Information and clarification is thin. The expected clarification announcement by the Chancellor did not take place. However, there are a few droplets of information being released.
VAT Deferral Scheme
HMRC are saying that no one needs to pay VAT due between now and the end of June. However this is only a deferral and VAT will be due eventually. VAT Returns should still be submitted. If you are due a VAT refund, you will still receive this.
However, if you pay your VAT by direct debit, you should cancel the mandate with your bank immediately – unless you want to pay VAT.
Coronavirus Job Retention Scheme
This is the scheme whereby employees can be “furloughed”. The guidance now confirms that an employer can reduce salaries to 80% and only has to pay extra if the employer wishes to do so.
This probably means that putting employees on “furlough” might be a better option than them claiming SSP. Whether making this choice is completely legal is another matter.
We don’t have details of how the amount to be paid is calculated. Best guess is that it will be based on February wages but we can see problems with this, not least because it was a short month and may not be a true reflection of “normal pay” for various reasons – sickness, holidays, variable hours etc. As we find out more we will keep you posted.
One intriguing phrase in the guidance is, “…………………….. claim a grant of up to 80% of employment costs”.
We don’t know if this means that the grant extends to Employer NI contributions or Pension contributions. We don’t even know if it extends to the cost of operating payroll.
As things are clarified we will advise accordingly.
3 Month Extension to File Accounts at Companies House
Companies House and the government have jointly confirmed that any company applying to Companies House for an extension for filing company accounts and citing Covid-19 as a reason, will be granted an automatic three month extension.
Note that an application must be made before the original deadline.
If any of our clients (or anyone which isn’t a client) need assistance with this, give us a call (01509 816150).
We will obviously monitor our clients and, if we think it is necessary, communicate directly.
Coronavirus Business Interruption Loan Scheme
This undoubtedly exists. However, feedback coming via various accountants seems to be that it might not be as simple or as helpful as the government is portraying it.
This is only information extracted from posts on accountancy websites but the experience to date doesn’t seem great.
One post says that Barclays offered a loan but asked for 100% personal guarantees. Since the government is supposed to be offering 80% guarantees, insisting on a 100% personal guarantee seems excessive.
NatWest responded to a query as follows:
“In situations where the customer has reached their level of unsecured debt that the bank is comfortable with, CBILS could be a viable option. Standard lending criteria must be exhausted first before CBILS can be considered. The purpose of the scheme is not to put cheap money out there, its to support businesses that otherwise wouldn`t be able to obtain bank funding.”
In other words, the government support is the last option.
Others report problems in actually speaking to their banks. One reported hanging on the phone for 4 hours.
As with all of these things, we hope that clarification follows fairly soon.
We are operational with staff working from home. Feel free to contact us with queries and we will do our best to help. Sending queries by email would probably better so that the most appropriate member of staff can respond. You can send general emails to email@example.com which will be seen by all members of staff. If it is a query specifically about payroll, you can use firstname.lastname@example.org which is seen by everyone connected with payroll.
Because of other commitments, including letting children use home computers for school work during the day, staff are not necessarily working normal hours. You may get a response at an odd time.
Our own clients will be given preference but we understand that not everyone has an accountant or may not be able to contact them and we will try to help.