With what is currently happening within the UK and the rest of the world we have spent some time looking at press releases from the Government and HMRC to try to summarise what is going on.
Firstly, we urge you all to adhere to the current Government policy on Social Distancing and Isolation policies.
Secondly, it is a worrying time for us all in business and whilst measures shown on the media outlets are welcome some say that they are not enough or too late. Everybody’s case is different, and this short document is here to try to help in helping you get through this serious matter.
For up to date information you should periodically visit www.gov.uk/coronavirus this is where you will find the most up to date information rather than relying on Social Media.
There are several ways in which the Government is helping as best they can. These are headlined below.
- Coronavirus Business Interruption Loan
- Bounce Back Loan Scheme
- HMRC
- Business Rates
- Help for the Self Employed
- Help for Employers
Coronavirus Business Interruption Loan (CBIL)
The government has committed to CBIL and has agreed terms with most banks and financial lenders. However, this is on a case by case basis and is for businesses with turnover less than £45m.
The criteria for lending money are also within the usual Banking lending criteria, which is on a Bank by Bank basis.
All Banks will offer the scheme which only launches this week. If you apply you will have to pass the usual credit rating mechanisms, which may mean Personal Guarantees or Charges on Property etc.
Also note that the Government are to guarantee 80% of the loan, historical types of finance like this usually mean that the balance of 20% needs some other form of security.
Bounce Back Loan Scheme (BBLS)
This was announced by the Government over the summer of 2020, the reason for it was the CBILS were too difficult for smaller traders to apply for and the intention was that the Government would support those smaller businesses. The maximum amount you can claim for is the lower of £50,000 or 25% of your latest turnover. This was a relatively straightforward claim which was done through your business bank.
Payment terms were nothing for first 12 months, then repayments over the next 6 years, this was then increased to 10 years. There is no security needed with any funder for this.
There was an update to this where if the business had not claimed the full amount in the first claim, then you could effectively top up to the maximum. By way of an example
- Turnover £100,000
- Maximum loan allowed would be £25,000 (25% of turnover)
- Amount claimed first time around £20,000
- TOP UP AMOUNT ALLOWED £5,000
Please remember it is a loan and not a grant so does need repaying, however it is a very cheap way if funding the business during the pandemic.
HMRC
Its fair to say that at the forefront of the assistance is HMRC. Their brief is to help all businesses as best they can.
Time to Pay agreements have been ramped up to assist any business or person with any arrears, any previous arrangements may need to be reviewed with HMRC as a matter of urgency.
New Time to Pay agreements are on a case by case basis.
VAT has been deferred from 20th March 2020 to after 30th June 2020. THIS IS AUTOMATIC but you should still submit any VAT returns in the usual manner, and by the appropriate deadline. You then have until March 2021 to catch up with any VAT arrears.
VAT refunds will be processed and re-paid in the usual manner.
PAYE/CIS payments are not actually referenced within any of the current documentation so we recommend contacting HMRC and discussing any Time to Pay arrangement with them, as disclosed above.
Small Business Rate Relief and Rural Rate Relief – SBRR and RRR
There are rules in place for businesses which are within the Retail, Leisure and Hospitality sector regarding Council grants which can be claimed. The rules for each sector are different and we urge you to visit your council website as there will be more links and information there.
Help for the Self Employed
Currently there is the Self-Employed Income Support Scheme (SEISS), which many people have applied for. There have been 3 payments already over the course of 2020 and we suspect that this will continue until at least mid-February 2021. This can only be claimed by the Soletrader or Partnership via the Government Gateway which will have been set up already if previous claims have been made.
Help for Employers
We are all aware of the current Furlough Scheme. This is designed to assist employers where employees cannot work, if they work from home then the scheme should not be used. It is merely a procedure to be the last resort from redundancy.
Currently up to 80% of salary can be claimed by the Employer up to £2500 per month. The calculation can be difficult to calculate and I would urge the business owner to contact their payroll provider to get the correct advice and calculations done.
HMRC have already investigated and prosecuted businesses where the rules have been abused, mainly where a claim has been made but the employee has continued to work. Fraudulent claims will be a hot topic for HMRC going forward to investigate.
Income Tax
For Self Employed Income Tax payments for the 2nd Payment on Account was July 2020 have been deferred until January 2021, note the balance will be due then as well for the 2019/20 tax year.
There has been no additional information of deferring any tax liability and forms should still be filed within the current deadline dates. Anyone who has HMRC liability is urged to contact HMRC and agree a payment plan. HMRC have been advised to give as much flexibility as possible to taxpayers.
Corporation Tax
There are no additional or updated rules in place for the payment of Corporation tax, however HMRC have been advised to be flexible on allowing payment plans for Companies to settle these liabilities.
VAT
Rules for Vat currently remain the same, please be aware though that if you deferred the quarter to April20, May 2020 or June 2020 this does need paying by March 2021.
There maybe new rules that come out over the next couple of days to assist in Lockdown 2.
Staff who have been told to work from home
If you have asked staff to work from home then it is very much things as usual, other than there are no current forms of assistance other than those above. This may change as cashflow dries up for businesses, but it is very much carry on within the current rules and regulations.
I would urge you all to stay safe, keep looking at the www.gov.uk website and apply as and when you are able to the appropriate government department.
We cannot do it for you, but we can help with queries on who to get in touch with.
Phil Dawson and Clare West.
Dawson & Co