COVID-19 - HK UPDATE 27TH MARCH 2020
This update is written and posted on 27th March 2020 and is likely to quickly become out of date. We will endeavour to update information as it becomes available.
Previous updates and other useful information can be found at our WEBSITE.
At the end of what has been an unprecedented week for decades, many of whom have seen their businesses have to close or at best reduce operational capability, we would remind everyone, that some downtime and reflection should be taken over the weekend. The download of information being released and advice given has been significant. Particularly with last evening consisting of one major announcement and further information on the Job Retention scheme, both covered in this update.
Self-Employed Income Support Scheme (SEISS)
As expected the Chancellor last evening announced the measure to support the self-employed in these difficult times, to be known as the Self-employment Income Support Scheme (SEISS), which will support self-employed individuals (including members of partnerships), who have lost income due COVID-19. The main condition that will impact the number of self-employed who will be eligible, is that their trading profits must be less than £50,000 (the Government believe this will support 95% of the self-employed). Full details of eligibility are as below.
The scheme will allow the self-employed to claim a taxable grant worth 80% trading profits up to a maximum of £2,500 per month for 3 months (March, April and May 2020). The scheme will be extended if the crisis continues. Please note that the amount received will be taxable.
We must emphasise that the scheme is for the self-employed, it does not apply to an individual who operates via a personal service company. Personal service company directors will have to look at the Job Retention Scheme.
There is no requirement to make an application, HMRC will contact those who they determine to be eligible. The main issue is that this may not be until the beginning of June, due to HMRC resource, which is already under pressure dealing with time to pay arrangements and setting up the Job Retention Scheme. (Labour are requesting that the Government take a similar action as that taken with the NHS, to ask retired or staff who have recently left HMRC to come back to help, to speed up the process).
Full details of the announcement, eligibility, how it will operate can be found HERE
Job Retention Scheme
In addition to the self-employed announcement, HMRC issued further guidance on the Job Retention Scheme, which is the priority for the Chancellor. A lot of the guidance fits with the views we issued yesterday, and a summary of the HMRC guidance can be found at HERE
HMRC Time to Pay Helpline
As reported yesterday, the HMRC time to pay helpline is being overloaded, therefore HMRC has changed the dedicated phone number for businesses and the self-employed to 0800 024 1222 to increase load capacity.
Opening hours for the helpline will be 8am to 4pm Monday to Friday only.
In another change, HMRC have clarified that the VAT payment deferral option applies to ALL businesses registered for VAT in the UK and is not restricted to UK established businesses.
In addition, HMRC have confirmed that:
- No interest or penalties will be charged on amounts deferred;
- The amount deferred will have to be paid on or before 31 March 2021;
- Once the deferral period ends, VAT payments will have to be made as they become due;
- This deferral option does not apply to payments due under the MOSS scheme.
Don’t forget to cancel VAT direct debits if you are deferring and secondly, you still need to file your VAT returns.
- The housing market was effectively suspended by the government last night in an unprecedented move as the sector was plunged into chaos by the coronavirus outbreak.
For everyone this last week has brought with it an unprecedented set of circumstances for both businesses and individuals. We are trying to support our clients as best we can with our updates, dealing with queries, supporting with applications etc. We are speaking with as many clients as we can and sometimes just chatting through issues can help, as it is always lonely being a business owner, and even more so now, having to make tough decisions.
Our advice is that you must continue to be proactive and we go back to our first bit of advice issued early last week: plan, cash flow forecast and manage cash. Now is the time to be proactive and act differently. Below we have set out an example, of the steps/actions one of our clients (a software supplier to the retail sector) have taken:
- Developers have always worked from home before the virus crisis, so no real change to working arrangements, although the client was able to agree a 20% wage discount with these employees, due to the difficult position the business moved into quickly with the closure of most of its clients business starting last week;
- A cashflow forecast has been prepared for the next four months, which is regularly updated, as the situation changes;
- In preparing the cashflow they have contacted all suppliers and agreed where possible time to pay, as well as a payment holiday with their landlord;
- As their customers are in the main retail/leisure businesses, they are expecting to have no business by early April and are looking at the employee furlough and taking benefit of the Job Retention Scheme;
- They have cash reserves to help see the business through the four months with the reduced costs, part of which was achieved from a research & development tax credit claim;
- They will take the opportunity of the VAT deferment, but as per our advice will only use the monies if there is an emergency;
- Finally, they are making a plan on how to get back in their marketplace once the crisis is over, to work with existing customers and new customers. Being in the retail sector, the “pain” will continue for a while when the current situation comes to an end.
Where possible take a break this weekend and stay safe.