Archive for April, 2020

Safety first options for manufacturing and retail sectors

Thursday, April 16th, 2020

Both of these sectors require people to work in close proximity to each other. Government has issues broad guidelines to reduce the risks for workers from Coronavirus.

Manufacturing and processing businesses

Manufacturing plays an important role in the economy. It can continue if done in accordance with the social distancing guidelines wherever possible.

Where it is not possible to follow the social distancing guidelines in full in relation to a particular activity, you should consider whether that activity needs to continue for the business to continue to operate, and, if so, take all the mitigating actions possible to reduce the risk of transmission between staff.

If you decide the work should continue, staff should work side by side or facing away from each other rather than face-to-face if possible.

You should increase the frequency of cleaning procedures, pausing production in the day if necessary for cleaning staff to wipe down workstations with disinfectant.

You should assign staff to the same shift teams to limit social interaction.

You should not allow staff to congregate in break times; you should consider arrangements such as staggered break times so that staff can continue to practice social distancing when taking breaks.

You should communicate to all staff that they should wash their hands with soap and water for 20 seconds or more at the beginning and end of every break, when they arrive at work and before they leave. To help with this, you should consider adding additional pop-up handwashing stations or facilities, providing soap, water and/or hand sanitiser.

When entering and leaving, you should ensure your workforce stays 2 metres apart as much as possible. To protect your staff, you should remind colleagues daily to only come into work if they are well and no one in their household is self-isolating.

Retail

You run a retail outlet which, in line with the government advice on retail, remains open.

To protect staff and customers, you should manage entry into the store, only allowing a limited number of people into your store at any given time.

You should put up signage to ask customers with symptoms not to enter the store, and to remind both staff and customers to always keep 2 metres from other people, wherever possible.

You should regularly encourage staff to wash their hands with soap and water as often as possible and for 20 seconds every time.

If feasible, you should also put up plexiglass barriers at all points of regular interaction to further reduce the risk of infection for all parties involved, cleaning the barriers regularly. You should still advise staff to keep 2 metres apart as much as possible.

To protect your staff, you should remind colleagues daily to only come into work if they are well and no one in their household is self-isolating.

More Coronavirus tax support options

Wednesday, April 15th, 2020

Apart from the main business and personal tax reliefs that have received publicity in the past few weeks, a number of supplementary support items have been introduced. We have highlighted two in this post.

 

Claiming Child Benefits for new-borns

General Register Offices are currently operating with reduced capacity and with government guidance to social distance and stay at home, new parents are advised not to visit them. However, they can still claim Child Benefit without having to register their child’s birth first to ensure that they do not miss out.

HMRC said:

“First time parents will need to fill in Child Benefit Claim form CH2 found online and send it to the Child Benefit Office. If they haven’t registered the birth because of COVID-19, they should add a note with their claim to let us know.”

If you already claim Child Benefit, you can complete the form or add your baby’s details over the phone on 0300 200 3100. You will need your National Insurance number or Child Benefit number.

Note, Child Benefit claims can be backdated by up to 3 months.

Child Benefit payments increased from 6 April to a weekly rate of £21.05 for the first child and £13.95 for each additional child. Child Benefit is paid into a parent’s bank account, usually every 4 weeks.

Only one person can claim Child Benefit for a child. For couples with one partner not working or paying National Insurance contributions (NICs), making the claim in their name will help protect their State Pension.

 

New HMRC tax helpline is now open for calls

Business owners and self-employed individuals who are struggling to pay their tax can now ring a new helpline. The service allows any business or self-employed individual who is concerned about paying their tax due to coronavirus to get practical help and advice. Up to 2,000 experienced call handlers are available to support businesses and individuals when needed.

 

For those who are unable to pay due to coronavirus, HMRC will discuss your specific circumstances to explore:

  • agreeing an instalment arrangement
  • suspending debt collection proceedings
  • cancelling penalties and interest where you have administrative difficulties contacting or paying HMRC immediately

The helpline number is 0800 024 1222 – and is an addition to other HMRC phone contact numbers. Opening hours are Monday to Friday 8am to 4pm. The helpline will not be available on Bank Holidays.

Tax planning options for 2020-21

Thursday, April 9th, 2020

The 6th April marks the beginning of a new tax, and for the coming year, unprecedented challenges. As with most things in life, problems are a necessary precursor to finding solutions. We have listed below a few reminders of the issues you may want to consider as worthy of including in your 2020-21 tax planning to-do list.

 

We are all likely to experience a drop in earnings this year. The scale of the reduction will vary, but very few will be able to maintain their business profits or personal income at pre-COVID-19 levels. Apart from the obvious reduction in taxes paid due to the reduction, what else should we consider? We have listed below just two options that you may like to consider.

 

1.If you are Self-employed

Most self-assessment tax falling due for payment in 2020 will include payments on account for 2019-20. HMRC has indicated that it will allow you to defer the 31 July 2020 payment until 31 January 2021. However, if you can demonstrate that your actual profits for 2019-20 were lower than those for 2018-19, you can formally apply to reduce your payments on account.

Action note: to do this prepare your accounts taxed in 2019-20 (usually the year ending 31 March or 5th April 2020) as soon as you can. We can then make the necessary postponement election for you based on the results – if they show a drop in profits.

A BONUS – if you prepare accounts quickly, you can also use the figures to support any application for bank funding to see you through the COVID-19 disruption.

 

2. Reduce benefit-in-kind charges

If your business is closed due to COVID-19, it is likely that directors and employees may not have been using their company cars since the lock-down started to bite in the last two months. Accordingly, if you can confirm that company cars were not made available to directors and employees in this time, and record this on your P11D return for 2019-20, then taxable benefits for 2019-20 can be reduced.

As directors and employees will have estimated benefit in kind amounts adjusted for in their tax codes for 2019-20, based on information for 2018-19, any resulting reduction could potentially create refunds of tax for 2019-20.

Action note: let us have the details of car usage asap. We can then file P11D’s sooner rather than later and apply for any overpayments in your tax paid for 2019-20.

Our advice?

When profits and income reduce this should encourage us to prepare accounts and tax returns quickly in order to challenge any overpayments of tax and NIC in previous years.

And as a bonus, the information produced will support applications to banks and other parties for financial support during this difficult time.

Please get in touch as soon as you can if you would like us to fast-track your accounts and tax return for 2019-20 and to quantify, and recover, any taxes you may have overpaid.

How to apply for a Business Interruption Loan

Tuesday, April 7th, 2020

The British Business Bank has updated its guidance on how to apply for the recently changed Coronavirus Business Interruption Loan Scheme (CBILS). A summary follows;

Who can you apply to?

Most of the UK High Street banks can provide a CBILS loan facility. As your present bankers already know you and your business, for most businesses, making an application to your existing bank would seem to be appropriate.

Apply online

Due to the present disruption – phone lines are extremely busy and it’s unlikely you will be able to visit a branch – make your application online.

What about personal guarantees?

Under the scheme, lenders will not take personal guarantees if your loan application is below £250,000.

For facilities above £250,000, personal guarantees may still be required, at a lender’s discretion, but:

 

  • Guarantees will not include your home – they will exclude any property that is considered to be the residence that qualifies for capital gains tax Principal Private Residence Relief, and
  • Recoveries under these guarantees are capped at a maximum of 20% of the outstanding balance of the CBILS facility after the proceeds of business assets have been applied.

Who can apply?

To apply, your business must:

  • Be UK-based in its business activity
  • Have an annual turnover of no more than £45 million
  • Have a borrowing proposal which the lender would consider viable, were it not for the current pandemic
  • Self-certify that it has been adversely impacted by the coronavirus (COVID-19).

 

The third point in this list is critical.

What your bank will need from you

Apart from completing the online application, lenders will need:

  1. The amount you want to borrow.
  2. Why you need the loan, what the money is to be used for.
  3. The repayment period, what term are you requesting, and
  4. Can you afford the repayments?

Supporting documents that may be required

You will need to provide certain evidence to show that you can afford to repay the loan. This is likely to include:

  • Management accounts
  • Cash flow forecast
  • Business plan
  • Historic accounts
  • Details of assets

The above requirements will vary from lender to lender. If you do not have everything listed here, a CBILS loan could still be an option to provide finance to support your business.

Note: For many customers approaching their existing lenders for a smaller facility, the process may be automated and therefore may not require the same level of documentation.

We can help

If you are considering a loan we can help you gather together the forecasts and other documentation you will need. We can also help you decide on the level of support you will need and how long you will need to repay the loan.

Dividends excluded from job support scheme calculations

Friday, April 3rd, 2020

When first announced as a news story, published by government 26 March 2020, information regarding the support scheme for the self-employed included a telling paragraph. It said:

Those who pay themselves a salary and dividends through their own company are not covered by the scheme [the self-employed scheme] but will be covered for their salary by the Coronavirus Job Retention Scheme if they are operating PAYE schemes.

Clearly, this confirms that claims under the Coronavirus Job Retention Scheme will be based on previously submitted payroll returns that include director’s salaries (but not dividends).

Directors that have taken the lion’s share of their income in the form of dividends – and benefitted from significant NIC reductions for a number of years – will therefore be restricted in the amount of relief they can claim. Potentially, they will only be able to recoup up to 80% of their monthly salary – capped at £2,500 a month.

To make a claim, directors will need to furlough themselves. This is the new shorthand for laying yourself off. To qualify, you will also have to play no further active role in the business. For most directors this is a non-starter as directors, at the very least, have a legal responsibility to monitor and file ongoing returns to HMRC and Companies House, keep accounts up-to-date and manage numerous ongoing matters for their business.

What are the choices for directors?

If your company is unable to trade – perhaps one of the leisure, entertainment or other “closed down” service industries – you may be able to organise moth-balling activity in such a way that you can assert you are furloughed and collect 80% of your reported salary as a grant, up to the £2,500 limit.

If this does not meet your basic cash requirements there are other personal claims you can consider: Universal Credits or other relevant benefits.

If you want to consider ongoing trading, possibly at a reduced level, planning will be key. Directors will need to take care that they do not borrow money to support temporary losses if this results in insolvency. Insolvency in this respect means running out of retained profits and issued share capital.

Whatever your decision on these choices, please contact us, as planning and monitoring of your company finances will be paramount. The longer this disruption continues, the greater the strain and risk for small businesses will become.

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