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APH Accountants COVID-19 Business Support Update 24/03/20

APH Accountants Wirral Merseyside accountant near me

I hope everyone is as well as can be and that cabin fever hasn’t set in yet!
Sadly news on help for the self-employed has yet to be announced which is frustrating to say the least. Also we are waiting on clarity as to how Ltd Company Directors are to be treated, either as self-employed or employees.
Over the course of this week we have spoken to as many clients as possible, however if you have not managed to talk to us yet then please feel free to get in touch. My staff are yours during this crisis, so please feel free to ask as many questions as possible and we will do our best to answer them.

A few things to focus on today which I think are important and relevant to your business, so it’s time to grab a cup of tea of coffee again and maybe a few biscuits too! 

  1. Self Employed, Freelancers & Contractors
  2. Company Directors
  3. Government Support and the Dash for the Cash
  4. Payroll
  5. A recap on Furloughing your staff
  6. Companies House Filing Extension
  7. Beware the Scammers
  8. Social Media/Whatsapp/Zoom
  9. Summary
  1. Self Employed, Freelancers & Contractors (Company Directors)

There is pretty much nationwide coverage now on the lack of support for the self-employed, it has been covered in parliament, a bill is being pushed through and a package of measures are being discussed. So the advice is to Hold on for now until the advice, guidance and support is issued. Easier said than done in a time when cash is running out!
Martin Lewis has summed things up pretty well. Click the video below to have a watch..

In terms of what measures are going to be available (but not yet confirmed) I have listed these out below:

  • The scheme must make provision for payments to be made out of public funds to individuals who are Self Employed or Freelancers (No clarity at the time of writing for Company Directors)
  • The payments are to be set so that the net monthly earnings of an individual do not fall below—
    • 80 per cent of their monthly net earnings, averaged over the last three years, or
    • £2,917
      whichever is lower.
    • No payment to be made shall exceed £2,917 per month.

A link to the bill can be found here for further reading

There are a number of variables still to be considered ie for people who have become self employed from being employed etc. We are still seeking clarity on these issues.
These measures will no doubt create a huge amount of work for us in providing the information for you. We will do our level best to support you through this to ensure you claim what you can.
Times are tough all round but in particular for the self-employed so fingers crossed the Chancellor announces these measures sooner rather than later. I will update you as soon as we have more on it.

  1. Company Directors

The question on whether a company director can be furloughed (more on that later) is one that is floating around a lot at the moment.
My thoughts on this are that a sole director cannot but other directors can. The company will need one director at least for it to run so by default cannot be furloughed.

That said for Company Directors my feeling at present is that it would be better for them to be classed as Self-Employed. My reasoning for this is that their Self Assessments will include dividends and hence may achieve as higher level support than if they furloughed themselves on 80% of a low salary.
This is an area we are waiting for more clarity on before giving you the best advice we can on it. Watch this space!

  1. Government Support and the Dash for the Cash

Despite the announcements on government support it will take some time for the cash to filter through to where it is needed.

  • Cash grants for business rates will take time to come through – possibly the end of April
  • Payments for Furloughed employees will possibly be end of April or early May.
  • Payments to support the Self-Employed haven’t even been announced yet so I am assuming end of April at the earliest.

The cash grants for business rates will come direct from the local authority and you don’t need to do anything at this stage.
With regards to payments for the self-employed and the furloughing of employees the systems are not yet in place to do this. Given the huge amount of people this will cover (tens of millions) and the complexity of the situation then I imagine it will take several weeks for the government to establish the systems and hence why I am thinking end of April / early May before the cash is received to where it is needed.

I am hoping these are worse case scenarios but at the moment there is no official timetable for when the cash is released that I am aware of.
The above will have a crippling effect on all of us in the time being along with the effect of losing income from our business.
My advice at this stage is to focus on preserving cashflow and measures you can take are:

  • VAT – If you are VAT registered there is an automatic deferment on paying any VAT you are due to pay between 20th March and 30th June – the money you owe here is automatically deferred to 31st March 2021.
  • Self-Assessment – Your second payment on account due 31st July 2021 is automatically deferred until 31st January 2021.
  • Any other taxes that you owe out in the next 3-6 months – then phone the time to pay helpline to ask for a deferment. Corporation tax for example are giving you a 3 month extension if you ask, however you should be asking for any tax you owe right now that hasn’t been given a deferment automatically.
  • Call loan/mortgage/credit card providers to ask for deferment of payments.
  • If you are in rented properties speak to your Landlord
  • Look at what you can claim if you are self employed – Martin Lewis has done some good work on this – click on the link below:

  • All businesses should be scrutinising their cashflow and bills right now – preservation of cash is key over the next few months.

We will be helping and supporting every single client we can to get every single penny of support they can as soon as they can.

  1. Payroll

As we are now approaching the first monthly payroll runs since the Chancellor’s announcements on the Job Retention Scheme (JRS) I thought it might be worth clearing a few things up on what will happen

  • Firstly funding will not be available from the government quick enough to support payments to any furloughed employees in March and possibly April, therefore employees may have to wait for the money unless the employer has the funds to cover this until they receive payment from the government. 
  • For furloughed employees you must follow normal employment law procedures and an agreement reached with them about being furloughed. 
  • Please identify furloughed employees to Kerry our payroll manager who will make a note of them in payroll and in a separate sheet so that when the mechanism for reclaiming the furlough payments is in place we can act on your behalf as quickly as possible. 

You will need to inform Kerry of the following 

  • Employee Name
  • Date of Furlough to commence from
  • If you are paying them 80% or 100% (the additional 20% being optional for you as an employer to top up and is not reclaimable)
  • Amount of pay
  • It is your responsibility to ensure you have followed the correct employment law procedures
  • All other payroll process will remain as normal ie submission to HMRC, payslips issued, auto enrolment submission made etc
  • Please ring the time to pay if your payroll generates PAYE liabilities before the date they are due to be paid.
  1. A Recap on Furloughing your Staff

This is my understanding of the Furlough situation as it stands – if you do need further HR support then let me know and I can put you in touch with Laura Cross from Concentric HR.

Options Available to you as an Employer

  • Make staff redundant (but there may be no cash to pay statutory)
  • Reduce staff hours – pro-rata accordingly
  • Furlough – they cannot do ANY work during this period.

Some technicalities of Furlough

  • We cannot backdate if if they have been working
  • The mechanism for getting the money back from government won’t be in place until at least May (he thinks) because there is nothing in existence already. If we processed furlough in April, but didn’t have the cash to pay, the business may have no choice but to wait until received. So whilst we would process payroll, the employee may have to wait for their salary
  • The cap per person is £2,500 including NI/Pension etc – some details still need to be clarified on this though
  • Pension would still need to be paid
  • Its unclear as to if we put them on Furlough but then take them off, whether we’d be able to put them on again
  • If someone isn’t working for another reason e.g. childcare, then we can’t Furlough. They would be on unpaid leave.
  • It generally won’t be available to standard sole-directors/partnerships – but if any of the directors cannot work – not even on admin, then they could be put on Furlough
  • You have to have a fair process e.g. can’t send your friend home on 80% of the pay, but keep someone else doing a full job for just 20% more without a process
  • There may be provision in an employment contract already about terminating employment, but if not then the employee can agree to it via a letter. It’s generally thought it will be more attractive to the employee to agree
  • Employee will still accrue holidays etc
  • Upon return if you were to then make them redundant, they’d be entitled to normal statutory (or whatever their contract says)
  • Not obliged to pay the 20%
  1. Companies House Filing Extension
  • From today (25 March 2020), businesses will be able to apply for a 3-month extension for filing their accounts.
  • This joint initiative between the government and Companies House will mean businesses can prioritise managing the impact of Coronavirus.
  • There are approximately 4.3 million businesses on the Companies House register, and all companies must submit their accounts and reports each year. Under normal circumstances, companies that file accounts late are issued with an automatic penalty. 
  • As part of the agreed measures, while companies will still have to apply for the 3-month extension to be granted, those citing issues around COVID-19 will be automatically and immediately granted an extension. Applications can be made through a fast-tracked online system which will take just 15 minutes to complete.
  1. Beware the Scammers

Please be very careful of scams like the one below – scamming activity has increased four-fold sadly – check with us first if you are unsure!

Dear Taxpayer,
After the last annual calculations of your fiscal activity we have determined that you are eligible to receive a tax refund up to 265.35 GBP.
To submit your tax refund please click here
A refund can be delayed for a variety of reasons. For example, for submitting invalid records or applying over the deadline.
Please submit a tax refund request and allow us 4-5 days in order to process it.
Best regards,
HM Revenue and Customs.
© 2020 Crown copyright.

  1. Social Media/Zoom/Whatapp

Please do follow us on social media lookout for APH Accountants Ltd on all forms of social media and me personally Paul White – I post regular information to keep you as up to date as possible.

  1. Summary

Lots to digest I know and if you have made it this far well done! Please feel free to contact me if there is anything you need more clarity or information on in this or future newsletters
In the mean-time please do stay safe and take care of yourselves. Stay positive, productive and proactive in ensuring the survival of your business.

Kia Kaha


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