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Over the weekend, the government announced that they had been in discussions with local authorities in England to provide additional support for certain small businesses previously outside the scope of the business grant funds scheme through a discretionary fund.
This will be via a 5% uplift to the £12.33 billion funding previously announced for the Small Business Grants Fund and the Retail, Hospitality and Leisure Grants Fund schemes with £617 million to be made available.
The government will confirm the exact amount allocated to each local authority during the course of this week.
This additional fund is targeted at small businesses with ongoing fixed property-related costs. The government is asking local authorities to prioritise:
However, local authorities have the discretion to make payments to other businesses based on local economic need.
The key criteria are that a business must be small with fewer than fifty employees and be able to demonstrate that they have seen a significant drop of income due to COVID-19 restriction measures.
There will be three levels of grant payments – the maximum will be £25,000, a second tier of £10,000 and local authorities will have option to make payments of any amount under £10,000.
We will continue to report any developments as they come through. In the meantime, please email support@cooperfaure.co.uk if you have any questions or would like any other information.
The Bounce Back Loan Scheme goes live today and the British Business Bank have published more detailed guidance.
The main eligibility criteria for a business are:
The key terms for the scheme itself are as follows:
For those businesses looking to access there scheme, the first port of call should be your current bank so long as they are on the British Business Bank accredited lenders list here. All the main Hight Street banks are on this list.
However, you can apply to any lender on this list under the scheme.
We will continue to report any developments as they come through. In the meantime, please email support@cooperfaure.co.uk if you have any questions or would like any other information.
The Chancellor, Rishi Sunak, has updated the House of Commons today on the Government’s economic response to COVID-19.
As part of the statement, he announced a new Bounce Back Loan Scheme. This will be targeted at small businesses with a fast-track finance application process and a 100% government-backed guarantee with the lenders to provide funds in a matter of days.
Key elements of the Bounce Back Loan Scheme for a business are:
In the House of Commons, Mr Sunak said “Businesses will be able to apply for these new Bounce Back Loans for 25% of their turnover, up to a maximum of £50,000, with the government paying the interest for the first twelve months.”
“My Right Honourable Friend the Economic Secretary and I have been in close talks with the banks, and I’m pleased to say that these loans will be available from 9am next Monday.”
“There will be no forward-looking tests of business viability; no complex eligibility criteria; just a simple, quick, standard form for businesses to fill in.”
“For most firms, loans should arrive within 24 hours of approval and I have decided, for this specific scheme, that the government will support lending by guaranteeing, to the lender, 100% of the loan.”
“Britain is a global leader when it comes to innovation. Our start-ups and businesses driving research and development are one of our great economic strengths and will help power our growth out of the coronavirus crisis.”
The Government has committed to work with lenders to ensure loans delivered through this scheme are advanced as quickly as possible and to agree a low standardised level of interest for the remaining period of the loan.
Whilst this is welcome news, it is deeply regrettable that it has taken so long for The Treasury to move on this since we and many other highlighted the shortcomings of the Coronavirus Business Interruption Loan Scheme back in March. It may be too late for some businesses.
We will continue to report any developments as they come through. In the meantime, please email support@cooperfaure.co.uk if you have any questions or would like any other information.
The Treasury has announced a £1.25bn package of support for start-up and tech businesses impacted by COVID-19 through two new facilities.
Firstly, the £500m Future Fund will launch in May and be delivered in partnership with the British Business Bank. The fund will provide government loans ranging between £125,000 and £5 million to UK-based companies subject to at least equal match funding from private investors.
These convertible loans are targeted at businesses that rely on equity investment to fund innovation and growth. Characteristically, the business is loss-making with a heavy cash burn rate leaving it outside the lending benchmarks adopted by banks under Coronavirus Business Interruption Loan Scheme.
There are three initial eligibility criteria:
Further details about this scheme will be published in due course but the headline terms can be found here .
Secondly, a new tranche of £750m of R&D loans and grants will be made available through Innovate UK. This is aimed primarily to accelerate and expand support to the 2,500 existing start-up customers. However, new support will be available to around 1,200 businesses not already in in receipt of Innovate UK funding.
The Chancellor, Rishi Sunak, stated “Britain is a global leader when it comes to innovation. Our start-ups and businesses driving research and development are one of our great economic strengths and will help power our growth out of the coronavirus crisis.”
We will continue to report any developments as they come through. In the meantime, please email support@cooperfaure.co.uk if you have any questions or would like any other information.
Chancellor Rishi Sunak has just announced that the Coronavirus Job Retention Scheme will be available for another month until the end of June. He has also kept the option to further extend the scheme if necessary.
Mr Sunak said “With the extension of the coronavirus lockdown measures yesterday, it is the right decision to extend the furlough scheme for a month to the end of June to provide clarity. It is vital for people’s livelihoods that the UK economy gets up and running again when it is safe to do so, and I will continue to review the scheme so it is supporting our recovery.”
However, there was a practical necessity behind this extension. As the Confederation for British Industry had highlighted, under Employment Law with the 31st May scheme end date, businesses would have needed to issue redundancy notices in the next week to comply with the forty-five day consultation requirements.
As Dame Carolyn Fairbairn, the Director-General of the Confederation of British Industry, commented companies “can return to focusing on protecting jobs and their businesses.”
We will continue to report any developments as they come through. In the meantime, please email support@cooperfaure.co.uk if you have any questions or would like any other information.
HM Treasury announced last night that the eligibility cut-off date for Coronavirus Job Retention Scheme has been extended to the 9th March 2020 from the original date of the 28th February 2020.
However, the employee simply being employed on that date is not enough. To be eligible as a furloughed employee, the employee needs to both be employed and on the business PAYE payroll on or before 19th March 2020. This was the day before the Coronavirus Job Retention Scheme was announced.
In practice this means the business would need to have notified HMRC through an RTI submission.
Whilst this will potentially open the scheme to some weekly and fortnightly paid staff, the Treasury estimate that the change is expected to benefit over 200,000 employees seems optimistic.
The reality is that most businesses run their payroll between the 25th and the last day of the month. As a result, anyone who started working for a company at the beginning of March and is on a monthly salary is still outside the scope of the scheme.
HMRC need(s) to have adequate measures in place to prevent fraud and one of the checks will be to see if there has been a PAYE payroll previously submitted for a furloughed employee.
However, this is leaving a tranche of employees disadvantaged merely from accepting and starting a new job in many cases agreed months beforehand. The HMRC solution of asking their previous employer to reinstate them on their payroll is incredulous and there needs to be a more nuanced solution.
As well as the recently employed, there are other groups currently falling through the cracks and left with no support – start-up businesses, the recently self-employed, the self-employed with annual earnings of more than £50,000 a year and company directors paid by dividends.
The Telegraph is reporting today that the Treasury is expected to unveil an extensive rescue package for start-up businesses within the next few days.
In addition, there is mounting pressure on the Treasury to support the other groups many of whom now have no income. As Mike Cherry, national chairman of The Federation of Small Businesses, stated those who are not being helped include “hard-working people who have built up successful businesses and paid taxes all their lives”.
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. Now is the time for the government to consider new and innovative routes of immediate support in terms of direct cash payments into businesses.
We will continue to report any developments as they come through. In the meantime, please email support@cooperfaure.co.uk if you have any questions or would like any other information.
As the Coronavirus Job Retention Scheme is scheduled to go live on 20th April, we have put together a brief guide based on the questions that our clients have been asking over the last couple of weeks since the scheme was announced.
Who is the Coronavirus Job Retention Scheme aimed at?
Businesses severely impacted by COVID-19 who would otherwise have had to reduce their current workforce.
What is an eligible business under the scheme?
Any entity that had created and started a UK PAYE payroll on or before 28th February 2020 including companies, charities, recruitment agencies and public authorities.
What else does a business need to have in place?
The business must have a UK bank account and be enrolled for PAYE online, this can take up to ten days for HMRC to set-up.
What can a business claim?
For ‘furloughed’ employees, a business can apply for a grant that covers 80% of their usual monthly wage costs up to £2,500 a month plus the associated Employer National Insurance contributions and minimum automatic enrolment employer pension contributions on that wage.
What is a furloughed employee?
To be eligible, a furloughed employee must be on the business PAYE payroll on or before 28th February 2020. Employees hired after 28th February 2020 cannot be furloughed and claimed for under this scheme.
An employee can be on any type of employment contract, including full-time, part-time, agency, flexible or zero-hour contracts.
Foreign nationals are eligible to be furloughed.
An employee whose hours or pay have been reduced but continues to work cannot be furloughed.
What does furlough mean?
Furlough means a leave of absence.
As a result, to be eligible for the grant, when on furlough, an employee cannot undertake work for or on behalf of the business.
Is a furloughed employee’s pay taxed?
Yes, while on furlough, the employee’s pay will be subject to usual income tax and other deductions.
Are there eligible individuals that are not employees?
Yes, the grant can be claimed for any of the following groups so long as they are paid through a PAYE payroll:
Detailed guidance for these groups can be found at https://cooperfaure.co.uk/covid-19-business-support-coronavirus-job-retention-scheme-eligible-individuals-that-are-not-employees/
What can someone on furlough do?
A furloughed employee can take part in volunteer work or training so long as this does not directly provide services to or generate revenue for the business during the period of furlough.
When does the furlough period start?
The eligible period for the grant starts from the date that the employee finishes work not when the decision is made or when they are written to confirming their furloughed status.
How are a furloughed employee’s usual monthly wage costs calculated?
This includes wages, overtime, fees and compulsory commission payments. However, discretionary bonus including tips, commission and non-cash payments are excluded.
For employees whose pay varies, the higher of either same month’s earnings from the previous year or the average monthly earnings for the 2019-2020 tax year can be claimed.
Non-monetary benefits provided to employees, including taxable Benefits in Kind, and benefits provided through salary sacrifice schemes that reduce an employee’s taxable pay should not be included in monthly wage costs.
How much is the furloughed employee paid?
A furloughed employee must be paid at a minimum the amount received as a grant under the scheme from HMRC. The business can opt make up some or all of gap between this and the employee’s full pay.
How is the grant claimed?
HMRC are scheduled to launch an online portal on 20th April 2020 and, for this, a business will need the following information:
Claims should be made either shortly before or during running the payroll although the first claim can be backdated to 1st March where employees have already been furloughed.
HMRC have built in a four to six working day review period before the grant is paid to combat potential abuse of the scheme. If the claim is eligible, HMRC will make the payment by BACS.
This portal is separate from the main PAYE system. As a result, if an employee’s pay is reduced to 80% of their salary, this must be adjusted in the business payroll before they are paid.
How long will the scheme last?
This is a temporary measure that is in place for three months starting from 1st March 2020 and employers can access the scheme anytime during this period. However, the minimum furlough period for an employee is three consecutive weeks. The scheme may be extended if necessary.
What happens when the Coronavirus Job Retention Scheme ends?
At this point, the business must take the decision, depending on circumstances, as to whether furloughed employees can return to their duties. If not, it may be necessary to consider termination of employment respecting an employee’s rights under Employment Law.
Please email support@cooperfaure.co.uk if you have any questions or would like any other information.
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. Now is the time for the government to consider new and innovative routes of immediate support in terms of direct cash payments into businesses.
The HMRC guidance below sets out specific considerations for those individuals who are paid via PAYE, but who are not necessarily employees in employment law. Unless explicitly set out below, all other guidance is applicable to these cases, and should be followed.
Office Holders
Office holders can be furloughed and receive support through this scheme. The furlough, and any ongoing payment during furlough, will need to be agreed between the office holder and the party who operates PAYE on the income they receive for holding their office. Where the office holder is a company director or member of a Limited Liability Partnership (LLP), the furlough arrangements should be adopted formally as a decision of the company or LLP.
Company Directors
As office holders, salaried company directors are eligible to be furloughed and receive support through this scheme. Company directors owe duties to their company which are set out in the Companies Act 2006. Where a company (acting through its board of directors) considers that it is in compliance with the statutory duties of one or more of its individual salaried directors, the board can decide that such directors should be furloughed. Where one or more individual directors’ furlough is so decided by the board, this should be formally adopted as a decision of the company, noted in the company records and communicated in writing to the director(s) concerned.
Where furloughed directors need to carry out particular duties to fulfil the statutory obligations they owe to their company, they may do so provided they do no more than would reasonably be judged necessary for that purpose, for instance, they should not do work of a kind they would carry out in normal circumstances to generate commercial revenue or provides services to or on behalf of their company.
This also applies to salaried individuals who are directors of their own personal service company (PSC).
Salaried Members of Limited Liability Partnerships (LLPs)
Members of LLPs who are designated as employees for tax purposes (‘salaried members’) under the Income Tax (Trading and Other Income) Act (ITTOIA) 2005 are eligible to be furloughed and receive support through this scheme.
The rights and duties of a member of an LLP are set out in an LLP agreement and in the absence of an agreement, default provisions in the LLP Act 2000, based upon company and partnership law. Such an agreement may include separate agreement between the LLP and an individual member setting out the terms applicable to that member’s relationship with the LLP.
To furlough a member, the terms of the LLP agreement (or any such agreement between the LLP and the member) may need to be varied by a formal decision of the LLP, for example to reflect the fact that the member will perform no work in the LLP for the period of furlough, and the effect of this on their remuneration from the LLP. For an LLP member who is treated as being employed by the LLP (in accordance with s863A of ITTOIA 2005), the reference salary for this scheme is the LLP member’s profit allocation, excluding any amounts which are determined by the LLP member’s performance, or the overall performance of the LLP.
Agency Workers (including those employed by umbrella companies)
Where agency workers are paid through PAYE, they are eligible to be furloughed and receive support through this scheme, including where they are employed by umbrella companies.
Furlough should be agreed between the agency, as the deemed employer, and the worker, though it would be advised to discuss the need to furlough with any end clients involved. As with employees, agency workers should perform no work for, through or on behalf of the agency that has furloughed them while they are furloughed, including for the agency’s clients.
Where an agency supplies clients with workers who are employed by an umbrella company that operates the PAYE, it will be for the umbrella company and the worker to agree whether to furlough the worker or not.
Limb (b) Workers
Where Limb (b) Workers are paid through PAYE, they can be furloughed and receive support through this scheme.
Those who pay tax on their trading profits through Income Tax Self-Assessment, may instead be eligible for the Self-Employed Income Support Scheme (SEISS), announced by the Chancellor on 26th March 2020.
HMRC has announced today that their system to submit applications for grants under the Coronavirus Job Retention Scheme Launch is set to go live on 20th April.
Given that the latest analysis by the Resolution Foundation is projecting that over nine million workers are likely to be furloughed under the scheme, HMRC are already flagging their concern over their ability to cope with the demand.
Based on the HMRC expectation that phone demand would be beyond their capacity to offer a normal service, the Coronavirus Job Retention Scheme portal has been designed to be self-serve with guidance in place.
The Resolution Foundation analysis has been extrapolated from data provided by the British Chambers of Commerce who have indicated that nearly 20% of smaller firms plan to furlough all their staff with another 50% looking to place the majority their staff into the scheme.
As a result, it is imperative that the HMRC portal has enough capacity to handle the level of applications. All the more with so many businesses needing an injection of cash before the end of April to survive.
For our clients that have already indicated their desire to furlough staff and filled in our online form, we have everything in place to process the grant application through the HMRC portal when it goes live.
For everyone else, there is still time to furlough staff and our guidance can be read at https://cooperfaure.co.uk/covid-19-business-support-how-to-make-a-claim-through-the-coronavirus-job-retention-scheme/.
Please support@cooperfaure.co.uk if you would like the registration form or any other information.
The Chancellor, Rishi Sunak, has announced that changes will be made to Coronavirus Business Interruption Loan Scheme (CBILS) from today to boost the support to businesses affected by COVID-19.
This is set against a backdrop of a growing sense of frustration at the stance being taken by the lenders that has made CBILS virtually redundant and not fit for purpose.
At a time when an estimated 20% of all small businesses will run out of cash before the end of April, it is a damning indictment that The Treasury’s own figures show that of the 130,000 enquiries to date only 983 have been approved.
A couple of welcome changes are that CBILS has been extended to all viable small businesses affected by COVID-19, rather than just those unable to secure regular commercial financing, and the government is formally stopping lenders from requesting personal guarantees for loans under £250,000.
In addition, the government is promising that they will be “making operational changes to speed up lending approvals”.
Whilst the government has reiterated that they will continue to cover the first twelve months of interest and fees, there is no directive to the lenders on the level of interest to be applied after this period.
From the discussions that we have had with clients, this is a major concern that is deterring businesses from approaching the lenders.
A new Coronavirus Large Business Interruption Loan Scheme has been implemented to open government-backed support to businesses with an annual turnover of between £45 million and £500 million. The scheme will be on the same basis as CBILS with banks able to make loans of up to £25 million.
In an encouraging sign, Sir Howard Davies, the Chairman of the Royal Bank of Scotland, acknowledged there had been problems with the initial version of CBILS but expects the changes to deliver a “sharp increase” in lending to small firms in the next few days.
However, in the final analysis, the end result of pursuing funding under CBILS will be to introduce debt into your business. There are other alternatives to consider.
For a myriad of reasons, hundreds of thousands of businesses are not engaging with the R&D Tax Credit process even though qualifying activities are being undertaken.
If there was ever a time to think again, it is now. A business can make a claim on activity in the last two financial years and the process is quick, simple and painless.
Similarly, on Monday you will be able to submit your 2019-20 Self-Assessment Tax Return through the HMRC portal. If you are entitled to a rebate, HMRC usually process the payment in days.
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.
For many small businesses, the strain on their cash flow from COVID-19 is really beginning to bite.
As a result, a growing number of businesses are looking for advice as to whether they legal grounds to end or suspend a contract in a bid to reduce expenditure.
Our colleague, John Warchus of Moore Blatch solicitors, has provided some valuable pointers on the:
In addition to the above advice, Moore Blatch have created a knowledge centre which gives detailed guidance on the impact of COVID-19 on commercial contracts at https://knowledge.mooreblatch.com/blog/coronavirus-how-safe-is-your-supply-chain and more general guidance on the legal impact of COVID-19 on your business at https://knowledge.mooreblatch.com/en-gb/coronavirus-mitigating-the-impact-on-your-business
If you need any specific advice or support on these matters, John would be pleased to speak with you in confidence on a non-obligation basis. He can be contacted either my email at john.warchus@mooreblatch.com or by phone on 020 8332 8631.
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.