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What did we learn on Tuesday 24th March?

Understanding of the support available creeps on:

Self-employed

Please be patient, something will come, let’s see what the end of the week brings.

It’s confirmed on the gov.uk website that to take advantage of the VAT deferral you should cancel your direct debit (if paying by DD, which is usually good practice).  Don’t forget to reset it up again after June 30th unless a) you need to negotiate a payment plan or b) as is quite possible, the deferral period is extended.  Remember this is a deferral and any VAT due will need to be paid by the end of the 2020/21 tax year.

However, in what is turning into a bit of a pantomime show, HMRC are looking at turning the DD system off, so you wouldn’t need to cancel.  Will they, won’t they, who knows at the moment, so we suggest wait and see – the next DD collection, for VAT quarters ending 29th February, will be claimed around 11th April so we have another couple of weeks for this to be confirmed and we take any necessary action. 

The local authorities are winding up processes to administer and pay out the rates-based grants announced by the chancellor.  Whilst as yet we have no payment dates identified, locally, North Tyneside have confirmed that you should email business.rates@northtyneside.gov.uk  with name, business address, and business rate account number. The council will contact you if you are eligible.  They will ensure you are paid directly to your bank account rather than by cheque.

The self-assessment deferral currently refers only to the self-employed, so currently NOT to director/shareholders who remunerate through a combination of salary and dividends.  Whilst this may change, let’s assume not at this point, but a bit of careful planning can help here.  For those with payments on account identified, let’s make best efforts to a) either (and preferably) complete your 2019/20 tax returns before the July 31st payment deadline, which will identify the actual payment due rather than an assumption based on the prior year, or b) a chat with your Blu Sky Account Manager to estimate payments due for 2019/20.

If self-employed, no action is necessary, just don’t pay the tax over in July.

CoronaVirus Job Retention Scheme

Boy, the CoronaVirus Job Retention Scheme (CJRS) is causing some confusion, so let’s revisit what we do and don’t know:

The aim of the scheme is, as the name suggests, to retain jobs.  The basis is that, where you would, under current circumstances, make an employee redundant, you have instead the option to ‘furlough’ the employee, i.e. stick them on garden leave, in which case HMRC will reimburse the employer 80% of their gross salary up to £2,500 per month (that’s the salary, not the reimbursement).  If on furlough the employee can do NO work for the business.  The employer does NOT need to top up the wages to 100%.

It may become possible that the employee can be placed on furlough, then called back, then placed on furlough again.  That’s currently under discussion. 

Placing an employee under furlough is subject to current employment law so if in doubt, consult a specialist.

The employee is paid through the normal payroll process (albeit possibly at only 80%).  The employer will then be reimbursed through submitting an application through an online portal, thought to become available by the end of April.  Let’s set expectations for first payments to come through in May.  There will be a short term cashflow implication between you paying the employee and being reimbursed. 

I’m pleased to confirm that if you are a Blu Sky client and we process your PAYE, we will also administer the reimbursement process for no extra cost.  We may have to jump through some gateway/authorisation hoops with you, we’ll let you know when we understand the process.

No, CJRS does not cover dividends, only PAYE costs.  It appears to be gross salary only, not employers NI or pension contributions.  Rumours abound that it may be possible to suspend employer pension contributions, but that’s all they are today – rumours.

It’s unlikely that CJRS will cover Directors salaries, as it’s also unlikely that a Director will do no work for a business – there is still some administration to do, Marketing to plan, suppliers to pay and liaise with.  None of that resonates with furlough.  It may be feasible to furlough one director if there are two or more of you, and we expect further clarification in the next few days when the ICAEW release guidance.

No, if someone is on sick leave with coronavirus-related issues you cannot put them on furlough immediately, they need to be on SSP first.

WE did SSP in an earlier blog, does anyone need an update here?

Coronavirus Business Interruption Loan Scheme

Finally the Coronavirus Business Interruption Loan Scheme (CBILS) officially launched on Monday.  It’s administered by around 40 lenders, and can give a loan of up to £5m with 12 months interest free.  A personal guarantee or security may be necessary depending on the size and perceived risk of the loan.  The recipient must have a business plan demonstrating that under (old) normal circumstances this is a viable business.  Best to approach your existing bankers first (we can help with the plan and forecast if you need). It’s a great facility, but please please beware of taking on added debt that may prove unhelpful in the longer term when the doors open again.  Eyes wide open please, as with all transactions of this nature.

Take care all, keep an eye open for our webinars, we’ll start a clients weekly Q&A on Thursday at 1pm, and have an open house Coronovirus help update on Friday at 10, register here, first 100 get the spot.

Remember the time to pay helpline for Coronavirus-related requests to delay PAYE and corporation tax payments.  0800 0159 559.  As with the normal helpline, have your details and a potential plan together before you phone.

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