This briefing note provides further and new information available as of today’s date.
In this note, we will cover:
- Small business grants: update
- Guidance to landlords (and tenants)
- Reminder on social distancing
- Wrongful trading rules
- Self-employment Support Scheme and self assessment tax payments
- Update on Job Retention Scheme: directors
Grants
The official guidance states that grants will be paid automatically.
However, Folkestone and Hythe District Council (FHDC) have updated their website and require any business eligible for either grant to apply by completing the relevant section of their site. Here is the link (for FHDC only): https://www.folkestone-hythe.gov.uk/business-grant-fund
It is not clear at this stage whether failure to apply means you lose any entitlement. We strongly recommend any business covered by FHDC should complete this form as soon as possible.
We understand that Canterbury City Council will be launching their portal in a few days’ time so keep checking for availability. We assume that all other councils will be doing something very similar so suggest that, if you are eligible, you keep checking your local council site on a daily basis.
Further detailed guidance has been issued overnight on the small business grant and the grant for the retail, hospitality and leisure sectors. Access this here: https://assets.publishing.service.gov.uk/government/uploads/system/uploads/attachment_data/file/876893/small-business-grant-fund-retail-guidance-vers-3.pdf
Guidance to landlords (and tenants)
HMRC have issued guidance. This seems to mostly cover legal responsibilities in these extraordinary times, but we know that many of you own rental properties so it may be useful for you to read these notes. Find them here:
https://assets.publishing.service.gov.uk/government/uploads/system/uploads/attachment_data/file/876500/Consolidated_Landlord_and_Tenant_Guidance_COVID_and_the_PRS_v4.2.pdf
Reminder on social distancing
Whilst this falls outside the usual remit of accountants, it may be useful to remember that social distancing guidance applies to the work place, even if your business is not covered by the trading restrictions implemented just over a week ago. Remember that, as an employer, you have a responsibility under health and safety legislation and social distancing forms part of that. Although it is undoubtedly yet another burden, you should have a company policy on safe working during the crisis. If you do not have a policy, please let us know; we can help you to formulate something.
Wrongful trading rules
The Government has announced a relaxation of the wrongful trading rules. Broadly speaking, this relates to a director’s potential personal liability for company debts if trading whilst insolvent.
This is a very complicated area and any initiative to help directors is always welcome in these difficult times. This is a good opportunity, however, to remind all directors who are paying themselves dividends (which will be most of you) that dividends can only be paid out of retained reserves. If you think your company is approaching an insolvent position, you must stop paying dividends and switch to a salary, however tax inefficient that might be.
If you are at all concerned about this, please give us a call.
Self-employed Support Scheme and self assessment tax payments
As you will know, sole traders and partners in partnerships may be entitled to claim a support grant from the government. There are restrictions on eligibility and not everyone will be able to apply. If you need assistance in assessing your eligibility or the amount of any potential claim, please let us know.
You are also reminded that the July tax payment is now deferred to 31 January 2021. We note that some individuals may have allocated overpayments of tax for the 2019/20 tax year to the payment on account due 31 July. Given the extension of the due date for the liability, if you are in this position, you may wish to consider reclaiming the refund now to free up cash flow rather than leaving it on deposit with HMRC for the next 9 months.
Updated guidance on the Job Retention Scheme: directors
In our update of 27 March 2020, we stated that a controlling (or managing) director could not claim under the Scheme as they could not furlough themselves. We have received updated guidance which indicates that there are certain circumstances in which a claim can be made for a controlling director.
Broadly speaking, a claim may be made where the company has suspended trading and where the director is carrying out only those administrative or management duties necessary to keep the company ticking over. The claim will be based on the amount paid as salary via the company payroll. In most cases this will be 80% of £719, or £575.20 per month (per director).
This may be a suitable point to remind you that HMRC have said they will name and shame companies that abuse this Scheme. This should not stop any company with a genuine right to claim from doing so, but clearly some care should be taken to make sure this is done correctly.
If you wish to discuss implementing the revised guidance, please contact us.
And finally
Some of the information in this briefing results from feedback from clients and contacts. Thank you if you have provided feedback. If you have any information to share, please do let us know and we will pass it on.
As always, we remain here to help and support you as far as we can. If you need assistance or further guidance, please let us know. Check out other information on https://acklandwebb.co.uk/blog/
DM
31.3.20
