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As part of the basket of measure the Chancellor announced to support businesses impacted by COVID-19, there is the opportunity to defer VAT payments as an aid to business cash flow.
All UK VAT-registered businesses have the option to defer VAT payments due between 20th March and 30th June. In practical terms, for businesses making quarterly returns, this means the VAT due on the February, March and April VAT returns.
During this period, businesses must continue to submit their VAT returns as normal.
If you opt to defer your VAT payment, the payment deadline is 31st March 2021.
There is no requirement to notify HMRC of your decision to defer the VAT. This will effectively be done by not making VAT payment or payments due in this period.
However, if you pay by Direct Debit, you should cancel this with your bank as soon as is possible. HMRC cannot guarantee that their collection protocol will not try to automatically collect on receipt of your VAT return.
You can continue to make VAT payments during the deferral period and if you would prefer to pay by BACS rather than Direct Debit to control the timing of the payments, the HMRC bank details are as follows:
Account Name: HMRC VAT
Sort Code: 08-32-00
Account Number: 11963155
Payment Reference: Business VAT Number
HMRC will be continuing to process and pay any repayment claims in the usual manner.
Over the weekend, the government announced changes to the UK Insolvency Law.
Speaking at the daily press conference on Saturday, Alok Sharma, the Business Secretary, said changes would be made to the Insolvency Law to protect businesses and Directors during the COVID-19 crisis and to allow companies to “emerge intact on the other side”.
Under the plans, the UK’s Insolvency Framework will add new restructuring tools including:
In addition, the government will also temporarily suspend the wrongful trading provisions to give Directors greater confidence to use their best endeavours to continue to trade without the threat of personal liability should the company ultimately fall into insolvency.
The current insolvency rules stipulate that Directors of limited liability companies can become personally liable for business debts if they continue to trade when there is uncertainty as to whether their businesses can continue to meet its obligations.
The relaxation of these rules is aimed to reassure Directors that the tough decisions about the future viability of their business can be made without fear of penalty.
The government will legislate for this temporarily suspension to be applied retrospectively from 1st March 2020 for a period of three months but there will be provisions to enable the period to be extended if necessary.
However, the existing laws on fraudulent trading accompanied by the threat of director disqualification will continue to be fully in force.
Mr Sharma said “Today’s measures will also reduce the burden on business, giving bosses much-needed breathing space to keep their workers employed and their companies going.”
If you have any questions or would like any further information, please either email support@cooperfaure.co.uk or book an appointment at https://calendly.com/jonathan-cooper/covid-19-support.
Overnight HMRC have published their detailed guidance on the eligibility and process for making a claim through the Coronavirus Job Retention Scheme which we have summarised below.
Unexpectedly, rather than the employer providing information to HMRC for them to calculate the grant entitlement, the onus is on the employer to make that calculation and submit the claim accordingly.
In addition, several questions that we have been repeatedly asked over the last few days have been definitively answered:
Employees That Are Eligible For The Scheme
The scheme is open to all UK employers that had created and started a PAYE payroll scheme by 28th February 2020 and the scheme starts from 1st March 2020. This includes recruitment agencies where agency workers are paid through PAYE.
The scheme is initially set to run for three months and an employer can use the scheme at any time during this period.
The only qualification for a furloughed worker is that they must have been on your PAYE payroll on 28th February 2020 irrespective of their type of contract.
As a result, the scheme is open to full-time employees, part-time employees, employees on agency contracts and employees on flexible or zero-hour contracts.
The scheme also covers employees have been made redundant since 28th February 2020 so long as they are rehired by their employer.
If an employee is working but on reduced hours or for reduced pay, they will not be eligible for this scheme. You will need to continue to the employee through your payroll and pay their salary subject to the terms of the employment contract you agreed.
As the employer, you need to discuss the situation with your staff and make any changes to the employment contract by agreement. Bear in mind in making decisions that equality and discrimination laws will apply in the usual manner.
To be eligible to claim the grant, employers need to write to their employee confirming that they have been furloughed and keep a record of this communication.
Employees on unpaid leave cannot be furloughed, unless they were placed on unpaid leave after 28th February.
Employees on sick leave or self-isolating should receive Statutory Sick Pay but can be furloughed after this period ends. However, employees who are shielding in line with public health guidance can be placed on furlough.
For an employee who has more than one employment, they can be furloughed for each job and, as each job is seen as separate, the furlough cap applies to each employer individually.
A furloughed worker can undertake volunteer work or training, as long as it does not directly provide services to or generate revenue for the business.
If you decide to require a furloughed worker to complete, say, an online training course, bear in mind that they must be paid at least the National Living Wage or National Minimum Wage level for the time spent training even if this is more than the 80% of their wage that will be subsidised.
For an employee on Maternity Leave, the normal Statutory Maternity Pay rules will apply. However, if you offer enhanced contractual pay above the Statutory Maternity Pay level, this is included as a wage cost that you can claim through the scheme.
The same principles apply where your employee qualifies for contractual adoption, paternity or shared parental pay.
Calculating What You Can Claim
For eligible furloughed workers, you will receive a grant from HMRC to cover the lower of 80% of an employee’s regular wage or £2,500 per month, plus the associated Employer National Insurance contributions and minimum automatic enrolment employer pension contributions on that subsidised wage.
Fees, commission and bonuses are not included.
At a minimum, employers must pay the employee the lower of 80% of their regular wage or £2,500 per month. An employer can also choose to top up an employee’s salary beyond this but is not obliged to under this scheme.
There will be more guidance from HMRC on how to calculate the claims for Employer National Insurance Contributions and minimum automatic enrolment employer pension contributions before the scheme becomes live.
For full-time and part-time salaried employees, the employee’s actual salary before tax as at 28 February should be used to calculate the 80%.
For employees whose pay varies and has been employed for a full twelve months prior to the claim, you can claim for the higher of either:
If the employee has been employed for less than a year, you can claim for an average of their monthly earnings since they started work.
Once the amount of an employee’s pay to be claimed has been calculated, you need to then work out the amount of Employer National Insurance Contributions and minimum automatic enrolment employer pension contributions you are entitled to claim.
If you decide to top-up the pay to furloughed worker, the resulting additional Employer National Insurance Contributions and automatic enrolment contribution will not be funded through this scheme.
Likewise, any voluntary automatic enrolment contributions above the minimum mandatory employer contribution of 3% of income will not be funded through this scheme.
What You Need To Have In Place To Make A Claim
You need to discuss the with your staff and make any changes to their employment contract by agreement. If you are unsure on this, it would be advisable to legal advice on the process.
If a large number of staff are involved, it may be necessary to engage a collective consultation processes to secure agreement to changes to terms of employment.
To claim, you will need:
The employer is responsible for calculating the amount that is being claimed and HMRC has the right to retrospectively audit all aspects of your claim.
You can only submit one claim at least every three weeks which is the minimum length an employee can be furloughed for and the claims can be backdated to the 1st March, if applicable.
Once HMRC has received your claim and you are eligible for the grant, they will pay it via a BACS payment to a UK bank account.
The claim should be made in line with actual payroll amounts at the point at which you run your payroll or in advance of an imminent payroll.
You must pay the employee all the grant you receive for their gross pay and no fees can be deducted from the money that is granted. You can choose to top up the employee’s salary, but you do not have to.
What Happens When The Coronavirus Job Retention Scheme Ends?
When the government ends the scheme, you must decide based on your circumstances at that point, as to whether employees can return to their duties.
If not, it may be necessary to consider termination of employment through a redundancy process.
Employees that have been furloughed have the same rights as they did previously which includes Statutory Sick Pay entitlement, maternity rights, other parental rights, rights against unfair dismissal and to redundancy payments.
Once the scheme has been closed by the government, HMRC will continue to process remaining claims before terminating the scheme.
Tax Treatment of the Coronavirus Job Retention Grant
Payments received by a business under the scheme are made to offset payroll costs that are a deductible business expense. As a result, the grant must be included as income in the calculation of the taxable profits of a business for Income Tax and Corporation Tax purposes.
The employment costs will be deducted as normal when calculating taxable profits.
We expect the HMRC portal to process the Coronavirus Job Retention Scheme claims to go live in around three weeks and the first grant payments to be made by the end of April.
In the meantime, if you have any questions or would like any further information, please either email support@cooperfaure.co.uk or book an appointment at https://calendly.com/jonathan-cooper/covid-19-support
This afternoon Rishi Sunak, Chancellor of the Exchequer, announced that the vast majority of the self-employed workforce would be entitled to a cash grant of 80% of their profits up to a maximum of £2,500 per month.
As with the Job Retention Scheme, the new Self-Employed Income Support Scheme is initially intended to run for three months between March and May.
However, HMRC will need time to build the mechanisms to facilitate the payment of the grants. As a result, the intention is that the three-month grant will be in be paid in a single lump sum and the expectation is that these payments will start rolling out at the beginning of June.
There are three qualifying conditions:
For those who are yet to submit their 2018-19 tax return, there is a further four-week submission window from today. If the tax return is submitted within this deadline, it will be included in the HMRC calculation of the grant due.
HMRC will identify eligible taxpayers and contact them directly with guidance on how to apply online once the scheme is operational.
The Self-Employed Income Support Scheme also applies to members of partnerships.
However, it does not apply to those who pay themselves a salary and dividends through their own company. Rather, their salary will be covered by the Coronavirus Job Retention Scheme if they are operating under PAYE.
We are expecting more detailed guidance to be issued by HMRC imminently on the Job Retention Scheme and we will post on this as soon as we have the information.
In the meantime, if you have any questions or would like any further information, please either email support@cooperfaure.co.uk or book an appointment at https://calendly.com/jonathan-cooper/covid-19-support.
In a joint initiative between the government and Companies House, from today, businesses are able to apply for a three-month extension for filing their Annual Accounts.
Under normal circumstances, a company must submit their accounts and reports to Companies House within nine months of the end of their financial year. The late filing of the accounts generates an automatic penalty.
Although a company will still need to apply for the three-month extension to be granted, any business citing issues around COVID-19 will be automatically and immediately granted an extension.
The application can be made through a fast-tracked online system which Companies House estimates will take fifteen minutes to complete and can be accessed at https://www.gov.uk/guidance/apply-for-more-time-to-file-your-companys-accounts.
Whilst this move will be welcomed by many businesses impacted by COVID-19, as it stands, the Corporation Tax remains due nine months and a day after the end of the business financial year.
As yet, it is unclear as to whether a similar extension will be applied to the Corporation Tax payment date.
We are expecting a further announcement from the government tomorrow which may address this along with other pressing matters including further support for the self-employed and clarification on the status of Employer’s National Insurance and Workplace Pension contributions for furloughed workers.
In the meantime, if you have any questions or would like any further information, please either email support@cooperfaure.co.uk or book an appointment at https://calendly.com/jonathan-cooper/covid-19-support.
Last night the House of Commons Public Bill Committee proposed the following amendment to the Coronavirus Bill:
Statutory Self-Employment Pay
(1) The Secretary of State must, by regulations, introduce a scheme of Statutory Self-Employment Pay.
(2) The scheme must make provision for payments to be made out of public funds to individuals who are:
(a) self-employed, or
(b) freelancers.
(3) The payments to be made in subsection (2) are to be set so that the net monthly earnings of an individual specified in subsection (2) do not fall below—
(i) 80 per cent of their monthly net earnings, averaged over the last three years, or
(ii) £2,917
whichever is lower.
(4) No payment to be made under subsection (2) shall exceed £2,917 per month.
(5) A statutory instrument containing regulations under this section is subject to annulment in pursuance of a resolution of either House of Parliament.
The Members of the Committee issued the following explanatory note:
“The purpose of this amendment is to make the Government ‘top up’ self-employed workers’ earnings to the lower of 80% of their net monthly earnings averaged over three years, or £2,917 a month.”
A Public Bill Committee is a committee set up by the House of Commons to examine the details of a particular Bill.
Whilst it is unlikely that this amendment will go through in its current form, it does reflect the mood of MPs that more needs to be done for freelancers, contractors and sole traders.
Our expectation is that there will be announcement by the government on this in the next couple of days.
In the meantime, if you have any questions or would like any further information, please either email support@cooperfaure.co.uk or book an appointment at https://calendly.com/jonathan-cooper/covid-19-support.
Dear Chancellor,
Firstly, we must commend the government as a whole and you, as Chancellor of the Exchequer, in particular, for what has been done so far to tackle this unprecedented crisis. So much has been achieved in a very short time.
All the tax deferrals and initiatives are to be applauded but we have profound concerns both that too many businesses and the self-employed fall through the cracks and that the time scale for delivery is too long.
There are a lot of pressure points on delivery with HMRC needing to build new systems to cater for the Coronavirus Job Retention Scheme and the reimbursement of Statutory Sick Pay, local councils needing to process cash grants to all the relevant businesses and the banks having the manpower to administer the financial support under Coronavirus Business Interruption Loan Scheme.
The first wave to suffer the impact of COVID-19 are the Retail, Hospitality and Leisure sectors. From this perspective, it makes absolute sense to use the Business Rates mechanism to deliver financial support. It disperses the delivery of the grants to the local authorities.
The further grant for businesses that are receiving Small Business Rate Relief or Rural Rate Relief is positive extra step.
However, HMRC is indicating that “Your local authority will write to you if you are eligible for this grant.”
As many business premises are closed and, with every likelihood that the lockdown restrictions will be tightened in the coming days, who is going to receive the letter and take the actions required from the letter? Similarly, if the local council makes the grant in the form of a cheque, how is it going to be banked?
Moreover, this takes no account of the reality of working models today. Countless professionals and start-ups either work from home or in a co-shared workspace. Tradesmen and women tend to effectively use their vehicle as their office. For businesses in serviced offices and units, the business rates are often absorbed by the landlord and effectively included in the rent.
As it stands, these businesses will get no support from their local authority.
In a similar vein, the Coronavirus Job Retention Scheme is a response to the first wave of impacted businesses and provides a route to a much-needed cash injection.
However, HMRC has to build the mechanisms to capture the data on the ‘furloughed workers’ under the scheme and to deliver the payments to employers.
The best estimate is it will be four weeks before HMRC is in a position to process the payments meaning, although covered by the scheme, there is no immediate support for the upcoming March payroll.
One of the requirements to be considered a ‘furloughed worker’ is that the employee is not working for the business.
This is effectively excluding the raft of businesses that need both support on paying their payroll and to keep their employees working albeit largely in a reduced capacity.
The support so far for the millions of self-employed is not sufficient and is, in turn, is encouraging people to continue to work in circumstances where they should not.
Further support is needed for freelancers, contractors and sole traders.
There is a strong case to adopt a Universal Basic Income model that would deliver money quickly with no hoops or barriers.
The Coronavirus Business Interruption Loan Scheme is now live and we recognise that it is an extraordinary feat to have delivered this in less than two weeks.
However, we have grave reservations that the scheme will prove to be too onerous and over-bureaucratic to provide the immediate financial support that businesses need now.
The stark reality is that many businesses need support in the next few days to meet their payroll costs, the quarterly rent payments and to pay their suppliers.
More needs to be done now in a streamlined way. For instance, the government could underwrite, say, a £25,000 overdraft facility or increase in overdraft facility for every business in the land and this could be up and running in days not weeks.
At CooperFaure, we understand the profound impact of COVID-19 on businesses from our conversations both with clients and others that have reached out at this time of need.
In these challenging times, we are reminded of the words of Winston Churchill, “Continuous effort — not strength or intelligence — is the key to unlocking our potential.”
We would urge you and the government to consider new and innovative routes of immediate support in terms to cash payments into businesses.
Yours faithfully,
CooperFaure Accountants
The Coronavirus Business Interruption Loan Scheme is now live.
The key features are:
A couple of other key points to consider:
Smaller businesses from all sectors can apply for up to the full amount of the facility. To be eligible, a business must:
More details are here https://www.british-business-bank.co.uk/ourpartners/coronavirus-business-interruption-loan-scheme-cbils/ and the participating lenders are here https://www.british-business-bank.co.uk/ourpartners/coronavirus-business-interruption-loan-scheme-cbils/accredited-lenders/
If you have any questions or would like any further information, please either email support@cooperfaure.co.uk or book an appointment at https://calendly.com/jonathan-cooper/covid-19-support.
As the government race to build a support structure for businesses and individuals left in crisis from the impact of COVID-19, much has been achieved in a very short time.
All the tax deferrals and initiatives are to be applauded but we have profound concerns both that too many businesses and the self-employed fall through the cracks and that the time scale for delivery is too long.
The first wave to suffer the impact of COVID-19 are the Retail, Hospitality and Leisure sectors. From this perspective, it makes absolute sense to use the Business Rates mechanism to deliver financial support. It disperses the delivery of the grants to the local authorities.
The further grant for businesses that are receiving Small Business Rate Relief or Rural Rate Relief is positive extra step.
However, HMRC is indicating that “Your local authority will write to you if you are eligible for this grant.”
As many business premises are closed and, with every likelihood that the lockdown restrictions will be tightened in the coming days, who is going to receive the letter and take the actions required from the letter? Similarly, if the local council makes the grant in the form of a cheque, how is it going to be banked?
Moreover, this takes no account of the reality of working models today. Countless professionals and start-ups either work from home or in a co-shared workspace. Tradesmen and women tend to effectively use their vehicle as their office. For businesses in serviced offices and units, the business rates are often absorbed by the landlord and effectively included in the rent.
As it stands, these businesses will get no support from their local authority.
In a similar vein, the Coronavirus Job Retention Scheme is a response to the first wave of impacted businesses and provides a route to a much-needed cash injection.
However, HMRC has to build the mechanisms to capture the data on the ‘furloughed workers’ under the scheme and to deliver the payments to employers.
The best estimate is it will be four weeks before HMRC is in a position to process the payments meaning, although covered by the scheme, there is no immediate support for the upcoming March payroll.
One of the requirements to be considered a ‘furloughed worker’ is that the employee is not working for the business.
This is effectively excluding the raft of businesses that need both support on paying their payroll and to keep their employees working albeit largely in a reduced capacity.
The support so far for the millions of self-employed is woefully inadequate and is, in essence, at or around the £94.25 a week Statutory Sick Pay level. This, in turn, is encouraging people to continue to work in circumstances where they should not.
The government is being pressed to deliver a mechanism that will cover 80% of their income in a similar manner to the furloughed workers.
However, there is a strong case to adopt a Universal Basic Income model that would deliver money quickly with no hoops or barriers. Daniel Susskind, a fellow in economics at Balliol College, has written this article in the Financial Times that makes the case https://www.ft.com/content/927d28e0-6847-11ea-a6ac-9122541af204.
The Coronavirus Business Interruption Loan Scheme is due to go live in the next few days but as we wrote in our article earlier in the week https://cooperfaure.co.uk/covid-19-business-support-action-needed/, we have grave reservations that the scheme will prove to be too onerous and over-bureaucratic to provide the immediate financial support that businesses need now.
The stark reality is that many businesses need support in the next few days to meet their payroll costs and to pay their suppliers.
More needs to be done now in a streamlined way. For instance, the government could underwrite, say, a £25,000 overdraft facility or increase in overdraft facility for every business in the land and this could be up and running in days not weeks.
At CooperFaure, we understand the profound impact of COVID-19 on businesses and we are making as much time available as we can to discuss your concerns.
We have reworked my diary to open appointments every weekday afternoon specifically to provide COVID-19 support which can be booked here https://calendly.com/jonathan-cooper/covid-19-support.
In these challenging times, we are reminded of the words of Winston Churchill, “Continuous effort — not strength or intelligence — is the key to unlocking our potential.”
Yesterday, The Chancellor announced new measure to support businesses through the challenging times ahead and we now have more details on how these will work in practice.
The Coronavirus Job Retention Scheme
Under this scheme, which is open to all UK businesses, HMRC will reimburse 80% of furloughed workers wage costs, up to a cap of £2,500 per month.
There are two tasks to complete to access the scheme:
HMRC has to both build the online portal and set out the details of information required. Our expectation is that the first payments will be processed in around one month from now.
Another consideration is that, to qualify for this scheme, a ‘furloughed worker’ should not undertake work for the business.
The scheme is intended to run for three months from 1st March 2020 but our expectation is that this period will be extended.
VAT Payments
VAT payments due between 20th March 2020 and 30th June 2020 for all UK businesses have been deferred. In practice, for the bulk of businesses, this means the payments due on your March, April and May quarterly or monthly returns.
This is going to be an automatic process which no action required by businesses and the intention is for the payments to be made by the end of the 2020-21 tax year.
If your business has a VAT rebate due in this period it will be refunded in the normal way.
Income Tax
To support the self-employed, the Income Tax payments due on 31st July 2020 have been deferred until 31st January 2021.
Again, this is an automatic offer with no applications required and no penalties or interest for late payment will be charged in the deferral period.
Cash Grants for Retail, Hospitality and Leisure Businesses
The Retail and Hospitality Grant Scheme will provide businesses in the retail, hospitality and leisure sectors with a cash grant of up to £25,000 per property.
For businesses in these sectors with a rateable value of under £15,000, the grant will be £10,000.
For businesses in these sectors with a rateable value of between £15,001 and £51,000, the grant will be £25,000.
A business is eligible, so long as:
The properties that will benefit from the relief will be occupied hereditaments that are wholly or mainly being used:
For those wondering, in this context a hereditament is a property which is liable to a business rate.
There is no application process for these grants with the relevant local authority due to write to all eligible businesses in their area. However, for those eligible businesses, we would recommend closely monitoring the website of your local authority on this.
Coronavirus Business Interruption Loan Scheme
The British Business Bank is working hard to get to go live on the scheme and are now expecting the scheme to be available in week commencing 23rd March 2020.
The government will cover the first twelve months of interest payments for any loans arranged under the scheme.
Summary
We have deliberately made this an informational blog and we must commend the government as a whole and Rishi Sunak, as Chancellor of the Exchequer, in particular, for what has been done so far.
However, there are a lot of pressure points on delivery with HMRC needing to build new systems to cater for the Coronavirus Job Retention Scheme and the reimbursement of Statutory Sick Pay, local councils needing to process cash grants to all the relevant businesses and the banks having the manpower to administer the financial support under Coronavirus Business Interruption Loan Scheme.
Moreover, there are glaring omissions which means that many businesses and self-employed are left with little or no support.
Tomorrow we will publish an overview of the landscape of the week and the perils and pitfalls ahead.
In the meantime, if you have any questions, please email support@cooperfaure.co.uk and we will compile an FAQ posting with thoughts and advice.
The Coronavirus Business Interruption Loan Scheme
We have been party to communications from Lloyds Bank on their general lending criteria in these times and how they anticipate Business Interruption Loan Scheme is going to work.
In our opinion, it isn’t. This is simply not the right solution for the problem. Our fear is if this is not addressed, many jobs will be lost and many businesses will close.
The bank acknowledges that Business Interruption Loan Scheme has yet to officially launch and expect of have the details on eligibility and terms tomorrow with a go live on Monday.
In addition, Lloyds has committed a further £2bn outside of the scheme to support clients where possible with loans, overdrafts or payment holidays where no additional fees for arranging these facilities will be charged.
However, the list of required information regardless of whether you qualify for the Coronavirus Business Interruption Loan Scheme or are looking additional support from Lloyds, is burdensome and takes no account of the new world order:
This is needed should the bank need to take any personal guarantees and their expectation is that the Coronavirus Business Interruption Loan Scheme will require this.
COVID-19 is affecting nearly every business in the UK many of whom need immediate assistance.
Even if the business can collate all this information, we do not believe that the banks have the resources to review the details, turn around the paperwork and make funds available in a timely manner.
This is an extremely urgent situation where businesses need an instant response not an onerous and over-bureaucratic solution.
Moreover, it should not be forgotten that we the tax-payers bailed out the banks, including Lloyds, at their time of crisis with none of this red tape.
We need a mechanism where money is either being paid directly to a business by government, which is the case in Spain and New Zealand amongst others, or is automatically approved and paid by the banks backed by a government guarantee.
We will be writing to The Chancellor to outline or concerns on this today but we would ask you to contact you MP (this can be done by email at https://www.writetothem.com/) or The Chancellor directly at rishi.sunak.mp@parliament.uk.
We need to act as a community and the banks have a duty to step up at a time of crisis. We must not let process kill business!
The spread of COVID-19 is presenting an unprecedented challenge to businesses across the world. We recognize COVID-19 as the greatest global threat since the Second World War and that we are extraordinary times that will probably last for the next few months.
As a global society, we have a duty of care to help the people around. For some, that could be helping elderly neighbours with their shopping. For others, it could be a generosity of spirit in not hoarding at the expense of others.
Quoting Winston Churchill seems apt at this time – “We make a living by what we get. We make a life by what we give.”
At CooperFaure, what we can give is a guiding hand through the package of measures that The Chancellor has set out to support businesses impacted by COVID-19 in the United Kingdom.
Many of these measures are yet to be operational and we are starting this daily briefing to keep you updated.
We have summarised the measures below and we have outlined our expectations of further support in the pipeline.
Business Rates – Retail, Hospitality and Leisure
There will be a business rates holiday for retail, hospitality and leisure businesses in England for the 2020 to 2021 tax year.
In addition, a £25,000 grant will be provided to retail, hospitality and leisure businesses operating from smaller premises with a rateable value between £15,000 and £51,000.
Enquiries on eligibility for the reliefs should be directed to your local authority and the government has committed to have guidance for local authorities on the business rates holiday will be published by 20 March.
Businesses that pay little or no business rates
The government will provide additional funding for local authorities to support small businesses that already pay little or no business rates because of small business rate relief (SBBR). This will provide a one-off grant of £10,000 to businesses to help meet their ongoing business costs.
If your business is eligible for SBRR or rural rate relief, you will be contacted by your local authority and there is no application process.
Funding for the scheme will be provided to local authorities by government in early April and guidance for local authorities on the scheme will be provided shortly.
The Coronavirus Business Interruption Loan Scheme
A new temporary Coronavirus Business Interruption Loan Scheme, delivered by the British Business Bank, will launch next week to support businesses to access bank lending and overdrafts. The government will provide lenders with a guarantee of 80% on each loan (subject to a per-lender cap on claims) to give lenders further confidence in continuing to provide finance to SMEs. The government will not charge businesses or banks for this guarantee and the Scheme will support loans of up to £5 million in value. Businesses can access the first six months of that finance interest free, as government will cover the first six months of interest payments.
We expect for there to be more details on this on Monday.
Statutory Sick Pay
The eligibility criteria for this scheme will be as follows:
The legislation is expected to come in to force before the end of the week but the government will work with employers over the coming months to set up the repayment mechanism for employers as soon as possible as existing systems are not designed to facilitate employer refunds for SSP.
Businesses Paying Tax
All businesses and self-employed people in financial distress, and with outstanding tax liabilities, may be eligible to receive support with their tax affairs through HMRC’s Time To Pay service.
There is now a dedicated helpline on 0800 0159 559 for those concerned about being able to pay your tax due to COVID-19.
We have used this for one client already and found the HMRC officer helpful and sympathetic.
Off-Payroll Working (IR35)
The government has confirmed that it is postponing the reforms to the off-payroll working rules, IR35, from April 2020 to the 6th April 2021.
Mortgage Holiday
The government is to support households affected by COVID-19 by providing mortgage payment holidays of up to three months.
The guidance from mortgage lenders is that there will be a fast-track system for approval but not everyone will be granted a payment holiday – you will need to show that there has been an impact of COVID-19. The unpaid interest will be recovered later but individual credit ratings will not be affected.
More to Come
We expect the government to announce more support for employers and for the self-employed and those working in the gig economy in the next few days and these will be outlined in our daily briefing.
We appreciate that these are extraordinary and scary times for businesses and individuals and our mission is to keep you informed of the support that becoming available to help your business survive.
If you have any questions, please contact us at support@cooperfaure.co.uk.
In a stunning development last night, Stephen Barclay, the Chief Secretary to the Treasury reported to the House of Commons “I can also announce this evening, madam Deputy Speaker, that the government is postponing the reforms to the off-payroll working rules, IR35, from April 2020 to the 6th April 2021.”
Although he went on to say, “This is a deferral in response to the ongoing spread of Covid-19 to help businesses and individuals. This is a deferral, not a cancellation and the government remains committed to reintroducing this policy to ensure people working like employees but through their own limited company pay broadly the same tax as those employed directly.”, this has an immediate impact.
In addition, we would hope that there will be the opportunity for a proper and measured reform of the IR35 rules especially with the House of Lord review due to be published soon.
For those of you who have contract up to 31st March and were then expected to either go inside IR35 or work through an umbrella company, you should urgently contract your engager or intermediary to define the next steps.
For those of you who have already been mandated to work through an umbrella based on the original HMRC timelines around payments rather than services, you should urgently contract your engager or intermediary to ask to revert back to the previous PSC arrangements.
As you will be aware, there are fast-moving changes to the tax regime and business support from the government and we will be setting up a channel to keep you informed of developments.