During the lockdown period, Afford Bond continues to be open for business, with the majority of staff now working from home. In the intervening period we intend to have a small skeleton staff at both offices and all telephone calls will be logged and returned as soon as possible. Please do not to hesitate to contact us on NANTWICH 01270 623731 or WILMSLOW 01625 416380.
In this period emails will be our main source of communication so please continue to use this source for all ongoing traffic.
HOW WE CAN SUPPORT YOU AND YOUR BUSINESS
We can offer practical and professional advice to help you and your business effectively navigate these unprecedented times and build a robust contingency plan.
– We can help you understand the options available to your business and how you can access the following government support.
– We can assist you in forecasting your cash requirements for the foreseeable period ahead.
– We can liaise directly with your finance providers and government agencies directly in support of your applications on the following initiatives.
– We can advise you as to how the government assistance can be utilised on a personal level for the benefit of all directors and employees.
– We can provide extensive and tailored guidance based on the experiences of many other businesses both within and outside your own sector. We are monitoring all government announcements on a daily basis and we will endeavour to provide relevant updates as soon as they are made available.
INTRODUCTION
We thought that it might be useful, at the start of this update, if we highlighted a few specific areas where we have been asked to support clients.
RESEARCH AND DEVELOPMENT TAX RELIEF
Our R&D tax relief specialists continue to make claims on behalf of clients. This is an extremely valuable relief that can potentially generate a significant repayment from HMRC. It’s important to note that there are strict time limits for making such claims. Whilst HMRC are still endeavoring to process 95% of the R&D claims within the usual 28 day period we are finding that there are some delays in getting the refund. In this respect Afford Bond can get you access to appropriate funding should the delay prove challenging from a cash flow perspective. Increasingly we find that R&D tax relief can be obtained by a wider range of businesses. Please contact your lead person at Afford Bond, if you wish to know more.
VAT CASH ACCOUNTING SCHEME
This allows businesses to account for VAT only when they have been paid by their customers and when they pay their suppliers rather than when invoices are issued. This is particularly beneficial for businesses which have to provide extended payment terms to their customers and do not have the equivalent extended terms from their suppliers. An added benefit is that cash accounting provides automatic VAT relief for bad debts. Please contact your lead person at Afford Bond, if you wish to know more.
** IMPORTANT ** CORONAVIRUS JOB RETENTION SCHEME (CJRS)
Please contact us if you have or operate an ‘Annual Payroll Scheme’ (where individuals are only paid once a year) as it is currently uncertain whether you will qualify for the CJRS grant unless your payroll is processed on a monthly basis.
BREAKING NEWS: HMRC have today (8th April) announced that they are ready to launch the CJRS service on 20th April. They will be contacting businesses shortly to advise them on the next steps.
CORONAVIRUS BUSINESS INTERRUPTION LOAN SCHEME (CBILS)
We have already been helping a number of clients access this facility, which starts with an approach to your existing Bank manager. There has been a very recent announcement that has relaxed the rules and if you had not had previous success on this front, now may be the time to reapply. We have access to external funders if you find that your existing Bank is unable to provide the facilities. There is clearly the potential to achieve a 12 month period here with no capital or interest payments. Please contact your lead person at Afford Bond, if you wish to know more.
PAYROLL OPERATIONS
A number of businesses have contacted us asking us to help with payroll. Many of them are struggling with their internal payroll staff being unavailable either because of self-isolation or because it is not possible to facilitate remote working. At Afford Bond we continue to have a fully operational robust payroll service which is designed to circumvent the challenges caused by the Covid-19 issues. Please contact us if you need help with your payroll.
COMPANY ACCOUNTS FILING DEADLINE WITH COMPANIES HOUSE
Please note that the filing deadline can be extended by a maximum of 3 months, subject to conditions. You must file a claim, in advance, in order to achieve this. Please contact your lead person at Afford Bond if you wish to know more.
CLAIMING LOSS RELIEF – CORPORATION TAX REFUND
In certain circumstances having your accounts prepared early and filing with HMRC may well result in a significant C.T. refund; this is especially relevant where losses have or will be encountered due to the current environment. Please contact your lead person at Afford Bond if you wish to know more.
1. Coronavirus Job Retention Scheme (CJRS)
Under this scheme the government have confirmed that they will offer grants that will cover up to 80% of regular pay for PAYE employees who would otherwise have been laid off. The scheme is open to all UK employers that had created and started a PAYE scheme on or before 28 February 2020 and will cover the cost of wages backdated to 1st March 2020.
Employees hired after 28 February 2020 cannot be furloughed or claimed for in accordance with this scheme. The scheme will be open for a minimum period of 3 months. It is anticipated that the grants will be made available before the end of April. The government have also recently confirmed that company directors can, in certain situations, qualify for the scheme. This includes salaried individuals who are directors of their own personal services companies.
Who can claim? Any entity with a UK payroll can apply.
How to claim under the scheme
Employers must designate affected employees as furloughed workers and notify employees of this change. It should be noted that changing the status of an employee remains subject to existing employment law, and depending on the employment contract may be subject to negotiation. Employers must submit information to HMRC about the employees who have been furloughed and their earnings through a new online portal. Beware that the portal may not be ready until mid to late April. HMRC will then reimburse 80% of the furloughed workers wage costs up to a cap of £2,500pm per employee. (see below for how to work out what you can claim) It is important to note that you can only submit one claim every 3 weeks. This is the minimum length that an employee can be furloughed for. Claims can be backdated to 1st March where applicable. Once HMRC have received the claim, if successful, they will pay the amount via BACS into your bank account.
The Furloughed staff must be on the payroll to claim.
HMRC have confirmed that the grant receivable will be the lower of 80% of an employee’s regular wage or £2,500 per month;the associated Employers National Insurance and minimum auto enrolment employer pension contributions on that subsidised wage. HMRC have also confirmed that regular payments such as ‘past overtime’ can be included but discretionary payments such as fees, commissions and bonuses should not be included. It should also be noted that, at an absolute minimum, employers must pay the employee the lower of 80% of their regular wage or £2,500 per month. You can choose to provide a top up salary in addition to the grant should you wish. More information on how to calculate the claim can be found in the government guidance (see link below).
It should be noted that whilst HMRC are working urgently to set up a system to facilitate the scheme, we understand that existing infrastructure is not yet set up to facilitate payments to employers. Therefore, businesses may wish to consider applying for the new Coronavirus Business Interruption loan and/or benefit from the VAT deferral announcement. These points are discussed in more detail below.
The full updated government guidance on the CJRS can be found here:
https://www.gov.uk/guidance/claim-for-wage-costs-through-the-coronavirus…
We can liaise with HMRC and apply for the scheme on your behalf if you would like to send us a list of furloughed workers along with the relevant information as detailed above. Please let us know immediately if you wish us to do this.
2. Self-Employment Income Support Scheme
On 26th March the chancellor announced a support package for self-employed individuals affected by the coronavirus outbreak. The Scheme details and eligibility criteria can be summarised as follows: The scheme will pay a grant worth 80% of the individual’s average monthly trading profit over the last 3 years, up to £2,500 per month, for at least 3 months. It should be noted that this grant will be taxable and reported on your self-assessment tax return form. It will apply to people who have filed a 2018/19 Self-Assessment Tax Return (late filers have another 4 weeks to file their 2018/19 tax return – i.e. by 23rd April 2020).
The scheme will not apply to anyone who started trading after 5th April 2019. The taxpayer must have traded in the 2019/20 tax year and intend to continue trading in the 2020/21 tax year. The taxpayer’s self-employed profits must be less than £50,000 and more than half of their total taxable income must derive from self-employment. This is determined by at least one of the following conditions being true: (i) Having trading profits in 2018/19 of less than £50,000 and these profits constitute more than half of the individuals taxable income OR (ii) Having average trading profits in 2016/17, 2017/18 and 2018/19 of less than £50,000 and these profits constitute more than half of your taxable income in the same period. It should be noted that if an individual started trading between 2016 and 2019, HMRC will only use the years for which a self-assessment tax return was filed in order to calculate the average profits.
The grant will be paid directly into the individual’s bank account, although it is unlikely that it will be received before the beginning of June. How to apply HMRC will contact all those eligible for the scheme and ask them to apply online. There is no requirement for individuals to contact HMRC at this moment in time. Official government guidance can be found here:
https://www.gov.uk/guidance/claim-a-grant-through-the-coronavirus-covid-…
How we can help
We can check your tax return submissions for the last 3 years to determine your eligibility. Once HMRC have contacted you, we will assist with the online submission of all relevant data in order to facilitate the receipt of your grant in a timely manner. Finally, we will review HMRC’s assessment of your grant entitlement to ensure that the grant has been calculated correctly.
3. Coronavirus Business Interruption Loan Scheme (CBILS)
This new scheme is being delivered by your current bankers/lenders in partnership with The British Business Bank. The lender will receive a guarantee of 80% of the loan amount from the government. The loans are available to UK based businesses with a turnover of no more than £45m and will be for a short to medium term. Loan facilities of up to £5m can be provided for but it is important to note that the borrower remains liable for 100% of the debt. How to apply for a loan It is important that you speak to your bank as soon as possible and potentially discuss your outline business plan and needs with them.
This will ensure that they are able to act quickly. If you have any existing finance facilities with your bank, you may wish to discuss payment holidays to assist with cashflow. More detailed guidance and eligibility criteria can be here:
https://www.british-business-bank.co.uk/ourpartners/coronavirus-business…
We understand the requirements for this funding and can provide cash flows, projections and historical data that will be needed for access to these funds. Contact your Afford Bond lead immediately to start the process and prepare the required forecasts and supplementary financial information.
4. Deferring VAT Payments
The Chancellor has announced that he will defer VAT payments for 3 months. This means that businesses will not be required to make any VAT payments until the end of June 2020. Businesses will then have until 5th April 2021 to settle any liabilities they have accumulated during the deferral period. The amount involved can be settled at any time before this date.
Do I need to apply for the VAT deferral?
No. The VAT deferral applies automatically and businesses do not need to apply for it. Please note that you should continue to prepare and submit your VAT returns on a timely basis. Failure to do so could involve interest and penalties. Although this is technically an automatic offer to defer VAT payments, with no applications required, businesses who normally pay by direct debit should cancel their direct debit with their bank if they wish to defer any VAT payments. Please do so in sufficient time so that HMRC do not attempt to automatically collect the amounts due on receipt of your VAT return.
We can prepare your VAT returns and submit them to HMRC on your behalf as we have robust systems in place to provide ongoing support for all clients.
5. Deferring Income Tax Payments
If you have an income tax payment due on 31st July 2020 under the self-assessment system, this will now be deferred until 31st January 2021. Again, this is an automatic offer and no application is required. No penalties or interest will be charged during the deferral period. Self-employed people can also now access full universal credit at an equivalent rate to statutory sick pay. Please let us know and we can advise you how much the amount is that you should have paid on 31s July 2020 and accordingly the total amount that will become due on 31st January 2021. We will continue to provide support on the above as requested from time to time.
6. Sick Pay Support
The government have announced that employers with fewer than 250 employees will be able to reclaim Statutory Sick Pay (SSP) for absences due to COVID-19. The following points should be considered: The refund will cover up to 2 weeks SSP per eligible employee off work due to COVID-19.
Employers should maintain records of staff absences and payments of SSP, but employees will not need to provide a GP fit note. If evidence is required by an employer, those with symptoms can get an isolation note from NHS 111 online. Those who live with someone who has symptoms can get a note from the NHS website. The repayment mechanism between employers and HMRC has not yet been set up, but it is hoped that this will be in place shortly. Our payroll department is fully conversant with the sick pay regulations and will provide guidance and assistance for all Afford Bond payroll clients.
7. Business Rates Holiday for Retail, Hospitality and Leisure Businesses
Your business will be eligible for a business rates holiday for the 2020/21 tax year if you are based in England and your business is in the retail, hospitality or leisure sector.
How to access this scheme
It is automatic and there is no action required. This payment holiday will be automatically applied to your next council tax bill in April 2020. If you have already received a bill, this will be reissued in due course. If you think this applies to you and you have not received a communication from your local authority by April 2020 please let us know in order that we may assist further.
8. Cash Grants for Small Businesses and Retail, Hospitality and Leisure Businesses
Any business which receives small business rates relief, including those in the retail, hospitality and leisure sectors, will receive a cash grant of £10,000 (increased from £3,000 announced in the 11 March Budget, this effective date for determining the rateable value). The Retail and Hospitality Grant Scheme provides businesses in the retail, hospitality and leisure sector with a cash grant of up to £25,000 per property.
For businesses in these sectors, your rateable value needs to be between £15,000 and £51,000. How to apply As with the business rates holiday, the cash grants will be administered by local authorities and should be delivered automatically, without businesses needing to claim. However, if you don’t pay by direct debit or you currently receive the full Small Business Rates Relief, you may be required to submit your bank account information online prior to receiving any grant. Please visit the website of your local authority for more information.
9. Support for Businesses Paying Tax – Time to Pay Service
HMRC’s Time to Pay scheme can enable firms and individuals in temporary financial distress as a result of COVID-19 to delay payment of outstanding tax and liabilities. The advice line is 0800 0159 559. If your business is finding difficulty in paying any government taxes or duties please make sure that you contact them in advance of the liability being payable to advise them of your position. Failure to do this could end with unfortunate action being taken against you and an adverse credit rating being incurred by your business.
Cheshire Accountants Afford Bond can help you negotiate with various Government Departments if you need additional support. Please just let us know.