Effective April 2020 the EA will be restricted to those employers who have a secondary NIC bill of £100,000 in the tax year just ended. So for the majority of employers approximately 100,000 the checking of the status to claim will be paramount as that check box in the software will have to be unchecked.
From 2020 the EA will in the view of HMRC be minimal state Aid which is permitted by the EU. The reason for this is, it is an amount that is insignificant in terms of amount and so does not cause a conflict with trade and competition between all member states, nor is there a requirement to report it to the EU. As such HMRC will now have to monitor the amount that is claimed and by whom ensuring that in the three year window an employer is permitted there is no over claim to the entitled amount.
This shift in attitude towards the EA also means a change in the way in which those eligible to claim, will do so. No longer will it be a ‘one tick fits all’, infact the EA will require the employer to report on the EA the “Amount of de minimis State aid received (in €), their relevant industry sector(s) or that State Aid does not apply.” It is anticipated that HMRC will announce the rate to be used on or around 1st April.
HMRC will be monitoring this and will if necessary reject any claim made. Notification of rejection will be via a GNS outlining the reason for the rejection which will be based upon:
“the £100,000 NICs limit, de minimis State Aid limit for the industry sector or other reasons ineligible.”
Software will still have to support the ‘old’ format of claiming the EA up to the 2019/20 tax year as well as the new format.
In the ‘Summary of Tax Year 20-21 Software Developers’ HMRC have set out a timeline as to when information and testing should occur, they anticipate this to commence in August 2019. The roadmap is:
“August 2019 – Technical specifications finalised and published via HMRC’s Software Development Support Team (SDST)
October 2019 – Changes deployed into TPVS and LTS testing environments. SDST to support testing products.
October 2019 - Business guidance issued.
March 2020 – Changes released into Production environment.”
You can see from this timeline that as always everything is right up to the eleventh hour.
Of course some of this may well become a moot point, if or as and when we leave the EU.