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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.
Here at CooperFaure we’re always trying to think of exciting new ways of how to engage with our clients. That’s why we’ve launched a video series called ‘Making Accounting Simple’ which aims to cut through the complexity of accounting.
Today’s video is all about how claiming Tax Allowance might be easier than claiming expenses. Keeping track of receipts can often be a painstaking part of running your business and the Tax Allowance stops you having to worry about this. To find out if you’re eligible to claim just click the picture to watch our video on the subject and see if you can save yourself the hassle of trying not to lose receipts! Make sure to check out our other videos at https://cooperfaure.co.uk/news/ for more great content.
If you have any questions. please contact us at tax@cooperfaure.co.uk arrange an initial consultation with one of our team of specialists. If you would like to find out if you are eligible for R&D Tax Relief you can arrange a consultation for a fee of £300.00 plus VAT and enjoy our 100% success rate.
If there are any topics you would like to be covered in future videos, or in a Q+A with our specialists, please let us know.
Here at CooperFaure we’re always trying to think of exciting new ways of how to engage with our clients. That’s why we’ve launched a video series called ‘Making Accounting Simple’ which aims to cut through the complexity of accounting.
In this episode, we break down what the Marriage Tax Allowance is and how you could be missing out on four years’ worth of claims. If you don’t claim before April 2020, you could be miss the chance to claim on previous years. Make sure to check out our other videos at https://cooperfaure.co.uk/news/ for more great content.
Stay tuned for more in depth videos from the people at Cooper Faure in the future!
If you have any questions. please contact us at tax@cooperfaure.co.uk arrange an initial consultation with one of our team of specialists. If you would like to find out if you are eligible for R&D Tax Relief you can arrange a consultation for a fee of £300.00 plus VAT and enjoy our 100% success rate.
If there are any topics you would like to be covered in future videos, or in a Q+A with our specialists, please let us know.