COVID 19 – What Do I Do?

Due to limitations in space, this article gives a summary of what needs to be considered amidst the current epidemic:

Job Retention Scheme

Identify employees who would otherwise have been made redundant or dismissed.
Meet and discuss the position and inform them that they would been dismissed/made redundant but for the Government’s assistance through the Job Retention Scheme, they are to be treated as Furloughed Employees (they need to agree to this). Furloughed Employees cannot work for the duration of the Furloughed period.
Write to employees Confirm your discussions and requesting a written confirmation from them.
The Government will reimburse 80% of their salary.
Only employees who are on the payroll on 28 February 2020 are allowed to be furloughed.
For part-time/variable hours employees, the amount that can be furloughed is 80% of the higher of:
- The monthly average of the year-to-date salary in the current tax year; Or
- The Gross Amount paid in the equivalent month last year.
Separately define Furloughed Wages on the employee’s payslip.
Ensure that PAYE/NIC is paid in respect of the Furloughed Wages (when due).
HMRC Are in the process of setting up an online portal for registration of Furloughed Employees in order to reclaim the costs incurred under the Job Retention Scheme

VAT Deferment

VAT payment deferment supplies from 20 March 2020 to 30 June 2020.
All VAT Registered Traders are eligible.
Applies to payments due on 7 April, 7 May and 7 June 2020.
Outstanding VAT will be collected by 5 April 2021.
Ensure VAT Returns are completed and submitted in time (unless a valid reason exists).
If VAT Returns cannot be completed, inform HMRC.
If VAT is paid by Direct Debit, inform your bank to cancel the Direct Debit mandate.
Repayments due will be paid by HMRC in the normal way.

Self-Assessment Payment Deferral

Applies to the second payment on account due on 31 July 2020 for 2019/2020.
Deferral is until 31 January 2021.
Applicable to self-employed and individuals who are due to make payments on account on 31 July 2020.
No application for deferral required.
Tax Returns should be filed as usual by the due date. The Tax Return for 2018/2019 must be filed.
No penalties or interest for late payment will be charged during the deferral period.
If payment is due by Direct Debit, cancel the Direct Debit mandate by informing your bank.

Business Interruption Loan Scheme

Support for SME’s with access to loans, overdrafts, invoice financing and asset finance for up to £5 million for up to 6 years
Assistance with interest on loans to cover the first 12 months of interest payments and lenders fees.
Government to guarantee 80% of each loan.
Accredited lenders have been identified, including all major banks.
Eligibility:
- UK business with an annual turnover of less than £45 million.
- Would otherwise have met the criteria for lending.
- Is likely to suffer in the short to medium term due to Covid 19.
To apply, first prepare a cash flow forecast based on previous years and on the assumption that Covid 19 Did not apply to business, then vary it for the effects of Covid19. This should enable you to identify the shortfall for which you require funding.
Additional conditions and requirements apply.

Assistance for Self Employed

Self Employment Income Support Scheme set up for self-employed individuals and members of partnerships who have lost income due to Covid 19.
You can claim a taxable grant of 80% of your trading profits up to a maximum of £2500 per month for the next three months.
Grants will be available where the average profit is less than £50,000.
The 2018/2019 Tax Return must have been submitted to HMRC. If it is not, you have until 23 April 2020 to ensure the Tax Return is submitted to HMRC.
Must have traded in the tax year 2019/2020
Grant available we will be based on the average profits of the tax years 2016/2017, 2017/2018 and 2018/2019.
Shorter periods of trading will be considered.
No need for an application to be made. HMRC will assess Tax Returns and apply the grants by June 2020.

Other areas of available Government assistance

Above is a very brief summary of the current announcements. Full details are available but cannot be published as a result of the lack of space.

Kiran Patel BA FCA is principal of Albury Associates Limited, a boutique Chartered Accountancy practice.