The past 10 days have seen a good deal of change both in philosophy and in practical measures with much debate in public and private about how we, as a nation, proceed from here. It will be interesting to see how many of the changes in working patterns and daily habits endure or whether we begin to return to previous habits. Although there seems to be a clear desire for many to continue with alternative ways of working, this is not going to be possible for everyone.
We remain optimistic about the resourcefulness and enterprise of businesses and we are constantly encouraged that many business owners are using the time available to them to look for new business opportunities and new ways of reaching customers.
This briefing note provides updates and commentary on the following issues:
- Grants: the discretionary scheme
- Job intervention scheme: extension
- More talk of restart
- Business funding: BBLS and CBILS
- Self employed income support scheme:
- Home working
- And finally
Grants
Astonishingly, even though the small business and retail grants were only implemented last month, they are pretty much old news by now.
Less well known is that the scope of these grant schemes have been widened beyond the original criteria by the introduction of a new discretionary grant. The amount of this grant is variable up to a maximum of £25,000.
The upside (and downside) to this scheme is that the lack of strict criteria means it is difficult to apply for and even more difficult to be sure whether there is any prospect of success. However, the guidance seems to indicate that, unlike the small business or retail grants, a business may be eligible even if it does not occupy rated business premises. We understand that one of the purposes of this grant was to bring businesses occupying shared space into the scope of the grant funding.
The guidance can be found here:
If your business is not eligible under the small business or retail scheme, we suggest you look at this grant and, if you think you may be covered, contact your local authority.
Job retention scheme
You will know that the furlough scheme has been extended to the end of October, with employees’ pay continuing to be funded at the existing rate of 80%.
The official guidance indicates that a return to work on a part-time basis will be permitted from the start of August. The suggestion is that businesses will pay for the part-time element whilst the government will continue to pay for the furloughed element. This aspect is still in the process of being implemented – we will provide an update as soon as it is available.
Please remember that you must ensure your furloughed employees do not carry out work of any kind for you whilst on furlough. The only exception is directors, for whom it is accepted that essential administration and management tasks do not breach the furlough restrictions. It will be easy to relax and breach these rules, especially now that we are coming out of lock down, so please do take care. We note that over 800 companies are currently being investigated for incorrect or fraudulent claims, so this is not an idle threat on the part of HMRC.
Please also remember that employees can still be furloughed for the first time. The only restriction, which has unfortunately affected a very small number of employees, is that anyone furloughed must have been on your payroll and reported as such to HMRC before 19 March 2020. This effectively means they will have been on your payroll on 28 February.
We also remind you that you can take employees off furlough and then refurlough them, but each furlough period must be a minimum of three weeks in duration for you to be able to claim compensation.
If you have any doubt please contact us for specific guidance. We are here to help.
More talk of restart
As we mentioned some weeks ago, the real challenge for many businesses is planning for a restart. It is not yet clear how long it will take to get back to normal (whatever that may now be) but it is becoming apparent that there will be some key areas to consider, including:
- Cash flow
- Safe environment
- Security of supply chain
We have previously noted the additional cash flow pressure when businesses need to get moving again. More on this in 4 below.
What is becoming increasingly clear is that a major concern (and hurdle) for many businesses is the need to implement rules to ensure a safe environment for employees and for customers. There is much myth and misunderstanding in this area and we do not claim to be experts, but whatever your personal views, this is going to be a hugely important issue that businesses ignore at their peril, particularly if there is some risk of a second wave. There is a great deal of guidance from government and other sources, so please do use the information available to establish proper procedures and guidelines to enable you to operate safely in these unusual times. The government guidance can be found here:
We have referred to the need to secure regular supplies in previous updates. Clearly as you return to normal operations, this may well become a more pressing issue.
Business funding: BBLS and CBILS
By now, you will know the terminology. Both schemes are designed as funding specifically to help small and medium sized businesses through the crisis.
BBLS is for very small business and is capped at £50,000 or 25% of turnover. The application process is very simple.
CBILS is for loans of over £50,000. The application process is more complex but by no means impossible.
Both loans are interest and capital free for the first 12 months and have limited security requirements.
If you have not yet applied for either of these loans and you are not confident that you have sufficient cash flow to see you through the next three months, you should give serious consideration to these facilities. Remember that you cannot get both; if you have already received a BBLS loan, you cannot now apply for CBILS.
Self employed income support scheme
The scheme is well under way and many of you have now checked for eligibility and have lodged claims. We understand that payments will be made in early June. If you think you may be eligible and you have not yet checked, you should do so as soon as possible here:
You have to make the claim yourself – we cannot do this for you. Part of this process is to ensure you have an HMRC gateway account. Find out how to create one here:
https://www.gov.uk/personal-tax-account
One point to remember is that, unfortunately, the scheme is quite limited in scope and there can be unexpected outcomes. If you trade through a limited company, if your business profit exceeds £50,000, or if your profit is less than 50% of your total income, you may not be covered. We have also seen some adverse results for individuals who returned to self-employment part way through the 2019 tax year, or who have taken up employment since 5 April 2020. Under the scheme rules, all of these issues will affect your entitlement to a grant payment.
If you do not appear to be eligible, or if your claim is rejected, let us know and we will review the position for you. It is possible to appeal the HMRC’s decision but we do not expect this to be quick.
Home working
Most of the discussions we have seen relate to issues such as wellbeing and organisation.
However, it is worth mentioning that the government has temporarily relaxed the rules relating to reimbursement to employees of the cost of home office equipment. If an employer pays for such equipment, there are currently no adverse tax consequences for employee or employer. We should point out that it may be better for the company to source equipment in the first place, but at least the rules do not now penalise anyone wanting to do so themselves.
Many of you will be working from home or will have employees currently working from home. As far as we are aware, no employer has yet implemented a scheme to reimburse any costs of working from home on the understanding that employees will be saving the cost of travelling to work and this generally offsets the increase in the cost of domestic utilities. However, there is no reason why employees cannot claim tax relief on the cost of working from home directly from HMRC on the basis that it is incurred in connection with their employment. The impact is limited, with HMRC generally accepting a claim of £6 per week as being reasonable, but claims can be greater if the cost can be shown to be higher than this. We generally already make claims for directors, but employees may also want to be aware of this. We cannot deal with this on employees’ behalf but, if you are an employer and you want to mention this to your staff, please do so. The relevant claim document is HMRC Form P87 and to complete it, employees will need to create a gateway account (link here: https://www.gov.uk/personal-tax-account). It is probably a little early to take action and the amounts are not life-changing, but every little helps…
And finally
There is much debate this week about whether we will see tax rises to pay for the cost of the crisis. Although it may be the case that some rises will be unavoidable, it seems to us that such discussions are somewhat premature, particularly in view of the increasing predictions of an imminent recession. In our view, the focus for media and politicians alike should be on promoting a return to normality; there will be plenty of time to debate these issues in the future, once we have some idea what the next few years will look like.
We have heard reports recently of fraudulent bank websites. Although by no means “new” news, it is disappointing that this is hitting the headlines once again. Please do take care.
We gratefully digest all feedback and contributions and use these as part of our regular updates. Please do feel free to forward this to anyone who you think might benefit and do check out other information on https://acklandwebb.co.uk/blog/
We remain here to provide help and support as far as we can. If you need assistance or further guidance, please contact any one of the team.
As always, take care.
DM
20.5.20
