TC Group remains on hand to help you through the challenges you are currently facing. Below are some of the priority areas we are working on for clients:
Clarification on the Government Scheme to pay up 80% of staff wages CJRS – and the implications on your payroll processes
The scheme has been set up by the Government to cover 80% of staff wages; however, this won’t be live for 2-3 weeks, and grants are unlikely to be paid until the end of April.
Further clarification on the scheme is urgently required as there are still lots of unanswered questions (see our CJRS overview here for full details). One of the main questions we are being asked by clients is whether you can effectively ‘part furlough’ employees, so reducing hours worked per employee as an alternative to reducing head count. We believe it is imperative that the legislation addresses this point as this would allow businesses the flexibility they need to continue trading whilst protecting jobs.
We understand the pressure businesses are under to make a decision on this but we are encouraging all clients to wait for the government clarification later this week and then speak to us so to ensure we can optimise your position within the confines of the guidance/legislation.
Payroll / Furlough Processes
Whilst we don’t yet fully understand the mechanics of the CJRS scheme described above it is clear that this is going to significantly complicate the payroll process for the foreseeable future. The month end (or period end) process will now require a combination of commercial, legal, HR, tax and financial processes all working in sync to ensure you comply with all of the necessary legislation and more importantly get the money you need to continue trading. We are encouraging all TC clients to talk to us urgently about their payroll processes and wherever possible handing this over to the TC team who can manage this from start to finish and avoid the complications of internal teams or 3rd parties trying to interpret our guidance.
Cancel VAT and other direct debits
VAT payments will be automatically deferred between 20 March 2020 and 30 June 2020 until April 2021. All UK businesses are eligible, and no applications are required. We understand that HMRC will continue to expect businesses to submit VAT returns, although payment is not required. There is no mention so far about direct debit payments. However, the information available at the time of writing suggests that the payment runs are automatic and therefore, may be problematic.
Accordingly, TC Group advises that clients cancel direct debits with their bank to make sure no payment is taken. Contact us if you need help preparing your next VAT return.
Government funding update – Business Interruption Loans Scheme
12-month interest-free loans have now been available for two days (under the Coronavirus Business Interruption Loan Scheme). The roll-out of the scheme is more challenging than we had hoped, and we understand the frustration that is being experienced by many of those who urgently need the assistance. We are hopeful that the Government will consider the feedback that is starting to emerge and encourage the banks and other institutions to loosen their lending criteria where possible so the funds can more easily reach the clients that need them. As a reminder we are working with multiple clients, brokers and banks and remain on hand to help, so please contact us immediately so we can assist you through this process, we are anticipating significant delays if you don’t act quickly.
The Government is expected to extend urgent financial aid to the UK’s five million self-employed workers and freelancers in the coming days. Currently, sole traders can access £94.25 a week in universal credit benefits and defer their payments on account, due on 31 July, until 31 January 2021. Parliament is currently discussing an extension to the coronavirus bill, which may include the introduction of statutory self-employed pay.
If approved, HMRC would subsidise whichever is the lower of £2,917 a month or 80% of a sole trader’s wages using an average from the last three tax years. Statutory self-employed pay would be similar to the coronavirus job retention scheme announced last week.
Owner directors of companies who may take a nominal salary and top this up with dividends may have limited support from CJRS and may not qualify for this support. As soon as more information is released, rest assured we will communicate this with you and the necessary advice will be available from TC Group.
Reminder – Landlords cannot evict commercial tenants
Commercial tenants are now protected from eviction for three months if they cannot pay their rent due to coronavirus. If you need any guidance or support on how to handle this, you can call us now; you should also contact landlords to negotiate payment plans or holidays.
TC Group is here to guide you through this challenging period
Contact us today to discuss the points raised in this email or any other concerns you have as a business owner, about your personal finances, or, as an employer now on 0330 088 7111.