This note follows on from our last update on 21 March. It comes at a time when we are awaiting an announcement of further support from the Government for the self-employed and freelancers.
Points covered below are:
- Coronavirus Job Retention Scheme: update
- Rates holiday: clarification
- Business grants: clarification
- Business Interruption Loan Scheme: update
- HMRC liabilities and time to pay: update
- Insurance cover: update
- Self-employed and freelancers
- Companies House extension
Coronavirus Job Retention Scheme
There is a great deal of uncertainty in relation to whether the scheme will cover directors of own companies.
At this time, we do not believe that it will, but we must also point out that the measure is based around salary payments and, for most owner/directors, these are set at the NIC earnings threshold for tax efficiency. Even if it did apply, the value of this relief for those individuals is limited.
We continue to advise our clients on implementation of furlough – we have draft letters and guidance you can use. Most importantly, make sure that records of employees and dates are maintained so that details can be entered on the dedicated portal when it arrives.
There has been clarification of the types of business that would benefit from the relief available for businesses occupying premises of rateable value £15,000 and £51,000 in the retail, hospitality and leisure sector.
Technically, this relief is known as “Business Rates Retail Discount”. Check here (pages 5 to 8) to see if you qualify:
As previously noted, entitlement is expected to be automatic. However you may wish to investigate further and, if necessary, you should contact your local council to discuss the matter.
As you will know, the small business grant of £10,000 is not expected to be paid until early April. This is also automatic. Sadly, our previous view is now confirmed – the grant is linked to occupation of property, so you will not be entitled if you work from home or do not occupy business rated premises.
The higher grant of £25,000, is sector specific. The same criteria apply as for the rates holiday above.
Business Interruption Loan Scheme
We understand that the major banks now have details of the schemes and funding that is available under this Scheme.
We have been given a copy of the version being issued by one bank. From a brief review, it is clear that, as we expected, this is not a quick solution. To qualify for these loans (including the 12 month interest free period and no fees) you will have to demonstrate that you have been affected by the crisis (not difficult for most) and that you have exhausted all other funding avenues. Normal lending criteria will also apply, albeit that the banks will accept pre-crisis turnover and profit figures.
To follow this path, we strongly recommend that you contact your own bank in the first instance. In the event that this scheme will not work for you, your bank may be able to offer other forms of funding to you.
HMRC liabilities and time to pay
We understand that the dedicated hotline number (0800 0159 559) is extremely busy, but you will get through eventually.
Some Government guidance has changed since our last note (including advice on closing non-essential retail businesses). There has been further guidance on insurance cover, although we continue to understand that most policies will not be affected and Covid-19 is not covered.
Self-employed and freelancers
We understand that a bill is currently passing through Parliament proposing that the self-employed and freelancers will receive support comprising 80% of monthly net earnings averaged over the last three years up to a maximum of £2,917.
At this stage, this is not law but we understand that the Government have said that an announcement will be made in the next few days. We understand that the Government are still looking at the detail of this proposal but it is clear that something will be coming soon.
What is less clear is who this will cover. As most small businesses in the UK now operate via limited companies, we would hope that the Government will recognise this and make sure that directors of small companies, who are unable to claim elsewhere, will be able to claim under this section.
We will provide an update as soon as we can but in the meantime, keep an eye on the news.
Company filing extension
If you are a director, you will undoubtedly know that accounts must be filed within 9 months of your company year end.
From today (25 March 2020), businesses will be able to apply for a 3-month extension for filing their accounts. Companies will have to apply for this extension to be granted; those citing issues around COVID-19 will be automatically and immediately granted an extension. Applications can be made through a fast-tracked online system which will take just 15 minutes to complete.
We would usually expect to file extensions on behalf of clients wanting to use this extension, so please let us know if this is the case.
For recipients of this note who are not clients, or if you want to apply yourself, here is the link. https://beta.companieshouse.gov.uk/extensions?_ga=2.135485106.227783380.1584965618-962621089.1583406783 Please note that you need to register as a Companies House user if you are not already.
One small note of caution: please bear in mind that this does not affect corporation tax returns and payment of corporation tax. Additionally, if you plan to apply for finance, remember that accounts will undoubtedly still be required for any application, so it may not necessarily be helpful to rely on this extension.
As always, we are here to help and support you as far as we can. There are still areas of uncertainty although things are becoming clearer. We are endeavouring to keep you up to date with all relevant announcements and will pass on new information as soon as it is available.
If you need assistance or further guidance, please let us know. Check out further information on https://acklandwebb.co.uk/blog/