HK BUSINESS FORWARD UPDATE - 22 December 2020
This update is written and posted on 22 December 2020 and is likely to quickly become out of date.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.
As we were all just getting ready for the Christmas break, the Government hit us with two recent announcements:
- The Prime Minister announcing at the weekend that large parts of the UK were to be placed into a new tier 4, resulting in a large number of businesses and shops having to close.
- At the moment no new or further financial support measures have been announced, only extensions of the existing schemes (see below). For those businesses that have to be closed, details of the grant support available can be found within our 12 November update.
- Last week The Chancellor made several announcements, summarised below, including confirmation of the Spring Budget date, 3 March 2021. Based on the tier 4 announcement and the likelihood of this tier impacting other parts of the UK, initial thoughts are that it may be too early to introduce any big tax increases as the coronavirus pandemic continues.
When announcing the Budget date, the Government stated that, as part of the Budget, they will set out their plans for the next phase of tackling the virus and protecting jobs. Despite this, it is still likely that the widely predicted capital gains tax rate increase will take place.
Loan schemes deadline extended
The Chancellor also announced an extension to the various loan schemes available to businesses which were originally due to close to new applicants on 31 January 2021, now extended to 31 March 2021.
It was also confirmed that Government are looking at replacing the current loan schemes with new arrangements for the future.
Furlough scheme extension
The furlough scheme has now been extended to 30 April 2021 (previously ending 31 on March 2021).
The scheme will continue to pay 80% of wages until it ends.
This extension ties in with the Budget date being set, when further support measures to protect jobs will be announced. It is understood that the Government has extended the scheme by a further month to give employers more than 45 days (the minimum consultation period for larger redundancy programmes) from the date of Budget to the end of the furlough scheme, to enable more informed decisions.
As we have flagged previously, in an attempt to deter fraudulent furlough claims, HMRC will be publishing details of employers who have made claims. The information displayed will be the employer name and the value of the claim. The only way to prevent the information being displayed is by way of an application advising that information would expose employees, or anyone they live with, to “serious risk of violence or intimidation”
Although HMRC’s aim of the publication is to get employees to notify them of employers who have made fraudulent claims, the publication may also have an impact from a reputation perspective. Currently, several businesses are repaying their furlough claims where their business has not been impacted as significantly as they initially believed, and they wish to pay dividends to shareholders. Although this news is in the main about large, listed companies, most owner managers reward themselves by way of significant dividends. Unlike the French scheme, there are no rules that restrict dividends if furlough has been claimed, although some business feel there is a reputational risk having made claims and then being able to distribute profits to shareholders. The biggest recent backdown was BDO accountants, who announced their partner profit share results (down from previous year, but still significant), but the accounts showing furlough claims totalling £4.1m. The partnership and senior partner justified the claims for over five days before backing down and repaying the furlough. (Harbour Key to date has not made any furlough claims).
Self Employed Support
The third grant for the self-employed is now open, covering the period 1 November 2020 to 31 January 2021. Details of what can be claimed and how to make a claim can be found at here.
The application deadline for the grant is 29 January 2021.
Records must be kept for 5 years, and HMRC are hinting that they could look to investigate up to half of SEISS claimants.
Tax Payment Deferrals
Self-assessment taxpayers who have a liability relating to the 19/20 tax year, falling due on 31 January 2021, have the option to defer this liability by a maximum of 12 months.
HMRC have confirmed that, although there will be no penalties for this payment deferral, there will be daily interest applied to any unpaid tax. The current interest rate HMRC use is 2.6% pa.
Taxpayers wishing to set up a time to pay arrangement (for tax liabilities less than £10,000) can do so without speaking to HMRC.
We wish you all a Happy and Safe Christmas.