Changes to the Coronavirus Job Retention Scheme – 1st July

Updated 1 July 2020

You can now submit claims that include days in July.

31 July is the last that you can submit claims for periods ending on or before 30 June.

The Coronavirus Job Retention Scheme will close on 31 October 2020.

From 1 July, employers can bring furloughed employees back to work for any amount of time and any shift pattern, while still being able to claim CJRS grant for the hours not worked.

From 1 August 2020, the level of grant will be reduced each month.To be eligible for the grant employers must pay furloughed employees 80% of their wages, up to a cap of £2,500 per month for the time they are being furloughed.

The timetable for changes to the scheme is set out below. Wage caps are proportional to the hours an employee is furloughed. For example, an employee is entitled to 60% of the £2,500 cap if they are placed on furlough for 60% of their usual hours:

– there are no changes to grant levels in June

– for June and July, the government will pay 80% of wages up to a cap of £2,500 for the hours the employee is on furlough, as well as employer National Insurance Contributions (ER NICS) and pension contributions for the hours the employee is on furlough. Employers will have to pay employees for the hours they work

– for August, the government will pay 80% of wages up to a cap of £2,500 for the hours an employee is on furlough and employers will pay ER NICs and pension contributions for the hours the employee is on furlough

– for September, the government will pay 70% of wages up to a cap of £2,187.50 for the hours the employee is on furlough. Employers will pay ER NICs and pension contributions and top up employees’ wages to ensure they receive 80% of their wages up to a cap of £2,500, for time they are furloughed

– for October, the government will pay 60% of wages up to a cap of £1,875 for the hours the employee is on furlough. Employers will pay ER NICs and pension contributions and top up employees’ wages to ensure they receive 80% of their wages up to a cap of £2,500, for time they are furloughed

Employers will continue to able to choose to top up employee wages above the 80% total and £2,500 cap for the hours not worked at their own expense if they wish. Employers will have to pay their employees for the hours worked.

The table shows Government contribution, required employer contribution and amount employee receives where the employee is furloughed 100% of the time.

Wage caps are proportional to the hours not worked.

  July August September October
Government contribution: employer NICs and pension contributions Yes No No No
Government contribution: wages 80% up to £2,500 80% up to £2,500 70% up to £2,187.50 60% up to £1,875
Employer contribution: employer NICs and pension contributions No Yes Yes Yes
Employer contribution: wages 10% up to £312.50 20% up to £625
Employee receives 80% up to £2,500 per month 80% up to £2,500 per month 80% up to £2,500 per month 80% up to £2,500 per month

 

If your next VAT return is for period 05/20, you need to get the direct debit re-instated as soon as possible.

If your next VAT return is for period 05/20, you need to get the direct debit re-instated as soon as possible.  If you don’t do this you must remember to pay electronically by 7 July 2020.

 

All good things must come to an end

Back in March, as part of the Covid-19 measures, HMRC automatically deferred all VAT payments due for the period 20 March 2020 to 30 June 2020. This meaning, there was no requirement to pay your VAT bill until 31 March 2021.

This deferral period covered the following:

(a) Quarterly and monthly VAT returns’ payments for the periods ending in February, March and April

(b) Payments on account due between 20 March 2020 and 30 June 2020

(c) Annual accounting advance payments due between 20 March 2020 and 30 June 2020

‘All good things must come to an end’ said ‘no-one ever’ when talking about getting an automatic extension to paying your VAT payment to HMRC.  HMRC are now encouraging all businesses to re-instate their direct debits in plenty of time then HMRC can collect the next payment when it is due. HMRC has assured that their payment collection software will not attempt to collect the VAT due from the deferral period.

If your next VAT return is for period 05/20, you need to get the direct debit re-instated as soon as possible. If you don’t do this you must remember to pay electronically by 7 July 2020.

If you find that you’re unable to pay the VAT due at the end of your next VAT period and need additional time to pay, please contact HMRC before the payment is due to arrange a time to pay. HMRC have a dedicated helpline for this – 0300 200 3835. If you do call, please quote ‘V1’.

Business as usual

As businesses begin to trade again, the effects of being closed could lead to possible cash flow issues. There are a some things that you could do to help with this from a VAT perspective:

(a) If you have had a drop in turnover, it may be that you are eligible to use the flat rate scheme to account for VAT. For more information on this please read – https://www.gov.uk/government/publications/vat-notice-733-flat-rate-scheme-for-small-businesses

(b) If you are a repayment trader, you should consider changing to monthly VAT returns. In addition to this, if your VAT return requires HMRC authorisation, managing the process efficiently will avoid unnecessary delays. HMRC aim to complete such checks as quickly as possible

(c) If the business is obliged to make payments on account, can these be reduced or even removed entirely if the revised forecast trading position is significantly different to the prior year?

(d) If you have customer debts older than 6 months, make a bad debt relief claim

For businesses whose customers take 30/60/90 to make payment, you can –

*   Switch to cash accounting if your turnover is below £1.35million. This will enable you to account for VAT on a cash basis rather than an accruals business.

*   Issue requests for payment initially instead of issuing VAT invoices. Follow this up by issuing VAT invoices when the customer pays in full. This would prevent paying over output tax to HMRC before your invoices are paid by your customers.

Other important points

During the whole Covid-19 hysteria, there has been some other changes in relation to VAT, some are temporary, and some are here for good. Either way, they need to be considered –

– The implementation of the domestic reverse charge for the construction industry has been postponed until 1 March 2021

– Until 31 July 2020, PPE can be imported free of duty and VAT. Applications must be made to HMRC for a relief certificate prior to the goods being imported. Depending on how the pandemic progresses, there is the possibility of this deadline being extended

– With immediate effect, HMRC reduced import VAT and duty to nil on the importation of items used to help find a treatment/cure for Covid-19 such as animals for scientific research and substances for biological and chemical research

– For any option to tax made during the period 15 February 2020 to 30 June 2020, you have 90 days to notify the option

– With effect from 1 May 2020, e-publications are now subject to VAT at 0%

– There has been issues with the C79’s for March. Some businesses were not issued with a C79 for March, or the C79 was issued containing the February 2020 data. HMRC advises businesses to use the most recent C79 that they have received

– For solicitors and conveyancers, HMRC have announced that with effect from 1 December 2020, you will no longer be able to treat postal property search fees charged to your clients as ‘disbursements’. VAT will be chargeable at 20% on the recharge of such costs

It’s been a hectic couple of months for all businesses. Over the next couple of weeks almost all businesses will be open again with trade hopefully returning to normal over the coming weeks.

 

If you are affected by any of the above or you have any questions or concerns, please speak to your usual Huddart contact or email us via hello@jeffreyahuddart.co.uk

 

Understanding more about Time to Pay (TTP) and HMRC

Understanding more about TTP

In the recent spring Budget, the Chancellor of the Exchequer Rishi Sunak said Britain will rise to the challenge of COVID-19, adding that: “HMRC will scale up the Time To Pay service to allow businesses and self-employed to defer tax payments.”

Known as a Time to Pay (TTP) arrangement, it is designed to help businesses that are fundamentally viable but experiencing temporary cash flow problems.

If HMRC believes that your company is nearing insolvency, they may act quickly to recover their money, so we must stress that a Time to Pay arrangement is only for those businesses that are fundamentally profitable.

Our advice is to always be proactive with HMRC – don’t wait to be contacted by them because your tax payment was late.  The existence of Time to Pay arrangements indicates an understanding by HMRC that problems will arise, and a willingness to help under certain circumstances, but the responsibility remains with you to initiate contact.

A TTP arrangement is a method of spreading your tax payments over a longer period of time than would otherwise be available.  It is used for arrears of corporation tax, VAT and PAYE, but can also be used if you are anticipating problems with an upcoming payment or payments, and it may help you to avoid a late payment penalty.

HMRC will want to satisfy themselves that you are not trying to deliberately avoid meeting your tax liabilities.  When weighing up the risk of allowing extra time to pay, they also consider the industry in which you operate, and its previous history of repayment as a whole.

If a TTP arrangement is agreed, it is imperative that you meet these payments in full and on time, otherwise your problems could significantly increase.  HMRC could immediately cancel the arrangement if you default, calling in the total debt and applying a range of penalties.

 

If a TTP is agreed, interest will probably be charged on the amount to be paid, but penalties may be lifted if you have made contact with HMRC quickly, and acted responsibly to redress your situation.

Applying for a Time to Pay arrangement

Once you have put together a strong case in favour of being granted extra time to pay, you need to phone HMRC, or seek the help of a professional accountant who will negotiate on your behalf.

But what constitutes a ‘strong’ case?  This means presenting a realistic proposal in terms of what you can afford to pay, backed up by evidence in the form of:

(a) Sales and cash flow forecasts for the following six months or more

(b) A plan of how you will cut costs to free up extra cash

(c) Generally conveying your determination to ensure repayments are met.

It is worth remembering that HMRC will want the TTP arrangement to be over the shortest time, with the highest repayments possible, in order to recoup their money quickly.  You must be careful, however, to offer only what you can afford, and be certain that your company can meet its obligations as set out in the plan before it is agreed.

Dealing with HMRC can be problematic unless you understand how they operate, which is why many of our clients ask us to discuss and negotiate on their behalf.

Get in touch via email:  hello@jeffreyahuddart.co.uk

By Phone:  0161 703 8353

Our offices are open Monday to Friday 9am – 3pm.

 

Starting a new job in the midst of a pandemic – here’s what it’s like

My decision to change jobs

After much deliberation and thought, and after almost 21 years with the same company, I decided to hand in my notice (3 months) and start afresh somewhere else.

I decided to join another firm of accountants local to my home as the commute into central Manchester was one of the main factors of handing in my notice. I was extremely excited as well as apprehensive and scared.

The shock of Covid-19

During my 3 months notice, with literally two weeks to go, the country went into lockdown because of Covid 19!

I had to work from home which was not a problem to me as I was used to doing this but the thought of leaving my safe, secure job and then maybe not having a new job to go to was the most frightening experience of my life.

I have always worked and been extremely independent. In fact, I was 12 years old when I started my first job and have never been out of work since, whether it be school and another job, college and another job or having two jobs literally!

My new job

To my delight and relief, I was still offered the job at the new accountancy practice. Phew!  Now to prove my worth working from home and building up the trust of my new bosses and colleagues.

My first day was in the office for a ‘one to one’ welcome meeting – social distancing of course – which was very strange in itself but it all went extremely well.

Starting a new job can be overwhelming after making such a huge leap but dealing with it during a pandemic and lockdown is a different ball game altogether. You are totally isolated from your new colleagues and have not got the comfort of asking a question across the table – no matter how big or small that question may be.

Learning new software with a different computer/laptop was also challenging but with my experience and knowledge I overcame my worries and fears. Fortunately, I have had the advantage of familiarising myself with all my new tools and not having the pressures of rushing which has been a tremendous help to me. Whilst it has been challenging at times, my new colleagues have been great at asking if I need help.

I was a little worried about how I would fit in at the office and having to present myself under these circumstances which was daunting but the one saving grace has been the weekly zoom meetings that we have.

 

The whole of the team are all very approachable and friendly and I feel like I have been part of the team for years. I really enjoy these meetings and try to get involved as much as I can so I can be part of the discussions and decision making.

Lockdown

I think anyone starting a new job during lockdown misses the buzz that is there for the first couple of days when you are new – the new routine, the chats, the lunches. It’s the small rituals we miss out on now.

However, this is something happening to so many people as a result of a global pandemic and if it means that I miss out on certain aspects of in-person training in order to keep myself and others safe, then that’s a choice I’m more than happy to make.

Being on lockdown, means that I cannot meet my new clients but again, because of my experience over the years, have contacted them via email or phone, introduced myself and had a long chat with them. I am really missing face to face contact with everyone at the office and being able to discuss any new ideas I have, discussing my role and proving my worth to the practice but that will hopefully come in time.

On the flip side of the coin, it has also been a very pleasant experience. Starting a new job, after such a long time in the previous one, is both challenging and stressful, but I have been able to ease myself into my new routine – as I am used to working both remotely and independently, so this was fairly easy for me to get on with.   My new employers have been very encouraging and patient and sympathised with me over my new role and any potential hurdles that I may or may not have had to overcome.

I think out of the first seven weeks at Huddarts I have only felt low and flat probably twice – not because of the work or the company, but because of the situation and circumstances that I find myself in.

It’s amazing what a pizza can do …

A poignant moment of my time at Huddarts was when Tom and Charles sent an email to each and every member of the team and said that we could order a large pizza for each of us and our family from the local Italian restaurant.

A small gesture – but meant the world to me.   Really boosted morale and felt a lot of appreciation from both directors.  I really do not feel under any pressure at all. My new employers encourage me to talk about any problems or concerns I may have. Something I have not experienced before!

Diane Mills

 

Open – Business as a New Normal

While our office has been open during lockdown with one member of staff in each day Monday to Friday, I’m pleased to say that we now have more staff operating from the office while others continue to work remotely or do a bit of both.

Office Hours

Our office hours remain Monday – Friday 9am to 3pm.

Visiting the office

If you are calling to drop of paperwork or sign a form please phone in advance and let us know.  The front door is locked for the moment so when you arrive (having phoned in advance) please knock and one of our staff will come and meet you at the door with social distancing rules applying.

We are doing all we can to maintain a safe system of work with only clients using the front door and staff coming into the office via our back entrance. We limit the number of staff in the office at any time and have an Upstairs Downstairs social distancing rule for their work stations.

We still prefer client appointments to be conducted by phone, facetime or Zoom meetings.  We believe this is the best for all concerned during this time.

Our office phone number is: 0161 703 8353

You can email us on: hello@jeffreyahuddart.co.uk

We are open for business.  However, as the caption says ‘Business as a New Normal’.

Tom Bathgate MBA.