21st March 2020

Late on Friday afternoon (20 March) the Chancellor announced further measures to help businesses cope with the impact of the Coronavirus. All are potentially positive, and the key points are summarised below. 

Coronavirus Job Retention Scheme

This was the big announcement that everyone had been waiting for. The headline is that the government will pay 80% of an employee’s salary up to £2,500 per month for three months. 

The detail is that this only applies to employees who have been “furloughed” and will be in the form of a grant payment from HMRC. HMRC will be setting up a portal for employers to submit claims and will also be publishing details of the information required. 

Further clarity will hopefully be provided on what precisely what a furloughed worker is and how a business can make an employee a furloughed worker who qualifies for the payment. Furlough means leave of absence therefore it will presumably be necessary to lay-off an individual for them to become a furloughed worker. Unfortunately, this is unlikely to be as easy as it might appear as unless an employment contract has lay-off provisions, reducing pay in a lay-off situation may need to be by mutual agreement. Any business going down this route will need to take employment law advice specific to their circumstances however as the issues will be relevant to so many businesses hopefully some more detailed guidance will be published. 

It is expected that the relief will be available in relation to employees who have been furloughed before 20 March.

VAT deferral is now automatic

No business will need to make a VAT payment between 20 March and 30 June. Any VAT which is due in this period will automatically be deferred (without the need to apply for a time to pay agreement). 

Any deferred VAT will then need to be paid by 5 April 2021. At present based on the guidance from HM Treasury there is uncertainty over which VAT returns the deferment will cover. This is because the announcement refers to dates on which VAT liabilities have been accumulated, as opposed to actual VAT return periods. We assume it covers (at least) VAT returns for periods ending February, March and April but there remains a question mark over a return ending May (which has a due date of 7 July). Hopefully this will be clarified by HMRC in the coming days. 

Automatic deferral of 31 July 2020 payment on account for self-employed

The second payment on account for 2019/20 which would have been due on 31 July 2020 will automatically be deferred until 31 January 2021.

PAYE/NI time to pay

There is no automatic deferral of PAYE/NI liabilities however there is a Coronavirus helpline (0800 0159 559) for businesses to contact to seek a time to pay arrangement. Many clients are comfortable making such calls themselves but if you would like assistance please speak with your usual partner/manager contact or Lee Muter (leemuter@unw.co.uk or 07810 852362).

Corporation tax time to pay

Corporation tax time to pay is not mentioned in the government announcements however from our experience over the last week HMRC are being helpful in relation to request for corporation tax time to pay. 

Business Loan Interruption Scheme

The government will provide lenders with a guarantee of 80% on loans to businesses with a turnover of up to £41m (a separate initiative has also been made available by the Bank of England for larger corporates). Loans will be from £1,000 to £5,000,000. The loans will be delivered by the British Business Bank through its participating providers which include the main banks and a variety of other lenders. The range of products supported include Term facilities, Overdrafts, Invoice Finance and Asset finance facilities. The Government will cover the first 12 months of interest payments (previously announced as interest free for six months). 

In the first instance you should speak to the relationship manager at your bank and ask them to provide details of their process, although please be aware that more than one bank can be approached. We have had lengthy discussions with many banks and the British Business Bank itself this week and they have all promised that details will be available early in the week commencing 23 March. If you would like to discuss such loans (or other financing options) please speak to your usual partner/manager contact or get in touch with John Healey (johnhealey@unw.co.uk or 07949 235813).

Reminder of other measures

The above gives a summary of the main changes announced on Friday 20 March. Other measures previously announced include: 

  • a Statutory Sick Pay relief package for SMEs 
  • a 12-month business rates holiday for all retail, hospitality and leisure businesses in England 
  • small business grant funding of £10,000 for business in receipt of small business rate relief or rural rate relief 
  • grant funding of £25,000 for retail, hospitality and leisure businesses with property with a rateable value between £15,000 and £51,000
  • a new lending facility from the Bank of England to help support liquidity among larger firms, helping them bridge coronavirus disruption to their cash flows through loans

We have tried to highlight the key points from the latest announcements – if you would like to discuss in more detail please get in touch.

Lee Muter (Employment Taxes Partner) – leemuter@unw.co.uk or 07810 852362
Mark Hetherington (VAT Partner) – markhetherington@unw.co.uk or 07715 704739
John Healey (Corporate Finance Partner) – johnhealey@unw.co.uk or 07949 235813

In his announcement to Parliament today (24 September), the Chancellor Rishi Sunak set out details of the Winter Economy Plan,

HMRC recently published a brief clarifying its policy on VAT and digital advertising services purchased by charities. The brief expands

In response to continued demand for its specialist tax services, North East accountancy and business advisory firm UNW has added

At the Summer Economic Update on 8 July 2020, the Chancellor Rishi Sunak announced changes to Property Taxes affecting purchasers

In the wake of the COVID-19 pandemic, many organisations have been understandably focused on stabilising cash-flow. As restrictions start to