APH Accountants Covid-19 Business Support Update 27/03/20
Afternoon everyone, apologies for another newsletter but as you will appreciate things are moving very quickly and as things become more clearer it’s important to stay up to date.
It looks like tea or coffee break time again reading this one – so sit back, relax and enjoy the read!
In today’s newsletter:
- Self Employed Support Package – Q&A’s
- Latest Information on Furlough
- Company Directors Recap
- Scam Alerts
We are doing our level best to answer every single query – but if we have missed anything please do get in touch. Contact details are below:
Office Number: 0151 630 4542
Paul White: 0151 556 7247
Helen White: 0151 556 7241
Matt Newman: 0151 556 7246
Carla Ashley: 0151 556 7244
Kerry Roe: 0151 556 7240
Dave Parry: 0151 556 7245
Danielle Levy: 0151 556 7243
Katy Holmes: 0151 556 7249
Lauri Murphy: 0151 556 7248
- Self Employed Support Package – Q&A’s
I have already been taking calls/emails/WhatsApp etc (you name it) from clients and friends who know me as ‘their mate who is good with numbers’ and in some cases as that bloke down the Pub!
To avoid not sleeping for the foreseeable future, I have tried to summarise to the best of my ability (while suffering from sleep deprivation) what I have taken from the announcement and any other supporting documentation I can find.
I will stress that there is no legislation around for some of these things so until this is the case, it is pure conjecture and you should not base your life around it – as things change though, like when Moses parted the waves – when the path becomes clear I will update you with more.
I’ve tried to pull out the key items and to keep it simple as if I were talking to my best mate Col who, as he would put it “fixes boilers”, rather than fill it with wording only Chartered Accountants would understand. I’ve done it in a Q&A style like I get on my 5th pint of lager down on a Friday night. So, bear with me and here goes:
It’s a bit tongue in cheek and typical of a conversation with a mate and might make a complicated situation easier to digest!
Q: Hey I have heard about the Self-Employed Support Package – How do I get started in making a claim?
A: Don’t phone up HMRC – they don’t want to know yet as there is no system in place, they are buried under a mountain of calls and have staff shortages themselves and new systems to put in place for tens of millions of people. Given Rishi has just chucked them a hospital pass, don’t waste your time. They will identify you from their records and be in touch in due course.
Q: How much am I going to get?
A: They’ll give you 80% of your averaged monthly profits based over the last 3 tax years (18/19 being the most recent) or £2,500 per month, whichever is the lower figure and unfortunately yes, it’s taxable as it’s a grant that will be treated as income.
Q: How do I figure that out, Smart Alec?
A: Take your last three years trading profits, add them together and divide by 36 (presuming they are full years). I’m presuming this is your profit before capital allowance deductions, but it hasn’t been stated anywhere that I can see yet. But this would be a good assumption to make I reckon.
Q: What happens if I haven’t been trading for 3 years?
A: They’ll average it out across the years you have done. If you’ve only just started in this current tax year, you’re knackered by the looks of things and will have to go down the Universal Credit route.
Q: When are they going to be paying me that then?
A: Sometime in June by the looks at present.
Q: Serious?!? What am I supposed to do until then – eat dust?
A: There are other measures available potentially such as the job retention scheme if you employ anyone, business loans, deferring any HMRC debts, call in any debts owed to you, giving your creditors a ring to see how far they can bend, ring your mortgage provider/landlord to enquire about a payment holiday, cancel your Sky television.
You should look at applying for Universal Credit as the amounts you get have gone up but it will depend on your own personal circumstances and if you’re really stuck try to get an advance on your first payment as the first payment can take up to 6 weeks. Bear in mind they are swamped with calls now so next week would be a better time to call – till then go online and register and see if you are entitled to anything.
Within the last few minutes a client has informed me they have been successful in obtaining an advance on their Universal Credit application and will receiving the money next week.
Also check out if there is anything available for you from any hardship funds, some provide some council tax relief etc. But defo speak with your bank as well and try and defer as many payments as you can.
Q: What about if I haven’t filed my 18/19 return yet?
A: You’ll get another 4 weeks to file it. If it’s your fault you haven’t filed it then go take yourself off to that corner and have a word, or if it’s with your accountant then bin them off!
Q: How long will this last then?
A: Initially for 3 months being from March to May. However, if we’re still in the cart come May time, I suspect it’ll be extended.
Q: My mate earns a shed load, he’ll be laughing
A: If your mate earns that much, he should have been a Limited Company before now, so I assume he has a crap Accountant – For the self-employed though If their profits are over £50k then it looks like they won’t qualify.
Q: I’ve got other income from my house rental – can I add this in?
A: It only covers profit from self-employment as far as I can see. Rental property income is outside of this so this cannot be added nor dividends. Also, your total income from self-employment needs to be more than 50% of your total income otherwise you don’t qualify.
Q: So, Budgie from down the pub with all his rental properties and no job won’t get anything?
A: It appears that’s the case.
Q: And what about Stevo who runs his business through a limited company and does the old minimum salary / higher dividends trick?
A: Dividends are not covered but if he does run a payroll and pays himself, then he may be able to furlough himself and claim through that way. Though at the moment sole directors don’t seem to get anything as they can’t furlough – this may change though?
A: Col I really worry about you at times – I have sent you 10 newsletters on it and plastered it all over social media
Q: Yeah I know don’t always get time to read them though in self isolation as there is too much on Netflix at the mo and thought I would ask you.
A: Yes, I thought as much, I have 500 other phone calls to make today. 😊 So, bear with me.!
Q: What about if I stopped trading ages ago?
A: Then you won’t be covered by this. You need to be currently trading at the point of application (or would have been if it were not for this virus) and that you intend on continuing to trade once we’re out the other end of this.
Q: How will HMRC know?
A: They’ll be making checks but not sure how yet.
Q: Can we go back and refile my 18/19 return?
A: What do you think! That’s fraud you numpty, and if you ask me to do it you’ll be sent packing.
Q: Just a thought but can I still do any work?
A: This is a very good question and one I myself have asked myself. Basically, unlike the Furlough arrangements where it appears that you cannot work if you are claiming the 80% grant, all it says in this release is ‘have you lost trading/partnership profits due to COVID-19’. I cannot see it anywhere specifically saying you have to stop, I’m 99% sure the chancellor explicitly said in his announcement that you can still work as well as get the grant. To me it sounds a bit wrong as employees on the furlough arrangements cannot go and earn extra money, so why would they allow you to. But I don’t know is the honest answer.
Q: There isn’t much you don’t know is there
A: There is lots I don’t know, I don’t have all the answers but at this moment in time no one does, this situation has never happened in my lifetime.
Q: Right, cheers for that info. I’m off for a lie down in a dark room?
A: I thought it was your round?
This is a scheme that has taken some time to put together; about a week later than the business/employee’s measure’s last Friday. I can see some glaring holes in there, particularly those who have registered as self-employed in this current tax year (6th April 19 to date) – doesn’t appear there is anything other than Universal Credits for them.
For me, a good solution would be to allow a window to file 19/20 returns, and have it signed off by a professional to do away with the risk of fraud. But I don’t think this is going to happen. But these are just my opinions and they don’t matter; however, one client did suggest I would give Rishi a run for his money…
- Latest information on Furlough
These are the key points, some of which had not previously been announced:-
- The scheme is open to all UK employers that had a PAYE scheme in place on 28 February 2020
- Any organisation with employees can apply, including charities, recruitment agencies and public authorities; with agency employees, the scheme is only available for agency employees who are not working.
- Employers can reclaim up to 80% of wage costs up to a cap of £2,500 per month, plus (not including) the associated employer NICs and minimum auto enrolment pension contributions on that wage. Fees, commissions and bonuses are not included.
- An employer can choose to top up to 100%, but does not have to (subject to employment law and renegotiating any contractual entitlements)
- For employees whose pay varies, the employer can claim for the higher of (i) the same month’s earning from the previous year (e.g. earnings from March 2019); or (ii) average monthly earnings in the 2019-20 tax year
- Individuals are only entitled to the minimum wage for the hours they work. So, if they are furloughed and do not work, and 80% of their normal earnings would take them below the minimum wage based on their normal working hours, they still only receive 80% as they are not working. However, they are entitled to be paid NMW for any time spent training.
- To be eligible, the employee must have been on the payroll on 28 February 2020. If they were hired later, they are not eligible. Anybody who was on the payroll on 28 Feb and has since been made redundant can be rehired and put on the scheme
- Furlough leave must be taken in minimum blocks of three weeks to be eligible for funding
- There is nothing in the guidance which prohibits rotating furlough leave amongst employees, provided each employee is off for a period of at least three weeks
- The employee must not be working at all. If they work for even an hour (presumably during their entire three-week furlough period), they are not eligible. However, they can undertake training and do volunteer work, provided they do not provide services to or make any money for their employer.
- When agreeing changes in hours (and acceptance of 80% pay), assuming the contract does not already allow for that, normal employment law applies. The employer must be careful not to discriminate in deciding who to offer furlough too. My view is that prioritising vulnerable workers is unlikely to be discrimination, as prioritising the over 70s (direct age discrimination against those under 70) is almost certainly justifiable, and those who do not suffer from serious health conditions are not a protected class.
- Employees on sick pay or self-isolating cannot be furloughed but can be furloughed afterwards. Employees who are shielding can be placed on furlough.
- Employees on maternity (or similar) leave can continue to draw SMP (or similar) payments. The guidance does not prohibit women on maternity leave agreeing to return to work early and then being furloughed or electing to change to shared parental leave and then being furloughed.
- Employers can only claim once every three weeks, i.e. they cannot get weekly reimbursement. Claims can be backdated to 1 March 2020.
The government will issue further guidance on the mechanics of claiming the payment in due course. It says it expects the scheme will be up and running by the end of April.
With regards to the physical payment of furlough to employees – If you do not have the 80% wage to pay employees then you will have to ask them to wait until you receive the money from the government before paying them.
You can choose to pay them from your own funds until such time as you receive the money back.
Full details of the scheme and further reading can be found here:
- Company Directors Recap
- If you are a Sole Company Director, then it looks unlikely at the moment that there is any support for you. Nothing from the measures introduced for the Self-Employed and nothing from the measures for the employed “Furloughing”. So, the Universal Credit route looks like the only option.
- If your Company has more than one Director, then other Directors can furlough but one must remain un-furloughed – this is only my understanding of the situation so far
- For those Directors that can furlough – Look at your Feb 20 payslip and take 80% of this as the amount you can furlough for.
- Please inform Kerry directly if you intend to Furlough, who is being furloughed, from what date and if you intend to put the Director on 80% (which can be reclaimed) or 100% of which only 80% can be reclaimed.
- Scam Alerts
Scams seem to be popping up everywhere – before careful opening or replying to anything. These are the latest I am aware of: