This update is written and posted on 2nd February 2021 and is likely to quickly become out of date.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.
We are all still in lockdown #3, which looks likely now to continue until mid-March, although there are signs that the vaccine programme is starting to have an impact.
With the continued lockdown period it is important that businesses continue to make use of the grants and funding supporting available, which currently continue until April. We wait to see what the Chancellor has to say in the Budget 3rd March 2021. Details of Government grants and support can be found on our website. At this stage, the Government is stating that no new support measures will be announced until the Budget.
SELF-ASSESSMENT TAX PAYMENTS
If you missed the announcement, the Monday before 31st January, HMRC delayed the tax return filing deadline to 28th February. No late filing penalties will be raised providing the return is filed on or before 28th. February. If the return is not filed a £100 penalty and there after the normal late filing penalty regime rules will apply. Late filing of your return, does not change the tax payment date. Tax payments were still due 31st January, and if not paid an interest charge of 2.6% applies.
HMRC are open to payment plans, and our experience is they are being very reasonable. Payments of less than £30k can be dealt with online, above this amount you have to call HMRC. The phone line has been very busy, so it is a case of sitting on and waiting, and having your details to hand to pass the security check. HMRC will only deal with the taxpayer, not the agent, when it comes to agreeing tax payments. Details can be found HERE.
It is important that you either clear your tax bill by or have a payment plan agreed by 1st March, as from 2nd March you will incur a 5% surcharge penalty, and thereafter the normal late payment penalty regime will kick in. For those having to call HMRC to arrange a payment, it is painful, but if you fail to agree a payment plan by the start of March, in addition to the interest charge, a 5% surcharge will apply, which on a £100k liability, this will be £5k! Please get payment plans agreed if required.
SELF EMPLOYED INCOME SUPPORT SCHEME (SEISS) GRANT
The third SEISS grant application window has now closed. Details of the fourth grant are to be announced in the Budget.
For the third grant (and also likely to apply for the fourth grant) the latest trading profits test applies to the accounting period as a whole and not just the relevant period to which the claim relates. As a result some future forecasting of profits may be required, and evidence retained to support any assumptions made in applying for the grant. Grants received under the first and second SEISS grants do not need to be taken into account.
It is our view that if your profits for the year are similar or higher than pre-covid, HMRC are likely to run a check to understand why you believed you are eligible for the grant. We are hearing stories of individuals whose income is below £50k, but who have not been impacted by Covid and have automatically claimed the grant, despite the qualifying condition of being impacted or reduced demand due to Covid not being applicable. HMRC have updated their SEISS guidance very recently, including steps that can be taken if a grant has been claimed in error to make a repayment.
It should also be noted that HMRC last week published its first list of businesses that have made furlough claims. The list published the names of about 750,000 employers as part of its “commitment to transparency and to deter fraudulent claims”.
We have reported previously that HMRC are enabling an extension of the period to pay the VAT that businesses deferred between 20th March 2020 and 30th June 2020, under the Deferred VAT Payment Scheme. Businesses have to opt into the scheme which will allow for the deferred VAT to be paid between 2 to 11 equal monthly instalments by 31st March 2022. No interest will be added to these deferred payments.
Businesses wishing to use this scheme must:
- be up to date with their VAT returns;
- opt into the scheme before the end of March 2021;
- pay the first instalment before the end of March 2021;
- be able to pay the deferred VAT by Direct Debit.
If businesses do not opt into the scheme, the deferred VAT will still be due to be paid to HMRC in full by 31 March 2021.
Again, tax agents/accountants cannot do this on behalf of the business, the business must apply. More details HERE
BOUNCE BACK LOANS & CORONAVIRUS BUSINESS INTERRUPTION LOAN SCHEME
The Government backed loans are still available, and businesses should take advantages of these schemes, as credit is likely to get tough once these loans close (31 March unless extended in the Budget). The £50k bounce bank loan can be “rolled up" in to a CBILS if required. With lockdown three continuing, businesses should consider whether they need a loan top up, or if they have not taken a loan, whether one is required now, or if cash is needed for the future to re-open the door, or resume normal trading when possible.
The press have reported that hundreds of business accounts have been “raided” by banks after they were linked to suspected bounce back loan fraud. The National Audit Office warned last year that £26bn could be lost to loan fraud and the Treasury has warned banks of the importance of fraud checks (one of the reasons it is difficult for new businesses to open new accounts). The banks apparently have a clause in the agreement enabling this action.
As we have advised on a number of occasions, there are no personal guarantees for the bounce bank loan, however if the funds are not used for the business, for example taken for personal use and not repaid with the business failing the lender will seek to recover the loan.
For more guidance see our Business Forward Support page on our website by clicking on this link.
In these difficult times, scammers and fraudsters will continue to try and exploit the coronavirus pandemic as an opportunity for financial crime, so please be vigilant. For example, HMRC will never request your bank details by phone, email or text. There is expected to be an increase in criminal activity as individuals rush to complete house purchases to beat the 31 March stamp duty holiday. Guard your identity, check post, never make any payments to anyone who rings you, confirm who you are making payments to, check details before giving details or transferring money. A fraud protection checklist is available at https://takefive-stopfraud.org.uk/
ASK FOR HELP
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 hopefully all of you and if 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.
Please do not hesitate to give us a call - 01452 713277
It's vital that everyone follows the guidelines & remember: