COVID-19 guidance

07 January, 2021

The Comptroller of Revenue has published (as below) a draft clarification to his Guidance on the Implications of Coronavirus for the Economic Substance Test. There have been discussions of this clarification with industry representatives and it is published now, pending confirmation through official channels.

In March 2020 the Comptroller of Revenue released a concession on the approach to economic substance that indicated where a company's operating practices have to be adjusted to compensate for the Coronavirus outbreak the Comptroller will not determine under article 6 of the Economic Substance Law that the company has failed the economic substance test.

The example given was of a company normally holding directors' meetings in Jersey but to avoid travel, or because individuals were self-isolating, meetings were temporally held virtually. It was stated the Comptroller would not regard this as failing to meet the economic substance test.

A particular point to note about the attached clarification of the Comptroller's approach going forward is that the concession will only be relevant to the directed and managed part of the economic substance test, it will not apply to other elements of the test such as the conduct of core income-generating activities in Jersey.

The clarification notes that reliance on the concession should be disclosed in the 2020 tax return. Companies are also reminded that they should ensure they are keeping sufficient records which evidence the changes made to normal operating practices and evidence the underlying reasons for these changes as these records will be required by officers of Revenue Jersey when checking if the concession was correctly applied.

Further information

Should you require any more information or assistance, please get in touch with any of the individuals listed below, or your normal PwC contact in our Channel Islands tax team.

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Tom Cowsill

Tom Cowsill

Tax Director, PwC Channel Islands

Tel: +44 7797 710529

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