Coronavirus update as of 29th March 2020

Please see the blog from our friends at CCF Accountancy, Harrogate – many thanks for your continued support in keeping us all informed on a very regular basis.

What we Know and What we Don't Know so far.......

Self-Employment Income Support

We know:

  • That this will be paid in June in a lump sum;
  • That HMRC will contact you and until then you need to take no action;
  • That you have to have traded in the tax years 2018/19 and 2019/20 to be able to claim;
  • That the claim is based on average trading profit over the last three years to 5 April 2019;
  • That if you have both self-employed and employed income, that the self-employed has to account for more than 50% of your income;
  • That you should be able to claim Universal Credit in the meantime whilst waiting for the grant;
  • That the grant is taxable income.

We don't know:

  • How HMRC will deal with people who have had a really good couple of years, preceded by a poor one, because this would reduce any claim. We can only assume that there might be an appeal process;
  • How people who have only been trading for a couple of years will be dealt with, other than assuming it will be an average based on a shorter period of time;
  • How this interacts with the grant that is available from the local authorities;
  • Whether HMRC will just use the information that they have that was submitted via self-assessment or if they will want any further details from you;
  • How HMRC deal with accounting adjustments such as depreciation and capital allowances, which can make a big difference to the profit that is shown on the tax return.
  • Furloughing Directors
  • We do know that directors can be furloughed, provided that:
  • They are not providing a service to their customers;
  • They are not involved in activities that are generating revenue;
  • That they can carry out company secretarial and administrative duties.
  • We don't know how HMRC will police this, but we know that they will audit any fraudulent or erroneous claims after this situation has settled down.

Furloughing Staff

We do know:

  • That staff can be paid 80% of their wages, up to a maximum of £2,500;
  • That employers will be reimbursed the employer's national insurance and minimum employer pension contributions;
  • That employers can choose to pay the full wage and claim the 80% reimbursement from HMRC;
  • That there is a minimum period of three weeks that any staff member can be furloughed for;
  • That you have to write to the employee and tell them of the change in employment status to being furloughed. Ideally you should have their agreement to this change in status if your employment contract does not allow for reducing hours or laying off staff;
  • That employees cannot work for you whilst furloughed;
  • That you do not have to furlough all of your employees;
  • If an employee is sick or self-isolating and being paid SSP, they cannot be furloughed until they return to being available to work;
  • That claims can be made every three weeks once the system is live.

We don't know:

  • How and when the SSP will be refunded;
  • When the new portal for the Furloughing claims will be available and whether this will be done via your existing Government Gateway or via a new portal;
  • Exactly when the refunds of Furloughed workers pay will come through once submitted;
  • Exactly what the fine detail of the scheme is, there are a lot of assumptions being bandied around.

Small Business Grants Scheme

This is the grant from the local authorities for businesses who pay little or no rates because of the Small Business Rates Relief or Rural Rates Relief.

What we know:

  • This is a one-off grant for businesses who qualify for the rates reliefs detailed above;
  • You do not have to actually pay any rates to qualify for the scheme, but your business premises do need to be registered in your business name in order to claim;
  • If you are in shared accommodation and you do not receive a separate rates bill for your premises, you are unlikely to qualify. We suggest you speak to your landlord to explore if they are making a claim and how they might be able to support you;
  • The local authorities are contacting businesses now and inviting them to make an application online. Many of our clients have been contacted via email. Please be sure to check the validity of any emails received as sadly, scammers are still keeping themselves busy despite this global crisis.

What we don't know:

  • Exactly when the money will arrive;
  • If there are any limitations as to what it can be used for;
  • If it is taxable, but we assume it will be in the same way that the other grants are taxable;
  • Whether there are any anti-abuse rules in place.

Retail, Hospitality and Leisure Grant

What we know:

  • That businesses in these sectors with a rateable value of less than £51,000 will receive a grant of £10,000 if the rateable value is less than £15,000 and they will get £25,000 if the rateable value is between £15,001 and £51,000.
  • That businesses who do not qualify for Small Business Rates relief may still qualify for this grant.
  • The local authorities are contacting businesses now and inviting them to make an application online. Many of our clients have been contacted via email. Please be sure to check the validity of any emails received as sadly, scammers are still keeping themselves busy despite this global crisis.

Deferral of Tax Payments

We do know:

  • That any VAT liability arising between 20 March and 30 June does not have to be paid until 31 March 2021;
  • That unless VAT direct debits are cancelled, HMRC will take payment as normal;
  • That the second self-assessment payment on account that is due in July does not need paying until 31 January 2021;
  • That HMRC are allowing more time to pay other taxes including corporation tax, older VAT liabilities, PAYE and self-assessment, however you need to call them on 0800 0159 559.

What we don't know:

  • Whether interest will be charged on the late payment of taxes, other than VAT which we know the deferral scheme does not apply interest or charges;
  • When HMRC will start getting tough again with people asking for time to pay. At the moment they are being very supportive and kind.

Business Interruption Loans

What we know:

The Government intended the scheme to make funding available to those businesses who were not able to provide a personal guarantee for the full amount of any loan. At the moment, in order to apply for one of these loans, you have to go via your existing bank. This process is extremely slow as the banks are under a phenomenal amount of pressure as you can imagine. There have been suggestions that in order to apply for a Business Interruption Loan, you first have to be turned down for a conventional loan. This is not what the Government intended with this scheme and so we have to "watch this space" to see if there are any further amendments to the process.

One to One would like to thank our friends at CCF Accountancy, Harrogate for this superb blog post, packed full of great information!

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