Apologies for the temporary interruption to service, we should now be back online.
You’ve no doubt been deluged with ‘C’ word info, so I’ll endeavour to pick through the chaff and provide the most relevant info for entrepreneurs and founders…
Coronavirus Job Retention Scheme
A bit of a rehash but this SO important that, in this case, it’s worth rehashing!
UK employers will be able to access support to continue paying up to 80% of their employees’ salary for those employees that would otherwise have been laid off during this crisis.
Who is eligible?
No size limits or industry requirements - open to all.
This is great news for your team. Especially those who were at risk of redundancy.
How do I claim it?
You will need to:
designate affected employees as ‘furloughed workers’ and notify your employees of this change - depend on employment law and contracts
submit information to HMRC about the employees that have been furloughed and their earnings through an online HMRC portal (yet to be released….watch this space)
It’s up to you whether you choose to top up the remaining 20%.
This is a great measure and I am pleased that the Government hasn’t hesitated to bring this in - just hoping that the practicalities follow quickly.
There’s some useful FAQ guidance here (I would credit if I knew who’s written it)
What about the Founders/Directors of the business?
The debate is raging on this one right now. Some say that directors could claim but there is the legal issue of ‘director fiduciary duties’.
Can a Director effectively make him/herself temporarily redundant…?
There’s still a business to run after all - even if in the background….
That’s before you tackle the whole issue of low salary / high dividend remuneration packages that will be common for many director/shareholders - current ‘furlough’ rules don’t take into account dividend income.
I suspect that those who fall into this category will have to wait for details of any support for the self-employed which we understand is incoming….
VAT deferment - what does it mean in practice?
For VAT, the deferral will apply from 20 March 2020 until 30 June 2020.
All UK businesses are eligible.
How to access the scheme
This is an automatic offer with no applications required. Businesses will not need to make a VAT payment during this period. 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.
What does this mean in practice?
If you have a VAT payment due between 20 March and end June, you have the option to defer that payment until a later date
The payment must be made before 31 March 2021 - it is a deferment, not a cancellation
There will be no interest charged on any deferred VAT payment, and you do not need to tell HMRC if you are deferring a payment during this time
As any Direct Debit normally automatically takes payment, HMRC currently advises you to cancel it (temporarily) just in case.
Defer any VAT payments - even if you’re not sure whether you need to. No-one knows what’s around the corner?
Tuck it away in a savings account, if nothing else!
Stories help - Audible releases audiobooks for free
Worth a listen.
Self Assessment Tax - July payment deferral
Your second payment on account of your personal tax liability due on the 31 July 2020 will be deferred until the 31 January 2021.
All who pay tax under Self Assessment.
How to access
This is an automatic offer with no applications required. No penalties or interest for late payment will be charged in the deferral period.
As above with VAT, take it (and stash it, in savings).
Dealing with HMRC
Some useful guidance from the ICAEW (that’s my regulatory body) on how to deal with HMRC in these troubling times (directly lifted from their newsletter but thought you might find useful):
Should businesses tell HMRC about problems?
It is helpful to communicate with HMRC in advance when a business is anticipating a problem meeting a deadline. This could be a payment which can't be met, a return that is going to be late or you require further time to deal with an existing enquiry. We are expecting HMRC's resources to be stretched so in the event it is not possible to speak to HMRC, document the instances you have tried to contact it and consider writing a letter to discuss the issue. Approaching the matter this way will assist in mitigating penalties down the line and hopefully minimise the likelihood of further HMRC intervention
I have received a penalty, assessment or notice from HMRC - what should I do?
The first thing you should do is ensure that this is appealed within the time limit. The deadline is often 30 days but the guidance accompanying the letter will make this clear. Try not to panic – penalties are often automated but we anticipate HMRC will be more sympathetic to taxpayer defaults in this climate.
How do I appeal?
An appeal should be made in writing stating what you are appealing and why. It does not need to be detailed and can be a very short letter. Do include relevant reference numbers (eg, the unique tax reference number) the date of the appeal and full details of the original HMRC decision/letter. Sometimes an appeal form will be included and you simply need to complete this.
On what basis can I appeal?
There can be a variety of reasons why a taxpayer might disagree with an HMRC decision – for example, they don’t agree with the underlying technical treatment. However, in the context of COVID-19, we anticipate the most typical reason for appeal will be ‘reasonable excuse’.
What does ‘reasonable excuse’ mean?
‘Reasonable excuse’ is a term provided in most penalty provisions and broadly means that, considering the circumstances, a taxpayer is not at fault for the failure resulting in a penalty.
We would strongly expect a global pandemic with the associated government measures to fall squarely within this category. Ordinarily being unable to meet your HMRC debt is not a reasonable excuse but given the circumstances leading to the current economic situation, we are in very different times. While we do not think it is necessary to provide a detailed letter at this stage, given management resources are likely to be stretched, it would be helpful to provide some narrative around reasonable excuse. For example, have your revenues declined because of government social distancing measures? Provide some brief details, if so, to justify the lack of funds.
I try to write this email daily (frequently fail) so please excuse any typos or (rare!) inaccuracies (or missed editions) as it is intended to prompt thought and discussion only. Please do not act on anything in this newsletter without first discussing your personal circumstances. Yadada...