This update is written and posted on 23rd March 2020 and is likely to quickly become out of date. We will continue to endeavour to update information as it becomes available.
As you know we act for clients all over the UK and in all business sectors, if you have any tips or advice, local to your area or sector, please let us know so that we can share with our clients.
Previous updates and other useful information can be found at our WEBSITE.
We will continue to monitor the Coronavirus situation daily and will follow the UK government guidelines as they evolve. For now, it is very much business as usual for Harbour Key, although we will be moving the whole business to home working shortly.
Job Retention Scheme
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.
Full details will not be known, until HMRC have finished devising the scheme, but the Government have released the following since the announcement on Friday evening. Existing systems are not set up to facilitate payments to employers.
To 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 (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 (including pension and NI).
To be classed as on Furlough, the employee must be sent home, and is not available to employers where the employee continues to work. Furloughed workers are those that, employers must prove, cannot work from home and would have otherwise been laid off. It also applies to workers laid off after 28th February 2020 due to the Coronavirus outbreak.
It is unlikely to apply to directors of small limited companies as the scheme is mainly designed to assist workers employed in the leisure and hospitality industries etc.
Any employer, whether a sole trader, partnership, Ltd Company or LLP. The only criteria is that you have employees, and you send them home.
We believe that the process for getting the money back will be on the Government setting up a portal:
- Select your employee for Furlough;
- Gain written consent to 80% pay;
- Send the employee home;
- Register for the Furlough Pay using the online registration portal (when up and running).
We expect there to be anti-fraud measures and warn all business owners that in the event of abuse of the system, expect public naming and shaming for what will be, after all, a form of illegal profiteering from a national crisis. We expect heavy penalties to follow.
VAT
All UK businesses are eligible to the VAT payments deferment for 3 months from 20 March 2020 until 30 June 2020.
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.
Most businesses submit quarterly VAT returns so this will apply to VAT return periods ending 31 March and 30 April where the normal payment dates are 7 May and 7 June respectively.
Any VAT refunds due back from HMRC will be processed as normal.
Please note there is no change or deferral to reporting requirements so businesses will still need to process and file their VAT returns by the usual deadlines.
More details can be found at HERE
Income Tax
Self-Assessment, payments due on the 31 July 2020 will be deferred until the 31 January 2021 for all self-employed individuals.
This is an automatic offer with no applications required. No penalties or interest for late payment will be charged in the deferral period.
This only applies to people who are self-employed. There is currently no guidance to suggest it refers to everyone in the self-assessment system, so directors who earn a salary and dividends will not be eligible. The scheme is aimed at those working for themselves outside of a limited company format who pay class 2 and class 4 national insurance.
Please note that there are no changes to reporting requirements; tax returns can still be filed from 6 April 2020 if you would like to reduce the 31 July 2020 payment on account and for those who would like to know their tax liabilities well before they need paying.
Support for nursery businesses that pay business rates
Business rates holiday for nurseries in England for the 2020 to 2021 tax year.
You are eligible for the business rates holiday if, your business is based in England and the property:
- occupied by providers on Ofsted’s Early Years Register;
- wholly or mainly used for the provision of the Early Years Foundation Stage.
The relief will be applied to your next council tax bill in April 2020. However, local authorities may have to reissue your bill to exclude the business rate charge. They will do this as soon as possible.
Current Bank Lending
Most high street banks had advertisements in the weekend press advising customers to make contact if they need to discuss their lending arrangements. Some have cancelled penalties or charges if emergency access to savings in fixed term accounts are required.
The Development Bank of Wales will be offering all its business customers a three-month capital repayment holiday to help them manage the financial fallout from the virus.
HMRC – Bogus emails/telephone calls
Pre our previous warning re being alert to scammers and hackers exploiting the covid-19 crisis, HMRC has reported a surge in reports of bogus telephone calls and emails regarding tax refunds.
Please be careful, below is an example of a bogus HMRC email – which although looks professional is bogus, as HMRC never email or call to say you have a refund. Ignore, and don’t click on any links like the below example we have set out!
Health costs
If you are setting up health screening or Covid-19 testing for employees the costs involved should not generate a tax and NIC charge. Other minor costs (£50 or less per employee) incurred by employers in relation to Covid-19 may be treated as trivial benefits which are exempt from tax and NIC.
If you offer any other medical assistance, then the basic position will be that it is likely to be taxable unless a specific exemption applies. Therefore, if you pay for specific treatment directly, this will be taxable either as a benefit in kind (BIK) if paid direct to the supplier and liable to Class 1A NIC. If the employee incurs the costs and these are reimbursed, this will also trigger a BIK liable to NIC (but Class 1 NIC). However, if medical costs are incurred whilst employees are overseas for business purposes no tax and NIC charges should arise.
International trading businesses – Government support
International supply chains affected by coronavirus, the Department of International Trade can help you to find alternative suppliers. The department has relationships with a global network of businesses across the world and will be able to advise you on the options available.
Financial support for British businesses trading internationally – in addition to the measures such as business rate relief and business interruption loan scheme, UK Export Finance (UKEF) works with banks and insurance brokers to help companies of all sizes fulfil and get paid for export contracts. It provides guarantees, loans and insurance on behalf of the government that can protect UK exporters facing delayed payments or transit restrictions. Help from UKEF:
- if your business is facing disruption due to late payments, UKEF can help ease cash flow constraints by guaranteeing bank loans through its Export Working Capital Scheme;
- if you are concerned about getting paid, UKEF offers an export insurance policy that can help you recover the costs of fulfilling an order that is terminated by events outside your control;
- UKEF can also support finance for overseas buyers through the Direct Lending Facility scheme, so they can continue to buy your goods and services;
- UKEF has over £4 billion of capacity to support UK firms exporting to China, as well as significant capacity across other markets affected by coronavirus to help cover these risks.
Miscellaneous
£500,000 of Government funding is available for technology companies who come up with digital support solutions for people who need to stay at home because of coronavirus. Further details can be found HERE
