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COVID-19: Support for businesses

Self-employment Income Support Scheme.

We would suggest in the first instance you read the government website link below which should answer many of your questions. Then contact us for further assistance if required.

https://www.gov.uk/guidance/claim-a-grant-through-the-coronavirus-covid-19-self-employment-income-support-scheme

Re Furlough and Job Retention Scheme.

See the link below to the government website, which does explain most things. Be careful if considering doing so for a director as they appear not allowed to do any work for the business whilst under furlough and there are concerns if in most cases, Directors will be applicable to the scheme.

https://www.gov.uk/guidance/claim-for-wage-costs-through-the-coronavirus-job-retention-scheme

The above link may be updated with more information by the government, so please ensure you are reading the latest update when accessing their site.

Self-employment Income Support Scheme

· Further information for you! 27th March 2020

As per our previous update, we will try and outline what we know so far for small business. I would hasten to point out, some of the information is at best “sketchy” and may well change/be not complete. We will update as we go along as best we can.

It was announced yesterday about the above scheme – it appears to relate to those self-employed and in Partnerships. Please see the information below. We are sure this will be updated in the near future. When we have further details we will let you know accordingly.

Use this scheme if you’re self-employed or a member of a partnership and have lost income due to coronavirus.

This scheme may allow you to claim a taxable grant worth 80% of your trading profits up to a maximum of £2,500 per month for the next 3 months. This may be extended if needed.

Who can apply?

You can apply if you’re a self-employed individual or a member of a partnership and you:

· have submitted your Income Tax Self Assessment tax return for the tax year 2018-19
· traded in the tax year 2019-20
· are trading when you apply, or would be except for COVID-19
· intend to continue to trade in the tax year 2020-21
· have lost trading/partnership trading profits due to COVID-19

Your self-employed trading profits must also be less than £50,000 and more than half of your income come from self-employment. This is determined by at least one of the following conditions being true:

· having trading profits/partnership trading profits in 2018-19 of less than £50,000 and these profits constitute more than half of your total taxable income

· having average trading profits in 2016-17, 2017-18, and 2018-19 of less than £50,000 and these profits constitute more than half of your average taxable income in the same period

If you started trading between 2016-19, HMRC will only use those years for which you filed a Self-Assessment tax return.

If you have not submitted your Income Tax Self-Assessment tax return for the tax year 2018-19, you must do this by 23 April 2020.

HMRC will use data on 2018-19 returns already submitted to identify those eligible and will risk assess any late returns filed before the 23 April 2020 deadline in the usual way.

How much you’ll get

You’ll get a taxable grant which will be 80% of the average profits from the tax years (where applicable):

· 2016 to 2017
· 2017 to 2018
· 2018 to 2019

To work out the average HMRC will add together the total trading profit for the 3 tax years (where applicable) then divide by 3 (where applicable), and use this to calculate a monthly amount.

It will be up to a maximum of £2,500 per month for 3 months.

We’ll pay the grant directly into your bank account, in one instalment.

How to apply

You cannot apply for this scheme yet.

HMRC will contact you if you are eligible for the scheme and invite you to apply online.

Individuals do not need to contact HMRC now and doing so will only delay the urgent work being undertaken to introduce the scheme. You will access this scheme only through GOV.UK. If someone texts, calls or emails claiming to be from HMRC, saying that you can claim financial help or are owed a tax refund, and asks you to click on a link or to give information such as your name, credit card or bank details, it is a scam.

After you’ve applied

Once HMRC has received your claim and you are eligible for the grant, we will contact you to tell you how much you will get and the payment details.

If you claim tax credits you’ll need to include the grant in your claim as income.

WE HOPE THIS HAS BEEN OF SOME ASSISTANCE AND WILL BE ADDING INFORMATION AS IT BECOMES AVAILABLE. OBVIOUSLY. MATTERS ARE CHANGING VERY QUICKLY AND SOME OF THE INFORMATION INCLUDED COULD ALREADY BE OUT OF DATE BY THE TIME YOU RECEIVE THIS. WE, THEREFORE, CANNOT ACCEPT ANY RESPONSIBILITY FOR THE RELIANCE UPON THE INFORMATION INCLUDED IN THIS NEWSLETTER. YOU SHOULD TAKE ALL RELEVANT ADVICE FROM APPLICABLE SOURCES PRIOR TO MAKING ANY DECISIONS. PLEASE KEEP IN TOUCH WITH US AND ASK ANY QUESTIONS YOU MAY HAVE.

Furlough and the Job Retention Scheme

 Further information for you! 25th March 2020

As per our previous update, we will try and outline what we know so far for small business. I would hasten to point out, some of the information is at best “sketchy” and may well change/be not complete. We will update as we go along as best we can. We cannot obviously advise on any legal matters relating to this and you should contact your employment helpline (probably via your insurance company etc) for legal advice.

The Government has announced its plans for financial assistance to help employers retain employees for an extended period of time, although offering no work, and avoid lay-offs. It is called the Job Retention Scheme and, while little information has been published as to how it will work, we have set out below what we do know, which will be updated as more details are released.

What is the Job Retention Scheme?

It involves employers placing their employees on “furlough”. This is a term which is typically used in the US and essentially means putting employees on temporary leave of absence where they do not work and do not receive pay, but are retained on your books to be brought back in when you need them. Employers who do this will be able to obtain a grant from the Government to cover 80% of “furloughed employees” wages, to a maximum of £2500 per employee per month.

Which employers can access the scheme?

All employers can access it; there is no restriction on size or type.

How do I get the Government grant?

Guidance states that you will need to designate which of your workforce will be furloughed employees and then submit that information to HMRC, along with each employee’s earnings. You will then receive a grant to cover the 80% wages. More information is awaited from the Government on the online portal to be used to submit the information and what other information may be needed. The Chancellor has stated he hopes the first grants will be paid by the end of April 2020, and they will be backdated to 1 March 2020. The scheme is initially intended to run for three months but may be extended.

Which employees can be furloughed?

Theoretically any employee can be furloughed. They need to be on PAYE in order for you to be able to claim the grant for their wages. Guidance states that your ability to furlough an employee depends on their contract. It is not likely that employee contracts will include a specific right to use furlough. However, contracts which contain a right to lay off employees on no pay already give you the right to send employees home and not pay them for a temporary period and so can likely be used to furlough employees. The difference is that employees on lay off will receive, subject to service criteria, statutory guarantee pay (SGP) whereas furloughed employees will receive 80% of their wages. SGP is £29 per day for a maximum of five days in a rolling 13-week period, so furlough offers the employee a much more favourable option in terms of pay. Despite a lay off clause, you may wish to seek specific agreement to the period of furlough with employees at the time to avoid challenges in the future that the employee was not in full agreement to being placed on leave with reduced pay. If contracts do not contain a right to unpaid lay off, you can ask the employee to agree to furlough. Although 80% of wages may not be an initially attractive option next to full pay, it is likely to be more attractive than redundancy which may be the end result if alternative options cannot be found. It may also be useful for employees who are struggling to find childcare.

If you have already taken the step to utilise lay off, you can get in touch with those employees and agree to change their current status from lay off to furlough. This would simply involve changing their pay arrangements from nothing (if not entitled to SGP), or SGP to 80% wages, as they are already not working.

You need to designate employees as furloughed, which means it is your choice. However, if you are not placing everyone on furlough, you should consider carefully who it should be. Think about whose skills will continue to be in demand through this difficult period. While you may assume that the best thing to do is furlough those employees labelled as high risk by the Government, forcing them on to furlough without their input, and therefore forcing them on to 80% wages, may result in discrimination claims from those who allege they were made to do it because of their age, disability or pregnancy. Where you need to select employees for furlough, it may be best to ask for volunteers across the workforce and if any high risk employees, who had previously been risk assessed as fine to still be in work, put themselves forward, it may well be appropriate to choose them first. There does not appear to be a maximum or minimum number of employees who can be furloughed.

Can I furlough employees now?

In the absence of full guidance from the Government on how the Job Retention Scheme will work, it may be prudent to wait before taking action to place employees on furlough now. However, it should be acknowledged that employees are in a difficult position with regard to the security of their jobs and may welcome some communication about what is happening. You may wish to take advice on this matter.

Can I furlough employees who are on short-time working?

Furlough requires the employee to not carry out any work, so short-time working could not continue during furlough. However, consider whether you could re-organise reduced work patterns to allow for some of those on short-time working to go back to full hours and the others to be furloughed. You should discuss this with employees first.

If I put employees on furlough and I get a grant to cover 80% of their wages, do I have to make up the other 20%?

No, there is no requirement to do this, but you can if you wish.

What about zero hours employees who have no standard wages? How will the 80% be calculated?

There is no clarity on this yet but the Chancellor said the intention was to try to cover as broad a group of people as possible.

NEWSLETTER – CORONAVIRUS TAX INFORMATION AND HELP FOR SMALL BUSINESS – 23rd MARCH 2020.

We are in unprecedented times and matters are changing on a daily basis. We will try and outline what we know so far for small business. I would hasten to point out, some of the information is at best “sketchy” and may well change/be not complete. We will update this newsletter as more information becomes available. We intend to keep our office running and open as best we can. However, we may be at a reduced capacity in the office and some will be working from home. If you have questions at this time you may contact us as normal – but please be patient as we don’t have enough hours in the day to answer everyone’s queries. If you do not receive a reply to an e-mail, please contact the office or Andy/Adrian by e-mail as there may well be reasons as I am sure you can appreciate.

We suggest you read the attached and then consider the following:-

  • Contact your bank as soon as possible to see what they can make available to you. Our experience so far is they are being very helpful. This is both for business and personal matters.
  • Consider the Furloughed workers. This is still sketchy on how it will work (see further down) and there will no doubt be a delay in that you may have to pay staff and claim it back. Again, matters are changing quickly, so this may alter.
  • You may have to consider your staffing situation and the above. We cannot obviously advise on any legal matters relating to this and you should contact your employment helpline (probably via your insurance company etc).
  • Payroll will still need to continue to be operated – especially because of everything going on and the SSP and Furloughed workers. We are still operating normally on this, but mainly remotely – so if you could try and e-mail Michelle and Jules rather than calling the office.
  • We still intend to prepare VAT as normal if we do this for you. The deferral of payment is exactly that and still has to be paid at some point. Returns should still be submitted.
  • Banks may require accounts or some management information to access the loans/funding. Again, as it stands, we will still be able to prepare this for you – albeit, meetings may be on the telephone or skype etc.

We hope to keep you up to date with information as it becomes available. Keep an eye on our website also.

VAT payments deferred for three months

The government has announced a three-month deferral for VAT payments until end June for all UK businesses with HMRC working all hours to thrash out the detail and we believe the VAT deferral will apply from 20 March 2020 until 30 June 2020. It appears to be an automatic offer with no applications required and also appears businesses will not need to make a VAT payment during this period.

Taxpayers will be given until the end of the 2020 to 2021 tax year to pay any liabilities that have accumulated during the deferral period. VAT refunds and reclaims should be paid by the government as normal.

It is not clear as yet how the scheme will work under Making Tax Digital for VAT reporting and we believe HMRC is urgently working through the details of the announcement and will advise businesses as soon as they can.

Six month deferral on self assessment payments

It appears that self employed taxpayers will see their income tax self assessment payments deferred for six months and that payments due on the 31 July 2020 will not now be payable until the 31 January 2021. Again, it appears to be an automatic offer with no applications required. We have been informed no penalties or interest for late payment will be charged in the deferral period.

Companies House extends accounts filing deadline

We believe Companies House intends on granting an extension for companies for filing company accounts, due to the current public health situation and the impact of coronavirus on staff who may be unwell or self-isolating. According to the Companies House website, if, immediately before the filing deadline, it becomes apparent that accounts will not be filed on time due to the company being affected by coronavirus, the company may make an application to extend the period allowed for filing.

The law presently gives a three-month extension, but normally it is Companies House policy to not allow extensions unless there are extreme circumstances. The Financial Reporting Council (FRC) has indicated in its coronavirus updates that that Companies House has changed its policy to automatically allow for a two-month extension and then another month after that if companies can demonstrate extreme circumstances.

Coronavirus Business Interruption Loan Scheme hiked to £5m

The government has released details about how the Coronavirus Business Interruption Loan Scheme (CBILS) will work, increasing the maximum value of a facility under the scheme to £5m, up from £1.2m, and said it would be available to businesses with a maximum £45m turnover.

The effective start date will be 23 March 2020. This has been confirmed by the Chancellor at the Friday press conference.

The maximum value of a facility provided under the scheme will be £5m and it will be open to UK based companies with a turnover of no more than £45m per annum.

Eligibility criteria

To be eligible for support, the small business must:

  • be UK based, with turnover of no more than £45m per annum;
  • operate within an eligible industrial sector (a small number of industrial sectors are not eligible for support or subject to limitations);
  • have to confirm that they have not received de minimis state aid beyond €200,000 equivalent over the current and previous two fiscal years [EU state aid competition rules]; and
  • be unable to meet a lender’s normal lending requirements for a fully commercial loan or other facility, but would be considered viable in the longer term.

Finance terms will be available from three months up to 10 years for term loans and asset finance, and up to three years for revolving facilities and invoice finance.

The scheme provides the lender with a government-backed guarantee against the outstanding facility balance, potentially enabling a ‘no’ credit decision from a lender to become a ‘yes’. The borrower always remains 100% liable for the debt.

The government will also cover the first 12 months of interest payments, increased from the original six-month period announced in the Budget on 11 March. The business remains liable for repayments of the capital.

The scheme will be provided by the British Business Bank through participating providers, and will offer more attractive terms for both businesses applying for new facilities and lenders, with the aim of supporting the continued provision of finance to UK businesses during the covid-19 outbreak.

The scheme will support a range of business finance products, including term facilities, overdrafts, invoice finance facilities and asset finance facilities.

The British Business Bank statement stated: ‘To apply for an CBILS-backed facility, businesses may wish to consider approaching one or more participating lenders to discuss their borrowing needs.’

Full eligibility criteria will be published when the scheme goes live week commencing 23 March 2020’.

ICAEW, ICAS, ACCA, Responsible Finance, UK Finance and NACFB are stakeholder partners in the scheme.

Government to pay 80% of salary for furloughed workers

The Chancellor has set out plans for a Coronavirus Job Retention Scheme to underwrite 80% of the salaries of workers if they have to be temporarily laid off, but the system could be open to abuse and details are limited.

Under the Coronavirus Job Retention Scheme, all UK employers will be able to access support to continue paying part of their employees’ salary for those employees that would otherwise have been laid off during this crisis. The scheme will be in place for three months initially and all UK businesses are eligible.

The salary subsidy will be paid through a new HMRC system and will reimburse 80% of furloughed workers wage costs, up to a cap of £2,500 per month.

HMRC is working urgently to set up a system for reimbursement. Existing systems are not set up to facilitate payments to employers. The Chancellor has announced it will be backdated to March 1. We believe HMRC will have to create a new IT software system to run the scheme and this will take until April to complete as it requires a brand new system to reverse pay staff normally paid under PAYE rules.

There is likely to be tight controls of the job subsidy to avoid abuse by unscrupulous employers who could see it as a way to simply lay off staff with no intention of rehiring them and creating ghost staff.

There is insufficient detail available at the moment to ascertain what kind of controls will be in place to monitor abuse of the system.

It is also not clear whether directors and shareholders of owner managed companies can put themselves ‘on furlough’, or how it affects zero hours workers.

The subsidy could cost up to £4bn a month to run depending on the scale of take-up, based on the £2,500 cap.

With the rushed nature of the scheme announcement, inevitably there is limited information available and no technical guidance from HMRC as yet.

While it should not be compulsory to use this scheme, it can serve as an alternative to a lay-off situation while helping both employees and workers to cover the many costs that are arising as a result of the outbreak. There appear to be no restrictions put into place; businesses of all shapes and sizes will be able to benefit from this.

How to access the scheme – This will be updated!!!!!!!

You will probably need to:

    • designate affected employees as ‘furloughed workers,’ and notify your employees of this change – changing the status of employees remains subject to existing employment law and, depending on the employment contract, may be subject to negotiation;
  • submit information to HMRC about the employees that have been furloughed and their earnings through a new online portal (HMRC will set out further details on the information required).

Support for businesses who are paying sick pay to employees

The government has said it will allow small-and medium-sized businesses and employers to reclaim Statutory Sick Pay (SSP) paid for sickness absence due to COVID-19. The eligibility criteria for the scheme is as follows:

  • this refund will cover up to 2 weeks’ SSP per eligible employee who has been off work because of COVID-19
  • employers with fewer than 250 employees will be eligible – the size of an employer will be determined by the number of people they employed as of 28 February 2020
  • employers will be able to reclaim expenditure for any employee who has claimed SSP (according to the new eligibility criteria) as a result of COVID-19
  • employers should maintain records of staff absences and payments of SSP, but employees will not need to provide a GP fit note. If evidence is required by an employer, those with symptoms of coronavirus can get an isolation note from NHS 111 online and those who live with someone that has symptoms can get a note from the NHS website
  • eligible period for the scheme will commence the day after the regulations on the extension of SSP to those staying at home comes into force
  • the government will work with employers over the coming months to set up the repayment mechanism for employers as soon as possible.

Small Business rate reliefs and grants

The Chancellor has said that anyone in receipt of small business rate relief currently will get a grant of £10,000. If you are in receipt of the retail, leisure or hospitality discount all the way up to £51,000 of rateable value you will receive a £25,000 grant at a flat rate.

Both of these discounts are available at a flat rate, unless there is an instance where a business qualifies for multiple grants, in which case particular circumstances will have to be looked at in further detail.

The government has said it will provide additional Small Business Grant Scheme funding for local authorities to support small businesses that already pay little or no business rates because of small business rate relief (SBBR), rural rate relief (RRR) and tapered relief. This will provide a one-off grant of £10,000 to eligible businesses to help meet their ongoing business costs.

You are eligible if:

  • your business is based in England
  • you are a small business and already receive SBBR and/or RRR
  • you are a business that occupies property

You should not need to do anything. Your local authority should write to you if you are eligible for this grant.

Any enquiries on eligibility for, or provision of, the reliefs and grants should be directed to the relevant local authority.

 

TO ALL OUR CLIENTS – KEEP WELL AND KEEP IN TOUCH.

WE HOPE THIS HAS BEEN OF SOME ASSISTANCE AND WILL BE ADDING INFORMATION AS IT BECOMES AVAILABLE. OBVIOUSLY. MATTERS ARE CHANGING VERY QUICKLY AND SOME OF THE INFORMATION INCLUDED COULD ALREADY BE OUT OF DATE BY THE TIME YOU RECEIVE THIS. WE, THEREFORE, CANNOT ACCEPT ANY RESPONSIBILITY FOR THE RELIANCE UPON THE INFORMATION INCLUDED IN THIS NEWSLETTER. YOU SHOULD TAKE ALL RELEVANT ADVICE FROM APPLICABLE SOURCES PRIOR TO MAKING ANY DECISIONS. PLEASE KEEP IN TOUCH WITH US AND ASK ANY QUESTIONS YOU MAY HAVE.

30 Birkenhead Road, Hoylake, Wirral, Merseyside, CH47 3BW Tel:  0151 632 3361

Fax:  0151 632 5795

Email:  mail@grahams.uk.com

Website: http://www.grahams.uk.com

Regulated by the Institute of Chartered Accountants

In England and Wales for a range of business activities.

Directors:     J M Graham, FCA   A S Fisher, FCA, FCCA

A J Smith, ACA, FCCA.

Grahams is the trading name of Graham & Fisher Limited.

Company Number: 08381939, registered in England & Wales.

Registered Office: 30 Birkenhead Road, Hoylake, Wirral, Merseyside, CH47 3BW.

 
We would point out that neither Grahams nor the writer accepts any responsibility for the reliance upon the information contained within this newsletter. It does not relieve anyone and/or third parties from satisfying themselves and making all relevant investigations for whatever purpose they require. It is for information purposes only.

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