Accounting and Taxation advice in Hexham, Northumberland

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Thoughts for the week commencing 20th April

Thoughts for the day 20th April

So, my husband and I spent the best part of 10 hours over the weekend capturing two 30 second WhatsApp videos to acknowledge a couple of family birthdays. The effort was immense and well outside my normal skill set evidently. Coronavirus restrictions are certainly taking their toll on my comfort zone!

Coronavirus Job Retention Scheme

The Coronavirus Job Retention Scheme (CJRS) has been extended from the end of May to the end of June.  This seems sensible given that the lockdown period has been extended for a minimum of three weeks.

 
The HMRC portal for claiming the CJRS grant went live at 8am this morning and is live 24/7.  It is designed to handle 450,000 businesses an hour - time will tell if this is enough!  I suspect that in the early days there may be excessive numbers of businesses applying, but this will settle down once initial claims are made.  
As of the time of writing, one of our clients has successfully managed to make their claim this very morning – hoorah!


It is still unknown how the CJRS interacts with the employment allowance (EA).  In theory an employer could claim EA for national insurance and also be reimbursed by a CJRS grant.  Watch this space regarding HMRC’s advice.


To make your CJRS claim, you need a PAYE online government gateway account.  When setting this up an activation code is usually required which is sent by HMRC by post which can take 2-3 weeks.  The requirement for the activation code has been temporarily suspended to make it easier for people to set-up their PAYE online account.


More detailed information about the claims procedure can be found here: https://content.govdelivery.com/accounts/UKHMRCED/bulletins/2870d1d

Motor Finance customers

The Financial Conduct Authority (FCA) is proposing payment holidays for those with car finance or high-cost finance.  For those with finance or leasing payments on cars, a three-month payment freeze is proposed. The consultation period ends today (20/04/20), after which we should see the final assistance available.

Well done Northumberland County Council for distributing their ‘Northumberland News – special Covid-19 edition’ to households over the weekend. You can download your copy here if you haven’t received one yet: https://www.northumberland.gov.uk/coronavirus/Northumberland-News.aspx#northumberlandnews

The section on scammers is worth noting.

  • Coronavirus testing kits will ONLY be offered by the NHS – no one else has them.
  • ONLY uniformed Police officers are in a position to enforce social distancing guidelines.

You would think that folks would have more social responsibility than to take advantage of the situation for their own illegal and selfish gain.

If you own a holiday let, most insurers are willing to extend the empty days policy from 30 days to 90 days, but you must notify them that you wish to pursue this.

That’s me for today.
Keep well and regards,
Tricia

 

Thoughts for the day 21st April

I was expecting the Chancellor to have more news on the Coronavirus Business Interruption Loan Scheme (CBILS) when he gave his talk last night. However, he appears determined to focus on the 80% wage guarantee. I fear that this could be the principle reason behind the delays in processing the loans – which are equally as much needed.

Coronavirus Job Retention Scheme (CJRS)
The HMRC portal for claiming the CJRS grant went live yesterday (Monday 20th), and apparently over 140,000 employers have already made a claim.  We previously thought that the portal would work out the employers’ national insurance (NI) and pension contributions automatically, but this is not the case.  Instead you need to have this information to hand, usually obtained from your payroll software.  However, HMRC have provided a job retention scheme calculator to help people calculate the amount that they can claim.  A link is below:


https://www.tax.service.gov.uk/job-retention-scheme-calculator/?_ga=2.55729003.1597551606.1587321171-1400116381.1587321171

The calculator is for one employee at a time, and shows the amount of pay covered by furlough, as well as the employers NI and pension amounts.
You will receive the funds in six working days, and you are advised not to call HMRC during that time.

You can make a claim in anticipation of any imminent payrolls, or payrolls already processed up to 14 days before the pay date.  Therefore, this first claim may include part of March and all of April.

Tip – as claims can be made up to 14 days before the payroll run, I suggest making your claim in advance of the month end to avoid the busy month end periods, and so that you also receive the grant before you need to pay your employees, thereby improving cashflow.

Other important points to note:

  • Once you have submitted your application, you will not receive a confirmation email.  Therefore, it is very important that you print the confirmation screen, or note down the claim reference number, at the end of the application
  • Note that there is currently no save and return option on an application, and therefore you have to complete the application in one session.

For employees that are furloughed over bank holidays, there are two options:  You can either top-up the employee’s salary to their usual pay for that day; or you can owe them a days holiday in lieu.

Slight note of warning is that scammers are invariably likely to try utilising the scheme, the knock on of which may mean your claims are queried. Whatever decision you come to in terms of assessing what your employees get paid whilst on furlough, be sure to document it. There will be lots of opinions on how you should be reaching a figure but you can’t be criticised if you can explain your decision in writing.


Red Flag Alert have found 509,000 businesses to be in significant distress under the Covid-19 measures. They predict this will increase quarterly by 15,000 which suggests that the idea that the economy can bounce back quickly is a pious hope. Inevitably the increase is greater in bars and restaurants but a surprising number in the construction industry are included, despite the fact that a lot of those businesses have continued to be able to work to some extent.

A new scheme called the Coronavirus Future Fund was announced by the Government yesterday making finance available for swiftly growing companies. More information can be found here: https://www.gov.uk/guidance/future-fund. It does sound rather like Nationalisation to me and most un-Conservative like to offer such a venture capital scheme or have I got the wrong end of the stick?

With the sun shining it begs the question – is lockdown easier or harder to cope with? In our household, the jury is out!

Take care,
Tricia

 

Thoughts for the day 22nd April

As my thoughts for today may show – I have spent some time this morning watching a webinar on the latest updates on furlough. The presenter ended the session stating that UKplc need their accountants now more than ever, to help them in navigating this unchartered territory. I always felt that we accountants were somewhat essential in helping the country keep going through this, but it is nice that someone else thinks so too!


Furlough Latest, in no particular order:

I must say ‘hats off’ to HMRC for getting the furlough scheme up and running as soon as they have done – they had very tight deadlines to work with.

With salary sacrifice it is the cash amount that is used for pay. Many sacrifices are pensions. See The Pensions Regulator website for more information: https://www.thepensionsregulator.gov.uk/en/covid-19-coronavirus-what-you-need-to-consider/automatic-enrolment-and-pension-contributions-covid-19-guidance-for-employers

Furlough and Employment Allowance:  On 17 April, HMRC provided this clarification in its new guidance 'Work out 80% of your employees wages':

"In calculating the total employer National Insurance contributions paid in any pay period, the employer should subtract any Employment Allowance used in that pay period. If you have not, or do not expect to pay any employer National Insurance contributions in a pay period as a result of the Employment Allowance, you should not claim any employer National Insurance contributions costs for furloughed employees in that pay period. If you expect to exhaust any Employment Allowance in a pay period then you should claim the lower of the employer National Insurance contributions grant calculation, and the employer National Insurance contributions costs that you paid, or expect to pay across your entire payroll.”

Part way through the furlough application process is a question about the bank account for the monies to be sent too. Ensure the address and postcode you submit is the employers’ address – the address where the business bank statements go to.

Some known problems so far are when directors are paid annually. The jury is still out on this one.

Problems also where an employer has both weekly and monthly payrolls. You will need to amalgamate the two payrolls and work out how to manage the three week claims periods to best aid your cashflow.

Reinstated employees - the Real Time Information (RTI) will take some time to update at present so these are also creating problems.

No guidance either on Coronavirus additional SSP support for employers as yet.

There is new guidance though that any employee who has agreed to be furloughed must do so in writing which is contrary to earlier guidance. From now on this will be a requirement but an email trail should be sufficient historically.

Some Economic news - speaking at the Big Four firm’s latest COVID-19 weekly webinar, Ian Stewart referenced the UK’s Office of Budget Responsibility’s (OBR) coronavirus reference scenario and stated that “perhaps 80 to 90%, of the short-term economic impact [of COVID-19] comes not from people falling ill, but rather from the disruption to economic activity associated with the public health restrictions and social distancing”.

That report forecast a 30% contraction in the UK economy so far this year and 35% in the second quarter, an outlook Stewart described as “astonishingly weak” and the sharpest downturn in 100 years.

“What the OBR makes clear is that the slowdown is different from any other,” said Stewart.” It is being caused overwhelmingly not by the disease itself, but by restrictions on movement which means this is going to be a very, very unusual slowdown. The economy has been put into a coma by policy.”

The OBR predicts that accommodation and food services will be down by 85% in the second quarter of 2020, with construction dropping by 70%. Financial and insurance services will see just a 5% negative impact, according to the report.

 

The times they are a-changin’.
Keep well,
Tricia

 

Thoughts for the day 23rd April

Happy St George’s Day everyone.

Holidays and furlough – there has been a lot of conflicting and contradictory advice on this. As of 17th April, HMRC are saying:

"Furloughed employees continue to accrue leave as per their employment contract".

"The employer and employee can agree to vary holiday entitlement as part of the furlough agreement, however almost all workers are entitled to 5.6 weeks of statutory paid annual leave each year which they cannot go below."

"Employees can take holiday whilst on furlough. Working Time Regulations require holiday pay to be paid at the employee’s normal rate of pay or, where the rate of pay varies, calculated on the basis of the average pay received by the employee in the previous 52 working weeks. Therefore, if a furloughed employee takes holiday, the employer should pay their usual holiday pay in accordance with the Working Time Regulations."

"Employers will be obliged to pay additional amounts over the grant, though will have the flexibility to restrict when leave can be taken if there is a business need. This applies for both the furlough period and the recovery period."

"If an employee usually works bank holidays then the employer can agree that this is included in the grant payment. If the employee usually takes the bank holiday as leave then the employer would either have to top up their usual holiday pay, or give the employee a day of holiday in lieu."

"During this unprecedented time, we are keeping the policy on holiday pay during furlough under review."

So again – watch this space for further briefings on this.



Job retention scheme (furlough) claims - From the Coal Face

I’ve had a couple of clients who have misunderstood the meaning of the National Insurance (NI) category letter required for the job retention scheme calculator, so I thought it would be worthwhile explaining what this is.  The NI category letter is NOT a letter on the employees NI number.  Instead it is a letter that may change during the employees working life.  Most employees will be category A, but employees over the pension age are category C, employees under 21 are M for example.  A full list of the categories can be found on HMRC’s website on the following link: https://www.gov.uk/national-insurance-rates-letters/category-lettersSE!

 

On 22 April 2020, the Government launched a new online platform to help businesses access financial support during the coronavirus pandemic.

The Coronavirus business support finder tool on www.gov.uk asks business owners to fill out a short online questionnaire, and they will then be directed to a list of all the financial support for which they may be eligible.

The tool takes the user through various questions about their business, including location, number of employees and turnover.



Also on 22 April, ICAEW reminded members that self-assessment tax returns for 2018/19 must be submitted by 23 April to ensure eligibility for the Self Employment Income Support Scheme (SEISS), as it shares the latest guidance in a webinar.

HMRC’s guidance is clear that taxpayers can only be awarded a grant under SEISS if they have submitted their 2018/19 tax return and would have continued to be self-employed in 2019/20 if not for the Coronavirus outbreak.

The standard deadline for 2018/19 tax returns was 31 January 2020, but HMRC announced that the filing date for self-assessment tax returns for the tax year to 5 April 2019 would be extended until 23 April 2020 in light of the coronavirus pandemic.

For the avoidance of doubt – the grant is taxable but not vatable.

You will need to have a Government Gateway log in to be eligible to receive the grant. We are happy to help you set it up if you need us to.

People who hope to get SEISS may well be relying on Universal Credit until its it paid out in June. The good news is that the grant will only be viewed as income for Universal Credit in the month in which it is actually received.

HMRC will review their database and contact you, which may be by email. Please be conscious of fraudsters using this as an opportunity to strike. Applications are ONLY accepted via the Government Gateway route. Do not be told otherwise.

The SEISS will not apply to those receiving property income and/or holiday let income.

No doubt there will be more information to come on SEISS as time moves forward.



With the next VAT deadline date of 7 May fast approaching, here’s a reminder of the process for those who wish to utilise the VAT payment deferral announced by the Chancellor in March. There's no need to apply for a deferral BUT:

  • You are still required to file a return through the normal route, including MTD if applicable.
  • Direct Debit payers will need to cancel their direct debit with their banks. If they don’t HMRC, will request payment. There is no automatic deferral of Direct Debit payment.

The GOV.UK guidance is here: https://www.gov.uk/guidance/deferral-of-vat-payments-due-to-coronavirus-covid-19

Remember to clap tonight - both for the NHS and for all the wonderful people serving the mass population in our shops, who are managing to keep the nation fed and watered, often with no PPE whatsoever.


Tricia

 

Thoughts for the day 24th April

The only technical titbit I’ll bore you with today regards important information for employers in the current HMRC’s ‘Employers bulletin’. You can find it here: https://content.govdelivery.com/accounts/UKHMRCED/bulletins/2878d4b

My musings at nearly the end of week 5 of lock down:
This is HARD

  • hard for the business person trying to keep the economy going with no bank support and both hands tied behind their back;
  • hard for the family in the flat trying to balance school work and grown-up work on the kitchen table;
  • hard for the parent who can’t explain to their three-year-old why they can’t go to the sandpit;
  • hard for the person in solitary confinement or self-isolation;
  • hard when you can’t see your family and you can’t explain or understand why;
  • hard for the person who is at home and unable to visit the sick relative in hospital;
  • hard for that person in hospital without the support of relatives;
  • hard for the people arranging funerals with only two or three people there to support them;
  • hard for those bringing new life into the world without the support of a partner;
  • hard for us all.

I’m probably showing my age but I think the lyrics in the links below encapsulate where we are:
‘A Hard Rain’s A Gonna Fall’ :Sung by Mr Bob Dylan: https://youtu.be/T5al0HmR4to or our very own Mr Brian Ferry from Washington Tyne and Wear https://youtu.be/7zwBHd4kll0

We didn’t need COVID-19 to remind us that we live in a highly complex and unpredictable world. ‘Twas was ever thus. It doesn’t matter how much data or information we have at our disposal, we never have, and we never will, be able to predict with certainty what will happen next.


I was passed on a wonderful expression: - NHS ARE SAVING LIVES, ACCOUNTANTS ARE SAVING LIVELIHOODS. Sadly, I don’t know to whom to attribute it.

Have a good week-end if you can?
Signing off until Monday,
Tricia  

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