Please see below our latest briefing information,
We covered this in our last Briefing but as this is due to come in next week, please see further information below:
From 1 July 2020, employers will have the flexibility to bring previously furloughed employees back to work part-time. Employers can decide the hours and shift patterns that the employees will work on their return and will be responsible for paying their wages in full when working.
The summary of Employer Contributions is detailed below:-
From August, the Government grant provided through the Job Retention Scheme will be slowly tapered.
· in June and July, the Government will pay 80% of wages up to a cap of £2,500 as well as Employer National Insurance (ER NICs) and Pension contributions for the hours the employee does not work – Employers will have to pay employees only for any hours they work
· in August, the Government will continue to pay 80% of wages up to a cap of £2,500 but Employers will have to pay the ER NICs and Pension contributions – for the average claim, this represents 5% of the gross employment costs that would have incurred if the employee had not been furloughed
· in September, the Government will pay 70% of wages up to a cap of £2,187.50 for the hours the employee does not work – Employers will pay ER NICs, Pension contributions and the 10% of wages to make up 80% of the total up to a cap of £2,500
· in October, the Government will pay 60% of wages up to a cap of £1,875 for the hours the employee does not work – Employers will pay ER NICs, Pension contributions and 20% of wages to make up 80% of the total up to a cap of £2,500
· the cap on the Furlough grant will be proportional to the hours not worked.
Again, we did mention this on our last Briefing, however, HMRC are now firming up their position in this regard.
Employers that believe they may have abused the Coronavirus Job Retention Scheme will have a 30-day period to admit their mistakes under plans being fast-tracked through Parliament.
HMRC are preparing to tackle fraudulent and erroneous claims made to the CJRS and the Self-Employment Income Support Scheme (SEISS), but first are going to allow claimants to confess to any misuse by providing a 30-day window of opportunity. Draft legislation is being rushed through Parliament and is expected to become law in early July as part of the Finance Bill 2020. A consultation period ended last Friday.
Almost £20bn was paid out to more than one million employers in furlough claims as of 7 June 2020 and a further £7.5bn has been paid to 2.6 million SEISS claimants in the same period. By the end of May almost 1,900 reports of fraud had been made to HMRC via its digital reporting service, expected to be largely from employees whose employers have fraudulently claimed furlough payments whilst expecting staff to continue working. The draft legislation includes powers to pursue company office holders where businesses become insolvent, with joint and several liability.
Once the 30-day window of opportunity to ‘confess’ and notify HMRC of any mistakes has passed it will be ‘gloves off’ for HMRC to pursue incorrect claimants using both criminal and civil powers. For business owners, many of whom may have implemented claims in a rush at the start of lockdown, now is the time to check and double-check the amounts are right. Please contact us if you have any concerns that your furlough claims have been over-stated.
Self-Employment Income Support Scheme – SEISS
Individuals can continue to apply for the first SEISS grant until 13 July. After this date this grant is closed with any potential claim lost.
The details of the second SEISS grant are as follows. Please note that this is as much detail as we have for now, however, we will update you further as the detail is released:-
HMRC will work out your eligibility the same way as the first grant. If you make a claim for the second grant you will have to confirm your business has been adversely affected on or after 14 July 2020.
This grant will be a taxable grant worth 70% (it was 80% last time) of your average monthly trading profits, paid out in a single instalment covering a further 3 months’ worth of profits, and capped at £6,570 in total.
The same tax years will be used as a basis to calculate the second grant as the first one. So, 16/17, 17/18 and 18/19. Please note that 19/20 will not be included even if you have completed and submitted your Tax Return.
If you are eligible for the second and final grant, and your business has been adversely affected on or after 14 July 2020, you will be able to make a claim in August 2020. You can claim for the second grant even if you did not make a claim for the first grant.
If you receive the grant, you can continue to work, start a new trade or take on other employment, including voluntary work, or duties as an armed forces reservist. The grant will be subject to Income Tax and National Insurance, collected through your 20/21 Tax return.
Your business could be adversely affected by coronavirus if, for example:
o you are unable to work because you:
o are shielding
o are self-isolating
o are on sick leave because of coronavirus
o have caring responsibilities because of coronavirus
o you have had to scale down or temporarily stop trading because:
o your supply chain has been interrupted
o you have fewer or no customers or clients
o your staff are unable to come in to work
Government examples are:
|Scenario||Adversely affected for first grant||Adversely affected for second grant|
|A builder’s trade was not impacted. She worked on a very small building site and was still able to go to work throughout the whole of the crisis as she was able to work at a social distance.||No||No|
|A builder was unable to find work from March to September because of the Government restrictions on building sites and the economic impact of the crisis on the companies she worked for.||Yes||Yes|
|A builder worked on short-term contracts on various building sites. She only had half the work she would normally have between March to May because some of her building sites were closed. She was able to work as normal from June because her building sites reopened.||Yes||No|
|A builder worked on short-term contracts on various building sites. She had no work from March to April because her building sites were closed. She was able to work as normal from May because she works on small house extensions which are completely outdoors.||Yes||No|
|A builder was able to work as normal from February to August because she works on small house extensions which are completely outdoors. However, she caught coronavirus in August, meaning she had to self-isolate and was unable to work for 6 weeks while she recovered.||No||Yes|
The Government have just issued a YouTube video on how to make the claim. Please access the link below in case that can assist. Or, as ever, just call us and we will talk you through it.
Business Reopening Tool
We know that many of your businesses are starting to reopen in one form or another. With this in mind, the Government has created a business reopening tool, that gives you a summary of the advice you should follow. There is no tax angle here but we thought it might be useful as a reference tool.
VAT Domestic Reverse Charge for the Construction Industry
For those of you who are VAT registered and work in this sector, you may remember that HMRC were due to change the way VAT is paid and charged on subcontract services where the ultimate supply was either Standard or Reduced Rated. This change was not applicable where the ultimate supply was Zero rated. The implementation date was originally set for 01 October 2019. It was then delayed, however, for your information, it has now been delayed again until 1 March 2021.
Please see the link below for full details.
We have received a number of calls this week regarding Credit limits. It appears that as businesses ramp up activity, many suppliers are altering the level of credit they are prepared to provide, by, generally, lowering credit limits across the board as they manage what they perceive to be a state of heightened risk in trading generally.
We can manage this to a certain degree by ensuring Accounts filed at Companies House are as up to date as they can be, by having current management information available to provide if we need to argue the limit higher, and also by engineering cash resources to ensure we can stick within these new limits. If you need assistance in this regard. Please do call us.
If you would like further help or to discuss any area of this briefing contact us on 01202 880384 or firstname.lastname@example.org
Chartered Accountants & Business Advisors