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Coronavirus Support

The Government is introducing drastic measures to facilitate social distancing in an attempt to control the spread of coronavirus (Covid 19). Unfortunately this will have the effect of threatening many small businesses with closure.

At this difficult time we want to highlight potential actions you can take if your business is struggling. Note we have written this with our Business Companion clients in mind, and these are only suggestions. We have had to make many assumptions where details are lacking but will update with further advice as things become clearer.

We will be working as usual and are here to support you. Call or email us with any specific problems/ questions

1. Reduce your Outgoings

If you are already struggling with cashflow there are several regular payments that you could delay. Bear in mind that they will have to be paid at some point.

Taxes
HMRC will not be in a hurry to chase taxes at the moment and appeals are likely to be accepted for businesses affected by Coronavirus. The Chancellor has promised 'improved Time to Pay (TTP) arrangements'. Consider delaying the following tax payments:

  • Self Assessment - Tax due or payments on account due on 31st July. If you need to discuss TTP options with HMRC ring 0300 200 3820 (8am - 5pm weekdays, quieter first thing).
  • PAYE - consider delaying your PAYE oayments. If necessary cancel Standing Orders or Direct Debits. Consider delaying payment of Corporation Tax: If you are likely to make a loss in the current year we can write on your behalf to explain that a loss this year will offset any profits made hitherto. Therefore you will be applying for a rebate.
  • For those on VAT Annual Accounting - if your turnover is down and you need to reduce your interim payments let us know and we will write to HMRC to explain the situation. VAT returns need to be submitted as usual.
  • For those who have quarterly VAT returns, VAT payments due up to June will be deferred. Taxpayers will be given until the end of the 2020 to 2021 tax year to pay any liabilities that have accumulated during the deferral period. VAT refunds and reclaims will be paid by the government as normal. VAT Returns need to be submitted as usual.

Note: HMRC helplines are likely to be completely jammed at the moment so you may not get through. Consider writing to HMRC instead - or we can help you with this.

Pension Contributions
If you will struggle to pay pension contributions please let us know. We will then submit the contribution schedules as normal but we can delay the payments from your Direct Debit. Do not cancel your direct debit - as this is difficult to reinstate. Once pension contributions are a few weeks late the pension provider may contact the Pensions Regulator. But it is unlikely that they will be quick to impose fines.

Rent and Rates

  • For this year, there will be a business rate holiday in England for eligible businesses in the retail, leisure and hospitality sectors with a rateable value below £51,000.
  • There will be an increase in the business rate discount for pubs from £1,000 to £5,000.
  • Send us a copy of your Business rates bill so we can see your Rateable value.

If you rent your premises and are in difficulties negotiate terms with your landlord
Are you working from home now? If so do you need to retain your premises?

2. Help for Employees

Coronavirus Job Retention Scheme
The Government will pay up to 80% of employees wages (up to £2,500 per month) for three months (and this may be extended). We can help small business owners make the grant applications to HMRC for this scheme. It can be backdated to start in March or you can start it in April. Consider the following:

  • Check the staff contracts you have issued for clauses for lay-offs/ short time working. What have you promised? Can you lay off people without triggering a redundancy?
  • The better option may be to designate workers as 'furloughed' and benefit from the coronavirus Job Retention Scheme. They will still be employed but will not be working.
  • Identify those staff who cannot work at all anyway, for instance due to caring responsibilities. You may want to prioritise them as ‘furloughed workers,’ whilst keeping a few other employees working.
  • You do have to seek agreement from employees to be furloughed, for instance by letter. We need to have copies of the furlough agreements before we submit furlough details to HMRC.
  • The 80% paid by Government will probably be based on previous wages (but we don't yet know exactly how it will be calculated).
  • Consider whether you can actually afford as employer to pay the extra 20% of wages (or top up beyond £2500) - if you can't afford to make this top up, it is not compulsory.
  • Tell us when you send us the payroll information who will be furloughed or made redundant and when.
  • We will submit information to HMRC about the employees that have been furloughed and their earnings through a new online portal (details waited from HMRC).
  • The repayment of wages from the government may take a while to come through (several weeks) warn your employees if their wages are likely to be delayed.

Statutory Sick Pay (SSP)
As explained in our Spring Budget Newsletter Statutory Sick pay (SSP) is now payable for those asked to self-isolate with or without symptoms because of Coronavirus, and the Government will refund the cost to smaller businesses. The SSP rate is £94.25 per week for up to 28 weeks and it is now payable from day one of sick leave.

SSP is a contributory benefit related to an employee’s National Insurance contributions. If you are an employer please check the wage and hours rates for your employees. In order to benefit from the new rebate of SSP your staff have to be earning at least £118pw for eight weeks.

3. Help for the Self-Employed

Freelancers and contractors will be able to claim up to 80pc of their profits from the state if they can prove they have been adversely affected by coronavirus.

However not all people who work for themselves will be eligible.

What help is there?

If they have suffered a loss in income, a taxable grant will be paid to the self-employed or partnerships, worth 80% of their profits up to a cap of £2,500 per month.

Initially, this will be available for three months in one lump-sum payment, and will start to be paid from the beginning of June.

It will be called the Coronavirus Self-employment Income Support Scheme, and is open to those who were trading in the last financial year, still trading now, and planning to continue doing so this year.

Who is eligible?

More than half of a claimant's income needs to come from self-employment.

The scheme will be open to those with a trading profit of less than £50,000 in 2018-19, or an average trading profit of less than £50,000 from 2016-17, 2017-18 and 2018-19.

Those who are recently self-employed, having set up since April 2019, will not receive any help under this scheme. This is because they will not have filed a tax return and therefore HM Revenue and Customs (HMRC) will not know of their self-employed status.

The government's new help comes on top of a six-month delay for tax payments through the self-assessment system.

Those with the lowest incomes are in line to receive more generous benefits payments, announced previously. The chancellor said those applying for universal credit should be paid within a few days.

4. Grants and Sources of Credit

  • Talk to your suppliers - can they extend credit?
  • Look through your insurance documents to see if you have business interuption cover.
  • Confirm your overdraft and loan arrangements
  • Local authority small business grant funding of £10,000. This is for all business in receipt of small business rate relief or rural rate relief. Your local authority will write to you if you are eligible for this grant. You may be able to speed this up by applying online with your rates bill and bank details. Check your local authority website.
  • Business grant funding of £25,000 for retail, hospitality and leisure businesses with property with a rateable value between £15,000 and £51,000. Your local authority will write to you if you are eligible for this grant. Again this may be speeded up by sending them your details. Check your local autority website for how to apply.
  • Small firms will be able to apply for a 'Coronavirus Business Interruption Loan' of up to £1.2million. Any small business interested should approach one of the accredited lenders with their borrowing proposal. The main criterion is for your business to be unable to meet a lender’s normal lending requirements for a fully commercial loan or other facility, but would be considered viable in the longer-term. Go to the British Business Bank Website for more information.

Next Step:

Please contact us if you need further advice.

Ask an MYOB accountant

Call us now on 01422 847500


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