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COVID-19 Updates

It is hard to know where to begin. None of this was forecast in our Christmas message only 3 months ago. Who then had heard of Corona or Self-Isolation? How things have changed.

The World has been visited by pestilence before. There are lessons to be learned and brutal facts to be faced. Even Self Isolation is not new. Without going back into pre-history the plague visited many times from 1300 onwards. A whole Derbyshire village famously cut itself off from the outside world to try to contain it. There can be silver linings - Shakespeare wrote Poetry during a closure of theatres in the 1590s. The first Flu pandemics hit Italy in the mid 1600s, and in 1665 Isaac Newton may well have been sitting underneath his apple tree in Derbyshire during an enforced break from Cambridge University. Cholera pandemics tore across the poorer areas of the industrialising World in the 1800s, and our grandparents will have lived through the Spanish Flu of the 1920s when upwards of 5 million died.

Each time inequalities are highlighted and lessons are learned - and lessons are sometimes forgotten or are wrongly remembered it is true. People adapt and find ways to muddle through, to help their neighbours, to survive. Science eventually identifies the causes and eventually develops vaccines. But the one constant theme always shines through - the need for Government support - for science, for the Health Service, and for its people who elected the Government into place. A Government needs to set out a raft of actions to anticipate and support its citizens through the social and economic impacts of a situation in which no-one is in control. As you will have seen on the news, different Governments respond in different ways. Only hindsight will tell us whether the level of Government intervention and support in the UK is correctly judged and efficiently carried out. But if the British economy is to come "roaring back" as suggested by the Prime Minister each time we hear him speak, then the whole country must get the correct level of support. It may well be that the government will need to find ways to keep such measures in place for at least two years or even more. Each day new measures are announced, deadlines are extended, rules are changed or adjusted as the situation demands.

We will try to keep you up to date, but from your accountant you do not want to hear about the measures being introduced concerning the Health Service, isolation, Care Homes or toilet rolls.

Most of the economic measures so far have been aimed at business where there are a mixture of Grants, Loans and Payment Holidays. If you think any of these may apply to you and have questions, let us know.

INDEX

  1. Grants from your local Council (not repayable)
  2. Bank Loans (ultimately repayable)
  3. HMRC - Tax Payment Deferral and Debt Helpline
  4. Statutory Deadlines for Filing with HMRC and Companies House
  5. Employers and Employees
  6. Self Employed
  7. Taxpayers with Rental Income
  8. Generally

We appreciate there are differences in NI and Scotland (e.g. Business rates scheme) but we have not covered them here.

1. Grants from your local Council (not repayable):

Small Businesses, and those in Retail, Hospitality and Leisure

(i) Business operating from premises with a rateable value up to £15k may be entitled to a £10,000 grant from their Council.

(ii) Businesses in the retail, hospitality and leisure sectors may be entitled to a £25,000 grant if they are operating from premises with a rateable value between £15,000 and £51,000.

(iii) Business in the retail, hospitality and leisure sectors should also be entitled to a Business Rates holiday. If you received the Retail Discount last year then automatically your rates bills received only recently will be re-billed.
If you have not heard from your Council regarding these Grants and think that you should be enitiled to them, you should contact them immediately. Remember to have your moost recent Rates bill to hand so you can give them the references.

2. Bank Loans (ultimately repayable):

(i) The Coronavirus Business Interruption Loan Scheme is there to support primarily small and medium-sized 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 will cover the first 12 months of interest payments. The Scheme will support loans of up to £5 million in value.

- This scheme never appeared to work very well given reluctance from banks to take any risk at all. Many High Street banks continue to ask for Personal Guarantees from the directors of businesses to further back up these loans. We consider this to be totally outside the spirit of the loan scheme. We consider that any such demands from the bank should be resisted and publicised if you are able, or complain to your MP.

(ii)Caronavirus Bounce Back Loans

This scheme has in many cases replaced the one above. If you managed to get one of the above loans then you cannot apply for a Bounce Back Loan - but you can apply to change it to a Bounce Back Loan if you prefer. This scheme helps small and medium-sized businesses to borrow between £2,000 and up to 25% of their turnover. The maximum loan available is £50,000. The government guarantees 100% of the loan and there won’t be any fees or interest to pay for the first 12 months. After 12 months the interest rate will be 2.5% a year. This is proving relatively easy to get and is very popular.

3. HMRC - Tax Payment Deferral and Debt Helpline,

(i) If you cannot pay any tax bill "that is imminently due" you can apply to HMRC dedicated helpline by calling 0800 015 9559.

At today's date imminent bills may include:

  • monthly PAYE due monthly on 19th inclusive of CIS (that you have deducted from your sub-contractors, mitigated by that deducted from you by a main Contractor)
  • Corporation Tax for those limited companies with a year end before 31 July 2019 any corporation tax is already due. Tax on 31 August 2019 year-ends is due on 1 June. Don't go silent on HMRC - talk to them and they will help.

(ii) Vat payments due between 20 March and 30 June can be deferred. Arrangements will then need to be made to pay these before 31 March 2021.

- Note however that b usinesses that wish to defer their VAT payments need to take urgent action to cancel any direct debit mandate that is in place. The next VAT payment due for the Feb/Mar/Apr quarter is due between 10-12 June.

- HMRC have confirmed that they will not automatically cancel collection of VAT payments by direct debit. Businesses that have a direct debit mandate in place to pay their VAT and wish to defer payment will need to contact their bank to cancel that mandate. This needs to be done before the direct debit is due to be collected. T axpayers will then need to reinstate their direct debit mandate once the deferral period is over and make arrangements with HMRC to pay the accumulated VAT by the end of the 2020/21 tax year.

- No announcements have been made regarding any continued deferral option for vat payments due after 1 July.

(iii) There is no general deferment of Corporation Tax available but the option is open to you to make individual arrangement on the HMRC Debt Helpline - see above.

(iv) Self Assessment payments due at the end of July 2020 can be deferred for 6 months until January 2021. Remember that the payment in January often varies but if you take this option it is likely to be larger than normal.

4.Statutory Deadlines for Filing with HMRC and Companies House:

Deadlines still exist for filing forms but there is likely to be flexibility. Our advice is to meet the deadlines if you can rather than enter any appeal process afterwards. If you get into trouble regarding payment refer back to paragraph 3.

Personal 19/20 Tax Returns can be prepared anytime after 5th April (in 3 weeks) and any liabilities will still be due in January. If you are sitting at home with nothing to do, get working on your 19/20 tax returns.
- From April 2020 Capital Gains Tax on the sale of Residential Property is now due within 30 days of completion. Be careful and make sure that you tell us if you are disposing of residential property that might give rise to a CGT liability. This is new and matches the requirement placed last year on non-uk residents. Your solicitor should tell you this during the sale process.
For Limited Companies&nbsb;PAYE and CIS must still be accounted for by the 19th of each month - Jane provides this information if you have given it to her.p;the new rules on enforcing IR35 are being put back 12 months to April 2021 but be aware that:
- VAT Returns are still due monthly or quarterly - Returns must still be submitted even if you are deferring payment. Jane reminds you when these are due.
- PAYE and CIS must still be accounted for by the 19th of each month - Jane provides this information if you have given it to her.
- Confirmation Statements are still due annually at Companies House. In most cases we remind you when this becomes due (if we do it for you). Companies House may start dissolution action if you do not.
- Accounts must still be prepared annually and should be filed within 9 months of your accounting year end
- we now remind you of this from 2 months before your accounting year-end and subsequently from 3 months after each year-end.
- it is currently possible to contact Companies House and extend your deadline by up to 3 months. This must however be done and agreed before your accounts miss the filing deadline and become overdue

5. Employers and Employees - SSP, the 80% and the Coronavirus Job Retention Scheme: 

(i) Statutory Sick Pay (SSP) for employees who are self isolating

Employees who are off work and self-isolating can be paid SSP. Of this the first two weeks will now be refunded to the employer (without a 3-day waiting period). After this you continue to pay SSP but it will not currently be refunded. Keep your eye on
Government announcements to see if this changes.
- No sick notes are needed for people sent home, or who decide themselves (or are forced) to self isolate or who are looking after self isolating people. Records must be kept of each decision for possible future inspection.
- SSP is currently £94.25 per week.

(ii) Furloughed Employees. Government support for Businesses whose employees would otherwise have been laid or made redundant during this crisis. All UK businesses are eligible.

- This relates to employees on the payroll submitted to HMRC at the end of February.
- placing staff on Furlough is a "change of employment status" that is subject to existing employment law and has to be done properly and legally. Draft Furlough Letters are available on request but we recommend these are checked by your own legal or HR professionals. Ultimately the rules on Sacking and Redundancy or Unfair/Constructive Dismissal continue to apply. But then so do the rules on insolvency and bankruptcy.

- WEST have provided to Clients a spreadsheet on which details of any Furlough claim can be entered, and WEST are then able to calculate the claim and enter these directly onto the Government portal. Most of our Clients have already received the first Furlough funding for April. The next claims for May are now being prepared. The scheme is now being extended until October.

- Company Directors can be included in workers who are furloughed in the absence of work but the calculation is based on salary only and does not include dividend.

- The rules are that Furloughed Employees should not carry out any sort of work on behalf of the business. The Government intends relaxing this rule from August as it tries to manage a controlled return to work.

Company Directors may continue to fulfil statutory responsibilities.

If you have contact with an HR professional or an Employment Law Solicitor you are best advised to talk to them now about any issues that occur to you. WEST are not legally trained nor are we HR Professionals. There are many issues around commission and holiday pay and other areas that make this a very complicated subject.

6. Self Employed Income Support Scheme

The scheme announced by the Chancellor offers self employed taxpayers the same level of support as the Furlough scheme for workers paid via PAYE. The guidance says taxpayers are eligible if they are a self employed individual or a member of a partnership and have submitted a self assessment tax return for the tax year 2018/19, traded in the tax year 2019/20 and are continuing into 20/21. The scheme allows taxpayers who have been negatively impacted by Covid-19 to receive a taxable grant worth up to 80% of trading profits up to a maximum of £2,500 per month for the next three months. This may be extended if needed.

- HMRC already know who they think are eligible and there is an on-line checker avaiable for individuals to see whether HMRC are to be in contact. Most have already received letters inviting them to access a Government Gateway. If you have not heard from them and consider that you should be eligible for this support, then you need to contact HMRC.

- the window for making claims opens on a gradual basis from 13 May. Self Employed workers need to make their own claim in a manner that cannot be undertaken by WEST even where we are officially registered as your agents. A single payment is intended to be made within 10 days of making the claim covering a three month period April - June. No extension has yet been announced to continue this scheme to October but one is expected.

7. Taxpayers with Rental Income 

Your tenants may be affected by the current situation. Deal carefully with arrears. Hopefully any shortages now appearing as a result of the Covid-19 virus will not appear until next year's tax return, but will affect your cash flow from hereon.

8. Generally

Generally Councils are providing helplines regarding the availability of benefits and how you may access them. In Solihull this is found at www.solihull.gov.uk/benefits Other Councils will have similar contact points.

In addition gas and electricity suppliers have agreed an emergency package of measures to ensure vulnerable people do not get cut off amid a virus outbreak and to help consumers if their bills rise because they are spending more time at home. Mortgage providers have been requested by HMG to properly consider allowing mortgage holidays where requested.

In the spirit of - and in support of - the Government initiatives set out above, WEST are not making any charges to clients for helping them through this unprecedented period of uncertainty.

Insurance: Most businesses are unlikely to be covered against a pandemic. Standard business interruption insurance policies are dependent on damage to property and will exclude voluntary cessation through the spread of disease. However insurance policies differ significantly, so businesses are encouraged to check the terms and conditions of their specific policy and contact their providers. The Government has confirmed with the insurance industry that their official advice to close is sufficient to make a claim as long as all other terms and conditions are met.