IN Accountancy client communication on the morning of 31 March 2020 with further updates about new details regarding support available for businesses through the ongoing Coronavirus crisis.
Please remember that this information is based on our understanding of the information available as it currently stands, and should not be relied on as advice. Please seek professional advice for any areas you are concerned about.
To all our clients and contacts:
We hope you and your loved ones are all staying safe and well.
We have been in touch with a great many of you individually over the last 10 days or so, and hopefully have answered many of your questions. We do hope that you are starting to settle into this new normality somewhat, and managing to focus a little more on what can be done as opposed to the shock from which I suspect we have all been reeling recently.
As per previous communications, this remains a very fluid situation, and so I felt it was time for a further update as additional details come to light and many of you have been seeking clarity around specific areas. There is a huge amount of info to follow, so please skip to the areas most relevant to you. If there is no new detail, or I have already covered the topic, I will not repeat the information here. All previous articles, videos and other forms of communication have now been published to a specific area on the homepage of our website, which is being continuously updated with further resources: https://www.in-accountancy.co.uk
Coronavirus Job Retention Scheme
Who can access it?
All UK employers with a PAYE scheme
What is it’s aim?
To provide support to employers to continue paying part of their employees’ salary for those who would otherwise have been laid off during this crisis
Who is eligible?
Employees on the payroll at 28 February 2020
What are the rules (as we understand them now)?
- Furloughed members of staff must not work for the employer during the period of furlough
- Furlough is from 1 March 2020, so is to be backdated. It will last for at least 3 months and will be extended if necessary.
- A firm will only be eligible to claim the grant once they have agreed the furlough with their staff and staff have stopped working for the employer. This is a matter for Employment Law
- The scheme pays a grant (not a loan) to the employer through a new online system which is being built for this purpose. There is no further detail about the application process at the moment, except for the information you will need to have available in order to make your claim, which is:
- your ePAYE reference number
- the number of employees being furloughed
- the claim period (start and end date)
- amount claimed (per the minimum length of furloughing of 3 weeks)
- your bank account number and sort code
- your contact name
- your phone number
- The grant received will be treated as income in your accounts.
- The employer will pay the employee through payroll, and report payments to HMRC using the Real Time Information (RTI) system as usual, as required by the employment contract. This contract may be re-negotiated, but that is a matter for employment law.
- The maximum grant will be calculated per employee and is the lower of:
- 80% of ‘an employee’s regular wage’ and
- £2,500 per month.
- Plus the associated employers’ national insurance contributions (NIC) on this amount and the minimum automatic enrolment employer pension contributions on that wage.
- Fees, commission and bonuses should not be included.
What about owner managed businesses – what can we claim?
As we understand it at present, owner managers can in some circumstances furlough themselves during this crisis, but dividends are to be excluded, so only the salaried part of any remuneration can be claimed for.
However, as I have mentioned to many of you, it is a tricky area to navigate. HMRC does state clearly that no work should be undertaken during this period, and while it is still unknown, we find it difficult to see how any solopreneur will be able to prove that they have undertaken no work whatsoever for their business and that they wold have had to close their business if they were not to receive the Job Retention Scheme grant towards their salary.
The ICAEW (The Institute of Chartered Accountants of England and Wales) gives a very clear example as they understand it, at present, of a pub with two owner directors, three salaried employees and a number of seasonal workers.
I therefore quote the following directly from the ICAEW’s guidance on the subject:
The pub closed on 20 March as instructed by the Prime Minister. and following the Chancellor’s announcement on 20 March, Pubco has furloughed its staff other than Mr & Mrs Fuller who are still living above the pub and dealing with the company administration.
Our understanding is that Pubco will be eligible to receive the government grant support under the Coronavirus Job Retention Scheme for the monthly wages of the three permanent staff members. The seasonal staff were not on the payroll at 28 February and so are not eligible. No grant support is available to support the living costs of Mr & Mrs Fuller.
Mr & Mrs Fuller will need to look for alternative support while the pub remains closed.
In light of this, we recommend any director wishing to place themselves on furlough should tread with extreme caution and seek clarity from an employment law expert.
Further details can be found via the following links.
https://www.gov.uk/guidance/claim-for-wage-costs-through-the-coronavirus-job-retention-scheme
HMRC will retain the right to retrospectively audit all aspects of your claim.
Grants for small businesses:
Details of how to apply for grants for small business are now live.
If your business is in Stockport, please apply via the following webpage:
https://www.stockport.gov.uk/start/small-business-grant-funding
If your business is in Cheshire East, please apply via the following webpage:
https://www.cheshireeast.gov.uk/business/business_rates/business-rates-relief/coronavirus-covid-19-help-for-business-rates-customers.aspx
Three month extension to file accounts with Companies House.
This one slipped out quietly!
Companies House on Friday announced that Businesses could apply for a three month extension in order to file their accounts. This brings the filing deadline for accounts in line with the deadline to submit accounts to HMRC and to file Corporation Tax Returns (CT61s) with Companies House.
However, please bare the following in mind:
- This is not an automatic deferment – you must apply, which can be done via the following link: https://www.gov.uk/government/news/companies-to-receive-3-month-extension-period-to-file-accounts-during-covid-19
- Any application must be made and agreed before the regular filing deadline has past.
- You will not be able to apply for an extension if you have previously shortened or lengthened your company year end in order to obtain a filing extension.
- There has been no indication that the due date for payment of any corporation tax liability will similarly be delayed, although this may well be part of the process.
Relaxation of Insolvency Laws
Quoted directly from Gov.uk: https://www.gov.uk/government/news/regulations-temporarily-suspended-to-fast-track-supplies-of-ppe-to-nhs-staff-and-protect-companies-hit-by-covid-19
The Business Secretary has also announced he will make changes to enable UK companies undergoing a rescue or restructure process to continue trading, giving them breathing space that could help them avoid insolvency.
This will also include enabling companies to continue buying much-needed supplies, such as energy, raw materials or broadband, while attempting a rescue, and temporarily suspending wrongful trading provisions retrospectively from 1 March 2020 for three months for company directors so they can keep their businesses going without the threat of personal liability.
Self-employment Income Support Scheme (SEISS)
What is it?
The Self-employment Income Support Scheme (SEISS) will support self-employed individuals (including members of partnerships) whose income has been negatively impacted by COVID-19.
Please see further details in my original article here:
https://www.in-accountancy.co.uk/2020/03/self-employment-income-support-scheme/
Be careful of scammers!!
Stockport Job Matching Site
While there are many people struggling for work at this difficult time, there are also many employers looking for quality, reliable workers on a permanent and temporary basis.
Stockport Metropolitan Borough Council has set up a job matching website, which you can access here: https://stockport-jobsmatch.co.uk , and which i would encourage you to share as widely as possible.
YouTube
Finally, for now, we also have a You Tube Channel, where I have shared in full the videos I have done regarding what we know so far, as well as the zoom based webinar which I hosted last week with some local business experts.
You can access these here: https://youtu.be/-pSVutC3Mu4
If you prefer this format of communication, please subscribe and send me your questions and I will do my best to answer them via video.
If you feel a further such panel Q&A style webinar would be useful, again please let me know and I will see what I can do to pull one together.
Please feel free to share and as always if we can be of any help in these challenging times please feel free to contact me directly. Just bear with me as I try to respond to all queries and questions.
For now, stay safe, and look after yourselves and one another.
Very best wishes
Sarah x
