Critical Covid 19 Business and Tax Updates
Helping Business in a crisis - Fast moving though the present situation is we will try to keep our friends and clients abreast with our freshly created Corona Virus Business update page signposting toward assistance. It may be that this information is quickly superseded as events move so quickly but we will try to keep abreast:
Updated 13 April 14.45 (previous 24 March 08.1020 March 2020 Midday 19 March 2020 16.00)
ICAS webinar on Covid shared:
Scottish Government Business Support Fund Now Open
Business Rates, HMRC payments and Sick Pay:
With COVID-19 / Coronavirus impacting every area of society, the Government has implemented a number of changes around HMRC payments to help support businesses. But what are they all and how might they assist you and your business?
In this article we at E F Accountants have created a summary; hopefully an overview of where HMRC will show flexibility (and who to) and what you must do to take advantage of them.
Whilst many businesses will face challenges ahead, we at are here to help and support you in the weeks and months ahead - you can contact us at any time.
Time to Pay – VAT, Corporation Tax, PAYE and CIS
These arrangements are agreed on a case-by-case basis and are tailored to individual circumstances and liabilities, however our experience so far has shown that HMRC are being very flexible with payment deferrals.
Whilst initially targeted towards specific industries (travel, entertainment, bars, restaurants and hotels), we have seen clients in other sectors negatively impacted also make successful applications for deferrals. At present HMRC will consider deferring payments for Corporation Tax, PAYE and/or CIS where the business is affected by the virus. Automatic deferment of all VAT has just been announced, covering VAT due over the next three months (see below).
After an initial deferment (where applicable), the business can also apply for further assistance via a Time to Pay arrangement. Typically, instalments of no longer than 12 months can be granted, however under these circumstances we expect there to be special concessions made.
HMRC are prepared to discuss this situation where a business with a current Time to Pay arrangement in place that they now cannot or will struggle to meet due to the disruption caused by the virus.
HMRC will take into account your specific circumstances when considering:
Agreeing an instalment arrangement (see below)
Suspending debt collection proceedings
Cancelling penalties and interest where you have administrative difficulties contacting or paying HMRC immediately.
Please note, if you have an automated bank transfer set-up for HMRC payments, it may be worth you cancelling that for the time being, to ensure payments are not made automatically that you are in the process of trying to defer. So far repayments of taxes recently paid arent available but this may change as things are moving very fast as the Government tries day by day to limit the economic damage.
VAT specific deferment (updated Monday 23 March):
VAT liabilities arising during the period 20 March 2020 to 30 June 2020 will automatically be deferred by 3 months without the need to apply.
Businesses will be given until the end of the 2020/21 tax year to pay any VAT arising during this deferral period.
VAT reclaims and refunds will be processed as normal.
Please note, VAT returns MUST still be filed, there is just no need to pay the VAT arising at this time due to the deferral relief.
This is all in addition to the time to pay offer currently operated by HMRC.
Other Support Measures
Noted below are some further measures the Government are introducing to support businesses through this time.
Support for Individuals Affected by COVID-19:
Statutory Sick Pay (SSP) will now be available for eligible individuals diagnosed with COVID-19 or those unable to work because they are self-isolating in line with Government advice.
SSP will be payable from day 1 instead of day 4 for affected individuals.
People who are advised to self-isolate for COVID-19 will soon be able to obtain an alternative to the fit note to cover this by contacting NHS 111, rather than visiting a doctor.
Those who are not eligible for SSP, e.g. self-employed earning below the £118/week, can now make a claim for Universal Credit or Contributory Employment and Support Allowance.
Support for Businesses Affected by COVID-19:
Emergency legislation is being passed that means employees suffering from Covid19 will be entitled to SSP from day 1. The Government have also advised that they will rebate employers but are yet to advise exactly how this will work however, HMRC do advise that "The Government will work with stakeholders over the coming months to set up a repayment mechanism as soon as possible.".
The eligibility criteria for the scheme will be as follows:
This refund will cover up to two weeks’ SSP per eligible employee.
Employers with fewer than 250 employees will be eligible.
Employers will be able to reclaim expenditure for any employee who has claimed SSP as a result of COVID-19.
Employers should maintain records of staff absences, but employees will not need to provide a GP fit note.
The eligible period for the scheme will commence the day after the regulations on the extension of SSP to self-isolators comes into force.
Changes to business rates:
Business Rates – Scottish Businesses:
Full non-domestic rates relief for retail, hospitality and leisure sectors for one year.
Small businesses in receipt of the Small Business Bonus Scheme or Rural Relief will be eligible for a £10,000 grant.
Businesses in the hospitality, leisure and retail properties with rateable values of £18,000 - £51,000, will be eligible for a £25,000 grant.
1.6% rate relief for all properties.
It is anticipated that applications for grants will be via your local authority. The above measures are all effective from 1 April 2020.
The Scottish Government are also urging local authorities to allow pubs and restaurants to operate as takeaways on a temporary basis by relaxing planning rules to facilitate this.
Business Rates – Rest of UK businesses:
2020/21 Business Rates holiday for retail, hospitality and leisure sectors in England.
For businesses operating in the retail, hospitality and leisure sectors operating from smaller premises with a rateable value of £15,000 - £51,000, a £25,000 grant will be available.
For businesses operating in the retail, hospitality and leisure sectors operating from smaller premises with a rateable value of less than £15,000, a £10,000 grant will be available.
Properties which benefit from the Business Rates holiday will be used wholly or mainly for:
Shops, restaurants, cafes, drinking venues, live music venues and cinemas.
Places of leisure and assembly.
Self-catering accommodation, hotels and guest and boarding premises.
Rates holiday now extended to include certain nurseries in England who meet the following criteria:
The properties are hereditaments.
Occupied by providers on Ofsted’s Early Years Register.
Property is used wholly or mainly for the provision of the Early Years Foundation Stage.
No action is required by qualifying businesses. If local authorities have already issued you with your rates notification commencing in April 2020 you will be reissued with a revised notice removing the business rate charge. This will be reissued as soon as possible.
For businesses operating in the retail, hospitality and leisure sectors operating from smaller premises with a rateable value of £15,000 - £51,000, a £25,000 grant will be available on application to your local authority.
Businesses which are already paying little or no Business Rates because of Small Business Rate Relief (SBRR) or who are currently eligible for Rural Rate Relief will be eligible for an increased one-off grant of £10,000. Businesses in the category will be contacted by their local authority with no need to apply. Funding will be provided to the local authorities in early April.
Information on the Coronavirus Business Interruption Loan Scheme, and any other business loans available, can also be discussed with you if you E mail us.
Qualifying businesses will be contacted by their local authorities shortly. Local authorities will be provided with guidance on the scheme shortly. If you have any enquiries on eligibility these should be directed to the relevant local authority.
Need help? Contact us!
01479 812211 or E mail firstname.lastname@example.org
Tax helpline to support businesses affected.
A dedicated helpline has been established to help businesses and self-employed individuals in financial distress, and with outstanding tax liabilities, receive support with their tax affairs. Through this, businesses may be able to agree a bespoke Time to Pay arrangement. If you are concerned about being able to pay your tax due to COVID-19, HMRC’s dedicated helpline is 0800 0159 559.
E F Accountants are available to assist and advise any clients in negotiating and agreeing a Time to Pay arrangement with HMRC.
To contact HMRC, yourself or for us to do so on your behalf, you will need to know:
Reference number (e.g. 10-digit Unique Taxpayer Reference or VAT reference number).
Value of the tax bill you’re finding it difficult to pay and the reasons why.
How the virus has affected the business.
The impact it has had e.g. have orders been cancelled, is the office closed?
Attempts made to raise the money to pay the bill.
How much you can pay immediately and how long you may need to settle liability.
Despite HMRC not requiring any documentary evidence to prove that a business has been affected by the coronavirus, they will consider your business's industry sector when making their decision.
When contacting HMRC to arrange a time to pay the normal identity checks will be carried out, but you will also need the month ending for last VAT return period and the box 5 figure on the last return.
Self-employed & personal tax payers:
The assistance available around the self employed, self assessment tax payers and individual support generally is moving quickly.
Currently we know that:
For self-assessment payments due on the 31 July 2020, these will be deferred until the 31 January 2021.
HMRC currently states that if you are self-employed you are eligible. [It has not yet been clarified if this also applies to those people in self-assessment who are NOT self-employed, but we are trying to seek clarification and will update this as soon as we know.]
This is an automatic offer with no applications required.
No penalties or interest for late payment will be charged in the deferral period.
This is all in addition to the time to pay offer currently operated by HMRC.
Working Tax Credits:
As part of a number of measures to support the country during the coronavirus (COVID-19) pandemic, Working Tax Credits payments will be increased by £20 per week from 6 April 2020 until 5 April 2021.
The amount a claimant or household will benefit from will depend on their circumstances, including their level of household income. But the increase could mean up to an extra £3,040 in the 2020 to 2021 tax year.
If you claim Working Tax Credits, you don’t have to take any action or contact HMRC - the increase in your payments will start from 6 April 2020.
Business Loan Support:
There have been various measures implemented to support businesses through this period of disruption caused by COVID-19.
Summary of loans available:
Small business grant funding of £10,000 for all business receiving small business rate relief or rural rate relief.
Grant funding of £25,000 for retail, hospitality and leisure businesses with property with a rateable value of £15,000 to £51,000
The Coronavirus Business Interruption Loan Scheme (“CBILS”) offering loans of up to £5 million for SMEs through the British Business Bank (more details below)
A new lending facility from the Bank of England to help support liquidity among larger firms, helping them bridge coronavirus disruption to their cash flows through loans. Referred to as the Coronavirus Corporate Financing Facility, this is designed to provide a quick and cost-effective way to raise working capital via the purchase of short term debt. This will support companies which are fundamentally strong, but have been affected by a short term funding squeeze, enabling them to continue financing their short term liabilities. Further details, including on how to access this funding will follow soon, and the scheme are due to be available from the week commencing 23 March 2020.
The full details are still under development and as above, this blog will be updated with full details when we have them.
Coronavirus Business Interruption Loan Scheme (“CBILS”):
The recent announcement regarding this funding scheme (including loans, overdrafts, asset finance and invoice finance) outlines that the scheme will become available in week commencing 23 March 2020. Summary details available at present are:
Funding will be provided by the British Business Bank through participating providers offering more attractive terms for both businesses applying for new facilities and lenders.
The lender receives a government-backed guarantee against the outstanding facility balance, potentially enabling a ‘no’ credit decision from a lender to become a ‘yes’.
The Government will cover the first 12 months of interest payments. The business remains liable for repayments of the capital.
Government will also pay for the lender-levied fees in relation to arranging this financing to alleviate initial set-up costs for businesses.
The maximum value of a facility provided under the scheme will be £5 million, and for up to 6 years.
Full eligibility criteria will be published in due course but to be eligible for support via CBILS, the business must:
Be UK based, with turnover of no more than £45 million per annum.
Operate within an eligible industrial sector (a small number of industrial sectors are not eligible for support – see below).
Be able to confirm that they have not received de minimis State aid beyond €200,000 equivalent over the current and previous two fiscal years.
Have a sound borrowing proposal, but insufficient security to meet the lender’s requirements.
Finance terms are from three months up to ten years for term loans and asset finance and up to three years for revolving facilities and invoice finance.
Please note that a limited number of further eligibility restrictions will apply.
Almost all business sectors are eligible, however there are a small number of excluded/restricted sectors arising primarily from EU de minimis-State aid rules.
We work with the majority of the providers in Scotland on a regular basis and will be able to assist you through the application process once things become clearer. Again this info will be updated as more details are available.