GUIDANCE FOR OUR CLIENTS – CORONAVIRUS (COVID-19) – UPDATED 23 MARCH 2020

To quote Bob Dylan (sorry to anyone under 50): “the times they are a changin’, but I doubt even he thought they would be changing this fast.

Disclaimer: other, more modern, artists may have uttered similar sentiments!

There seem to be almost daily proposals announced by the government to try to steer us through this crisis, and those announced on Friday (20th) are the most radical yet, with a broad swathe of measures to help businesses and employees. It is hoped that these will keep businesses from failing and leave the economy in a position to restart activity quickly when the virus is under control.

Employment Support

  • You can pay staff 80% of their wages whilst furloughing them (essentially just telling them not to work), and reclaim this as a grant from HMRC.
  • There is no mechanism in place for this yet, but we expect there to be more news on that in the next couple of days
  • You may of course need to wait until you get the grant to pay the staff if you can’t access bank funding.
  • If you decide to pay some staff more than 80% you need to be able to justify this. Use the same criteria as you would for any standard lay-offs or redundancies.
  • You should probably hold off any possible redundancies, as you would not get any financial support for those payments.

VAT

  • This will not be collected for the current quarter.
  • With little or no sales likely in the next quarter for some businesses (assuming a 3 month shutdown in many cases), you may be able to make a reclaim, and this will be paid back in the normal way.
  • If you do have VAT liabilities in future quarters, and there has been no further deferral announcement (although we expect there to be), you ought to cancel the direct debit and contact the HMRC Time To Pay helpline. Expect long waits!
  • You must still submit VAT returns on time, or the usual penalties will apply.

PAYE

  • There will obviously be some liability due in April for March wages and you may want to consider withholding this.
  • We suggest waiting on this, and not yet cancel any direct debit, in case this ties in with the Employment Support scheme.

Corporation Tax

  • This isn’t due until nine months after the last accounts year-end, but you may wish to would consider not paying it for now.
  • Again, you would probably need to contact the Time To Pay helpline.

Personal income tax

  • The 31 July instalment for self-employed has been deferred until 31 January 2021.
  • If you don’t qualify (e.g. you are company directors), you may want to contact the Time To Pay helpline on this in due course.
  • We expect HMRC to be sympathetic to requests, and there may be further announcements from the government on this.

Rates

  • If you pay little or no rates, due to Small Business Rate Relief (SBRR), there is a £10k grant available.
  • Those in retail, hospitality and leisure will have to pay no rates, and may be able to claim a £25k grant for larger premises (rateable value £15k to £51k).
  • This will be administered by the local authority who will contact eligible businesses shortly.

Rent

  • You should contact your landlord to discuss a rent holiday.
  • Eviction of non-paying tenants is not really an option for most landlords, as they wouldn’t be able to re-let the premises anyway, and would probably rather have a reliable tenant at the end of this.
  • For landlords on the receiving end of requests, you may be able to obtain mortgage repayment holidays for three months.

Discretionary spending

  • This could be the time to think about stopping your own pension payments, but you should discuss this with your financial advisers.

Grants

  • There were grants available for retail, hospitality and leisure businesses.
  • We are not sure if these will remain available now that businesses have been told to close, but you ought to check.
  • These are being administered by the local councils.

Banks & lending

  • The banks will have schemes in place for cheap or interest free loans, 80% guaranteed by the government.
  • They have been told to be sympathetic as a trade-off for the support they got in the 2008 financial crisis.
  • Mortgage lenders have been told to view requests for three month repayment holidays sympathetically.

Insurance

  • Although some insurers initially seemed to be doing their utmost to avoid paying out on claims for “pandemic” business closures, they have agreed with the government that they will meet their liabilities.
  • Unfortunately, most policies simply do not cover pandemics, but you should check the policy wording.

Self-employed

  • Apart from the deferment of the July tax instalment, there has been little additional support to date.
  • You may be able to claim sick pay via the Universal Credit route.
  • There is pressure from many trade bodies on your behalf, so expect an announcement soon.

Useful HMRC weblinks

  • Business support: https://www.gov.uk/government/publications/guidance-to-employers-and- businesses-about-covid-19/covid-19-support-for-businesses
  • Employee guidance (that you may want to send to staff): https://www.gov.uk/government/publications/guidance-to-employers-and-businesses-about-covid- 19/covid-19-guidance-for-employees

Best wishes, and stay safe and healthy

Andy, Simon, Jo, Hannah and the team

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