For modern times we are in unprecedented waters. No-one knows just exactly what we are all in for over the next few months. However, we do have financial information we can impart, which we highlight below. Fyfe Moir & Associates will be operational, irrespective of lockdowns, office closures or anything else which may be ahead of us. For once, technology really is a wonderful thing!
Some of the advice below is taken from the advice we have received from our professional associations, so there are elements aimed directly at us to consider on a client by client by client basis.
They have given our specialist details of the deferment procedure, the situation is very fluid and so could change. If you have are having financial difficulties due to the coronavirus then you can apply for a deferment of VAT. Currently they are not checking the validity of any information received.
The HMRC telephone number is 0300 200 3853. You will need the following information to hand.
1 VAT number
2 Date of VAT registration
3 Details of the last VAT returns box 5 figure.
4 Name address and post code of the business.
You will then need to explain that your income has been severely depleted/ceased due to the Coronavirus and that you will not be able to pay your VAT debt/liability. Ask for a deferment of 3 months and when this is agreed you will need to cancel the DD if one is set up. HMRC will not chase the debt if this action has been completed but if no action has been taken then they will proceed as normal.
The specialist unit hasn’t yet been set up yet so any calls on the specialist number are just going through to the normal teams. They are very short staffed.
All businesses and self-employed people in financial distress and with outstanding tax liabilities, may be eligible to receive support from HMRC through the Time To Pay arrangement. This will be viewed on a case by case basis. HMRC’s dedicated helpline number is 0800 0159 559.
Other tax options to consider maybe now or if this crisis continues is:
- De-register for VAT
- Make a claim to reduce your payments on account.
- If a self-employed client does not have a 31st March/5April yearend look to see if it will help with your cash flow by changing the year end and bringing forward overlap relief.
- For the self-employed is there a loss situation? Can this loss be utilised by setting off against other income in the year or can it be carried back up to 3 years and trigger off a refund?
- Are we comfortable that we have exhausted areas such as R&D/patent box relief and capital allowances claims?
IR35 Private Sector
The Government have announced that they are now delaying the rolling out of the new private sector IR35 regime until 1st April 2021.
This could release those large companies who have not yet or are in the throes of issuing Status Determinations from having to do so.
Assuming there are contracts still to be fulfilled or entered into, it may enable our PSC clients to continue to run these contracts through their existing vehicle. Of course, in theory, the existing IR35 rules could still catch you out. It may cause some clients to delay going into umbrella companies, if that was the option you were considering.
Those employees who follow the Government advice on self-isolating and have to stay at home and cannot work as a result, will be eligible for Statutory Sick Pay (SSP) from day 1 even if they are themselves sick.
Anyone not eligible to receive sick pay, including those earning less than the average of £118 per week, some working in the gig economy, or self-employed, the Government state they may be able to claim Universal credit and/or contributory Employment and Support Allowance. If someone needs money urgently due to the COVID-19 crisis they can apply for an advance.
SME businesses (fewer than 250 employees) will be refunded up to 2 weeks SSP for eligible employees who have been off work due to COVID-19. The Government will be working with employers to set up a suitable repayment mechanism.
There is a 12 month business rate retail holiday for retail, hospitality and leisure businesses for the 2020/21 tax year in England. A £25,000 grant will be provided these businesses operating from small premises with a rateable value of between £15,000 and £51,000. There will be additional funding for local authorities to support small businesses that already pay little or no business rates because of small business rate relief (SBRR) by way of a grant of £10,000.
In Scotland the present situation is that there is 75% rates reliefs for retail, hospitality and leisure businesses with a rateable value of £61,000 or less plus a fixed rates relief of up to £5,000 for all pubs with a rateable value of £100,000 or less.
Businesses in Northern Ireland will not have to pay rates for the next 3 months and household rate bills will be deferred from April until June.
In Wales, retail, leisure and hospitality businesses with a rateable value of £51,000 or less will receive 100% non-domestic relief and pubs with a rateable value of between £51,000 and £10,000 will receive a £5,000 reduction in their bill.
Businesses that have cover for both pandemics and government ordered closures should now be covered, on the grounds that the government and the insurance industry have confirmed the advice given on 17th March would make the claim valid. Businesses should check to see if their insurance policy covers this as many will not.
The Coronavirus Business Interruption Loan Scheme
This will be launched next week by the British Business Bank to support businesses to access bank lending and overdrafts. The government will provide lenders with a guarantee of 80% on each loan to give lenders the confidence to continue to provide finance for SMEs. The government will not charge businesses or banks for this guarantee. Businesses can access the first 6 months of this finance interest free.
Those affected by COVID-19 will be able to have a 3 month mortgage holiday. Lenders should be approached on this matter if the client is affected.
Further announcements are likely regarding school closure, further help for the self-employed and protection for those tenants in private rented accommodation.
We can help, so ask!
Finally, stay safe and we’ll see you on the other side.