Time to pay arrangements

A business which has or will have outstanding tax liabilities should consider contacting HMRC for a Time to Pay arrangement.

HMRC will consider:

• agreeing an instalment arrangement, typically over 12 months;
• suspending debt collection proceedings; and
• cancelling penalties and interest.

The dedicated helpline – 0800 0159 559 – is open Monday to Friday 8 a.m. to 8 p.m., and Saturday 8 a.m. to 4 p.m.

Delayed right of forfeiture for business tenancies

The Government has announced that legislation will be enacted to ensure that a business that is unable to meet a rent payment in the next three months will not be forced out of its premises.

Trade Credit Insurance

The government has announced that it will temporarily guarantee business-to-business transactions currently supported by Trade Credit Insurance.

Loans through the Future Fund

On 20 April 2020, the government announced a new source of finance for companies: the Future Fund (the ‘Fund’). The Fund, which is aimed at companies which rely on equity investment, and so which may be unable to access other support, will launch in May 2020.

The government will provide loans ranging from £125,000 to £5 million, subject to at least equal match funding from private investors.

To be eligible for a loan from the fund the company must have raised at least £250,000 from private third-party investors in previous funding rounds in the last five years.

Government guidance

Job Retention Scheme

Under the Coronavirus Job Retention Scheme (CJRS), an employer is able to a claim a grant from the UK government to cover part of the cost of paying the salary of an employee that would otherwise have been laid off (a ‘furloughed employee’).

A director of a limited company is not eligible for a grant under the Self-employed Income Support Scheme.

HMRC’s guidance states that directors, including directors of personal service companies (PSCs), are eligible to be furloughed under the Job Retention Scheme.

Qualifying for the CJRS

All UK employers that had created and started a PAYE payroll scheme on or before 19 March 2020 are eligible for the CJRS. The employee must undertake no work for the employer in order to qualify as a furloughed employee. Only employees that were on the payroll on or before 19 March 2020, and which were notified to HMRC on an RTI submission on or before 19 March 2020 are eligible for the CJRS.

Warning!

The employer will need to consider a number of issues before they decide to furlough staff, including the employee’s employment rights and equality and discrimination laws.

Extension of filing deadlines

A company which is unable to file its accounts with Companies House on time should consider applying for 3-month extension. This may prevent the imposition of a fixed penalty.

Warning!

Unlike some other measures, this is not given automatically – the company must apply to Companies House for an extension.

It is possible to apply for an extension online.

Statutory Sick Pay (SSP)

A number of changes have been announced with regard to SSP, including that a UK-based small or medium-sized enterprise (SME) is entitled to reclaim SSP paid for sickness absence due to COVID-19. Key points to be aware of with regard to this facility are that:

• the refund will cover up to 2 weeks’ SSP per eligible employee;
• the government does not require the employee to provide evidence of their illness. If the employer requires evidence for their own purposes, the employee should be asked to request an isolation note from NHS 111 online or, where they live with someone that has symptoms, from the NHS website; and
• the eligible period for the scheme and the mechanism for claiming the repayment have yet to be determined.

For this purpose, a business is a SME where it had fewer than 250 employees on 28 February 2020.

Other statutory payments

The rules for some family-related statutory payments (eg Statutory Maternity Pay) have been changed to ensure that the employee is not disadvantaged as a result of being furloughed under the Coronavirus Job Retention Scheme.

Annual leave

The government has announced that workers who have not taken all of their statutory annual leave entitlement due to COVID-19 are able to carry it over into the next 2 leave years.

Tax-free allowance for homeworkers

This is increased from £4pw to £6pw from April 2020.

Relief from making VAT payments to HMRC

All UK businesses are removed from the need to make a VAT payment to HMRC during the period from 20 March 2020 to 30 June 2020. The relief does not extend to VAT MOSS or import VAT. The relief is given automatically; i.e. the business does not need to make a claim.

Warning!

Where a direct debit is in place, the business will need to cancel the direct debit. This was confirmed by HMRC on 26 March.

All relevant VAT payments are deferred to 31 March 2021.

The business will be required to submit VAT returns as normal. VAT refunds and reclaims will be paid by the Government as normal.

Temporary zero-rating of PPE

The government has announced that a temporary VAT zero rate applies from 1 May to 31 July for the supply of Personal Protective Equipment (PPE) recommended for use in connection with COVID-19.

Grant for businesses that pay low or no business rates

The rules in this area differ depending on whether the property is in England, Wales, Scotland or Northern Ireland; unless stated otherwise, the rules broadly applying in the UK are summarised below. Please follow the links below to the guidance issued by the UK, Scottish and Welsh Governments and by the Northern Ireland Executive.

Broadly, a business that:

• occupies a property in the UK; and
• receives Small Business Rates Relief (Scotland: Small Business Bonus Scheme) or Rural Rates Relief (Scotland: Rural Relief) in respect of that property,

is entitled to a one-off grant of £10,000.

For businesses in the retail, hospitality and leisure sectors, the grant is increased to £25,000 in certain circumstances.

On 2 May, the UK government announced additional funding for local authorities in England to support small businesses with ongoing fixed property-related costs. The allocation of funding is at the discretion of local authorities.

The grant is a State Aid under the Framework and as such is subject to the overall cap on such aid.

Coronavirus Business Interruption Loan Scheme (CBILS)

A small business is able to claim finance (e.g. a loan or overdraft) through the Coronavirus Business Interruption Loan Scheme (CBILS) of up to £5m. The loans are 80% guaranteed by the Government and the Government will meet the cost of the first years’ interest charges and any fees imposed by the lender.

To qualify for the CBILS, the business must:

• be UK based;
• have annual turnover of no more than £45m; and
• satisfy the eligibility criteria set out by the British Business Bank (BBB) – see the quick reference guide and detailed guidance provided by the BBB.

The CBILS is delivered through commercial lenders. Should the business wish to apply, it should contact its lender or one of the accredited providers.

On 3 April, the chancellor announced some changes to the CBILS intended to make it easier for companies to secure a loan. These include:

• extending the CBILS to all small businesses affected by COVID-19, not just those unable to secure regular commercial financing;
• preventing lenders from requesting personal guarantees for loans under £250,000; and
• making operational changes to speed up lending approvals.

A business that is unable to access finance through the CBILS may wish to consider the Coronavirus Bounce Back Loan Scheme (CBBLS) or the Future Fund

Coronavirus Bounce Back Loan Scheme (CBBLS)

A small business may apply for a government-backed, low-interest loan of between £2,000 and £50,000 under the CBBLS. The CBBLS opened for applications from 4 May.

The loan, which is 100% government-backed, is arranged through one of a panel of accredited lenders. There are no fees or interest for the first 12 months and a low rate of interest for the remainder of the term. The maximum term of the loan is six years.

Only eligible businesses may apply for funding under the CBBLS. A business is an eligible business where it satisfies all of the following conditions:

• it is based in the UK;
• it has been negatively affected by COVID-19;
• it is not an excluded business. Excluded businesses are:
  • banks, insurers and reinsurers (but not insurance brokers);
  • public-sector bodies; and
  • state-funded primary and secondary schools; and
• it is not already claiming funding under the CBILS (above). It is possible to transfer a loan of £50,000 or less from the CBILS to the CBBLS.

Note

A number of changes have been made to the CBBLS since it was first announced, including that:

• it is no longer a condition of the scheme that the business was not an ‘undertaking in difficulty’ on 31 December 2019; and
• granted-funded further education establishments are now able to make a claim.

COVID-19 Corporate Financing Facility (CCFF)

The Bank of England will buy short-term debt from larger companies under the COVID-19 Corporate Financing Facility (CCFF).

There is detailed guidance on the CCFF on the Bank of England’s website, here.

Coronavirus Large Business Interruption Loan Scheme (CLBILS)

On 3 April, the Chancellor announced a new source of government-backed funding for large companies: the Coronavirus Large Business Interruption Loan Scheme (the Scheme).

The Scheme will provide a government guarantee of 80% to enable banks to make loans of up to £25 million to firms with an annual turnover of between £45 million and £500 million.

Loans made under the Scheme will be offered at commercial rates of interest.

Further details are expected later this month.

Deferral of IR35 changes

The Government has announced that the proposed changes to the IR35 rules for larger private-sector businesses will be delayed by one year, to 6 April 2021.

For guidance on IR35 generally, see this Quick Link.

Charities

On 8 April, the UK government announced a £750m package of support for charities throughout the UK. This would appear to be in addition to the funding available to charities in Scotland through the Third Sector Resilience Fund (see here).

The government has published COVID-19 guidance specific to charities, here. This includes information on using reserves and restricted funds, holding AGMs and accounting for charities (the Charity SORP).

HMRC has announced that where the charity is allowed to keep the fee for a cancelled event, the fee will qualify for Gift Aid in certain circumstances.

Following discussions with the government, the Charity Tax Commission has advised that:

• where the charity has suspended membership subscriptions and an individual continues to pay, the amount received may be treated as a donation for the purpose of Gift Aid (here); and
• the government have relaxed some of the procedures around Retail Gift Aid (here).

Where it is likely that the charity will not be able to submit its annual report by the deadline, it should consider contacting the Charity Commission for an extension (see here).

Exporters

The government has relaxed some of the rules and procedures for moving goods through customs (see the government’s guidance) and with regard to customs authorisations (see here).

UK Export Finance (UKEF) can provide assistance through:

• guaranteeing bank loans through its Export Working Capital Scheme;
• offering an export insurance policy that can help the business recover the costs of fulfilling an order that is terminated by events outside the business’ control; and
• supporting finance for overseas buyers through the Direct Lending Facility scheme.

In addition, UKEF has over £4bn of capacity to support UK firms exporting to China, as well as significant capacity across other markets affected by COVID-19.

The Department for International Trade (DIT) can:

• provide assistance with customs authorities to ensure smooth clearance of products;
• offer advice on intellectual property and other issues with business continuity; and
• help the business to find alternative suppliers.

Fishing industry

There are cash grants for fishing and similar businesses across the UK.

Government Guidance: business in England; Scotland; Wales; Northern Ireland

Importers

Relief may be claimed in respect of import duties and VAT on protective equipment, relevant medical devices or equipment brought into the UK from non-EU countries during COVID-19 outbreak.

Government guidance 

Nursery businesses

There is a business rates holiday for nurseries in England for 2020–21.

A property that is:

• occupied by providers on Ofsted’s Early Years Register; and
• wholly or mainly used for the provision of the Early Years Foundation Stage,

will qualify for relief.

The relief will be given automatically by the relevant local authority; i.e. the business does not need to make a claim. Detailed guidance for local authorities on the business rates holiday can be found on GOV.UK.

Innovation

Innovate UK offered grants of up to £50,000 for projects where the intention was for “realistic and significant benefits for society (including communities, families and individuals) or an industry that has been severely impacted and/or permanently disrupted by the Covid-19 pandemic”. The closing date for applications was 17 April. For further details, see here.

Companies engaged in R&D may be more likely than companies engaged in other sectors to qualify for funding under the Future Fund.

The Chartered Institute of Taxation (CIOT) has published guidance from HMRC with regard to claims for R&D tax relief and the disruption caused by COVID-19.

Retail, hospitality and leisure businesses

The rules in this area differ depending on whether the property is in England, Wales, Scotland or Northern Ireland; unless stated otherwise, the rules broadly applying in the UK are summarised below. Please follow the links below to the guidance issued by the UK, Scottish and Welsh Governments and by the Northern Ireland Executive.

There is a cash grant of up to £25,000 for retail, hospitality and leisure businesses.

Qualifying properties are those that are used wholly or mainly:

• as shops, restaurants, cafes, drinking establishments, cinemas and live music venues;
• for assembly and leisure; or
• as hotels, guest and boarding premises and self-catering accommodation.

The cash grant is given by reference to the rateable value of the property, as set out below:

Planning point

As the grant is payable by reference to the rateable value of the property, and not the size of the business that occupies it, it is expected that a wide range of businesses in the retail, hospitality and leisure sectors will benefit.

We can help with all of your business and personal tax and financial planning needs. For a strategic review of your finances, please contact us.

Disclaimer: We don’t take any responsibility for actions taken based on above information. Please speak to our consultants if you need more information. This guide was written specifically for Smart Accounting clients. Some of the information contained in this guide might not be applicable if you do not have a business managed by Smart Accounting. By necessity, this briefing can only provide a short overview and it is essential to seek professional advice before applying the contents of this article. No responsibility can be taken for any loss arising from action taken or refrained from on the basis of this publication. Details are correct at time of writing.