Coronavirus Support Update – 6 July 2020

Did you have a haircut, or a pint in the pub? Shame we can’t get our nails done yet or go to the theatre, but needless to say we should be able to soon, unless there is a second wave, so please be careful.

We wanted to provide a further update on the key Coronavirus Support Schemes, as there have been a few changes since our last email, in addition to remind you of some of the things which are coming up shortly.

Job Retention Scheme (CJRS)

Latest numbers released earlier this week show that the number of people on furlough has now hit 9.3m jobs from 1.1m employers, at a total cost so far of £25.5bn.

From the beginning of this month, the scheme is now more flexible to enable employers to bring previously furloughed employees back part time and still receive a grant for the time when they are not working (AKA ‘Flexible Furlough’), in line with the lightening of lockdown. Employers will decide the hours and shift patterns their employees will work on their return and will be responsible for paying their wages in full while working. This means that employees can work as much or as little as the business needs, with no minimum time that they can furlough staff for.

Any working hours arrangement agreed between a business and their employee must cover at least one week and be confirmed to the employee, in writing. When claiming the CJRS grant for furloughed hours, they will need to report and claim for a minimum period of a week. They can choose to make claims for longer periods such as on monthly or two weekly cycles, depending on what is best for them.

If, however, employees are unable to return to work, or employers do not have work for them to do, they can remain on furlough and the employer can continue to claim the grant for their full hours under the existing rules.

Don’t forget that from next month onwards, employers will have to start contributing to the wage costs of paying their furloughed staff (employer’s NIC and pension contributions) and this employer contribution will gradually increase in September and October, as shown below:

We have also seen a delay in payments this month. To date, HMRC have usually paid within six working days, but this month, they have been a day or two later that this, in some cases.

Please be careful not to commit fraud here. Nearly 4,500 employees have referred their employers to HMRC through their whistle-blower helpline for forcing them to work whilst on furlough. Some surveys suggest up to a third of employees have been asked to work during furlough.

We have already seen firms like IKEA and Taylor Wimpey pay back furlough claims they made in error to avoid further action from the Government. If you have overclaimed in a given month, you can make an adjustment in the following month’s claim. However, if you have made an underclaim, you will have to contact them directly to arrange the repayment on 0800 024 1222.

Self-Employed Income Support Scheme (SEISS)

Remember that this scheme has been extended with a second and final grant available in August, with a taxable grant worth 70% of your average monthly trading profits for three months, paid out in a single installment capped at £6,570. The eligibility criteria is the same as before and is available for those ‘adversely affected’ by coronavirus. HMRC define this as a business must have either temporarily stopped trading, or has been scaled back, and it suggests three possible causes for this reduction or cessation in trade as:

• supply chain has been interrupted;
• fewer or no customers or clients; and/or
• staff were unable to work.

Second Payment on Account

VAT Deferral

If you cancelled your Direct Debit for VAT to take advantage of the deferral under the coronavirus schemes, please reinstate this, as it has now come to an end. Payments after this are due as normal, unless agreed otherwise with HMRC. For these previous periods, even if payment was not made, the returns still needed to be filed.

Government-Backed Loans

Over £40bn has now been lent through government-backed coronavirus schemes, with over 304,000 businesses benefiting through Bounce Back Loans (CBBLS) £28bn, Business Interruption Loan (CBILS) £10.5bn and Large Scheme (CLBILS) £2.1bn. If you are not sure which scheme is for you, please get in touch and we’d be happy to talk this through with you.

Credit Card/Loan Holidays

The original support scheme here allowed a holiday on payments from April to June, if agreed with the lender, with the banks and building societies not allowed to put a black mark on your credit report for doing it. As this has proven to be so successful, with 961,700 payment deferrals on credit cards and 688,900 payment deferrals on personal loans made by banks, it has now been extended until the end of October. Whilst this is good news on the surface of it, interest will continue to accrue on balances, so we would encourage you to make payments on these, if you can.

Government Claw-Back

Whilst it is still draft legislation at this stage, we wanted to make you aware that if you have received support during COVID-19 (including CJRS, SEISS and potentially the business loans) which you were not entitled to (deliberately or in error), HMRC will look to claw this back in full. If this is not disclosed (potentially through a 30-day amnesty), there will be interest and penalties and if you are a company director, you could also be personally liable/prosecuted for the amounts owed to HMRC in some circumstances.

Summer Economic Update

The Chancellor Rishi Sunak will be issuing a Summer Economic Update next Wednesday, 8 July 2020. In what has been a baptism of fire, just days after he announced his first Budget back in March, he announced an ‘unprecedented’ £350bn economic package to prevent potentially the biggest economic contraction in 300 years from COVID-19.

It will be interesting to see what he announces, will he focus on rebuilding the economy, will he be more focused on managing the deficit/borrowing or will it be about clawing-back the funds provided wrongly as part of the coronavirus support scheme? Whatever happens, we will of course keep you updated.

Software Promotion

Are you interested in using Cloud-Based Accounting Software in your business but don’t currently use one? Or are interested in changing your existing provider? If so, we are offering 50% off if you sign-up to either Quick Books or Xero through us for the rest of the calendar year (Quote: SOFTWARE50). If this is of interest to you and you would like to hear more, please contact us.

HMRC has started sending out Making Tax Digital ‘nudge’ letters to firms they believe should have signed up to the scheme but have not already done so. These softwares are ideal for this, but also for others who may not fall under this legislation yet, but want to take advantage:

• Access to your financials anywhere in the world with wi-fi, from your computer, tablet, or phone;
• Better controls of your financial processes at your fingertips;
• Bank feeds to greatly reduce time doing your books, including bank rules to automate bank reconciliations;
• Additional functionality through endless Apps;
• Cost and time-effective solution, which is easy to share and collaborate with;
• High levels of security with no need to back-up; and
• Less paperwork so better for the environment

…to name but a few of the advantages.

If you know someone else who might benefit from this, please share this with them, as you could also benefit from the usual £25 John Lewis voucher as a thank you for the referral.

Big Belly Buster

As promised before, following on from the success of the Big Shave, we are delighted to announce our latest Charity challenge for the amazing Ark Cancer Centre Charity, in Basingstoke.

After lockdown laziness, Jon’s “sympathy” pregnancy weight (of nearly 6 years) has reached new and embarrassing levels, with his excuses all but running out, it’s time for a change.

From the beginning of this month, Jon is aiming to lose four stone in three months. It’s a stretch, but he needs the challenge, especially for such a great cause. Donations are welcome as absolutes, or as a measurement or weight goal. Regular updates will be included here and across all social media channels. Jon would like to claim this was his idea, but of course creativity is not his biggest virtue, it’s a great idea suggested by an esteemed client. More information can be found on our justgiving page.

Your donation will help to provide the care and support that local cancer patients, their families and loved ones need and deserve. The cancer treatment centre enhances the care received by patients and their families throughout their cancer treatment. Core treatments together with complementary therapies are provided in a calm and uplifting environment.

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.