In these troubled times… Business support from the government by Kathryn Gigg chartered accountants, Hunstanton
- 04 May 2020
As I am certain you will be aware, the Chancellor, Rishi Sunak, recently set out a package of measures to support both individuals and businesses through this unprecedented period of disruption caused by COVID-19.
The Government is publishing daily guidance on each of these measures and we are endeavouring to keep pace with all of the detailed provisions. Please however remain aware that there may be further updates of the guidance issued subsequent to my writing this article, and once the legislation is enacted. Hence, all businesses and employers should check the GOV.UK website and/or take specific professional advice before taking any action.
The package of measures to support business includes:
The Coronavirus Job Retention Scheme (CJRS)
The CJRS is a government grant to reimburse employers for 80% of the wage costs of “furloughed” workers, to a cap of £2,500 of gross pay, plus the attendant Employers NIC and Employers Auto Enrolment basic level contributions per month.
Employers can top up either the unfunded 20% or the amount above £2,500 for higher paid employees, but this is not required.
The scheme is open initially for 3 months, backdated to 1 March, (on the basis that the employee had not worked wef that date), and the Chancellor may extend the scheme “for longer if necessary”.
All UK employers with a UK bank account are eligible.
A furloughed worker must not do any work for the employer whilst on furlough leave.
The grant is available for both full and part-time employees, casual workers and office holders such as company directors. The latter can continue to undertake their statutory duties but must not do any work as an employee that would be commercially advantageous to their company.
The rules do not prevent employees furloughed by one employer working elsewhere for another, i.e. taking on a second job.
The grant will be available for those employees who were included on the payroll as at 19 March 2020 but will not be available to those taken on after this date.
There are a number of pre-requisite requirements that must be met before an employer can access the grant and as these are also impacted upon by current Employment Legislation great are should be taken when furloughing staff. Relevant legal advice should therefore be taken in this regard as the employees’ contract of employment must be amended to reflect the furlough period and pay; and such amendment must be documented and agreed to by the employee.
There are several things that one should do to get ready for when the HMRC Furlough Scheme Portal opens on Monday 20 April 2020. The only way to make a claim is on-line.
The following information will be needed to make a claim:
1. Your Bank Account Number and Sort code.
2. Contact details of the person in your business for HMRC to call with any queries.
3. Your own or your company’s Unique Tax Reference (UTR) number, or Company Registration Number.
4. The name, employee number and National Insurance Number (NINO) for each of your furloughed employees.
5. The total amount being claimed and the total furlough period.
Assuming that you have less than 100 employees you will need to input information directly onto the system for each employee. The inputting is likely to be pretty labour intensive.
It has yet to be made clear how you will proceed if you are a domestic employer without a UTR (e.g. engaging a Nanny) or where your employee does not have a NINO.
The Revenue are actively encouraging agents, such as your accountant, who is authorised to act for you for PAYE purposes to make the claim on behalf of their business clients, in the hope that this will avoid the HMRC phone lines being inundated with calls when the system first goes live.
Full details of the mechanics of the system, at the time of writing (16 April 2020), are still awaited, which is somewhat concerning when the Portal is due to open on Monday next week.
To ensure that you are able to make your claim under CJRS, without fail, you need to ensure that your Government Gateway (GG) includes PAYE on the list of services that you can access. You will not be able to make a claim without such access. Find your GG ID and password now!
As mentioned above, an agent who is authorised to act for you for PAYE purposes, will be able to make your claim on your behalf, but do not assume that your accountant has this access automatically. If access is not already in place, please make every effort to get it in place without delay if you are not confident of using the Portal yourself.
By the time you read this article the first claims will have been made and we will have all learnt a lot more about the intricacies of the system and so if you need our help in making your own claim please contact us promptly in order that we can assist you as swiftly as possible. We are able to support you with your calculations (the grant claim figures will not necessarily be mirror image of your payroll), specific advice on the Portal, and how to carry out the necessary upload. If necessary, we will help you by accessing your screen remotely and securely, and run through the upload step-by-step.
It is planned that claims will be paid within 6 working days and you will be best advised to direct any queries to your agent in the first instance, or the HMRC webchat service if available in a timely manner. Please do contact us if we can help in any way.
Self-Employed Income Support Scheme (SEISS)
This scheme will allow self-employed individuals to claim a taxable grant worth 80% of their trading profits up to a maximum of £2,500 a month for 3 months at least.
It is available to self-employed individuals or members of a partnership who have submitted their Self Assessment Tax Return for 2018/2019 tax year ahead of 23 April 2020; who traded in 2019/2020; and are trading when they apply or would be except for COVID-19; who intend to continue to trade in 2020/2021; and have lost profits as a result of the virus. (As to whether or when the latter point will ever be checked it is not clear, or whether HMRC will impose any claw-back mechanism should any of the conditions not be met.)
Note that any changed figures submitted in amended Returns filed after 26 March 2020 will not be recognised when considering eligibility for SEISS.
Profits must be less than £50k and comprise more than half of the individual’s total income. This will be determined by at least one of the following conditions being true:
(i) Having profits in 2018/2019 of less than £50k and these profits constitute more than half of your total taxable income; or
(ii) Having average trading profits in 2016/2017, 2017/2018 and 2018/2019 of less than £50k and these profits constitute more than half of your average taxable income in the same period. (Losses of the same period will reduce averages, but not losses brought forward.)
People starting self-employment after 6 April 2019 will not be eligible for the grant, which is particularly harsh for someone who left employment last summer, for example, to start their new business.
This is, of course, an unprecedented level of support, but we are in unprecedented times. It is expected that 95% of all self-employed will benefit from this scheme, however, cash flow is currently under immense pressure and the sole traders and partners amongst us have yet to get through the next couple of months because the SEISS system does not yet exist. We are told that HMRC is working on this “night & day” but is not expected to start payments until the beginning of June.
HMRC state that they “will contact you if you are eligible for the scheme and invite you to apply online. Individuals do not need to contact HMRC now and doing so will only delay the urgent work being undertaken to introduce the scheme”. It is hoped that contact will be made mid-May.
At the moment it is not clear as to whether agents/accountants will be able to apply on behalf of their clients but clarity in this regard is being sought as it is recognised that many taxpayers will need such support.
As you will have noted, both the CJRS & SEISS support packages have cut-off dates, so watch this space as the lockdown continues as the Government may be forced to extend these dates to ensure that more people in distress are eligible.
For those anticipating financial hardship in the meantime, the following support measures may assist:
- Your 31 July 2020 Self Assessment payment on account can be deferred until 31 January 2021 without penalty or interest.
- VAT payments due between 20 March 2020 and 30 June 2020 can be deferred until 31 March 2021. (Don’t forget to cancel your Direct Debit though if you want to benefit from this!)
- Small Business Grants are available from your Local Authority for those with premises that pay little or no business rates. Make sure you claim now if you have not already done so: BCKLWN are very speedy in making the payments if you are eligible and NNDC, although running behind, are now catching up.
- Increased amounts of Universal Credit are available to be claimed. (Remember to separately identify any savings which you have set aside for your tax bills.) A claim for Universal Credit can be made whilst individuals wait for the SEISS grant to arrive, but the grant could affect how much UC applicants are entitled to later on as the SEISS will be classed as income for UC purposes.
- Business Interruption Loans that are 80% Government guaranteed are also available upon application (but unfortunately this system is currently on overload so you will need to be efficient in getting your application in and push hard).
- Some Local Authorities are also running Hardship Funds so it may be worth contacting them to see if there is anything available to you in that regard.
As mentioned above, the SEISS system is not yet up and running, but if when you get your grant through (the 3 monthly payments will be paid in advance in one lump sum into an account of your choosing) you do not feel that the figure is correct, please do not hesitate to contact your accountant or ourselves in order to get the calculation checked.
If, having read through the information provided above, you require advice, please contact either myself or my assistant Nicola Tarry FCA on 01485 534800 or email firstname.lastname@example.org if we can assist in any way.
Caution: The information listed above is for general guidance only. You should neither act, nor refrain from action, on the basis of any such information. You should take appropriate professional advice on your particular circumstances because the application of laws and regulations will vary depending on particular circumstances and because laws and regulations undergo frequent change. Whilst I endeavour to ensure that the information contained herein is correct, neither I nor my firm shall be liable in damages (including, without limitation, damages for loss of business or loss of profits) arising in contract, tort or otherwise from any information contained in it, or from any action or decision taken as a result of using any such information.
© Kathryn Gigg 2020