Webinar – VAT on Domestic Reverse Charge

February 16, 2021

Join us on Monday 22nd February at 2.30 pm as our VAT Consultant discusses the VAT Domestic Reverse Charge changes for the Construction Industry,

Join us on Monday 22nd February at 2.30 pm as our VAT Consultant discusses the VAT Domestic Reverse Charge changes for the Construction Industry, how it works, and what impact it may have on your business. Don’t miss out on this chance to understand the new rules which come into effect from 1 March 2021.

Please contact Kevin Booth at kevin.booth@alexandersloan.co.uk to reserve your place.

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Robert Pattie

Position: Tax Manager
Email: robert.pattie@alexandersloan.co.uk
Phone: 0141 204 8989

I am a Chartered Tax Adviser originally training as an Inspector of Taxes  followed by thirty years’ experience  in professional practice.

I joined Alexander Sloan in November 2020 and work with a variety of corporate clients, in both the commercial and  not for profit sectors. My role is primarily the provision of corporation tax compliance services but also includes general corporation tax advice as required.

I work closely with other services within in the firm to ensure that we provide a joined up and efficient service which meets clients’ needs.

Robert Pattie
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Covid Restrictions highlight benefits of Cloud Accounting

November 11, 2020

Restrictions on movement in 2020 and reliance on digital world has drawn more businesses to the Cloud

At Alexander Sloan we have long championed the benefits of using cloud accounting and this will become even more relevant as business owners and organisations react to the easing of lockdown restrictions and begin focusing on the future. However, as the uncertainty of future lockdowns continues, we would encourage you to make the move to cloud accounting software now and ensure you are taking the necessary steps to look after your business financially.

Your sole objective may be to recover and rebuild your business and in doing so you should consider the advantages of implementing cloud accounting to monitor your business finances. It is no secret that many businesses struggled with accessing government support during the summer of 2020. This was primarily due to the lack of up to date accounting information and restricted access to their accounting records due to remote working, which led to increased stress and business uncertainty.

As we now look towards the ‘new normal’, naturally we will try to hold on to the processes and procedures that we are well acquainted with. However, in doing so, are we missing the chance to make positive changes to our businesses by not ensuring we are well prepared for the risk of further lockdowns?

Why is this important?

For many years we have encouraged a move to cloud accounting to comply with HMRC’s Making Tax Digital requirements, or simply to embrace new technologies. However, this year, our message has been shaped by the business effects due to COVID-19.

We want to ensure you have complete visibility of your business finances by being able to access this anytime and anywhere, in real-time. As the pandemic led to offices being closed and a move to home working, many businesses had paperwork such as bank statements, invoices, and bills in their offices which were not accessible to finance teams. By implementing cloud accounting, the need for paperwork and desktop applications would be eliminated with the use of bank feeds and automatic invoicing.

COVID-19 is forcing businesses of all types to change the way they operate due to social distancing. Inefficiencies with the use of legacy processes that were once ignored have now been extremely exposed. These legacy processes also relate to manual accounting procedures which were paper focused but are now being adapted to ensure a more ‘access anytime, anywhere’ approach.

As the uncertainty of how long the pandemic will go on for increases to rise, we would encourage taking steps now to ensure you have complete access to your financials in the event of further lockdowns. By making a move to cloud-based accounting software now, you would be taking the necessary steps to ensure your business finances are fully accessible and eliminate the risk of key financial information being left behind in offices if further restrictions are imposed. As businesses continue to work from home, you will have peace of mind in knowing exactly where your business is financially and allow you to have real-time reporting accessible to you at any time.

Transitioning to remote working, the new norm?

The COVID-19 outbreak forced millions to embrace working from home and to undertake flexible working to a heightened level. This led to different means of working and forced the business into alternative methods of communicating with and managing their employees. This may have been through the implementation of Zoom or Microsoft Teams, however, if we think of your finance function – this would work in the same way. Cloud accounting has paved the way for remote working and ensuring complete visibility and access to your business finances.

Whilst your finance team is working from home, they can be accessing your accounting software remotely and able to ensure your accounting records are kept up to date. Not only does this ensure your staff can continue working, but it also ensures you have complete real-time information and can make better-informed business decisions.

Moving your accounting processes to the cloud will allow you to save everything you require online so that it can be accessed from anywhere, at any time. This will also make it easy for your teams to collaborate regardless of where they are working. Cloud accounting will allow you to save documents online rather than filing paperwork in offices. This will drastically reduce the amount of paperwork, printing costs, and manual input, whilst also speeding up the invoice payment process, leading to an overall more efficient way of working.

How can we help

Please contact us to find out more about cloud accounting, and how we can help your business. We offer services such as a complete migration to cloud software as well as training and consultancy services, to ensure you are ready for any eventuality. We continue to encourage the use of cloud accounting and would urge you to speak with us if you have any concerns regarding your current finance function and what to do next. We want to ensure you have complete visibility and real-time access to your accounting records as the uncertainly of further lockdowns again poses risks in you not being able to access your business finances when you most require them.

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Furlough Scheme extended to March 2020, SEISS support increased

November 5, 2020

Government agrees to extend furlough to March

Key Points from the surprise announcement today:

  • The Job Retention Scheme has been extended to 31 March 2021
  • Employees made redundant after 23 September 2020 can be re-employed and furloughed.
  • Usual Wage calculated by reference to salary at 30 October 2020 but only for newly employed employees.
  • The Job Support Scheme is postponed.
  • The Job Retention Bonus (due to be paid in February 2021) has been cancelled.
  • Self Employed Income Support Scheme (SEISS) 3rd grant increased to 80% of trading profits for 3 months.

The furlough scheme (or Job Retention Scheme) has now been extended to the end of March 2021, it was announced at lunchtime today (5 November), and will apply throughout the UK.    The scheme will pay up to 80% of an employee’s wages up to a cap of £2,500 a month.  The extension of the scheme into November was confirmed last Friday,  but this extends the scheme for a further four months and at the same rates and conditions.  The Government will issue full guidance on 10 November.

https://www.gov.uk/government/publications/extension-to-the-coronavirus-job-retention-scheme/extension-of-the-coronavirus-job-retention-scheme

As noted when the extension into November was confirmed last week, the furlough scheme will operate in a similar way to the JRS in August 2020 (ie, employer can claim for 80% of usual wages for hours not worked but must contribute fully towards employer’s national insurance and employer’s pension contributions).

The Government has also confirmed that anyone made  redundant after 23 September 2020 (when the replacement Job Support Scheme was first announced) could be re-hired, at the employer’s discretion, and be furloughed.  This was a similar situation to what happened when the JRS was originally announced back in March.

The guidance states that the basis of the claim (the ‘usual wages’) for employees that were employed on or before 19 March 2020 remains their pay at that date.   For new employees hired between 20 March and 30 October , the calculations of their furlough rate will be based on thei pay period immediately prior to 30 October or, for staff on variable hours, average earnings from start of employment to start date of furlough.

The government has also confirmed that the Job Support Scheme has been further postponed and that the Job Retention Bonus (JRB) will now not be paid in February 2021 and has been cancelled.

The Self-Employed Income Support Scheme (SEISS) will also be increased and the claim for November 2020 to January 2021 will now cover 80% of prior average trading profits.  This level of support is similar to the first grant claim that was claimable in June 2020.  This had been increased last Friday to cover the equivalent of 55% of three months trading profits but, in line with the extension of the furlough scheme, this has now increased to a full 80%.   This is expected to be claimable from early December.

 

 

Alexander Sloan

 

 

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Furlough extended to November

October 31, 2020

Job Retention Scheme will be extended for another month

The announcement by the Prime Minister yesterday evening (31 October) of a second lockdown in England contained confirmation that the Coronavirus Job Retention Scheme (CJRS) (the ‘furlough scheme’) would be extended until 30 November.

What this means is that the commencement of the Job Support Scheme, due to start 1 November, has been delayed until the CJRS ends.    The UK Government has confirmed that the Furlough scheme extension will apply to all UK nations,  so whether your Scottish business is legally required to close or whether your staff are able to work at least 20% of their usual hours is not relevant for November.

https://www.gov.uk/government/news/furlough-scheme-extended-and-further-economic-support-announced

Key Features of CJRS Extended:

 Employees eligible to 80% of usual wages up to a maximum of £2,500 per month;

  • The Government will cover 80% of the usual wages  (in September this had reduced to 70%, October to 60%);
  • The employer must pay employer’s national insurance and pension contributions, these are not claimable;
  • Flexible furlough will be allowed as well as full furlough;
  • Employers can top up employee wages if they wish.
  • Employee must have been on the payroll on 30 October 2020

The rules seem similar to those that were in place for August 2020 with the one key difference being that the employee could have been on the payroll at 30 October (not just on 19 March).  There is no mention in the (currently limited) guidance that the employee need to have been previously furloughed (a key condition for being flexibly furloughed before).   The methodology of calculating hours and wages will remain the same but it’s not yet clear whether usual wage is now based on that at 30 October and not February 2020.  Further detail will be issued shortly by HMRC.

In summary, the Furlough Scheme is being extended for another month and the JSS Open / JSS Closed schemes are not starting until at least December.  This change in Government support may impact on decisions on whether to keep open or temporarily close parts of your business.

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Working from Home Allowance and JSS changes

October 23, 2020

Staff can claim a tax free allowance for home working

Working from Home Allowance

 Staff that are working from home may be able to make a tax relief claim. From 6th April 2020 they can claim £6 per week without having provide any evidence of costs incurred. Alternatively, the employee can claim the exact amount of costs incurred in working from home. This would include additional  costs such as heating, new broadband connection and business calls, but not costs that would have been incurred irrespective of whether the employee was working from home, for example rent or mortgage interest.  Staff may also be able to claim relief for equipment or furniture they have purchased for home working.

The following conditions apply:

  • The staff member must not be working from home through choice
  • The employer can’t have already compensated the staff member for any costs they are incurring by working from home.

Job Support Scheme Changes

The UK Government has updated its plan for jobs to increase support for business in the winter period.

The Job Support Scheme will come into effect on 1 November 2020 and will replace the initial Furlough scheme. The government has made the following changes to its initial proposals:

  • The minimum hours required for employees to work has dropped from 33% to 20% and
  • the employer contribution for non-worked hours has dropped from 1/3 to 5%.

The Government will pay 61.67% of hours not worked up to a cap of £1,541.75 per month, with the employer contributing 5% of non-worked hours up to a cap of £125 per month. These caps are based on a monthly reference salary of £3,125. This will ensure employees earn a minimum of at least 73% of their normal wages, where their usual wages do not exceed the reference salary. The employee will have to work a minimum of 20% of their normal hours.

 To give an example of the impact of these changes. An employee is normally paid £1200 per month (ignoring tax / NIC for simplicity):

Initial Proposal

Hours Worked Employer Pays(Gross) Government Pays Employee Receives (Gross) Percentage of Normal Pay employee receives
33% (400+267)=667 267 934 77.8%
50% (600+200) =800 200 1000 83.3%
75% (900+100)=1000 100 1100 91.6%

This has now been changed to:

Hours Worked Employer Pays(Gross) Government Pays Employee Receives (Gross) Percentage of Normal Pay employee receives
20% (240+48)=288 592 880 73.3%
33% (400+40)=440 493 933 77.8%
50% (600+30) =630 370 1000 83.3%
75% (900+15)=915 185 1100 91.6%

There is no change in the amount received by the employee, but the employer’s contribution is substantially reduced.

Full details can be found at:

 https://www.gov.uk/government/news/plan-for-jobs-chancellor-increases-financial-support-for-businesses-and-workers

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Job Support Scheme – Expansion

October 10, 2020

The government’s replacement for furlough – Job Support Scheme – has been expanded

The Government announced today (9 October 2020) an expansion to the Job Support Scheme, which was itself only announced two weeks ago.

UPDATE – the Job Support Scheme has been postponed and is NOT available until at least April 2021

The Job Support Scheme, which will commence on 1 November, is open to employers who will be able to claim a grant from HMRC in respect of their employees who are working reduced hours, though a key condition is that the employee works at least 33% of their usual hours.   Following recent announcements in Scotland and parts of England and in anticipation of more businesses being forced to close due to government restrictions, the Chancellor today announced an expansion of the Job Support Scheme specifically for these businesses.   According to the initial information, this Expansion applies only to businesses legally required to close as a result of coronavirus restrictions.

The JSS Expansion will also start from 1 November and run for six months, though a review will take place in January.  This means that those businesses temporarily shutting from this evening will remain eligible only for the Job Retention Scheme (the ‘furlough’ scheme), and of course be bound by the rules specific to that scheme.  Namely, that eligible employees will have to be have been furloughed previously and that the employee had to have been on the payroll on or before 19 March 2020.

With the new JSS and JSS Expansion, eligibility will be based on the employee being on the payroll as at 23 September 2020 and that employee need not have been previously furlioughed.

Under the JSS Expansion – so for those businesses legally forced to close due to coronavirus restrictions –  employees may receive up to 2/3rd of their usual wages up to a maximum of £2,100 per month.    Employers are responsible for paying the employees but can then reclaim this via a grant from HMRC from early December.    There is no obligation on employers to make additional top-up payments, though all employer’s national insurance contributions and employer’s pension contributions must be covered by the employer and will not be reimbursed by HMRC.

There is currently no official Government web page giving specific details of the Expansion but this will be forthcoming in the next few days, but a search for ‘Job Support Scheme’ on HMRC’s website will show updates when they appear.

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Credit Unions – preparing for the 2020 year end

September 30, 2020

Audit in the shadow of covid-19 – how to prepare

This year end is likely to be different from any other due to Covid-19. We therefore thought it would be useful to update last year’s blog on preparing for your year end.

AGMs

The FCA have stated that they do not plan to take actions where AGMs have been postponed as a result of following government guidelines on Covid-19. They do highlight that members would still be able to take action in such circumstances. The FCA also state organisations will want to consider alternative arrangements for AGMs such as video conferencing.

The Corporate Insolvency and Governance Act 2020 allowed registered societies (including Credit Unions) to hold Annual General Meetings electronically and for members to vote electronically. The rule was introduced as most organisation’s rules do not specifically allow meetings to be held electronically. A traditional AGM in the current climate, however, poses a high risk to members, staff and directors. Originally this rule only applied until 30 September but it was extended until 31 December 2020. This date may be reviewed in the future depending on the position with the pandemic.

We would recommend that you do review your rulebook as soon as possible and consider implementing rules to allow member meetings to be held electronically in the future. This legislation will only last for a limited period of time and there is an increased risk of future pandemics and lockdowns.

Arrangements for the Audit

The increased risk of staff illness and potential access issues to Credit Union offices, where there are local lockdowns, offers the potential to cause audit delays. Many audits will be done remotely to help reduce the impact of these risks as well as complying with social distancing measures. Good communication throughout the audit will be even more important to ensure audits go as smoothly as possible.

Auditors should provide you with a list of the information that they require. If you don’t receive one it’s worth speaking to them to ensure you have all the information they require. We would recommend pulling together this information as soon as possible in case of illness or local lockdown restrictions.

Focus of the Audit

A Credit Union prepares financial statements on a going concern basis, when, under the going concern assumption, the Credit Union is viewed as continuing in business for 12 months from the date of signing of the accounts. Going concern is always an audit risk but will have even more focus due to Covid-19. With most Credit Unions facing increasing bad debt costs and rising share balances, their capital ratios will be under pressure.

The directors of a Credit Union have a legal duty to consider whether the Credit Union is a going concern and to apply this basis to the financial statements. When preparing their auditors report the Credit Union’s auditors will consider the appropriateness of the credit unions’ assessment. Both the Credit Union and the Auditors will need to take into account the impact of Covid-19. As part of their audit work, your auditor will normally be looking to review your financial projections and scenarios which consider the impact of Covid-19.

Holiday Pay Accrual

With staff holidays being impacted due to Covid-19 we have received a number of questions about whether there has been any changes to the accounting rules on holiday pay accruals (for HR or legal aspects please contact your HR consultant or lawyer). While many members of staff will have more accrued holidays the accounting rules remain the same. The reason is that staff have earned these holidays and this will be a future cost to the Credit Union when staff do look to take this time off. The only difference is where staff holidays can be used over 12 months then that element technically would be discounted, although for most the difference between discounting and not is unlikely to be material.

 Information for the Auditor

For credit unions carry who do not prepare daily bank reconciliations it is important these are carried out reconciling the year end nominal to the year end statement balance. If you don’t have a reconciliation at the year end it will lead to additional work and possibly cost from your auditor. Year end cash counts are particularly important as well.

It is vital that your transactions on your system are up to date before your year end process. Bad debts to be written off should be done so before the year end and before running year end arrears reports to avoid double counting. It is also useful to chase up suppliers in September to ensure you have invoices for services/goods incurred before the year end.

Certain reports can only be run at the year end. Reports involving interest are the main example of this with reports including the year end accrued interest, delinquency reports and interest earned reports usually not being able to be reproduced if not run at the year end. It is therefore important these reports are produced at the end of day on your year end.

A year end back up is critical for a number of reasons.  If any reports are missed they could be reproduced from the backup. It also means that if there is mispostings or corruption after the year end then you have a set of records that still can be audited.

Systems such as Curtains let you post nominal and member transactions on different days. This can lead to records not matching especially at the year end if the member posting is done in one year and the nominal posting in another. This should be avoided where possible or a record taken of these transactions to aid reconciliation of the year end balances.

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Summary of Financial Assistance – June 2020

June 2, 2020

As Scotland enters Phase 1 of easing of lockdown restrictions, we recap on support for business

As we start a new month, a few days into Phase 1 of the easing of lockdown restrictions in Scotland, and with further clarity on the Job Retention Scheme and Self-Employed Income Support Scheme by the UK Chancellor at the end of last week,  it’s worth recapping on some of the key measures that have been put in place by the UK Government, Scottish Government, and local authorities since March to assist businesses, employers, and individuals and consider what support is still available in the coming weeks.

Job Retention Scheme

Many organisations will be very familiar with much of the detail of the first stage of this scheme in the past 10 weeks and  have already received grants from HMRC.  The premise of the scheme is for employees to continue to receive at least part of their normal wages during this period of uncertainty and for employers to receive a taxable grant from HMRC effectively reimbursing 80% of the normal wages and some employment costs of employees it had placed on furlough.    This scheme will remain unchanged until 30 June.

The UK Chancellor announced an update to the Job Retention Scheme on Friday 29 May but a further announcement is expected on 12 June with more precise details on how the next stage of the scheme will work.

As of 29 May, the Job Retention Scheme will continue to remain open until 31 October.   Employees enrolled into the scheme will still be entitled to 80% of their usual wages for time they are furloughed until 31 October.  The main changes announced on 29 May are:

  • The scheme will be closed to new entrants from 10 June (the earliest date that makes them eligible for a claim as at 30 June), which means that an employee must be placed on furlough for the first time by this date for an employer to make a claim in respect of that employee.  Note that an employee previously furloughed, and since un-furloughed, can still be re-furloughed at a later date.
  • From 1 July, an employee can work part-time and be paid normal wages for doing so but still be paid 80% for the hours/days they are furloughed.  As an example, an employee contracted to a 40-hour week could be brought back to work 3 days a week for full pay and receive 80% of wages for the two other days.   The current rules are ‘all or nothing’ and do not allow furloughed employees to carry out any work so this new measure gives flexibility to employers who want to operate more in line with the needs of their business.   Details on how this might be calculated for employees on variable hours will be announced by 12 June.
  • From 1 August, there will be a phasing down of the Government’s commitment to furloughed employees.   From August, the employer will not be able to claim back employer’s pension or NI contributions.   From September,  the employer will have to contribute to 10% of usual wages, with the Government’s contribution reducing to 70% up to a maximum of £2,190 per month.    From October, the employer will have to contribute to 20% of usual wages, with the Government’s contribution reducing to 60% up to a maximum of £1,875 per month.

https://www.gov.uk/guidance/claim-for-wages-through-the-coronavirus-job-retention-scheme

Coronavirus Business Support Fund

There are two main grants available for businesses from local government:

  • Small Business Grant Fund – a £10,000 grant to businesses that are eligible for Small Business Bonus Scheme or Rural Relief.   Some organisations with Charitable Rates Relief and Nursery Relief are also now eligible.  This scheme is for organisations where non-domestic rates would be due but the organisation is eligible for Relief as the rateable value of their business property is under £18,000 for instance.
  • Retail, Hospitality & Leisure Grant Fund – a £25,000 grant to businesses in the Retail, Hospitality, and Leisure sector where property has a rateable value between £18,001 and £50,999.

For businesses with two or more premises, there’s a subcategory to this Fund, the Coronavirus Multiple Properties Fund.

This scheme allows additional grants to the value of 75% of the initial grant for a single non-domestic property.  So, if your business ran out of four small properties each of which were eligible for the Small Business Bonus Scheme, your business could apply for £32,500 in grants (£10,000 + £7,500 + £7,500 + £7,500).

Applications can be done through your business’s local Council’s website.

The closing dates for applications to the Coronavirus Business Support Fund is 31 March 2021.

Relevant page from the Scottish Government website:

https://www.mygov.scot/non-domestic-rates-coronavirus/grants-to-help-non-domestic-businesses-during-coronavirus/

Relevant pages from City of Edinburgh Council and Glasgow City Council website:

https://www.edinburgh.gov.uk/coronavirus-4/businesses-employers/4?documentId=12924&categoryId=20297

https://www.glasgow.gov.uk/coronavirusbusinessfund

Non-Domestic Rates relief

This should be an automatic relief and should have been applied in your annual bill issued by your local council.  For those in the Retail, Hospitality and Leisure sector there is a 100% rates relief for the year from 1 April 2020 to 31 March 2021.  For other businesses, the relief is 1.6%;  effectively freezing the rates at 2019/20 levels.

https://www.mygov.scot/non-domestic-rates-coronavirus/non-domestic-rates-relief-to-help-during-coronavirus/

VAT

The main measure offered by the Government in respect of VAT was allowing businesses to defer until 31 March 2021 any VAT payments that fell due between 20 March and 30 June 2020.    For those businesses filing monthly and quarterly VAT returns then this covers VAT returns up to 30 April 2020 (as the 31 May 2020 return is due for payment by 7 July 2020).   For any businesses that opted for this it is essential that these VAT deferrals are held as a liability in the bookkeeping records so as not to risk spending these funds which will need to be paid by spring 2021.

https://www.gov.uk/guidance/deferral-of-vat-payments-due-to-coronavirus-covid-19

Another amendment concerning VAT is the temporary zero-rating of Personal Protective Equipment from 1 May to 31 July and will include the supplies of disposable gloves, aprons, and masks, which many businesses are now purchasing in order to protect their staff and premises.

https://www.gov.uk/government/publications/vat-zero-rating-for-personal-protective-equipment/vat-zero-rating-for-personal-protective-equipment

Income Tax

For any individual due to make a Payment on Account to HMRC by 31 July 2020 this can be deferred with payment instead due by 31 January 2021.   No application need be made and no interest will be charged on such deferrals.   Typically, this will primarily affect self-employed individuals but anyone due to have made a payment, including landlords for instance, can defer income tax until January 2021.

Time to Pay

HMRC have a dedicated helpline on 0800 024 1222 for businesses and self-employed individuals struggling to pay HMRC bills, including outstanding tax liabilities.  The scheme existed prior to the COVID-19 pandemic but HMRC has drawn more attention to the availability of this service.

Self-Employed Income Support Scheme

This  scheme was set up to act as an equivalent to the Job Retention Scheme and originally covered the 3 month period March to May.   The scheme is up and running and individuals that are self-employed or in partnership have been able to apply to the scheme since 13 May.   Applications for the first phase of the scheme remain open until 13 July (not a typo, the deadline is the thirteenth of July which is two months after it opened).

The UK Chancellor announced on 29 May that a second grant will be available to cover the 3 month period June to August.   From August, applications will be open for the second grant.

 

To be eligible, a taxpayer must have at least filed their 2018/19 Tax Return and have taxable profits of £50,000 or less on average.   HMRC intended to contact everyone who was eligible but may not have done so if an email address was not registered with them, for instance.  In which case, it is possible to check your eligibility for the Scheme through the following link (you will need your UTR and National Insurance number):

https://www.tax.service.gov.uk/self-employment-support/enter-unique-taxpayer-reference

HMRC will have calculated your total self-employed taxable profits from the tax years 2016/17, 2017/18, 2018/19 to produce an annual average (the total divided by tax return periods).  From this they pro-rate 3 months and award a taxable grant of 80% of that figure, capped at £7,500.   The second grant, available from August, will award a taxable grant for the equivalent of 70% of 3 months earnings, capped at £6,570.

The Government’s webpage for the SEISS is on:

https://www.gov.uk/guidance/claim-a-grant-through-the-coronavirus-covid-19-self-employment-income-support-scheme

Coronavirus Newly Self-Employed Hardship Fund

The Self-Employed Income Support Scheme (see above) is eligible only for those self-employed individuals who started prior to 5 April 2019 and have filed at least one tax return with HMRC.  For those individuals newly self-employed, the Scottish Government has made available a one-off £2,000 grant.  You can apply online through the local authority where you are resident.

Relevant pages from City of Edinburgh Council and Glasgow City Council website:

https://www.edinburgh.gov.uk/coronavirus-4/businesses-employers/3?documentId=12924&categoryId=20297

https://www.glasgow.gov.uk/selfemployedhardshipfund

Business Loans

There are four main business loans established by the UK Government in its response to the pandemic:

  • Coronavirus Large Business Interruption Loan Scheme (CLBILS)

For companies with a turnover of over £45,000,000 with loans available up to £200,000,000.  The maximum term of the loan is three years.

https://www.british-business-bank.co.uk/ourpartners/coronavirus-business-interruption-loan-schemes/clbils/

  • Coronavirus Business Interruption Loan Scheme (CBILS)

For companies with turnover up to £45milllion, a loan of up to £5,000,000 is available.   Personal guarantees may be requested by the banks – over 50 of which are involved are in the scheme – for loans over £250,000.  The maximum term of the loan is six years and is interest-free in the first year.

https://www.british-business-bank.co.uk/ourpartners/coronavirus-business-interruption-loan-scheme-cbils-2/

  • Bounce Back Loan Scheme (BBLS)

The scheme went live in early May with around 20 banks signing up to the scheme.  A business can apply for the Bounce Back Loan Scheme  for a loan of between £2,000 and the lower of 25% of the business’s annual turnover and £50,000.  There are no repayments in the first 12 months, with interest are set at 2.5%.  The loan is 100% guaranteed by UK Government with no personal guarantees required.  The maximum term of the loan is six years and early repayments can be made without any penalty.   This scheme is useful for any business with short-term cashflow concerns where a small cash injection for items such as computer equipment and investing in home-working may help the business get up and running.

https://www.british-business-bank.co.uk/ourpartners/coronavirus-business-interruption-loan-schemes/bounce-back-loans/

  • Future Fund

This scheme was introduced to provide match-funding to support start-up or innovative companies where investors would apply to the Future Fund and the company receive 100% match funding from £125,000 to £5,000,000 in the form of a convertible loan.  There is strict eligibility criteria and conditions attached to the funding which has a term period of 36 months and no early repayment provision.  Applications are available only until 30 September 2020.

https://www.british-business-bank.co.uk/ourpartners/coronavirus-business-interruption-loan-schemes/future-fund/

Charities

Some of the support for business offered by the UK and Scottish Government is also available to charities and many have already applied for such reliefs and grants.  There has been additional support from funds made available by the Scottish Government which has been through three main Funds:

  • The Third Sector Resilience Fund –  this is a Fund set up for those third sector organisations that require help to stabilise and manage cash flows during this period.   Costs are intended to cover overheads and essential staff and the award can be in the form of a grant, a loan, or a mix.

https://scvo.org.uk/support/coronavirus/funding/scottish-government/third-sector-resilience-fund

  • The Wellbeing Fund – this Fund was for those charities working with at-risk groups and providing support on areas such as mental health, personal finances, housing.   This fund has now closed.
  • Supporting Communities Fund – this is a Fund to support community ‘anchor’ organisations that support local responses to the current crisis and will be community-based charities.

https://scvo.org.uk/support/coronavirus/funding/scottish-government/supporting-communities-fund

A number of grant-funding bodies have continued to be highly supportive of charities they fund but these Scottish Government-backed Funds are available to offer some charities additional support if required.

The following page on the Scottish Council for Voluntary Organisations (SCVO) website is a useful summary of the support available for charities:

https://scvo.org.uk/support/coronavirus/funding/scottish-government

IR35

The introduction of the Off-Payroll Working rules to the private sector was due to take place on 1 April 2020 but these have been postponed until 1 April 2021.

Administration

Companies House have extended the deadline for filing company accounts by three months for companies that are able to cite COVID-19 as a reason for requiring the extension.  To avoid a late filing penalty, an application must be made to Companies House before the end of the existing reporting deadline.   The application need not be done through the normal WebFiling service on Companies House website but can be done through the following webpage:

https://beta.companieshouse.gov.uk/extensions

This is not an exhaustive list of all the measures adopted by the Government to keep the economy moving but covers the support available for a majority of organisations during this uncertain period.   As can be seen above, a number of the measures are still ‘live’, but some are being wound up or have a set time limit for organisations to apply for a grant, loan or deferral.

 

Alexander Sloan

 

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Summary of Government Support in March 2020

March 21, 2020

Summary of Government Support so far as restrictions are imposed

In these unprecedented times, when you may be facing significant operational, staffing and financial challenges resulting from the Covid-19 outbreak and the Government’s efforts to combat it, we acknowledge that you will be finding it hard to keep track of news and details that could be vital in keeping your organisation afloat and that support your staff.

On Friday 20 March 2020 the Chancellor announced the UK Government’s latest measures to financially support businesses and employers affected by economic turmoil resulting from its efforts to combat the Covid-19 outbreak.

The announcement on 20 March follows previous statements in the UK Budget on 11 March, and a further statement on the Government’s response to the Covid-19 outbreak on 17 March.   There have also been announcements by the Scottish Government from the Finance Secretary and Economy Secretary that are specific to Scottish businesses.

This is a fast moving situation and further details will emerge in the coming days but the key points from the Government’s announcements currently are:

Coronavirus Job Retention Scheme

The Government has introduced a scheme that will allow employers to retain employees that would otherwise be laid off or not working.  The UK Government will reimburse up to 80% of gross wages per employee – up to a maximum of £2,500 per employee per month – of ‘furloughed workers’ initially for a period of three months backdated to 1 March.   Furloughed workers are not able to work during their period of furlough and would include those already laid off.

This will operate through submitting particular information online to HMRC with specific details not yet available but is expected to be announced by HMRC soon.

All employers, large and small, charitable or profit-making, are eligible to apply.  It is considered unlikely that the first payments to businesses will be before the end of April and banks are being encouraged to assist in the meantime to support businesses with immediate cashflow concerns.  See also below regarding the Coronavirus Business Interruption Loan scheme.

Deferral of Tax and VAT payments

This has been introduced automatically with no requirement to apply.  VAT Liabilities that are due to be paid between 20 March 2020 and 30 June 2020 will be deferred until the end of the 2020-21 tax year (5 April 2021).   VAT refunds will still continue to be paid.

Self-Assessment payments on accounts due by 31 July 2020 will be deferred until January 2021.

Support for Sick Pay payments

Refunds will be available for organisations with 250 employees or fewer who have paid Statutory Sick Pay as a result of Covid-19.

Business Rates (Non-Domestic Rates)

Non-domestic rates is a devolved matter so Scottish businesses should refer to the Scottish Government announcement.   There are a few measures and these relate to the period 1 April 2020 to 31 March 2021.

Businesses in the Retail, Leisure and Hospitality sectors will receive a 100% non-domestic rates relief.  Grants of £25,000 will be available to businesses in those sectors if the Rateable Value of their property is between £18,000 and £51,000.

Grants of £10,000 will be available to all businesses that are eligible for non-domestic reliefs through the Small Business Bonus Scheme or Rural Relief.

This will be administered through the appropriate Local Authorities and further detail will be on your local Council website or will be coming very soon.

Coronavirus Business Interruption Loan Scheme

Further detail should be available from Monday 23 March from the British Business Bank on government-backed loans.  Eligibility is based on certain criteria and Turnover of the applying organisation must be under £45 million per year.  The loan will be interest  free for the first 12 months.

The following link should prove useful:

https://www.british-business-bank.co.uk/ourpartners/coronavirus-business-interruption-loan-scheme-cbils/

Time to Pay service

The government’s Time To Pay service is available to businesses and the self-employed with tax liabilities that are struggling to pay tax bills can apply to defer payments.  This will be considered by HMRC case-by-case.  HMRC’s helpline for this service is 0800 0159 559.

Links

The following is a link to the Government’s website and their Guidance to Employers and Businesses About Covid-19 and Guidance for Employees.  Please note that the section on Business Rates relates to England only.  There is also a link below to the Scottish Government website regarding non-domestic rates support for Scottish businesses. This is correct as at 20 March 2020, the situation of course may change.

https://www.gov.uk/government/publications/guidance-to-employers-and-businesses-about-covid-19/covid-19-support-for-businesses

https://www.gov.uk/government/publications/guidance-to-employers-and-businesses-about-covid-19/covid-19-guidance-for-employees

https://www.mygov.scot/non-domestic-rates-coronavirus/

 

Many businesses and organisations are facing uncertainty of a kind unseen before and in the coming days there will be further clarity on some of these Government initiatives that should alleviate some of that uncertainty. We hope you find the summary and links above helpful.

Stay safe.

 

Alexander Sloan

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