Wheelers Words

Stay up to date with all the latest accounting, tax and company news on our Wheelers Words blog posts.

Mar 20, 2020

Wheelers Words: Practical Business Tips for dealing with COVID-19

On 20th March 2020 the Chancellor notified the Country about a raft of measures to help business and employees survive the social distancing measures that have been introduced. We have tried to summarise them below from the information we have at the moment but the detail on how some will be funded is still to be released. We will try to keep you up to date when we know more. Although we are working from home as much as possible, we are doing our best to keep normal service running. Robert, Helen and Emma are available to discuss your queries over the telephone as required.

Support for businesses with employees

1. Job Retention Scheme

HMRC have laid out the following advice so far:

Under the Coronavirus Job Retention Scheme, all UK employers will be able to access support to continue paying part of their employees’ salary for those employees that would otherwise have been laid off during this crisis.

You will need to:

  • designate affected employees as ‘furloughed workers,’ and notify your employees of this change – changing the status of employees remains subject to existing employment law and, depending on the employment contract, may be subject to negotiation
  • submit information to HMRC about the employees that have been furloughed and their earnings through a new online portal (HMRC will set out further details on the information required)

HMRC will reimburse 80% of furloughed workers wage costs, up to a cap of £2,500 per month. HMRC are working urgently to set up a system for reimbursement. Existing systems are not set up to facilitate payments to employers.

If your business needs short term cash flow support, you may be eligible for a Coronavirus Business Interruption Loan.

Support for businesses who are paying sick pay to employees

The reclaim of SSP from HMRC was withdrawn several years ago. It has been announced that Employers with fewer than 250 employees can now claim back SSP for up to 2 weeks if sickness is due to COVID – 19. HMRC guidance is copied here:

The eligibility criteria for the scheme will be as follows:

  • this refund will cover up to 2 weeks’ SSP per eligible employee who has been off work because of COVID-19
  • employers with fewer than 250 employees will be eligible – the size of an employer will be determined by the number of people they employed as of 28 February 2020
  • employers will be able to reclaim expenditure for any employee who has claimed SSP (according to the new eligibility criteria) as a result of 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 of coronavirus can get an isolation note from NHS 111 online and those who live with someone that has symptoms can get a note from the NHS website 
  • eligible period for the scheme will commence the day after the regulations on the extension of SSP to those staying at home comes into force
  • the government will work with employers over the coming months to set up the repayment mechanism for employers as soon as possible

A rebate scheme is being developed. Further details will be provided in due course once the legislation has passed.

General Business Support

1. VAT payments

The next VAT quarter payments will be deferred, meaning no VAT payments until end of June 2020. Taxpayers will be given until 5 April 2021 to pay any liabilities that have accumulated during the deferral period. VAT refunds will be processed as normal.

It is not yet clear how businesses with Direct Debits set up will get the payment holiday. We will have to wait and see whether all the DD instructions are cancelled or whether each business needs to do themselves. We are currently working on the assumption that the VAT return will still need to be filed on time despite the fact no payment will be needed.

2. Income Tax Payments

The Income Tax payments on account for self-employed people due on 31 July 2020 will no longer be payable, they will be deferred until 31 January 2021. The guidance does not seem to allow a deferral for others in the Self-Assessment system at present, for example people in receipt of dividends or rental income who are within the Self-Assessment system.

3. Business rates holiday

HMRC have released guidance for those in the hospitality and leisure industry as well as small businesses in general. Their guidance is copied below:

We will introduce a business rates holiday for retail, hospitality and leisure businesses in England for the 2020 to 2021 tax year.

You are eligible for the business rates holiday if:

  • your business is based in England
  • your business is in the retail, hospitality and/or leisure sector

Properties that will benefit from the relief will be occupied hereditaments that are wholly or mainly being used:

  • as shops, restaurants, cafes, drinking establishments, cinemas and live music venues
  • for assembly and leisure
  • as hotels, guest & boarding premises and self-catering accommodation

You are eligible if:

  • your business is based in England
  • you are a small business and already receive SBRR and/or RRR 
  • you are a business that occupies property

You do not need to do anything. Your local authority will write to you if you are eligible for this grant.

4. Cash grants for retail, hospitality and leisure businesses

The Retail and Hospitality Grant Scheme provides businesses in the retail, hospitality and leisure sectors with a cash grant of up to £25,000 per property.

For businesses in these sectors with a rateable value of under £15,000, they will receive a grant of £10,000.

For businesses in these sectors with a rateable value of between £15,001 and £51,000, they will receive a grant of up to £25,000.

Properties that will benefit from the relief will be occupied hereditaments that are wholly or mainly being used:

  • as shops, restaurants, cafes, drinking establishments, cinemas and live music venues
  • for assembly and leisure
  • as hotels, guest and boarding premises and self-catering accommodation

The above grants are administered by the local councils and should be paid automatically, although it could be worthwhile contacting your local council to ensure that they are aware you are within the scheme.

5. HMRC time to pay

This arrangement is not new, but firms and individuals can apply to delay payments of outstanding liabilities due to the COVID – 19 outbreak, the dedicated number is 0800 0159 559. Currently HMRC will not accept deferral requests from us as Agents so it is likely that you will have to call yourselves to arrange this.

6. Business Interruption Loan Scheme

  1. these should be available from Monday 23 March and are delivered by all major banks that partner with the British Business Bank. The lender receives a guarantee of 80% of the loan amount from the Government.
  2. they are available for UK-based businesses with turnover of no more than £45 million and can provide for a facility up to £5 million. The borrower remains liable for 100% of the debt.
  3. no interest will be charged for the first 12 months.

7. Mortgage and rent holidays

Mortgage borrowers can apply for a three-month payment holiday from their lender. Both residential and buy-to-let mortgages are eligible for the holiday. It is important to remember that borrowers still owe the amounts that they don’t pay as a result of the payment holiday. Interest will continue to be charged on the amount they owe.

Tenants can apply for a three-month payment holiday from their landlord. No one can be evicted from their home or have their home repossessed over the next three months

 8. Insurance claims

We suggest you contact your broker but the current HMRC guidance is as follows:

Businesses that have cover for both pandemics and government-ordered closure should be covered, as the government and insurance industry confirmed on 17 March 2020 that advice to avoid pubs, theatres etc is sufficient to make a claim as long as all other terms and conditions are met.

Insurance policies differ significantly, so businesses are encouraged to check the terms and conditions of their specific policy and contact their providers.  Most businesses are unlikely to be covered, as standard business interruption insurance policies are dependent on damage to property and will exclude pandemics.