Accounting and Taxation advice in Hexham, Northumberland

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Thoughts for the week ending 3rd July

Hi folks,
I must begin by offering my most sincere sympathies to our MP for Hexham Guy Opperman and his wife Flora who recently lost their twin boys Teddy and Rafe due to complications at birth. The couple have opened a JustGiving page in their sons’ memory in order to fund research into Prelabour Rupture of Membranes (PPROM) which can be found here: https://www.justgiving.com/crowdfunding/teddy-and-rafe?utm_term=6B4JAN7r4. Our thoughts and prayers are very much with Guy and his family at this unbelievably difficult time.

I read the Prime Minister’s speech of the 30th of June in its original form and it looks very like a Winston Churchill speech. The gaps are there for him to take breath and to make his oratorial points. Something we can all learn. It is, I have to say, an inspiring speech and if what follows actually does what it says on the packet, as the post-war New Deal which Boris referred to did, then this may be a historic speech. Let’s hope so. You can read the transcript here: https://www.gov.uk/government/speeches/pm-economy-speech-30-june-2020


Sadly other modern day orators didn’t actually live to see the speeches come to reality. I think of Kennedy and ‘Ich Bin Ein Berliner’ and Martin Luther King, and ‘I Have a dream’ so let’s hope in the 21st-century good oratory doesn’t create an opportunity for assassination.

Flexible furlough starts this week. More information can be found here: https://www.gov.uk/government/publications/changes-to-the-coronavirus-job-retention-scheme/changes-to-the-coronavirus-job-retention-scheme


A number of queries have been raised by clients, and on training forums over the past weeks, and I set out below those where I feel clarity might be helpful:

  •  Can someone claim both furlough and a self-employed grant (SEISS)?

The answer to this is yes, because someone can be both employed and self-employed and therefore if the employer is able to claim furlough there is no reason why the employee can’t receive it, and the self-employed grant will be paid if the self-employed income is more than 50% of that individual’s overall income.

  • Is the SEISS grant impacted upon by the receipt of the local authority tourism grant?

The answer is that the two things are completely separate.  The tourism grant is based on property, the SEISS is based on income and therefore there is no inter-relation. Receipt of one doesn’t preclude you from claiming the other.

  • Can you receive more than one local authority grant?

The answer to this is yes because these grants are property based.

  • What about furlough for directors?

In terms of what work they are allowed to do whilst on furlough, they can do work on the business i.e. the management, but not anything client-facing or which would generate money.
Part-time furlough is even more difficult for directors as they generally do not have a set working week. Various suggestions have come up on this but the most sensible one seems to be that it should be assumed that a director is working what the normal working hours are for that business, and that if they’re doing less than those hours they would be considered to be part-time. Sadly if they’re doing more than those hours but less than they normally do, the claim would probably be considered as spurious unless the hours both normally and now could be proved.

  • What do employees need to be paid if furloughed over holiday or notice period?

It’s clear now that furlough can be used to cover both holiday periods and periods of notice for redundancy. The important thing in both these cases is to remember that the furlough claim is just a subsidy to the business for the wages that are paid, and that unless an agreement has been made to put the member of staff on furlough and pay them 80%, they are entitled to 100% of the current year’s pay. Therefore those people who are furloughed and on holiday, or who are furloughed in a redundancy notice period, will have to have their pay made up to 100%.

  • How does training and furlough work?

One of the reliefs on furlough is that individuals can do training during that period. For clarity though it is the individual receiving the training who can do it on furlough.  An individual providing the training in a work environment is actually working and therefore doesn’t comply with the furlough requirements.

  • Can we now amend furlough claims?

Another frequent enquiry is with regard to amending furlough claims. Grants that are overpaid can be corrected on the next furlough claim made – there is now functionality in the system to do this.  If you have underclaimed the grant, or have over claimed but are not going to make another claim, you should call HMRC on 08000 241 222.

  •   How do I assess if my business is adversely affected by Coronavirus for my SEISS claim?

Another thorny problem is what does it mean to be ‘adversely affected’ by COVID-19, as this is one of the requirements that you need to satisfy in order to apply for the self-employed grant (SEISS). There are two tests - one was when the first grant was paid in May and the second will be applying to the business when the second grant is paid in August when you must have been “adversely affected” on or after 14 July 2020.

This is considered by everybody to be a very subjective test, and the problem is that if you were going to see whether a business actually made less money, you would not know this until the end of the year. There might be many reasons for the turnover being down, or expenses increased, or the business might have adapted by the year end, etc. The most common sense approach that I have heard is to say you need to consider whether you feel that your business has been stressed in any way at the point at which you are applying for the grant, and you need to have contemporaneous records as to why you believe that to be the case. For example, a farmer may feel that the complications of selling animals through a mart at the moment means that market prices have been adversely affected as a result of COVID-19, and therefore the business has been affected.

  • How do I know if I am fit for work?

HMRC have updated the guidelines for employers on assessing fitness to work. The guidance covers when an employer should ask for medical evidence, fit notes and dealing with long-term or frequent absences: https://www.gov.uk/guidance/statutory-sick-pay-employee-fitness-to-work

 
So, what are the possible ways in which the government are going to pay for all the outlay due to Covid? It is thought that a 5% additional tax surcharge to finance the NHS may take place as a temporary measure. It may also be that specific taxes are levied on larger companies who have in fact benefited from the pandemic.

I will be watching the Chancellor with interest on Wednesday 8th July when he delivers his mini budget!

Keep well
Tricia

P.S. Finally I was delighted to be recognised as ‘Trader of the week’ in this week’s Hexham Courant on page 36. It again makes all the extra energy expended due to CV that bit more worth it!

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