THE SINGLE MOST IMPORTANT ACTION WE CAN ALL TAKE IN FIGHTING CORONAVIRUS IS TO STAY AT HOME IN ORDER TO PROTECT THE NHS AND SAVE LIVES.
This update is written and posted on 6th April 2020 and is likely to quickly become out of date.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.
Happy Tax New Year!
Job Retention Scheme
HMRC provided a further update to the Job Retention Scheme on Friday,
The update has confirmed that HMRC are not expecting to have their claims portal ready until the end of April, but are hopeful that it might be available around 25 April.
The latest guidance does emphasise again that the scheme is there to help those businesses that have been severely affected by Covid-19, but it is open to all employers who have furloughed employees to make a claim. Employers must remember to discuss with their staff the intention to furlough and make any changes to the employment contract by agreement; legal advice should be sought on the process.
As we know, to claim under the scheme the employer must have set up a payroll by 28 February 2020 and they must have enrolled for PAYE online and have a UK bank account.
There has been some tidying up of who is able to be furloughed and this extends to an individual engaging a nanny, but probably more important for our clients:
- Shielding employees (those individuals who are at high risk of developing severe illness from coronavirus), or those who are in the same household as someone who is shielding, can be furloughed where they cannot work from home and would otherwise be made redundant;
- Employees who are unable to work due to caring responsibilities (for example caring for children due to school closure) can be furloughed;
It remains the case, that those who are ill (with something other than Covid-19) or who are choosing to self-isolate (as opposed to shielding described above) cannot be furloughed.
Further clarification has been provided on what the grant claim is based on; it is defined as any regular payments that the employer is obliged to make. This includes wages, past overtime, fees and compulsory commission payments. It does not include discretionary bonus (including tips) and commission payments and non-cash payments. Neither does it include any benefits in kind nor any benefits provided through salary sacrifice (including pension contributions). Grants will be prorated if your employee is furloughed for part of a pay period, with the claim being made from the start date of the furlough and not the date that the negotiations started.
With regards to salary sacrifice, the rules state that this can be changed or cancelled because of a life event. HMRC has confirmed that Covid-19 is such a life event that could warrant a change.
The grant will cover the employer’s national insurance and employer pension contributions for furloughed employees, but the contributions will be limited to the amounts due on the gross salary payable for the employee by the grant. If you decide to top up an employee’s pay any additional National Insurance or pension contribution payable will not be funded by the grant. Similarly, if you pay an employer pension contribution above the minimum requirements the excess contributions will not be covered by the grant.
The guidance now makes specific mention of eligible individuals who are not employees but are paid under PAYE and that they can be furloughed. This includes office holders (including company directors), salaried members of Limited Liability Partnerships and agency workers (including those provided via umbrella companies). There are specific considerations for each of these, especially around the legal process to follow. For instance, when furloughing a Company Director steps must be taken by the Board of Directors and recorded; once furloughed they can fulfil their statutory obligations but not undertake any work which would generate commercial revenue or provide services to or on behalf of their company. This latter point extends to include a Personal Service Company.
In respect of the directorship point above, we have in previous updates advised that the decision to furlough any employees should be minuted by the business owner/company directors, to support the reasoning and record the fact. In terms of records, further clarity has been given of the duty to keep the written notification to employees ( a letter/notice that we advise is signed by them) of their furlough for 5 years minimum. This would indicate to us, that HMRC intends to audit firms using the scheme for a considerable period of time after the current crisis has ended, probably to catch those who abuse the scheme.
The scheme only applies to employees who were on the payroll at 28 February. This created a problem for those employees who changed jobs after 28 February and were then, or about to be furloughed. The advice to these employees had been to ask their former employer to take them back and furlough the employee to claim the Government support. Although there was no guidance or statement from HMRC to this effect, that is until Friday, it has now been confirmed that employers may rehire staff who departed and pay them through the scheme. HMRC advised that the Job Retention Scheme is aimed at those who would otherwise remain employed had it not been for Covid-19, and “it allows for those who were on payroll of a company on February 28, but subsequently made redundant to be put back on payroll and furloughed.”
The announcement may help employees who have encountered this issue, as a former employer may now be more willing to participate, as feedback had not been positive on this approach. However, it is up to the employer whether to in effect re-hire and furlough an employee or not.
We believe that HMRC will make a once a week update/announcement, at the end of the week, dealing with queries and update on the progress of the scheme.
Full details of the scheme can be found at HERE.
We have been asked, or comments have been made, about not taking a mortgage holiday, as it will damage a credit record. Our advice on taking any holiday, is to put the cash to one side and only use it in an emergency. However, in respect of credit-ratings, it is our understanding that it does not have an impact if you agree the holiday in advance of any default with the lender, and once the holiday is over, restart making the payments. If you fall behind before an agreement is made, then it will have an impact on your credit record, so please don’t cancel your direct debit before an agreement is made. You also risk not getting an agreement to a holiday, if you default.
The three main credit reference agencies, Experian, Equifax and Transunion, have agreed to protect the scores of those affected by Covid-19. Check the position with your lender when you ask for a holiday.
Innovate UK Grants
We have made reference before to seeing if there are any grants available from Innovate UK which may support your business. On Friday, Innovate UK announced a new competition, which opened the same day for grants of up to £50,000 available to technology and research-focused businesses to develop new ways of working and help build resilience in industries such as delivery services, food manufacturing, retail and transport, as well as support people at home during this crisis and the future. A Government spokesperson said:
"This new investment will support the development of technologies that can help industries, communities and individuals adapt to new ways of working when situations like this, and other incidents, arise."
Further details can be found at HERE.
- Business Bank Accounts - The majority of banks who offer business accounts have waived business banking fees and fees on overdrafts. Barclays are offering free banking to small business customers (<£250k) till mid-June, as well as waiving fees and interest on overdrafts. Lloyds are offering similar arrangements;
- Covid-19 Scams - Please be careful in these difficult times to avoid being scammed or hacked, which we keep warning about. Action Fraud, the national crime reporting centre, received 509 reports that mentioned the virus between February 9 and April 2, with total losses to victims of £1,583,023. The Pension Regulator has also warned people to be alert of fraudsters who are targeting people worried about a drop in their pension fund and offering fake investment schemes that guarantee unrealistic returns;
- Knowledge Transfer Network (KTN) - KTN have put together on their web-site a list of Covid-19 funding opportunities and open calls, which can be found at HERE;
- Save our Start Ups - Save our Start Ups is a campaign to tell the UK Government what needs to be done to protect start-up/early stage businesses in the current crisis, many of whom don’t qualify for any Government support, with their usual route to finance and equity investments being practically closed. The campaign is lobbying Government, with a petition to raise the profile of such businesses. More details can be found at HERE;
- Coronavirus Status Checker -A new Coronavirus Status Checker has been established to help the NHS coordinate its response and build up additional data on the Covid-19 outbreak. The Status Checker has initially been developed for NHS England. People with potential coronavirus symptoms are now being asked to complete the status checker and answer a short series of questions which will tell the NHS about their experience. The survey can be accessed on the NHS website HERE.
A summary of the Government support and tips can be found at our WEBSITE
We know that this is a very difficult time for all businesses and some difficult decisions are having to be made. We have spoken to many of you and for those we have not we would like you to know that we are here ready to help if you need us to provide advice, deal with queries, or just be a business sounding board.
Stay safe everyone, and please remember to stay at home to protect the NHS and save lives.