COVID-19 Update

***All Balmforth Associates staff are currently working from home whenever possible so please bear this is in mind when sending documents in the post. Please speak to your usual contact for their home address where appropriate***

The following has been put together to provide a summary of the main measures that have been put into place to help businesses cope with the impact of COVID-19. We will continue to update as new facts and/ or greater clarity becomes available.

Accounts & Business Advisors

ADVICE FOR ALL BUSINESS OWNERS

PAYE/CORPORATION TAX

Businesses are advised to take advantage of HMRC’s Time to Pay scheme, which, based on early claims, is allowing payments to be deferred for between 2 and 6 months (dependent on credit history). The number to call is 0800 024 1222.

While we are happy to call on your behalf it is becoming difficult for us to do this completely free of charge due to the length of the queuing times (currently over an hour!) combined with working in less than optimal conditions involving too many people, too many children and not enough offices!)

CBILS

Coronavirus Business Interruption Loan Scheme (CBILS) is a scheme that can provide facilities of up to £5m for small businesses across the UK who are experiencing loss or deferred revenues. In order to be eligible your business must:

1. Be UK based with an annual turnover of less than £45m.

2. Have a borrowing proposal which, were it not for COVID-19, would be a viable proposition for the lender and for which, the lender believes the provision of finance will enable it to trade out of any short to medium term difficulty.

The scheme went live 22 March and will initially run for six months. At the discretion of the lender the scheme may be used for unsecured lending facilities of up to £250,000. (However, please note that this is discretionary, we are aware that HSBC and Barclays both require personal guarantees). The loans will be interest free for 12 months and then subject to the rates set by the individual lenders.

We are hoping to provide a comparison of the market offering as more information becomes available. Please contact us directly if you are considering loan financing for your business.

PERSONAL MORTGAGE REPAYMENT RELIEF

The Government has committed to enabling individuals affected by COVID-19 to defer their personal mortgage payments for three months. Subsequent payments from month four onwards will then be recalculated and increased to absorb the underpayment. The Government has also expressed that this scheme may be extended if necessary. You will need to call your personal mortgage provider to discuss the payment holiday- please do not simply stop paying!

VAT

Businesses have been advised by the Government not to pay their next quarters VAT bill. Please note you should still prepare and file the return by the due date as normal. It is only the payment obligation that you are being temporarily relieved of. Please ensure that you cancel any direct debit in good time as HMRC won’t refund any money paid “accidentally.” If we prepare and submit your returns each quarter, then we will do this for you unless you instruct us otherwise.

FILING RESPONSIBILITIES

As there have been no concessions from Companies House in terms of filing responsibilities, we recommend clients should continue to file all accounts and corporation tax returns by the usual deadlines to avoid penalties. We appreciate many clients will be experiencing cash flow difficulties over the next few months and are therefore happy to allow payment of fees for accounting services to be paid monthly provided that a standing order is set up in advance. Please let us know if you would like to do this.

SELF-ASSESSMENT OBLIGATIONS

July payment on accounts are no longer required. This is a deferral rather than an exemption and (at present) the full amount will become payable in January 2021 along with the usual payment due at this time.

SELF-ASSESSMENT OBLIGATIONS

July payment on accounts are no longer required. This is a deferral rather than an exemption and (at present) the full amount will become payable in January 2021 along with the usual payment due at this time.

2020/21 BUSINESS RATES

Relief is currently available to all entities operating in the entertainment, leisure and hospitality industries. It is possible that this may be extended into other sectors. There is no need to take any action.

Accounts & Business Advisors

ADVICE FOR EMPLOYERS

FURLOUGH

The Government has committed to paying up to 80% of all furloughed employee salaries up to a maximum of £2,500 per month. The employer can choose to, but is not entitled to, make up the remaining 20% or any part thereof.

The furlough scheme starts from 1 March 2020 and will end 31 May 2020, although it may be extended beyond this point.

The salary of the employee as at 28 February 2020 is the figure that should be used for calculation purposes. If the employee was not employed on this date, they are ineligible for the scheme.

Please note that employees should continue to make the same level of pension contributions as prior to the furlough. Employers are also expected to maintain the statutory contributions.

Employers should agree and clearly communicate the terms of the furlough to the employee in writing, who must be made aware that they should not do any work whatsoever for the company during this time. If interpreted strictly this includes responding to emails.

FURLOUGH

There has been no guidance on the length of notice required so we would advise judgement - if a week is possible this should be the aim.

It is possible to “bring back’ the employee earlier than the initial agreed period but this should be agreed in advance between both parties.

In practical terms the employer will continue to pay the furloughed employee as usual and claim a reimbursement from the Government via a portal. The timing of the first repayment is currently expected to be towards the end of May.

The portal has recently been made live so claims can now be submitted. If you need any guidance on the process, we are happy to help.

Directors are covered by this scheme and are equally free to claim 80% of their salary cost but it is important to note that if all of the directors have been furloughed the company cannot continue to trade during the period of the furlough.

Accounts & Business Advisors

SELF EMPLOYMENT/ FREELANCERS/ CONTRACTORS/ PARTNERSHIPS

PROVISIONS

Below is a summary of the (somewhat disappointing) provisions announced yesterday.

The Government has committed to provide a non- repayable monthly grant of 80% of a self-employed individual or partner’s average profits up to a maximum payment of £2,500 per month, initially for three months.

Average profits will be calculated with reference to either trading profits in 2018/19 or an average of the past three years.

The aim is for the system to be running from 1 June with the first payments being made early that same month.

In order to qualify for a grant, the following criteria will need to be satisfied:

1. You must be self-employed or a member of a partnership.

2. You must have lost trading profits due to COVID-19 or expect to lose profits.

3. You must have filed a tax return for 2018-19 as self-employed or a member of a partnership.

4. You must have traded in 2019/20 AND be currently trading (subject to COVID-19 restrictions) AND intend to trade in the future (we are not sure how the latter can be accurately assessed).

5. Trading profits must account for more than half of your total self-assessment income. 6. You must have trading profits of less than £50,000. There is no London weighting to this figure.

PROVISIONS

At the time of writing the £50,000 profit level appears to be a cliff edge. An individual with profits of £49,999 will qualify for a grant of £2,500 per month but an individual with profits of £50,000 will be ineligible for assistance.

A sole trader with trading profits of £45,000 per year and rental income of £40,000 will be able to claim a grant of up to £2,500, per month. A sole trader with £51,000 of trading profits and no rental income would again be ineligible for assistance.

If you are a director of an owner managed limited company and paid a mixture of salary and dividends this scheme does not apply to you. You are eligible for furloughing but please note that you cannot then continue to work whilst ‘in furlough’.

Any grant paid will form part of your taxable business profits for the 2020/21 tax year.

The scheme is set up on a “don’t call us, we’ll call you” basis. If you meet the qualifying criteria you will automatically receive a letter from HMRC. We would not recommend calling to chase the letter as they will not fast track you and you will simply spend several hours of your life in a telephone queuing system that you will never recover.

Finally, be aware that as the scheme is intended to assist those with reduced profits due to COVID-19 it is as yet unclear what would happen if an individual or partnership recovers well ‘post virus’ and ultimately suffers no fall in profit for the 2020-21 tax year. In this instance a claw back may apply so a note of caution is advised in these early stages.

get in touch now

Get in touch via phone, fax, email, or alternatively send us a message via our contact form.

Please note that due to Covid-19 all staff are currently working from home therefore we kindly request that you send an email in the first instance and we will provide you with a personal mobile number for all future ocassions.

  • E-mail General: info@balmforthassociates.co.uk

  • E-mail Bryony: bbalmforth@balmforthassociates.co.uk

  • E-mail Vicky: vwestcott@balmforthassociates.co.uk