COVID-19 Business Help Sheet
We understand that there is a lot of uncertainty and worry at the moment about the potential impact of the Coronavirus, both on us all personally and our businesses.
Due to the social distancing rules applied by the government our offices are now closed so please don’t try and attend the office. Our phone lines, emails remain open and we are continuing to provide the same high level of service to our clients that we always have. We are now operating on reduced staffing numbers and have prioritised payroll, business plans, grant applications and tax refunds.
We are still here to help, please just call us first for further instructions on 0191 5484949
To help our clients understand what is going on we have prepared this help sheet.
Please note this information changes all the time and is given as assistance only and should not be relied on as fact as it is changing by the hour. This was produced on Thursday, 09 April 2020 at 8.00am
Updates are available in real time from our dedicated website www.1stcloudaccountants.co.uk/covid-19
1. Confirm tax bills earlier & Get January 2020 payment on account tax back.
In times of crisis, it's always easy to defer such things as doing accounts, but this will be the best time for clients to get on the case. Clients get their accounts out of the way and plan the tax bills coming. If your business profits are decreasing then we can apply for reductions in payment on account and in some cases obtain tax refunds for payments on account which have already been made in January 2020. If your self employed and have made payments on account in January, we can help claim this back for you now.
2. Time to pay service with HMRC
HMRC's Time to Pay Service for all businesses in financial distress and with outstanding tax liabilities may be eligible to receive support. There number is 0800 015 9559
The guidance for PAYE payments due on the 22nd March being issued by them at presents seems to be (source accounting web 18 March 2020) :
1) If you can pay you should do so - there is no amnesty or waiver in place at the moment
2) If you can afford to pay some then pay what you can and call next week to discuss plans for the remainder
3) If you can't pay anything, wait until it becomes a debt ie you are late and then call the helpline next week.
The guidance for VAT payments either already overdue. Further guidance is provided later for VAT due after the 20th March 2020.
1) If you can pay you should do so - there is no amnesty or waiver in place at the moment
2) If you can afford to pay some then pay what you can and call the helpline now.
Generally, corporation tax is payable as normal, however we understand the time to pay helpline will generally allow you to pay this for period up to 12 months. If you are in arrears already you should call them direct yourself or we can do this on your behalf.
3. Job Retention Scheme (80% Wages reimbursement)
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)
HMRC will reimburse 80% of furloughed workers wage costs, up to a cap of £2,500 per month. HMRC are working urgently to set up a system for reimbursement. Existing systems are not set up to facilitate payments to employers.
HMRC will also reimburse the cost of the Employers National Insurance and also the minimum pension contribution required by law for auto enrolment. So your claim per employee appear to be £2804 per month. (£2500 Wages + £245 employers NIC + £59 Auto-enrollment pension)
Institute of Chartered Accountants for England and Wales have stated that an employee must have been employed at 28th February 2020 to qualify.
We are also aware a BBC article states “already have been laid off”, however we cannot find another other reference to this statement and we believe the chancellors intension was to backdate the scheme rather than limit it to just employees that had already been laid off.
When your employee is furloughed, they cannot carry out any work for you and you must inform them they have been furloughed and gain their consent. We have a template letter available which can be used for all of our clients.
As the employer you have the choice to decide who is furloughed and who is required to work. Our interpretation from employment lawyer’s guidance is that it not the employee’s choice and they cannot be asked to be furloughed as it is the employers choice down to the needs of the business.
We anticipate the government will pay the grant with minimal checks in the first instance, however, will check your entitlement to the claim in a PAYE inspection later. If any incorrect claims will be punished severely as undoubtably it will be classed as “profiteering in the time of national crisis”.
HMRC portal to make the claim will open on the 20th April 2020. This claim will be made though either our agent portal or through your own .gov website which you use for PAYE purposes if we don’t operate the payroll on your behalf.
Please note there is now limited technical data released by HMRC and we have included this on a separate page as advise to employershttp://www.1stcloudaccountants.co.uk/covid-19/covid-19-furloughed-workers
4. Check insurance policies
It’s a good idea to check any business interruption insurance cover on your business insurance. It appears most business insurances policies won’t cover you, but knowing if your covered will help you make decisions.
5. Small business Grants £10,000 / £25,000
A lot of questions have been directed at the small business grant. As far as we are aware you will receive this grant if you receive an annual rates bill from your local authority. Even when the bill has been reduced to zero by small business rate relief (SBRR shown on your bill).
- 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 £15,000 and £51,000
Unfortunately, it appears the that there is no grant for Gig economy workers or those who are just operating from the house or are without premises etc as the grants are all linked to business rates bills.
This is a grant is not repayable in the future and it is per the Valuations Records as of the 11 March 2020. No backdating or amending records (even if your application was already in) will be result in the grant payment.
Any business which enters into liquidation or is dissolved will not be entitled to the grant.
All local authorities will require you to verify your details prior to the payment being made and as far as we know this will be an online process, so please visit the local authority website for more information. A link for some of the local authorities is below.
The government has promised the funding to local authorises on or before the 1st April 2020 so we would anticipate no grant payment until at least a week after that date.
Full details of the scheme have now been published https://assets.publishing.service.gov.uk/government/uploads/system/uploa...
All business will qualify irrespective of the trade sector if your rateable value is below £15,000. If you are not the ratepayer on the bill i.e you just sublet serviced offices and don’t get an annual rates bill, you will not be receiving the grant.
It appears these will be paid by the local authority which issue you the rates bill on an annual basis. i.e Sunderland Council and will be payable per SBRR claimed. Updated guidance has now been produced and it indicates that it will be paid per “herediments” (shops premises etc.)
Any Hereditaments which are used for private purposes such as private stables, beach huts, moorings, car parks etc do not qualify.
The retail, hospitality and leisure business qualify if your rateable value is between £15,000.01 and £50,999.99 It appears from HMRC website that the local authority will repayment this by adjusting your rates bills for 2019/2020 to generate the refund.
You are eligible for the grant if:
- your business is based in England
- 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
Other businesses such as doctors, accountants, post offices etc do not qualify under this grant fund only.
We have a full list of Local Authority and links for all councils on a dedicated page to help you make you claim. http://www.1stcloudaccountants.co.uk/covid-19/covid-19-local-authority
6. Coronavirus Business Interruption Loan Support (CBILS)
A new temporary Coronavirus Business Interruption Loan Scheme, delivered by the British Business Bank, will launch next week to support businesses to access bank lending and overdrafts. The government will not charge businesses or banks for this guarantee, and the Scheme will support loans of up to £5 million in value. Businesses can access the first 6 months of that finance interest free, as government will cover the first 6 months of interest payments.
You will need to approach your own bank for this package to be arranged. The government .gov website is now stating “the scheme will be available from early week commencing 23 March 2020”, however from our clients experiences we are finding it hard to apply for as you require business plans and your business needs to prove it is viable concern.
A list of banks available to make these loans can be found at https://www.british-business-bank.co.uk/ourpartners/coronavirus-business-interruption-loan-scheme-cbils-2/current-accredited-lenders-and-partners/
7. Employees Sick Pay (source gov.uk)
An eligible employee who would have normally qualified for standard SSP will get 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
The government will work with employers over the coming months to set up the repayment mechanism for employers as soon as possible.
Although all employee’s absence will be paid for by the government there is no mechanism for the employer to reclaim this yet. Indications show that it will two months before this can be done, however we would anticipate that employers with PAYE tax and liabilities could deduct this prior to HMRC payments. If we run your payroll we will discuss this prior to advising on your next payment.
8. Self Employed, Gig Economy workers and Low Earners
There government have just launched a 80% of averaged profits scheme for the self employed and we have a dedicated page for at http://www.1stcloudaccountants.co.uk/covid-19/covid-19-self-employed
Those who are not eligible for SSP or the 80% scheme, for example the self-employed or people earning below the Lower Earnings Limit of £118 per week, those who have just commenced self employment since April 2019 can now more easily make a claim for Universal Credit or Contributory Employment and Support Allowance:
- for the duration of the outbreak, the requirements of the Universal Credit Minimum Income Floor will be temporarily relaxed for those who have COVID-19 or are self-isolating according to government advice, ensuring self-employed claimants will receive support
- people will be able to claim Universal Credit and access advance payments upfront without the current requirement to attend a jobcentre if they are advised to self-isolate
- contributory Employment and Support Allowance will be payable, at a rate of £73.10 a week if you are over 25, for eligible people affected by COVID-19 or self-isolating in line with advice from Day 1 of sickness, rather than Day 8
Information on how to make a universal tax credit clam can be found at https://www.gov.uk/universal-credit/how-to-claim or you can call the helpline on 0800 3285644
9. Mortgage Holidays for businesses & Landlords.
We are aware that banks are allowing you 3 to 6 month capital repayment holidays to business and landlords. NatWest bank have informed us that there will be no effect on your credit rating by taking a capital holiday, however we strongly advise you check this with you bank first.
You will need to speak to your bank in advance about taking a holiday. As we understand most high street banks can deal with this request now.
Legislation has also been introduced to ensure that businesses that cannot meet the rent payments for the next three months cannot be forced out of its premises as a result. The legislation applies to England, Wales and Northern Ireland. This does not mean the rent charge is cancelled and that is for agreement between the landlord and the tenant as unless otherwise agreed full rent will be payable for the entire period.
10. Self Assessment tax payment deferral (normally due 31st July 2020)
If you were due to pay a second payment on account in July this payment has been deferred until 31st January 2021. This is being applied automatically by HM Revenue and Customs and NO application is required. You can of course still pay your tax as normal if you wish to do so.
Please be aware that will may also have your balancing payment on account due for 2019/2020 tax year and your first payment on account for the 2020/2021 tax year all falling due on the same day so it could be very expensive day for some clients!
HM Revenue and Customs have now confirmed that the six-month income tax self assessment deferral for payments due in July applies to all taxpayers, and not just those who are self-employed.
11. Deffered VAT
The VAT deferral will apply from 20 March 2020 until 30 June 2020 for all vat amounts due to be paid in this period.
This is an automatic offer with no applications required. 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 will be paid by the government as normal.
You will still need to make your VAT returns on time and as normal and it is just the payment of VAT which does not need to be completed. HMRC are now advising deferral users that should cancelling Direct Debits, so payment not automatically deducted
12. IR35 for the private sector (due to start 6th April 2020)
The government’s £330bn "Whatever it takes" response to the economic impact of coronavirus also brought comfort to freelancers with a 12-month delay to the IR35 off-payroll rules for private sector engagers was also announced.
This means it is taking the compliance burden off medium sized business in the short term.
13. Extension of filing deadlines
A company which is not able to file its accounts with Companies House on time should consider applying for a three month extension. This should stop any late filing penalties being charges.
Guidance from companies house states that if you states that COVID-19 is the reason for applying for the extension then this process should be just about auntomatic.
You can complete this online https://www.gov.uk/guidance/apply-for-more-time-to-file-your-companys-ac...
However please be aware Companies House states “Companies that have already extended their filing deadline, or shortened their accounting reference period, may not be eligible for an extension.”
14. Review business costs
Clients should look at all costs and reduce discretionary and non-essential expenses as far as possible. Fixed costs such as wages, rent, utilities, financing costs are not affected by a decline in sales need to be properly managed. Investigating whether costs can be spread rather than paying in one lump sum e.g. business insurance.
Remember you will need to rely on your accountant for cash flow, tax planning, repayments, working with HMRC, time to pay arrangements, general business advise in times off stress and we will be in the trenches beside you later down the line.
15. Carry on
It is vital that the business must at least give the impression that it is carrying on. This may be impossible if the business is a restaurant, bar etc but is feasible for the many others who might have to self isolate and work remotely.
And finally, 16. look ahead
The coronavirus crisis will change the way businesses and society works. When the urgent part of the crisis is over, businesses should consider what this crisis changes for them, what they have learned and plan for any future crisis.
It’s important to look ahead. As Eliot Hoff, the head of APCO Worldwide’s Global Crisis Practice has said about the virus: “There will be an end to this, as there is with every crisis.”
We are here to help
If you require any further information or we can help in any way please feel free to call us
- Sunderland Office : 0191 5484949
- South Shields Office : 0191 4324119
We will NOT be charging clients for these phone call under our normal terms of engagement and will only be charging for any works which will be required.