What Support Is Available For The National Lockdown 5 November 2020?

Following on from the government announcements we thought we would reach out about what support is available so far, as we go into the national lockdown on Thursday:

Coronavirus Job Retention Scheme

  • CJRS (furlough) scheme extended to December paying 80% of employees wages up to £2,500.
  • Employers will be required to cover national insurance and pension contributions.
  • Full time and flexible furlough will continue to be available.
  • Neither the employer nor the employee needs to have previously accessed the Furlough scheme.
  • All employees on the employer’s PAYE payroll by 23:59 30 October 2020 will be eligible.

Mortgage payment holidays extended

Borrowers who have been impacted by coronavirus and have not yet had a mortgage payment holiday will be entitled to a six month holiday, and those that have already started a mortgage payment holiday will be able to top up to six months without this being recorded on their credit file.

Business grants available

Businesses required to close in England due to local or national restrictions will be eligible for the following through their local authority:

– For properties with a rateable value of £15k or under, grants to be £1,334 per month, or £667 per two weeks;

– For properties with a rateable value of between £15k-£51k grants to be £2,000 per month, or £1,000 per two weeks;

– For properties with a rateable value of £51k or over grants to be £3,000 per month, or £1,500 per two weeks.

 

Self Employed Income Support Scheme

  • Claims window being brought forward from 14 December to 30 November which will cover the period November to January
  • For November it is worth 80% of average trading profits and for December it is worth 40% of average trading profits meaning the total level of the third grant is 55 per cent of trading profits. The maximum grant will increase to £5,160.
  • Claims must be done by individuals, accountants cannot do these

To be eligible for the Grant Extension self-employed individuals, including members of partnerships, must:

  • have been previously eligible for the Self-Employment Income Support Scheme first and second grant (although they do not have to have claimed the previous grants)
  • declare that they intend to continue to trade and either:
  • are currently actively trading but are impacted by reduced demand due to coronavirus
  • were previously trading but are temporarily unable to do so due to coronavirus

 

Bounceback Loans & CBILS

 

Self Assessment Tax Deferrals

The July 2020 payment on account that was deferred to 31 January 2021 and amounts due by 31 January 2021 can be payable over a further 12 month period under a time to pay arrangement. This can be set up online by individuals here: https://www.gov.uk/difficulties-paying-hmrc

 

VAT Deferrals

Businesses that deferred their VAT during the period 20 March to 30 June 2020 to 31 March 2021 can now make smaller payments interest free up to 31 March 2022. You have to opt into this, you will find more info here: https://www.gov.uk/guidance/deferral-of-vat-payments-due-to-coronavirus-covid-19

 

We hope that you find this round up useful. Things are changing daily so please always check the up to date guidance.

Self-Employment Income Support Scheme Grant Extension

Self-Employment Income Support Scheme Grant Extension

Due to the ongoing impact that Covid-19 has had on the self-employed the UK government has taken action to provide support. The Self-Employment Income Support Scheme (SEISS) Grant Extension will provide critical support to the self-employed in the form of two grants, which will both be available for 2 three month periods, the first covering November 2020 to January 2021 and the second covering February 2021 to April 2021.

Who can claim?

To be eligible for the extension self-employed individuals, including members of partnerships, must:

  • have previously been eligible for the SEISS first and second grant (but don’t have to have claimed the previous grant)
  • declare they intend to continue trade and either:
    • are currently trading but are impacted by reduced demand due to Covid-19
    • were previously trading but temporarily unable to do so due to Covid-19

What does it cover?

This extension lasts for six months, November 2020 to April 2021. The grants will be paid in two lump sums each covering a three-month period. The first grant covers the period from 1 November 2020 until 31 January 2021. The government will provide a taxable grant covering 40% of average monthly trading profits, paid in a single instalment covering three months’ worth of profits, but capped at £3,750 in total.

The government are providing the same level of support for the self-employed as is being provided for employees through the Job Support Scheme.

The second grant covers the period from 1 February 2021 until 30 April 2021. The government will review the level of the second grant and set this in due course. Both grants are taxable income and are subject to National Insurance contributions.

HMRC will provide full details about claiming and applications in guidance on GOV.UK in due course. Please see the SEISS page for latest updates.

Self Employed Income Support Scheme Extended

The original Self Employed Income Support Scheme (SEISS) covered March – May and most people received their payments during May. Individuals can continue to apply for the first SEISS grant until 13 July. An extension has now been announced where the self employed can apply for a further grant in August if they have been adversely affected by the coronavirus crisis. The grant will be worth 70% of their average monthly trading profits, paid out in a single instalment covering three months’ worth of profits, and capped at £6,570 in total.

If you’re eligible for the second and final grant, and your business has been adversely affected on or after 14 July 2020 you’ll be able to make a claim in August 2020. You can claim for the second grant even if you did not make a claim for the first grant.

Recent guidance released goes through how different scenarios can affect whether you should claim the grants.

For example if you worked on a building site and it closed during March & April so you couldn’t work but then went back to work as normal from May you would be adversely affected for the first Grant period but not for the second so should not claim the second grant.

Please read the guidance here before making your claims: https://www.gov.uk/guidance/how-different-circumstances-affect-the-self-employment-income-support-scheme?fbclid=IwAR0UuJ_JRC4Q6L1qnow6GFSCnvNH8VrXvKdJoLsnYzC0eMMu5VbqmmTkth0#adversely-affected-examples

It is likely that HMRC will seek to examine claims down the line so it is important that when you make the claim you are eligible.

 

 

Am I Eligible For The Self Employed Income Support Grant?

HMRC have released an eligibility checker today which you can use to check if you are eligible to claim the grant in June. Some people are able to put applications in from as early as 13th May 2020. In order to check eligibility please ensure you have to hand your UTR and National Insurance Number and click on the following link: https://www.gov.uk/guidance/claim-a-grant-through-the-coronavirus-covid-19-self-employment-income-support-scheme#eligible

IR35 Reform Delayed

It was announced this evening that the IR35 reforms that were due to come in on 6 April have now been delayed by a year.

Chief Treasury Secretary Steve Barclay made the announcement as part of measures put in place to protect the economy during the Coronovirus outbreak

What Happens If I miss The Self Assessment Deadline?

The deadline for submitting an online Self-Assessment and paying tax you owe is midnight on the 31st of January following the end of the tax year. If it is not filed on time you will face penalties.

Anyone who misses the Self-Assessment filing deadline will receive a £100 fine, this is imposed immediately whether you owe tax or not. If the tax return is more than 3 months late HMRC can then impose an extra daily fine of £10 for the next 90 days if you fail to file your return during this time, potentially increasing the total penalty by £900 to £1000.

Penalties for late filing are also imposed after 6 months and then 12 months, which are based on 5% of the amount of tax you owe or £300 (whichever is greater).

The penalties for being 6 months late and 12 months late are subject to the interaction rule and taken together they should not exceed 100% the tax due.

On top of this you will be charged penalties and interest on any unpaid tax. Additional penalties may also apply if HMRC believe you deliberately have withheld information and a return is late.

We offer tax insurance for our clients

HMRC has been using a range of new tactics to ensure that businesses are paying the right amount of tax. Even if you have paid tax correctly, it can still be expensive and nerve-racking.

The average HMRC investigation cover can last 16 months and can cost a potential £5,000 in accountancy fees.

We know that HMRC investigations can be expensive, that’s why for all of our clients we offer tax health and investigation insurance for services. This month, we have had a VAT inspection with a clean bill of fees fully covered by the insurance. http://bit.ly/2ui8458

Are you a landlord of a residential property?

HMRC have released ‘The Let Property Campaign’ which allows landlords the opportunity to bring tax affairs up to date and get the best possible terms to pay tax owed.

HMRC might look at things such as the land registry, landlords using the tenancy deposit regime and even issue notices under Paragraph 1, Schedule 23 to the Finance Act 2011 to letting agents to obtain details of residential landlords and transactions. Data obtained will then be cross checked against self-assessment records.

HMRC will identify and write to landlords who they consider might not have declared rental income. If you would like free confidential advice on your next steps as a landlord, get in touch http://bit.ly/2ui8458

New finance bill proposed for 2019-20.

From 6th April 2020, if a company becomes insolvent with unpaid tax liabilities which should be payable to HMRC such as VAT, PAYE Income Tax, Employee National Insurance contributions and these liabilities will take priority over other unsecured or floating charge creditors.

Other company tax liabilities such as corporations’ tax and employers NIC will not be affected by the measure.

HMRC will also make directors and other people involved in tax avoidance, evasion or phoenixism jointly and severally liable for company tax liabilities, where there is a risk that companies may deliberately enter insolvency.

To find out more, please visit: http://bit.ly/2RmSZvG

HMRC Insolvency Powers from April 2020

From 6th April 2020 new measures regarding insolvency will be introduced by the 2019-20 Finance Bill meaning HMRC will have increased powers.

It is proposed that Finance Bill 2019-20 will contain measures to ensure that from 6 April 2020 where a company becomes insolvent with unpaid tax liabilities which it holds in trust to pay to HMRC, these liabilities will take priority over other unsecured or floating charge creditors.  

Taxes that a company holds in trust for HMRC include VAT, PAYE Income Tax, Employee’s National Insurance Contributions and Construction Industry Scheme deductions.  Other company tax liabilities such as Corporation Tax and Employer’s National Insurance Contributions will not be affected by the measure.  HMRC will remain below preferential creditors.

Diane Dunion, Partner from Begbies Traynor Stoke has helped to expand on what exactly this means for businesses:

“The draft legislation proposes to amend The Insolvency Act 1986, giving HMRC priority in the recovery of VAT and certain other debts owed to HMRC in insolvency proceedings; by creating a new category of creditor for the purpose of the distribution of assets. 

When a business enters formal insolvency proceedings, the order in which assets are distributed is prescribed by law.  Currently, HMRC ranks as an unsecured creditor.  The introduction of the legislation will allow HMRC to rank as a “secondary preferential” creditor, which places them in a better position on the creditor hierarchy.

However, HMRC will remain an unsecured creditor, for taxes levied on businesses such as Corporation Tax and Employer NIC.

The Explanatory Note to the Legislation notes that “the Government does not believe it is fair that taxes paid by employees and customers should be diverted to other creditors, when these are only held temporarily by businesses whose role is to transfer these payments to the Government. The Government view is that this is a fair approach that balances the interests of creditors and the Exchequer, which relies on these taxes to fund public services.”  

Monies collected in respect of those taxes paid by employees and customers, are essentially held on trust for HMRC.  On that basis and in the event of formal insolvency proceedings, these funds will be paid over to HMRC – to “benefit the wider population by being utilised for their original purpose” (i.e. to fund public services).”

The new finance bill will also allow HMRC from 6 April 2020 to make directors and other persons involved in tax avoidance, evasion or phoenixism jointly and severally liable for company tax liabilities, where there is a risk that the company may deliberately enter insolvency. It is designed to prevent individuals benefitting from avoidance or evasion through the insolvency of their business when unable to pay its debts to HMRC.

The conditions for a joint liability notice are:

  • Insolvency is underway for the company or there is serious threat of insolvency
  • A company has entered into tax avoidance arrangements, or engaged in tax evasive conduct.
  • The person either was responsible for the company/LLP (perhaps as a director or shadow director), enabled the avoidance or evasion or benefited from it
  • A tax liability is expected to arise from the avoidance or evasion and there is a serious possibility that some or all of that tax will not be paid

The new rules will also allow HMRC to issue a joint liability notice to individuals whose companies have been involved with repeated insolvency or non-payment of tax with limited liability

There is a common misconception that directors/members will not be personally liable for anything, because their business has limited liability (either Limited Company or Limited Liability Partnership).  This is not always the case and more people may find themselves held accountable for their actions as a result of the changes.