Coronavirus Information as of 1st June 2020

Furlough Extension.

The Furlough Scheme for employers has been extended, which is welcome news, however we are expecting many questions over the detail of the scheme. We can set out the key points as follows:

The scheme in its current form is being extended to 31 July, that is the Government paying 80% of the gross pay, NI and pension contributions up to £2,500 per employee per month

To be able to claim for employees after 1 July, they have to have been furloughed at some time for at least three weeks prior to this date. Employers have until 10 June to furlough an employee for the first time.

Any claims relating to the period to 30 June have to be made before 31 July.

From 1 July employers will be able to have employees working part time and furloughed the remaining time. The full detail on how this is to be calculated has not yet been released however we suspect it will be similar to the current scheme, with employee allowances being prorated between the period when they are working and furloughed.

In the meantime, the overview of the scheme is that from 1 August, employers will not be able to claim for the employers National Insurance and pension contributions. For many smaller employers, this will not represent a significant increase and will be less than the 5% cost quoted by the Government. This is because the smaller employers benefit from an exemption from the first £4,000 of National Insurance cost in each tax year.

From September, where an employee is on furlough and is being paid 80% of their salary as furlough, the Government will pay 70% and the employer will pay the remaining 10%. If the employee is on full pay, the employer will pay 30% and the Government still pays 70%. The maximum per employee that the Government will pay is £2,187.50 and the maximum with the employer making it up to £2,500 maximum.

From October, where an employee is on furlough and is being paid 80% of their salary as furlough, the Government will pay 60% and the employer will pay the remaining 20%. If the employee is on full pay, the employer will pay 40% and the Government still pays 60%. In this case the maximum paid by the Government will be £1,875, with the employer’s maximum remaining at £2,500.

The finer detail is still to be released. The best way to keep abreast of the updates is to tune into our weekly webinar, every Monday at 14:00 on Zoom. The meeting ID is 884 0822 0603

We will also be releasing a simple calculator shortly to show the cost to the employer per week for employees working part time on furlough.

Coronavirus Information as of 18th May 2020

Furlough claims

These seem to be going through well with few problems encountered. The main issue that employers need to be aware of is that the system is not infallible and it relies on employers making correct calculations of the claims. It does not do the calculations for you.

HMRC have already indicated that claims will be audited later and so it is important that they are accurate.

As announced recently, the scheme has been extended until October, however full detail is yet to be released. We recommend you keep reading our weekly updates or join the Monday webinar for updates.

 

Self Employment Income Support Scheme

The Self Employment Income Support Scheme has been launched and claims are being paid within 6 working days.

There have been reports of some people getting paid earlier that this timeframe, however we would not take much heed of this. If you haven't received the money after six working days, that is when to make contact with HMRC and not before.

The grant is being calculated as an average of taxable profit for the three tax years 2017 - 2019. In instances where people have had significant capital purchases that have reduced their taxable profit, they are finding they are getting a lower claim than expected.

The main reason we are seeing people getting claims refused is because their self-employment income represents less than 50% of their total income when it should be more than 50% to qualify.

We are still being asked by company directors if they can claim this grant for their dividends. The answer is "No". Dividends are investment income and not self-employment income.

 

Statutory Sick Pay

The portal for reclaiming SSP has still not been released yet. As soon as this has been launched, we will let you know. The format is expected to be similar to the furlough claim.

 

Bounce Back Loans

These are being paid out by the banks in some cases within a day or two of applying. This is a self-certification loan, meaning no forecasts or management accounts are required. Banks are advising businesses to borrow under this scheme if possible, rather than the CBILs loan. The maximum that can be borrowed is £50,000 or 25% of annual turnover if less, so if more money is needed the CBIL loans would have to be explored.

 

Regular Updates

We are holding a Q&A webinar every Monday at 14:00 where we provide a general update, answer the main questions from the last week as well as providing attendees the opportunity to ask for help or to share their wins. For access to the meeting please email events@ccfaccountancy.co.uk

Coronavirus Information as of 5th May 2020

HMRC have issued guidance on how to check that Self Employed people are eligible for the Self-Employment Income Support Scheme.

The initial process to check eligibility is simple. All you need to do is use this link and enter firstly your Unique Taxpayer Reference and secondly your National Insurance Number. After that, the system will advise if you are eligible and when you can make a claim.

On the cases we have checked, it advises that claims can be made from 15 May. This is obviously different to the previous advice which was that HMRC would get in contact with eligible people.

The Unique Taxpayer Reference is the ten digit number that is used as a payment reference when paying self assessment tax and is always quoted on the top of tax returns alongside the NI number

Coronavirus Information as of 13th April 2020

HMRC have announced that the portal for making claims for Fuloughed staff will be available by 20th April.

 

It has not yet been detailed exactly when the money will be reimbursed, but the suggestion is that it will be within 4 - 6 days after the claim is submitted and checked for eligibility by HMRC.

At CCF, we have been ensuring that all clients that we know will be furloughing staff, have the PAYE taxes available on their Government Gateway in order for the claim to be made. There have been suggestions that we as agents may be able to deal with this via our own agent portal for clients. In order to ensure that there is no doubt or likeliness of any delay, we are making sure that clients are active for PAYE on both their own and our portal.

You can check your own Government Gateway portal has PAYE included as a service by logging on and checking that you can see PAYE in the list of taxes that you can manage online. If the service is missing, you can click to add PAYE as a service. You will need your PAYE reference and Accounts Office reference to activate the service and once this is done, an activation code is posted out, which may take 7 - 10 days to arrive.

If you need any help with this, please let us know. If we have already been in contact with you, you just need to follow the instructions in the email and no further action is required.

Where CCF are processing furlough claims, we will be dealing with them when the payroll is prepared for April or the next weekly or fortnightly pay, depending on the pay frequency.

For people who have monthly payrolls and need to claim for March, we will make the claim as soon as the scheme becomes live.

When we process the payroll, the additional information we will need to know will be:

Please do make sure that you have written to all employees who are being furloughed and in the case of directors, that there is a board meeting minute in place to authorise the furloughing of directors. Our template letter can be downloaded as a Word or PDF document.

We are aiming to make the process as clear and stress free as we can for clients. If you do have any questions or concerns that we have not covered here, please email enquiries@ccfaccountancy.co.uk

Coronavirus Information as of 31st March 2020

Information on how to furlough an employee or director.

 

The most frequent question we are receiving at the moment is how to furlough an employee or director. This is what we currently understand the position to be:

1. Write to your employee/director and explain to them that their employment status has changed to furloughed. We sent out an example template letter to clients last week or it can be downloaded as a Word or PDF document.

 

2. Contact CCF or your payroll provider to confirm which employees are furloughed, from what date, for how long if you know, and whether you will be paying their full wage or 80% of the wage.

 

3. Be aware that the amount you pay them cannot be more than the higher of February's pay or the same month last year. This is to prevent directors attempting to artifically inflate their salaries to a higher figure.

 

4. Remember that whilst furloughed employees cannot provide any services or generate income for the business. The same applies to directors, however they can perform their company secretarial duties. HMRC have indicated that they will be auditing these claims later.

 

5. Wait. The portal has not been made available yet, so we cannot submit claims to HMRC for the reimbusement of the 80%. We also do not know if this will be done via the Government Gateway that you already have or via a new portal. As soon as we know, you will know.

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Coronavirus Information as of 29th March 2020

What we Know and What we Don't Know so far.......

We have done a summary of what we do and don't know at the moment. You can also download this as a PDF here

Self-Employment Income Support

We know:

That this will be paid in June in a lump sum;

That HMRC will contact you and until then you need to take no action;

That you have to have traded in the tax years 2018/19 and 2019/20 to be able to claim;

That the claim is based on average trading profit over the last three years to 5 April 2019;

That if you have both self-employed and employed income, that the self employed has to account for more than 50% of your income;

That you should be able to claim Universal Credit in the meantime whilst waiting for the grant;

That the grant is taxable income.

We don't know:

How HMRC will deal with people who have had a really good couple of years, preceded by a poor one, because this would reduce any claim. We can only assume that there might be an appeal process;

How people who have only been trading for a couple of years will be dealt with, other than assuming it will be an average based on a shorter period of time;

How this interacts with the grant that is available from the local authorities;

Whether HMRC will just use the information that they have that was submitted via self-assessment or if they will want any further details from you;

How HMRC deal with accounting adjustments such as depreciation and capital allowances, which can make a big difference to the profit that is shown on the tax return.

Furloughing Directors

We do know that directors can be furloughed, provided that:

They are not providing a service to their customers;

They are not involved in activities that are generating revenue;

That they can carry out company secretarial and administrative duties.

We don't know how HMRC will police this, but we know that they will audit any fraudulent or erroneous claims after this situation has settled down.

Furloughing Staff

We do know:

That staff can be paid 80% of their wages, up to a maximum of £2,500;

That employers will be reimbursed the employer's national insurance and minimum employer pension contributions;

That employers can choose to pay the full wage and claim the 80% reimbursement from HMRC;

That there is a minimum period of three weeks that any staff member can be furloughed for;

That you have to write to the employee and tell them of the change in employment status to being furloughed. Ideally you should have their agreement to this change in status if your employment contract does not allow for reducing hours or laying off staff;

That employees cannot work for you whilst furloughed;

That you do not have to furlough all of your employees;

If an employee is sick or self-isolating and being paid SSP, they cannot be furloughed until they return to being available to work;

That claims can be made every three weeks once the system is live.

We don't know:

How and when the SSP will be refunded;

When the new portal for the Furloughing claims will be available and whether this will be done via your existing Government Gateway or via a new portal;

Exactly when the refunds of Furloughed workers pay will come through once submitted;

Exactly what the fine detail of the scheme is, there are a lot of assumptions being bandied around.

Small Business Grants Scheme

This is the grant from the local authorities for businesses who pay little or no rates because of the Small Business Rates Relief or Rural Rates Relief.

What we know:

This is a one-off grant for businesses who qualify for the rates reliefs detailed above;

You do not have to actually pay any rates to qualify for the scheme, but your business premises do need to be registered in your business name in order to claim;

If you are in shared accommodation and you do not receive a separate rates bill for your premises, you are unlikely to qualify. We suggest you speak to your landlord to explore if they are making a claim and how they might be able to support you;

The local authorities are contacting businesses now and inviting them to make an application online. Many of our clients have been contacted via email. Please be sure to check the validity of any emails received as sadly, scammers are still keeping themselves busy despite this global crisis.

What we don't know:

Exactly when the money will arrive;

If there are any limitations as to what it can be used for;

If it is taxable, but we assume it will be in the same way that the other grants are taxable;

Whether there are any anti-abuse rules in place.

Retail, Hospitality and Leisure Grant

What we know:

That businesses in these sectors with a rateable value of less than £51,000 will receive a grant of £10,000 if the rateable value is less than £15,000 and they will get £25,000 if the rateable value is between £15,001 and £51,000.

That businesses who do not qualify for Small Business Rates relief may still qualify for this grant.

The local authorities are contacting businesses now and inviting them to make an application online. Many of our clients have been contacted via email. Please be sure to check the validity of any emails received as sadly, scammers are still keeping themselves busy despite this global crisis.

Deferral of Tax Payments

We do know:

That any VAT liability arising between 20 March and 30 June does not have to be paid until 31 March 2021;

That unless VAT direct debits are cancelled, HMRC will take payment as normal;

That the second self-assessment payment on account that is due in July does not need paying until 31 January 2021;

That HMRC are allowing more time to pay other taxes including corporation tax, older VAT liabilities, PAYE and self-assessment, however you need to call them on 0800 0159 559.

What we don't know:

Whether interest will be charged on the late payment of taxes, other than VAT which we know the deferral scheme does not apply interest or charges;

When HMRC will start getting tough again with people asking for time to pay. At the moment they are being very supportive and kind.

Business Interruption Loans

What we know:

The Government intended the scheme to make funding available to those businesses who were not able to provide a personal guarantee for the full amount of any loan.

At the moment, in order to apply for one of these loans, you have to go via your existing bank. This process is extremely slow as the banks are under a phenomenal amount of pressure as you can imagine.

There have been suggestions that in order to apply for a Business Interruption Loan, you first have to be turned down for a conventional loan. This is not what the Government intended with this scheme and so we have to "watch this space" to see if there are any further amendments to the process.

We will continue to provide updates as soon as we know any more about any of the schemes and guidance provided by the Government.

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