COVID-19 Updates: Financial Advice for Businesses Impacted by Coronavirus

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COVID-19: Support for Businesses

The government announced various measures aimed at supporting businesses during these testing and uncertain times:

Key highlights from packages announced:

  • A Coronavirus Job Retention Scheme
  • Deferring VAT and Income Tax payments
  • A Self-employment Income Support Scheme
  • A Statutory Sick Pay relief package for small and medium sized businesses (SMEs)
  • A 12-month business rates holiday for all retail, hospitality, leisure and nursery businesses in England
  • Small business grant funding of £10,000 for all business in receipt of small business rate relief or rural rate relief
  • Grant funding of £25,000 for retail, hospitality and leisure businesses with property with a rateable value between £15,001 and £51,000
  • The Coronavirus Business Interruption Loan Scheme offering loans of up to £5 million for SMEs through the British Business Bank
  • Coronavirus Bounce back Loan
  • A new lending facility from the Bank of England to help support liquidity among larger firms, helping them bridge coronavirus disruption to their cash flows through loans
  • The HMRC Time To Pay Scheme
  • Application to Companies House to extend the filing deadline for Company accounts (maximum extension is 3 months and stringent conditions apply)

If you would like to discuss anything included within the advice then please get in touch.


Self-employment Income Support Scheme

The self-employment income support scheme (SEISS) will allow you to claim a taxable grant of 80% of your average monthly trading profits, paid out in a single instalment covering 3 months, and capped at £7,500 altogether.

HMRC will contact you by email, SMS or letter from the 4th May if you are eligible for the grant, and will invite you to make a claim on the online service which will be open from 13th May. Funds will then be paid out by 25th May or 6 working days after you claim.

You can check if you are eligible using HMRC’s online tool .

Update:

29 May: The Chancellor has announced a second and final grant to the self-employed who are eligible for the Self-employment Income Support Scheme (SEISS), based on 70% of earnings and capped at £6,570.

HMRC has confirmed the same eligibility criteria will be used to establish self-employed individuals’ entitlement to a further SEISS grant; the grant will be 70 rather than 80% of average earnings for three months and the maximum amount will be capped at £6,570, down from the £7,500 for the first grant. Applications will open in August and HMRC expects to publish further guidance on 12 June.

How can we help?

At present accountants and agents aren’t able to make the claim on your behalf through their agent Gateway. Furthermore, due to the sensitive data held on your personal Government Gateway accounts, passport info etc, we are not allowed to create or access these on your behalf due to GDPR.  Therefore, this is something that you will need to attempt yourself.  If this changes in the next week and we are able to assist in any way we will let you know accordingly.

Here is some guidance on claiming via your Government Gateway ID:

If you are eligible, you will need to ensure that you have a Government Gateway ID and password set up, that enables you to access your personal tax account.

If you don’t already have a Government Gateway ID, you should click here , scroll to the bottom and click “continue to your account” then click “Create sign in details”.

Then simply follow the onscreen instructions to set one up.  You will need your UTR number, NI number and passport details to hand (if you do not have a passport HMRC can verify your identity using your credit records).   You will be asked to create a password.

You should make a note of your Government Gateway ID and password as you are completing the process as you will need these at a later date to make your claim.

Once you have set up and logged on to your account, you will see a box headed self-assessment, click on the link “activate your Self Assessment”. HMRC will then post you an access code to enable you to access your Self Assessment account.  We would recommend that you do this as soon as possible is it can take up to 7 days for an access code to be issued, enabling you to access your account.

If you already have a Government Gateway ID and password we would recommend that you try logging on now to ensure that you still have access and that your log on details are correct to avoid delaying your claim.

The following link gives details on how to make your claim and what information you will need.

How to claim

Can I still work and claim the grant?

If you receive the grant you can continue to work, start a new trade or take on other employment including voluntary work, or duties as an armed forces reservist.

Is the grant taxable?

The grant will be subject to Income Tax and self-employed National Insurance.

Grant received isn’t what you expected?

If when you receive your claim you feel the amount is incorrect, please let us know, and we can look into this for you, please note there would be a charge for this service. However, the following link gives information on how HMRC will calculate your grant: How HMRC will calculate your grant


Small business grant funding of £10,000

In order to support small businesses through the coronavirus pandemic, the government has increased its one-off cash grant to £10,000, this is part of the £330b package of support for businesses.

Which businesses are eligible?

Eligibility for the grant is based around rate relief.

Criteria:

  • You are a small business that already qualifies for Small Business Rate Relief (SBBR) or Rural Rate Relief, and
  • Occupies a property, and
  • Is based in England

The coronavirus grant only applies to small business in England. Business rates in Scotland, Wales and Northern Ireland are set by their devolved administrations.

This means that many small businesses will be excluded – basically you need to have a business premises in England, but the tradable value of those premises needs to be below £15,000.

Approximately 700,000 small businesses are expected to be eligible.

Can’t remember if you get one of these types of rate relief? Check your latest rates bill – the relief is shown on there.

When is it available?

The Department for Business, Energy & Industrial Strategy will be working with local authorities to outline the scheme and encourage local authorities to prepare.

However, once up-and-running, your local authority will contact you rather than having to apply yourself. Grant money will not be available until early April, as stated on the government website.

Guidance was issued to the local authorities on 24 March 2020 and can be found here, they will write to business shortly with details of how to claim the grant.

You can find your local authority here, we recommend you regularly check their website for updates.

Given that the COVID-19 situation is continually evolving and updates are daily, we recommend that you check the links shown below the table of contents for the most up to date and accurate information.


Grant funding of £25,000 for retail, hospitality and leisure businesses

The Retail and Hospitality Grant Scheme provides businesses in the retail, hospitality and leisure sectors with a cash grant of up to £25,000 per property.

Businesses in these sectors with a property that has a rateable value of £15,000 and under will receive a grant of £10,000.

Businesses in these sectors with a property that has a rateable value of between £15,000 and £51,000 will receive a grant of £25,000.

Which business are eligible?

You are eligible for the grant if:

  • your business is based in England, and
  • your business is in the retail, hospitality and/or leisure sector

Properties that will benefit from the relief will be occupied hereditaments that are wholly or mainly being used:

  • as shops, restaurants, cafes, drinking establishments, cinemas and live music venues
  • for assembly and leisure
  • as hotels, guest and boarding premises and self-catering accommodation

Not sure if your business comes under one of these categories? There’s a full list of how the Government define them in this guidance document, pages 5 to 8.

How do businesses access the scheme?

You do not need to do anything. Your local authority will write to you if you are eligible for this grant. Guidance for local authorities on the scheme was issued on 24 March 2020 and can be found here. Any enquiries on eligibility for, or provision of, the reliefs and grants should be directed to the relevant local authority.

You can find your local authority here, we recommend you regularly check their website for updates.

Can you get both the small business grant and the retail, hospitality and leisure businesses grant?

If your business is eligible for the Small Business Grant Scheme and the Retail and Hospitality Grant Scheme, it seems you’ll get both grants. However, this isn’t confirmed yet by the Government.

Your local council are currently organising how to distribute the money and they’ll contact all eligible businesses.

Given that the COVID-19 situation is continually evolving and updates are daily, we recommend that you check the links shown below the table of contents for the most up to date and accurate information.


Coronavirus Job Retention Scheme

On the 26 March 2020 the government released further details on the Coronavirus Job retention scheme, for full detail click here.

What is the Coronavirus Job Retention Scheme?

The Coronavirus Job Retention Scheme (see Treetops article) is a temporary scheme open to all UK employers, it was initially put in place for four months starting from 1 March 2020, but it has later been announced that the scheme will run to 31 October 2020, though with varying terms.  The scheme is designed to support employers whose operations have been severely affected by coronavirus (COVID-19).

The government has announced that from July, employers currently using the scheme will have more flexibility to bring their furloughed employees back to work part time, whilst still receiving support from the scheme, we have updated our Q&A with the information we know at present, and included further details here.

What does the current Coronavirus Job Retention Scheme offer?

Employers can use a portal to claim for 80% of furloughed employees’ (employees on a leave of absence) usual monthly wage costs, up to £2,500 a month, plus the associated Employer National Insurance contributions and minimum automatic enrolment employer pension contributions on that wage. Note changes to the scheme come into effect from 1 July, refer here for further details.

Who is eligible?

Any UK organisation with employees can apply, including:

  • businesses
  • charities
  • recruitment agencies (agency workers paid through PAYE)
  • public authorities

You must have created and started a PAYE payroll scheme on or before 19 March 2020, you must have enrolled for PAYE online (this can take up to 10 days) and you must have a UK bank account.

Where a company is being taken under the management of an administrator, the administrator will be able to access the Job Retention Scheme.

How do you access the scheme?

You will 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

The system by which claims can be made went live on 20th April 2020, refer to our Q&A for further details and see HMRC guidance on making a claim here.

Given that the COVID-19 situation is continually evolving and updates are daily, we recommend that you check the links shown below the table of contents for the most up to date and accurate information.

We also highlight that we are neither employment or legal experts and that you should where appropriate, utilise employment and legal experts before taking action.

For a more in-depth look at the job retention scheme please click here for our Q&A blog


Deferring VAT and Income Tax payments

To support businesses during the pandemic HMRC announced that they would be deferring VAT payments and income tax payments to help with cashflow.

VAT Deferral

If you’re a UK VAT registered business and have a VAT payment due between 20 March 2020 and 30 June 2020, you have the option to:

  • defer the payment until a later date; or
  • pay the VAT due as normal

It is important to note that this does not cover VAT MOSS payments.

What VAT payments can I actually defer?

You can only defer:

  • quarterly and monthly VAT returns’ payments for the periods ending in February, March and April
  • payments on account due between 20 March 2020 and 30 June 2020
  • annual accounting advance payments due between 20 March 2020 and 30 June 2020

How long do businesses have to pay the VAT payments they have deferred?

If you choose to defer your VAT payment as a result of coronavirus (COVID-19), you must pay the VAT due on or before 31 March 2021.

Do I need to tell HMRC that I am deferring VAT payments?

No, there is no need to tell HMRC that you are deferring payments.

If you normally pay by Direct Debit you should contact your bank to cancel your Direct Debit as soon as you can, or you can cancel online if you’re registered for online banking.

Will businesses deferring VAT be charged interest or penalties?

HMRC will not charge interest or penalties on any amount deferred as a result of the Chancellor’s announcement.

How does deferring VAT payments affect payments on account?

If you defer a payment on account between 20 March 2020 and 30 June 2020 but the balancing payment is outside of these dates, the amount you must pay is the balancing payment less any deferred payments.

Deferring payments will not create a repayment.

What happens after the VAT deferral period?

 VAT payments due following the end of the deferral period will have to be paid as normal.

Do UK VAT registered business still need to submit VAT returns on time?

Yes, you still need to submit your VAT returns as usual and on time to avoid late filing penalties.

My business is due a refund, will HMRC still pay this?

Yes, HMRC will continue to process VAT reclaims and refunds as normal and most repayments are paid within 5 working days.

Repayments will not be offset against any deferred VAT, but they will be offset against existing debts.

You can apply online to move to monthly returns to improve your cashflow if you’re in a repayment position.

Income tax payments

If you’re due to pay a self-assessment payment on account by 31 July 2020 but the impact of the coronavirus causes you difficulty in making payment by that date, then you may defer payment until January 2021.

Who is eligible for income tax payment deferrals?

 You are eligible if you are due to pay your second self-assessment payment on account on 31 July. You do not need to be self-employed to be eligible for the deferment.

The deferment is optional. If you are still able to pay your second payment on account on 31 July you should do so.

Do I need to tell HMRC that I am deferring payment of my income tax?

 No, this is an automatic offer with no requirement to notify HMRC.

Will I be charged interest or penalties for deferring payment?

No penalties or interest for late payment will be charged if you defer payment until 31 January 2021.


Coronavirus Bounce Back Loan

This scheme will help small and medium-sized businesses affected by coronavirus (COVID-19) to apply for loans of up to £50,000.

How will the scheme help my business?

The Bounce Back Loan scheme will help small and medium-sized businesses to borrow between £2,000 and £50,000.

The government will guarantee 100% of the loan and there won’t be any fees or interest to pay for the first 12 months.

Loan terms will be up to 6 years. No repayments will be due during the first 12 months. The government will work with lenders to agree a low rate of interest for the remaining period of the loan.

The scheme will be delivered through a network of accredited lenders.

When will the scheme be available?

The scheme launched on 4 May 2020 and can be accessed here.

Who is eligible to apply?

Eligibility

You can apply for a loan if your business:

  • is based in the UK
  • has been negatively affected by coronavirus
  • was not an ‘undertaking in difficulty’ on 31 December 2019
Who cannot apply

The following businesses are not eligible to apply:

  • banks, insurers and reinsurers (but not insurance brokers)
  • public-sector bodies
  • further-education establishments, if they are grant-funded
  • state-funded primary and secondary schools

If you’re already claiming funding

You cannot apply if you’re already claiming under the Coronavirus Business Interruption Loan Scheme (CBILS).

If you’ve already received a loan of up to £50,000 under CBILS and would like to transfer it into the Bounce Back Loan scheme, you can arrange this with your lender until 4 November 2020.

 


Breaking news on IR35

The changes to IR35 and the implementation of off-payroll working rules has been delayed for one year, this was announced on 17th March 2020 in the house of commons. If this impacts upon your business you may need to check with the decision-maker at your clients to see what action, if any, they are taking following this announcement.

If you would like to discuss your IR35 position then please get in touch.

Treetops Office

In line with the latest government guidance the majority of our staff are now working from home, however we are running a skeleton workforce at the office.

If you need to contact a particular member of staff, your query will be dealt with more quickly if you email the staff member directly rather than phoning the office. If you do phone the office, your message will be passed on and you will be called back.

Abbie Glew: abbie@ttca.co.uk
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Amy Fagan: amy@ttca.co.uk
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Sam McManners: sam@ttca.co.uk
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Tom McManners: help@ttca.co.uk
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Zak Tift: zak@ttca.co.uk

Tom McManners
Tom McManners BSc ACA ACMI

Tom is a Chartered Accountant and Senior Statutory Auditor. He is also the Director at Treetops. For more accounting advice please call or complete our website contact form:

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Treetops is an established Chartered Accounting firm based in Farnborough, Hampshire. We have clients locally and nationally. For advice and a free consultation please contact us.

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