Coronavirus Support Update – 17 April 2020

Please find below an update on the key Coronavirus Support Schemes and an extension to the reporting deadline on Capital Gains Tax (‘CGT’) for disposal of UK residential properties by UK residents, based on what has been released in the last week. We are also keeping you updated via our blogs and across social media (Facebook, Instagram, LinkedIn and Twitter).

After 25 days of lockdown, it was announced last night that this would be extended for at least three more weeks. Whilst the YouGov poll found 91% of respondents agreed with extending the measures, this is a very challenging time for everyone. If you are struggling with this remember our blogs below, which you might find helpful:

• What To Focus On During UK Coronavirus Lockdown?
• 5 Top Tips For Effective Remote Working: From Self Care To Maintaining Productivity

You can always talk to us if there is anything else we can do to help too.

Since last week, we have only published one key new blog, which might be of interest to some of you who own limited companies:

• R&D Tax Credit: Your route through the Coronavirus Crisis? – R&D Tax Credits are a great way to potentially get cash into your business relatively quickly. If you think you could be eligible, get in touch today and we can discuss this further.

UK Support during the Coronavirus

The below are intended as recaps and updates so are not necessarily complete. Please see our earlier updates for a complete story, or visit our blogs. The big updates below are on the Self-Employed Income Support Scheme, the Job Retention Scheme, Rates Relief and Grants and the Business Interruption Loan.

Self-Employed Income Support Scheme (SEISS)

The online service is still being worked on by HMRC, but they are aiming for it to be live from mid-May with payments made from early June 2020. Remember, unlike the Job Retention Scheme, you can continue to work and still claim this support, subject to the Government’s lockdown guidance.

If you or anyone you know still needs to submit their 2018/19 tax returns, remember this needs to be filed by 23 April 2020, if you want to make an application. If we can do anything to help, please do not hesitate to get in touch.

The application process will be through the Government Gateway:

• If you would like us to do this for you, we have gone through and checked we have the authorisation to talk to HMRC on your behalf. If we didn’t have access, we have requested this, so you should receive a code through the post in the coming days. Please share this with us as soon as you receive it, so we are ready to go.
• If you want to do this yourself, make sure you have access to your own Self-Assessment tax return online account. If you already have a government gateway account, please log in to make sure it works, and your password is correct or is renewed. Then ensure that Self-Assessment online services is available for you to use. If it is not, please follow the instructions to add it. You will need your National Insurance and Unique Tax Reference to hand when you do. If you do not have a government gateway account already, please visit https://www.gov.uk/log-in-register-hmrc-online-services to set one up. An activation code will need to be posted to you which is why we suggest you action this now. If assistance is required, consider consulting with a self-assessment accountant for guidance through the necessary procedures.

As mentioned before, as we haven’t seen the exact process, we don’t know how long it will take to complete the application. We, therefore, cannot confirm if/how much we will charge for this process, but please be reassured we will keep it as low as physically possible, especially given the current climate. We will update you as soon as we have further information.

Remember, you will only be able to claim using the Government Gateway. If you receive texts, calls or emails claiming to be from HMRC, offering support, it is highly likely to be a scam, so be careful.

Job Retention Scheme (CJRS)

The big announcement this week was the cut-off date has been moved from 28 February to 19 March 2020. As a result, more than 200,000 more employees could be furloughed as the government changes the scheme to help more people.

Monday, 20 April 2020, is D-Day, with the launch of the Portal for making applications to HMRC. They have been beta testing the platform all week with a sample of employees and it appears everything is in place for Monday. However, given the high number of applicants expected, we wouldn’t be surprised if the portal crashed, as the system struggles to cope with the high level of applications. We understand that reclaims for March and April will then follow shortly after. You, therefore, need to ensure you keep paying your employees, in line with the terms and conditions of employment, unless you have an agreement otherwise.

The bad news announced this week however was if you are furloughing less than 100 employees, you must manually enter them individually. It, therefore, is likely to be a slow and painful process. The CSV upload is only available to organisations which have 100+ employees being furloughed. Whilst we must commend HMRC for getting this system up and running so quickly, this lengthy process really should have been considered at the planning stage!

In terms of using the portal:

• If we do your payroll, you can rest assured we will take care of this for you. Where we aren’t currently authorised as your agent for PAYE, we requested this yesterday and contacted you to say a code will be coming through. As soon as you receive this, please share this with us so we are good to go.
• If you use an alternative payroll provider, make sure they are authorised to act on your behalf with HMRC on PAYE. However, we’d be delighted to help you here, if you wish.
• If you do your own payroll, make sure you have access to your PAYE online account. If you already have a government gateway account, please log in to make sure it works, and your password is correct or is renewed. Then ensure that PAYE Online for Employers is listed as a service that you can use. If it is not, please follow the instructions to add it. You will need your PAYE reference number and accounts office reference number to hand when you do. If you do not have a government gateway account already, please visit https://www.gov.uk/log-in-register-hmrc-online-services to set one up. An activation code will need to be posted to you which is why we suggest you action this now. However, if this all sounds like too much work, we’d be delighted to help you.

As mentioned before, we haven’t seen the exact process and don’t know how long it will take. We, therefore, cannot confirm if/how much we will charge for this process, but please be reassured we will keep it as low as physically possible, especially given the current climate. However, payrolls this month took up to five times longer than usual, due to all the furlough calculations, none of which we will charge for, as a goodwill gesture. We will update you as soon as we have further information.

HMRC have confirmed it is a requirement to notify employees and have proof of their agreement to be furloughed.

Directors

Specifically, on Directors, there is conflicting advice on what exactly Directors can do from the Government and HMRC, if they furlough themselves, especially if they are the sole Director. Whilst we don’t know how strict HMRC will be with enforcing the rules, we think it is best to err on the side of caution and stick to the seven general duties of Company Directors, outlined by Companies Act 2006. Our blog outlines these for you.

Additionally, we have drafted templates for:

• Board Minutes;
• Letter to Directors; and
• Responses from Directors.

Rates Relief and Grants

As these are administered by local councils, the status and process will depend on the council in question. Some councils are automatically getting in touch with businesses to confirm details and have made BACs transfers directly, others expect you to apply and they will get back to you. All of them now appear to be live and typically grants are transferred in a matter of days.

We, therefore, recommend that if you believe you are eligible, that you get in touch with your council today if you haven’t already. Sometimes we have found that the local office does not have up to date information on businesses so it might be necessary to update them and even appeal if you believe that the decision they reach is incorrect.

Business Interruption Loans

Based on the most recent numbers, it appears 6,020 loans have been made worth £1.1bn. Whilst this is nearly twice the position last week, so marks significant progress, this is still well behind the desired levels, especially when you consider that SME’s monthly payroll is approximately £41bn. Given most of the funds available through the Coronavirus Support Scheme are still unavailable, the key to this scheme was to cover the gap, which clearly has not happened.

The good news though is that several new lenders have joined the scheme, including Co-operative Bank, Cynergy Bank, OakNorth Bank and Starling Bank (and Coutts through RBS). We are hoping to see IWOCA, MarketFinance and Funding Circle and other similar challenger banks/fintech’s following soon, with the expectation that they will be more flexible and fast in processing applications.

We have seen some real success stories here, with clients securing large loans at great terms and don’t forget if you get rejected, we understand it shouldn’t hurt your credit rating, so if you aren’t successful on your first try, do consider applying again or using another lender under this scheme. Some lenders are taking a significant amount of time however and saying it will take 6-8 weeks to reply (thought to be because their checks are being outsourced to different countries and they have a backlog of claims to consider). Therefore, if you might need this lifeline in the next couple of months, it might be worth starting the process soon, if you haven’t already. Remember, however, whilst it is interest-free for 12 months, may not require a personal guarantee and can have other attractive features, it is still a loan so make sure you will be able to pay it back.

The scheme for large companies has now been released too, although this doesn’t impact very many of you, so we won’t detail this further here.

Other Key Measures

The other key measures where there haven’t been any substantial updates, but we include as a re-cap are:

• Charity Support;
• Deferring VAT Payments;
• Deferring Income Tax Payments;
• Statutory Sick Pay Relief;
• Universal Credit; and
• Government Helpline.

Capital Gains Tax (CGT) Changes on Disposal of UK Residential Properties by UK Residents

There are some substantial changes in the way tax is calculated, reported, and paid when UK residential properties are sold by UK tax residents after 6 April 2020. Our blog Capital Gains Tax Changes Coming 6 April 2020 details this further.

Earlier this week, the Government confirmed that there will not be any penalties for the late reporting up to and including 31 July 2020. However, interest will continue to accrue if the tax remains unpaid after 30 days. i.e., this relates to transactions completed between 6 April and 30 June 2020 and reported up to 31 July 2020. Transactions completed from 1 July 2020 onwards will receive a late filing penalty if they are not reported within 30 calendar days, under the new reporting rules.

This grace period has been provided to give those selling properties time to familiarise themselves with the change in the rules and online process. Given we have had a lot of conversations with conveyancing solicitors over the last month and many were unaware of the changes, this is much needed. Our blog has been updated to reflect these changes too.

Even before these came into play and the Coronavirus crisis became more serious, there had been a big impact on the housing market, with landlords only purchasing 8% of homes in the first three months of 2020, down from 15% in the final quarter of 2019, according to Hamptons International. This is their lowest market share for buy-to-let purchases in a decade.

Fraud is still Fraud

Don’t forget, fraud is still fraud, no matter what the climate. If you try and claim where you are not eligible for the support schemes, HMRC will not only look to claw-back the support provided, plus interest and penalties, they will also consider criminal prosecution. HMRC have already set up a specific hotline where employees can inform that they have been furloughed but are continuing to work and we expect similar measures to follow.

Black and White Accounting

This is a difficult time for everyone and we must come together to get through this. Our thoughts are with you, your family and your friends especially at this time.

If there is anything we can do to help you at this difficult time, please do get in touch by contacting Black and White Chartered Certified Accountants, populate the “Got a Question” form on the right, or call us on 0800 140 4644.