As we got further into lockdown, the pressure on businesses and individuals started to increase. As we start to come out of this 1st (and last?) lockdown, the same pressure will intensify for those businesses and individuals. Given today’s announcements, this week is obviously another significant week for the release of the lockdown.
Whilst lockdown restrictions are easing, we recognise that, whilst this is welcomed, it is inevitably going to put a strain on businesses and individuals given there are some big and tough decisions to make.
We can assure you of our continued commitment to provide as much advice, guidance and support as you need to help you to come through this as best as you possibly can.
Communication is imperative and we will continue to ensure that we disseminate relevant and up to date information as it emerges from government.
Self-employed Income Support Scheme – New parents
It has been announced that self-employed parents whose trading profits were reduced in the 2018/19 tax year due to taking time out to have children will be assisted in the context of claiming the self-employed income support scheme (SEISS) grants.
As previously advised, the SEISS requires claimants to have been self-employed and traded in the 2018/19 tax year with the profits contributing to at least half if their total income.
The government has announced that parents (including mothers, fathers and those who have adopted), who took time out of trading to care for their children within the first 12 months of birth of the child, or within 12 months of an adoption placement, will be able to use either their 2017/18 self-assessment tax return, or both their 2016/17 and 2017/18 self-assessment returns as the basis for their eligibility for the SEISS – as opposed to their 2018/19 self-assessment tax return.
To successfully claim the grants under the SEISS, claimants are within the scope of this announcement will still need to meet the other standard eligibility criteria.
The government has advised that specific guidance will be published later this month.
Please see the formal announcement here.
Job Retention Scheme – PAYE payments still need to be made
We have come across a few cases where employers have not made relevant PAYE payments to HMRC under the misapprehension that the payments were not required given that claims were being made for the Job Retention Scheme (JRS) in relation to the employees.
Please note that the PAYE payments still need to be made irrespective of whether claims are being made for the JRS.
Corporation tax – Instalment payments – Repayment claims – Updated guidance
HMRC have updated their guidance for companies paying corporation tax via instalments, and specifically when HMRC will accept repayment claims in relation to losses being made in the current period.
The updated guidance can be found here.
The guidance advises that companies can make a repayment claim in relation to previous instalments made “where you may make a repayment claim where the revised calculation of your liability includes anticipated losses from your current accounting period that has not yet ended.
This may occur where you have sustained significant losses. You will need to provide supporting evidence to verify the losses and support your claim for repayment”.
The guidance suggests that such losses will need to be evidenced by latest management accounts and forecasts – showing the need for these to be accurate and up-to-date at each instalment date.
The guidance explains the method of making such claims, stating:
“Claims must be made to an officer of HMRC and must state both:
- the amount that you consider should be repaid
- your grounds for believing that, because of a change in circumstances since the payment or payments were made:
- the amount of your total liability for the period is likely to be less than previously calculated
- the cumulative payments exceed the revised calculation of the liability”
There does not appear to be any guidance or examples of what HMRC would consider to be a “change in circumstances”, however, it would be safe to assume that the impact of the COVID-19 pandemic would comfortably fall within the scope of this, and especially give the timing of the update.
A small number of companies in Cornwall and the Isles of Scilly will be required to pay corporation tax by instalments, however, for those that need to, repayment claims in relation to previously settled instalments should be considered.
VAT – Deferral warnings
One of the first business support measures that was announced by the government was the deferral of VAT payments that needed to be made between 20 March 2020 – 30 June 2020, and many have taken advantage of this deferral. The payment deadline being deferred to 31 March 2021 at the latest.
It is important to note that this deferral only applied to VAT payments due on or before 30 June 2020, and therefore VAT payments due after 30 June 2020 are payable as normal.
Whilst stating the obvious, it is important to understand that this was merely a deferral. The payments are still due, and it is therefore important that the payments are factored in to forecasts and cash-flow projections etc.
Finally, many businesses will have cancelled the HMRC direct debit in order to defer the relevant VAT payment. These direct debits should now be reinstated in order to avoid late payment penalties and interest charges.
Grants to small businesses and retail, hospitality and leisure businesses
The government has released the latest figures for the grant support that is being provided by government though Councils nationally. This can be found here.
The figures show that a significant number of grants have been made to date, however, that there are still grants that Councils have identified as being available that have not been claimed.
For Cornwall Council, the figures show that they have identified 23,813 properties as potentially qualifying for the grants, and that 20,212 grants have been made (at 14 June 2020). Still quite a shortfall.
For the Council of the Isles of Scilly, the figures show that they have identified 397 properties as potentially qualifying for the grants, and 375 of grants made.
If you are yet to claim, we would urge you to consider doing so. Please see our previous blogs that provide useful guidance as to the application process.
If we can help and advise you in any way, please get in touch with your usual RRL contact, we continue to work remotely to keep our staff and clients safe and our telephone contact details can be found here. We will respond to emails as usual. We are conducting meetings virtually (using Microsoft Teams).
We will provide further updates, as and when further announcements are made and detail/guidance released.