FINANCIAL ADVICE

COVID-19 GOVERNMENT SUPPORT ALL YOU NEED TO KNOW

I sincerely hope that all readers are well and are experiencing improvements in business activity.

BREXIT trade deals are starting to nudge in a little but COVID-19 remains the dominant feature on the economic landscape, therefore A COVID related update is perhaps still appropriate.

Job Retention Scheme (Furlough)

For those employers still having to furlough staff, the level of re-claim from HMR&C under the Job Retention Scheme fell to 60% of usual wages on the 1st October. There is a monthly cap of £1,875. The cap is proportionately adjusted if the employee has returned to work on a part time basis, so has a mixture of normal pay and furlough.

Employee’s national insurance and pension costs are now the responsibility of the employer. It is expected that furloughed workers will still receive 80% of their usual pay, with employers expected to fund the shortfall with the new 60% rate.

Correcting Errors

The complexity of the calculations under the Job Retention Scheme and the testing conditions in which many payroll administrators are working is creating a situation where mistakes on claims will inevitably be made.

HMR&C have acknowledged the difficult circumstances and have indicated that they do not intend on seeking out innocent mistakes and small errors for compliance action.

Where businesses have made errors there is a formal process to make corrections and a timeframe as follows:

If you have claimed too much CJRS grant and have not repaid it, you must notify HMR&C and repay the money by the latest of whichever date applies below: • 90 days from receiving the CJRS money you are not entitled to

• 90 days from the point circumstances changed so that you were no longer entitled to keep the CJRS grant

• 20 October 2020, if on or before 22 July you received CJRS money you’re not entitled to, or if circumstances changed.

Amounts not declared to HMR&C under these rules, which are subsequently found to be incorrect, are subject to potential penalties and interest charges.

HMR&C have received many thousands of tip-offs concerning fraudulent misuse of COVID related assistance schemes and have already ear-marked many thousands for review.

Dean Flood, Rowland Hall Chartered Certified Accountants

Deferred VAT Repayment

HMR&C have commenced issuing letters to businesses inviting them to repay their COVID deferred VAT payments as soon as possible after the 30th June 2020. The actual deadline for repayment of those amounts has been confirmed as the 31st March 2021 and businesses will need to ensure they have reviewed their forward cashflows with these payments in mind. Loans

The CBILS loan scheme closed to new applicants on the 30th September. The ‘Bounce Back Loan’ scheme remains available up to the 4th November although there is uncertainty whether this is the final date for applications or processed claims. Prompt action is recommended if you wish to consider the latter. Banks are undertaking increasing levels of due diligence for applications due to a perceived level of widespread fraud in this area, therefore, applications may take longer. 

Furlough Scheme Replacement

The Job Retention Scheme ceases with effect from the 31st October and HMR&C have recently announced it will be replaced by the Job Support Scheme, which will run for 6 months to the end of April 2021.

At the outset, the scheme will benefit all employees where they work a minimum of one third of their usual contracted hours. HMR&C and the employer will then have to effectively ‘top up’ the employee’s wages, so that they earn at least 77% of their normal pay.

The government will pay one third of the hours not worked by the employee whilst the employer will pay an additional one third of unworked hours. The employer will have to cover the cost of employer’s NIC and pension contributions as this will not be met by government. The government contribution towards costs will be capped at £697.92 per month, per employee.

Calculation of normal wages will be similar to the rules under the ‘furlough’ scheme. Employers who use this scheme and retain staff through this period will still qualify for the Job Retention Bonus if certain criteria are met. Please note that ‘large’ companies will be subject to a financial test to see if they qualify for use of the new scheme.

Details on the new scheme are gradually being clarified further by HMR&C so it is advisable to ensure that you monitor announcements from HMR&C and utilise the expertise of your tax and accounting advisors at this time.

Wishing you all the best of health. Financial advice by Dean Flood | www.rowlandhall.co.uk