Support for Charity sector and other Coronavirus Support Update

As it has been nearly two weeks since our last Coronavirus Support Scheme Blog, it felt like time for an update. The big updates below are principally on the Support of Charities, Income Support Scheme, Job Retention Scheme and Rates Relief and Grants.

In addition to posting regular updates on our blogs, we are also active across social media (Facebook, Instagram, LinkedIn and Twitter) so please follow us here. You can also subscribe to our Newsletter at the bottom of our homepage, or by emailing us your first name and surname to [email protected].

Support of Charities

New measures were announced last night in regards to the Charity sector. We are still waiting for more flesh on the bone, but we currently understand there will be a £750 million package of support for frontline charities. This will be:

• £360 million direct from government departments; and
• £370 million for small and medium charities, including a grant through the National Lottery Community Fund. We understand tens of thousands of charities providing vital services will benefit from direct cash grants to ensure they can meet the increasing demand for their services as a result of the current crisis.

Additionally, the government will match donations to the National Emergencies Trust, as part of the BBC’s Big Night In fundraiser later this month to a minimum of £20 million. Don’t forget, Charities are also eligible under the Job Retention Scheme (more below) and Oxfam and Age UK have already furloughed 2/3 of their staff as a result.

Whilst it is great that charities are specifically getting the recognition for the critical role they play, especially at this time, some Charity Chiefs believe the black hole for charities is closer to £4bn. As more specific guidance is provided here, we will update you accordingly.

Income Support Scheme

Here the self-employed can claim a taxable grant worth 80% of their trading profits up to a maximum of £2,500 per month for the next 3 months (extended if needed). This will be available for:

• Those with trading profits worth up to £50,000;
• Where the majority of income is from self-employment;
  • Only those already in self-employment who have tax returns for 2018/19; and
• Will be provided even if you are still able to work, unlike the Job Retention Scheme outlined below.

Don’t forget if you, or anyone you know, haven’t submitted their 2018/19 tax return yet, please get in touch with us today, as this will need to be done before you can make an application. You have just two weeks to do this, with the deadline being 23 April. At this stage, we understand payments are still likely to be received in June.

It is likely the online application will be part of the Government Gateway. Therefore:

• If you would like us to do this for you, we have gone through and checked that we have 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 or you to use. If it is not, please follow the instructions to add it. You will need your National Insurance number and Unique Tax Reference to hand when you do. If you do not have a government gateway account already, please click here 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  professional self-assessment accountant for guidance through the necessary procedures.

As we haven’t seen the exact process, we don’t know how long it will take to complete the application. For this reason, we 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 know further.

Job Retention Scheme

This is the ‘furlough’ scheme for employees and potentially Directors, where if they are not working (effectively laid off), HMRC will reimburse 80% of their pay for up to £2,500 per person per month, where the individuals are furloughed for at least three weeks. We have a furlough template, if you would find this useful, please ask, although we have already provided it to many of you.

If you are a Company Director and considering furloughing yourself, please read our blog on the Statutory Duties of a Director of a Limited Company. for clarity on what you can and cannot do. If you are on furlough, you cannot work, you are limited only to fulfilling your seven duties as a Company Director, which this blog explains further.

The big update is you will be able to claim funding from the government using a new portal if you have furloughed any of your employees, as soon as 20 April. Although we have not yet been given full guidance from HMRC, it appears that the funding will need to be claimed through the government gateway service for employers.

Therefore:

• If we do your payroll for you, 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, if you wish, we’d be delighted to help you.
• 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 click here 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 above, we haven’t seen the exact process and don’t know how long it will take. Due to this, we 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 know anything further.

To make any of the above applications, we understand you will need:

• your ePAYE reference number;
• the number of employees being furloughed;
• the claim period (start and end date);
• amount claimed (per the minimum length of furloughing of 3 consecutive weeks);
• your bank account number and sort code;
• your contact name; and
• your phone number.

You will need to calculate the amount you are claiming and HMRC will retain the right to retrospectively audit all aspects of your claim. Don’t forget the normal terms & conditions of employment are the same, unless your employees agree to forgo these. Do speak to a HR Specialist or Solicitor if you need to.

This scheme is likely to cost £30-40bn over three months based on the latest numbers and the British Chamber of Commerce (BCC) suggest nearly a fifth of smaller firms plan to furlough all their staff and 50% of companies are putting most of their staff into the scheme. There is, however, still some areas where we are lacking clarity, for example on Apprentices, but we will keep you updated.

As we mention below, HMRC has set up a specific hotline where employees can inform on their employers who furlough them, but still expect them to work, so make sure you stay both within the letter and the spirit of the law here.

Rates Relief and Grants

Here businesses who get small business rate relief or rural rate relief will get grant funding of £10,000 and there is additional grant funding of £25,000 for retail, hospitality and leisure businesses with property with a rateable value between £15,000 and £51,000.

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 recommend that if you believe you are eligible, you get in touch with your council today. Typically, you will need:

• Account Reference (can be found on Rates bill);
• Property Reference (as above);
• Business or Company Name;
• Unique Tax Reference or Company Number;
• VAT Number (if applicable);
• Business Address;
• Applicant Name, Address and Title; and
• Bank Details for the Grant (bank, sort-code, account number and name of account)

Let us know if we can help you with any of this.

Business Interruption Loan

Offering loans of up to £5 million for SMEs through the British Business Bank, interest-free for up to 12 months, it could make a difference on some businesses, although it is still a loan and needs to be repaid.

This has been live for a couple of weeks now. However, so far, despite the Chancellor’s revamps to the scheme last week, as of yesterday just 2,022 loans had been made from around 300,000 applications, or 0.65% success rate. The £291.9m lent is microscopic especially when compared to the SME’s monthly payroll costs of roughly £41bn. This is progress of sorts versus the previous week, but it is still far behind what the Government intended. The removal of personal guarantees for loans less than £250,000 will help.

From our experience, whilst the conversation can be easier with your existing bank (if they are one of the 40+ lenders), do consider others on the panel, if required as some are more flexible than others. Also, we understand that if you are not successful with an application, it should not impact your credit rating and some businesses are finding success from re-applying, so if at first you don’t succeed (potentially consider), try, try again…

Deferring VAT Payments

If you are VAT registered your next payment of VAT (up to 30 June 2020) will be automatically deferred until the end of the 2020/21 financial year. If you pay by Direct Debit, this should be cancelled and reinstated before the next payment is due, to ensure HMRC do not take the payment out accidentally. However, VAT returns still have to be submitted as normal.

Deferring Income Tax Payments

If you pay under payment on accounts, your second payment for 2019/20 due 31 July 2020 can be deferred to 31 January 2021. This is an automatic entitlement, you don’t need to apply for it, but it is optional. You will still need to make this payment, so we are aware some of you are looking to pay it as normal or have already paid it.

Statutory Sick Pay Relief

They will refund up to two weeks of SSP per eligible employee, subject to the usual criteria.

Universal Credit

Enhanced for the self-employed, as is Housing Benefit. Nearly a million people have successfully claimed Universal Credit in the last two weeks, compared to about 100,000 applicants in a normal two-week period. You will need to be patient and it will take time (don’t blame the staff who are trying to help as best they can), but the support is here for you. This is subject to the usual criteria, however, only applies to those with savings less than £16,000. However, the cash advances now available could really make a difference to some.

Government Helpline

In addition to providing help and support they can arrange payment plans above and beyond the usual time to pay rules. Like with Universal Credit, you have to be patient, and you will need key financial information to hand to have a good conversation with them.

Directors of Limited Companies

We appreciate especially for Directors of Limited companies there is still much to be desired when it comes to these support schemes.

Whilst we don’t know for certain, at this stage, we do not believe that further measures of support to help you are likely to be forthcoming, unless of course the crisis goes on for much longer than they anticipate. Whilst we would love to be proved wrong, it appears the Government have made a conscious decision here; their rationale appears to be if they considered Dividends in the Self-Employed Income Support Scheme, these would include both from your own limited company, but also from much bigger companies (e.g., listed companies) and they are unsure if they would be able to distinguish between the two. Also there may have been many hints that they will look to tax everyone more in line with employees going forward , we will of course keep you updated if there are any changes here.

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 more similar measures to follow.

Anything Else?

Aside from the schemes mentioned, there are plenty of other things which you can do to help you and your business survive at the present time.

These include:

• Act now, plan, prepare and be ready, whatever the scenario;
• Prepare cashflow models for your business, to understand how your position is looking and when your issues will arise under different scenarios;
• Go through your profit and loss account; are there any costs you can strip out? Today, next week, next month? Do you need to set the ball-rolling now, especially as some services require a notice period;
• If you have a landlord (for business or personal) talk to them and see if there is any flexibility in your current arrangement. They are potentially getting relief, maybe they can pass this along to you to keep you as a tenant?;
• Manage your debtors and creditors. Don’t pay anyone before you need to and get money in from your customers as quickly as you can. Maybe look to see if you can extend credit terms, payment days or put things on direct debit to spread payments and ultimately improve your working capital;
• If you have any lenders, keep communicating. If you are going to have any issues with payment, the earlier you communicate the better. However, you never know, they may be able to accept delay payments, payment holidays or potentially even extend your current facility. Again, they might be getting some help here, so maybe they can pass this over to you. We have seen flexibility on mortgages, credit cards, store cards and overdrafts so it’s worth having a conversation; and
• On the personal front, we have seen some local councils allow payment holidays for rates on residential homes.

Further Updates

We will continue to keep you updated as more information about the existing support packages, or indeed new packages become available. If, however, there is anything else you would like to see us do, please just let us know. Please get in touch with us, if you would like to be added to our Newsletter and you will get this information even sooner.

Rishi Sunak’s words yesterday “We depend on each other” could not be truer and we all need to do whatever we can to help and support those around us at this time. But he also added that he couldn’t help everyone and again hinted that the differences between the ways the self-employed and the employed are taxed could be addressed. Whilst the above measures are likely to be extended, should the lockdown continue, it feels less likely now that there would be a package of support specifically aimed at those who are left behind, including Directors of Limited Companies. We would love to be proved wrong here. If you are having to make tough decisions as a result, do get in touch so we can talk it through, you are not alone at this time.

We hope you find these updates useful. We don’t have all the answers currently as new information is coming out every hour, but we will continue to keep you informed, as and when we get substantial updates. We are also keeping you updated via our blogs and across social media (Facebook, Instagram, LinkedIn and Twitter).

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.