is no provision to carry it back to previous accounting periods.

Therefore, as there is no profit in the current year to relieve, and the company is not part of a group, the loss is simply carried forward.

The loss can be carried forward and, subject to a claim being made, offset against the total profits including gains of the company in subsequent accounting periods – providing the rental business continues.

If there is a rental loss in the next period, it will be relieved against the total profits including gains of the company in that period, but any brought forward loss requires a claim.

A claim for relief for the carried forward loss to be offset against total profits needs to be made within 2 years of the end of the period where relief is claimed – s62(5C).

For the practicalities of obtaining relief, see the notes re boxes 190 and 250 in HMRC’s Guide to completing a CT Return and HMRC’s comments at PIM4236.

Discretionary Trust and ten-year charge

A husband and wife have settled a jointly held rental property worth £400,000 into a discretionary trust for their grandchildren. If the property value stays the same in ten years’ time would the trustees have a ten-year charge to pay as the value would be over the £325,000 nil rate band? 

For inheritance tax purposes this would be treated as two separate trusts as stated in IHTA 84 s44(2) – see IHTM42253. Therefore, the Discretionary trust in this case would be treated as two separate trusts, one with the wife as settlor and one with the husband as settlor.

Each trust would have its own nil rate band of £325,000 providing the settlors hadn’t made any previous chargeable lifetime transfers within the 7 years prior to settling these trusts. This would mean that each trust held relevant property worth £200,000 which is below the nil rate band so it appears as no inheritance tax would be due at the ten-year charge date.

However, there still may be a reporting obligation for the ten year anniversary event unless the trust is an “excepted settlement” within SI 2008/606. The value of the notional aggregate chargeable transfer specified in IHTA84 s66(3) cannot exceed 80% of the nil rate band (current maximum £260,000 – see IHTM06124) and the following “general conditions” must be met – see IHTM06123:

  • No related settlements
  • The settlor is domiciled in the UK when the trust was settled and remained domiciled in the UK throughout the trust until the occasion of charge or the settlor’s death
  • The trustees of the settlement are UK resident throughout the existence of the settlement.

The above stands for all relevant property trusts except pilot trusts that meet the conditions in IHTM06122.

Will I now have to pay inheritance tax if I set up this trust?

I want to set up a discretionary trust for my grandchild with £100,000 cash but I have already gifted them £325,000 in cash directly so will I now have to pay inheritance tax if I set up this trust?

Making a gift into a discretionary trust is a chargeable lifetime transfer as per s2 IHTA 1984. The inheritance tax nil rate band available is £325,000 so only if you have already used up your nil rate band (NRB) in the last 7 years would inheritance tax would be payable – at 20% on the transfer of value into the trust.

A gift of cash from one individual to another is a potentially exempt transfer (PET) within s3A IHTA 1984 and does not utilize your nil rate band. Generally, these will only be within the scope of inheritance tax if the donor does not survive 7 years after making this gift making this a “failed PET”.

If there is a failed PET, then after allowing available annual exemptions (£3,000 pa) your available NRB would first be used against the failed PETs as the chargeable transfers are calculated in date order – s7 IHTA 1984. If there is only a single nil rate band available (I.e. there is no transferrable spousal/civil partner NRB), then this would mean part or all of the transfer to the trust would become chargeable depending on how much of the NRB has been used against the failed PETs.

At present, the earlier gift you made to your grandchild of £325,000 in cash was a PET so this would not affect the availability of your current NRB. Therefore, you do not have to pay any inheritance tax settling £100,000 into trust proving of course that you have not made any other chargeable transfers in the last 7 years prior to this.

 

How to support staff who are going through the menopause.

Our client wants to know how they can support staff who are going through the menopause and if it is a good idea to intervene in what might be a delicate time for employees going through the change.

Whilst is it not advisable for you to confront employees going through the menopause or put them on the spot in any way, it is important that they have a clear and open system for supporting these employees. This ensures that any worker who needs additional support feels able to approach management on the issue and are fully aware of the steps that can be taken by the company on their behalf.

You have a duty to ensure the health, safety and welfare of your employees, and to undertake risk assessments to assess risks that the workplace may pose. In addition, the Equality Act 2010 outlines that employees must not be discriminated against due to any form of disability. Although an employee going through the menopause is not automatically protected by the provisions of the Act, the symptoms that can arise from the menopause may be classed as a disability if they meet the required definition.

To defend against any liabilities, and potentially costly compensation awards, if you take steps to offer support and assistance to all individuals who are going through the menopause, they will experience real benefits. By fostering a workplace where employees feel safe, you are more likely to retain the skills and experience of your employees.

To clearly outline organisational procedures that are in place to support and assist those going through the menopause, it may be useful to create an official policy which may include the following:

  • a general introduction, highlighting what the policy is for and reaffirming your commitment to treating all individuals fairly
  • an outline of the aims and objectives of the policy
  • an outline of any action or support groups that are being put in place to help, alongside any intentions to work with the menopause actions and third-party groups
  • a list of the type of support that you can offer, e.g time away from work where the symptoms are severe, encouraging communication, easy access to toilet facilities by repositioning the employee, providing alternative tasks to heavy lifting to combat increased levels of fatigue and muscle strain, etc.

Individuals respond differently to the menopause and it is essential that you are fully aware of this fact. Some women may be relatively unaffected whilst others experience significant difficulties for prolonged periods of time.

You should therefore ensure that all line managers and HR representatives are fully conversant with the policy on responding to the menopause and are able to respond to it in a non-discriminatory and open manner. Essentially, employees should feel comfortable and secure approaching this topic with their managers.

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