Coronavirus Business Interruption Loan Scheme (CBILS)

What information do I need to provide for a CBILS application?

You will need to submit a detailed application for the funding you need to the lender. This will vary from lender to lender.

The British Business Bank also advises that you will need to provide certain evidence to show that you can afford to repay the loan. For larger facilities, this may include:

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

The above requirements will also vary from lender to lender. If you do not have access to everything listed above, that does not mean you will be ineligible for a CBILS loan, but it may affect your ability to access finance.

I have been rejected by one of the accredited lenders under the CBILS, can I apply to another?

Yes, you are free to make as many applications as you like. If you were rejected previously by a bank at the start of the crisis it is advised that you consider reapplying as the Government has changed the rules to encourage lenders to support more businesses.

Alternatively, if you are finding it difficult to access finance via CBILS you could consider making an application for up to £50,000 of finance via the Bounce Back Loan Scheme (BBLS).

How soon will the facility requested be available once I make an application?

Due to the volume of requests being made to banks, and the strict controls they have in place, it is taking quite some time to process loan applications and release funds. If you urgently require finance to cover costs within your businesses then you should see what other support is available to you.

Does the CBILS cover overdrafts?

CBILS supports a wide range of business finance products, including overdrafts, as well as term loans, invoice finance and asset finance facilities. The type of finance offered varies by lender, so you should use the British Business Bank’s finance finding tool on its website here.

Do I need to pay interest?

CBILS will be interest-free for the first 12 months, as the Government has guaranteed to cover these payments during this period.

Most facilities are being offered over a six-year period, which means that businesses will have to repay the debts plus interest over the additional five years.

Terms are not necessarily fixed at six years for all facilities though, so businesses must discuss the length of repayment and interest rate with their lender.

The Government and the British Business Bank, which is helping to administer the CBILS, have confirmed that no setup fee will be charged.

Do I need to provide a personal guarantee?

The British Business Bank has confirmed that the lender can only require personal guarantees for facilities of £250,000 or more. However, where personal guarantees are required:

  • they exclude the Principal Private Residence (PPR), and
  • recoveries under these are capped at a maximum of 20 per cent of the outstanding balance of the CBILS facility after the proceeds of business assets have been applied
If the scheme is Government-backed, am I liable for all of the debt?

The borrower will remain 100 per cent liable for the debt. An 80 per cent guarantee offered by Government is simply to provide some recourse for the lender in the event of a borrower defaulting on their debt in future.

Rejected applications should not affect your businesses credit rating, but non-payment of an accepted loan will.

The business is a subsidiary in a larger group, can I still apply?

Multiple companies within a group can be considered for the CBILS facility, but the consolidated group must not have a combined turnover in excess of the £45 million annual threshold.

Our turnover is too high for this scheme, are there alternative schemes available to larger businesses?

The Coronavirus Large Business Interruption Loan Scheme (CLBILS) is aimed at large businesses with annual turnovers above £45 million.

Like CBILS, a Government guarantee of 80 per cent will be provided to enable banks to lend in circumstances where they might not otherwise be able to.

Unlike CBILS, which only provides loans of up to £5 million, CLBILS will provide loans of up to £25 million.

However, while CBILS provides loans that are interest-free for 12 months, CLBILS loans will be provided at normal commercial rates of interest.

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Bounce Back Loan Scheme (BBLS)

How much finance can I apply for via the BBLS?

The Bounce Back Loans scheme (BBLS) will allow small businesses to borrow up to 25 per cent of their turnover, up to a maximum of £50,000.

What are the terms of the BBLS?

The BBLS will be 100 per cent backed by a Government guarantee, unlike the Coronavirus Business Interruption Loan scheme (CBILS) and will offer an interest-free period for 12 months.

Businesses won’t pay any fees and no repayments will be due during the first 12 months.

The loans will be provided by a network of accredited lenders, similar to CBILS, which means some loan agreements may vary, but the Government level of fixed interest at 2.5 per cent for the remaining period of the loan (loan terms will be up to six years).

Is my business eligible for BBLS?

The BBLS is open to businesses from most sectors and those applying must be able to self-certify the following to lenders:

  • It is UK-based in its business activity and established by 1 March 2020;
  • It has been adversely impacted by the Coronavirus (Covid-19);
  • It is not currently using a government-backed Coronavirus loan scheme (unless using BBLS to refinance a whole facility);
  • It was not a business in difficulty at 31 December 2019; and
  • It is not in bankruptcy, liquidation or undergoing debt restructuring.

Some organisations are excluded from BBLS finance, this includes:

  • Credit institutions (falling within the remit of the Bank Recovery and Resolution Directive)
  • Public sector bodies,
  • State-funded primary or secondary schools
  • Insurance companies.
Can I apply for a loan via CBILS, as well BBLS?

No – You cannot apply if you are already claiming under the Coronavirus Business Interruption Loan Scheme (CBILS). However, if you’ve already received a loan of up to £50,000 under CBILS and would like to transfer it into the Bounce Back Loan scheme, you can arrange this with your lender until 4 November 2020.

How can I apply?

Once a business has selected an accredited lender via the British Business Bank website here, they will be required to fill in a short online application form on their chosen lender’s website.

This self-certifies that they are eligible for a Bounce Back Loan facility. The bank will then undertake standard customer fraud, Anti-Money Laundering (AML) and Know Your Customer (KYC) checks.

If the bank is satisfied that the borrower meets the conditions of the BBLS then they should be able to release funds within a matter of days – in some cases within 24 hours.

To start the BBLS application process please click here

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Coronavirus Job Retention Scheme (CJRS)

What does the CJRS offer?

The Coronavirus Job Retention Scheme is a temporary scheme open to all UK employers until at least the end of June that is designed to support employers whose operations have been severely affected by coronavirus (COVID-19).

Employers can use the HMRC portal to claim for 80 per cent of furloughed employees’ usual monthly wage costs, up to £2,500 a month, plus the associated Employer National Insurance contributions and minimum automatic enrolment employer pension contributions on that wage.

Is my business eligible?

Any UK organisation with employees can apply for the scheme including:

  • businesses
  • charities
  • recruitment agencies (agency workers paid through PAYE)
  • public authorities.

However, you must have created and started a PAYE payroll scheme on or before 19 March 2020 and have a UK bank account to access the scheme. Click here to find out more.

Which employees can benefit from the scheme?

The scheme applies to employees on a leave of absence, referred to as furloughed workers. These are generally employees who are on the payroll, but who might normally be laid off or made redundant due to a lack of work.

To be eligible for the scheme, an employee must have been on the employer’s PAYE payroll on or before 19 March 2020 and HM Revenue & Customs (HMRC) must have been notified of a payment through Real Time Information (RTI) by that date.

To be eligible for the subsidy, an employee must not undertake work for or on behalf of the organisation until the end of June. This includes providing services or generating any revenue.

From the start of July some furloughed employees may be allowed to return to work part-time and still receive subsidised pay via the scheme.

When will the scheme end?

When launched in March the scheme was initially only due to run for a month or so, but the Government has now extended the scheme until the end of October 2020.

The scheme will remain unchanged until July, but then new rules will come into place allowing furloughed employees to work part-time and require employers to make a greater contribution to employment costs.

What contributions will I be required to make from July until the scheme ends in October?

from 1 July employers will be able to make new flexible furlough agreements with employees that enable them to return to work on a part-time basis, while the employer will still be able to claim a CJRS grant for the hours not worked. Only employees who have been furloughed for a full three-week period up to this point will still be eligible to be furloughed.

From 1 August, CJRS grants will cease to cover the costs of employer NICs and pension contributions in respect of furlough pay.

Then, in September, the value of CJRS grants will reduce to 70 per cent of furloughed employees’ usual wages, with employers required to top-up the remaining 10 per cent so that furloughed employees still receive 80 per cent of their usual wages, capped at £2,500 a month.

Finally, October will see the value of CJRS grants fall to 60 per cent of furloughed employees’ usual wages, with employers having to contribute the remaining 20 per cent.

Will HMRC help me calculate my contributions to the scheme?

Employers are responsible for calculating the correct amounts to claim from the scheme, with HMRC expected to take a hard line on errors that are not corrected quickly.

HMRC’s guidance walks employers through the various calculations needed to work out the amounts they need to claim in respect of furloughed employees in different circumstances over the remaining months of the scheme.

This includes information about:

  • Calculating flexible furlough claims;
  • calculating employer NICs and pension contributions on hours worked and furlough hours;
  • dealing with considerations around the National Living Wage (NLW) and National Minimum Wage (NMW);
  • employees returning from parental leave;
  • employees returning from Statutory Sick Pay (SSP) and
  • the reduction in the value of the main grant in September and October.

To help employers deal with the potentially wide range of permutations, HMRC has published example calculations in the guidance dealing with different situations. To read the latest guidance, please click here.

What happens if I overclaim for the CJRS?

Where employers find that they have overclaimed, they can report this as part of their next claim, which will be adjusted down to take the previous overpayment into account. HMRC says it is working on a mechanism to deal with circumstances where an employer has overclaimed but does not wish to make further claims. In the event of underclaims, employers should contact HMRC directly.

What happens if I receive an overpayment?

If an employer has received an overpayment and is making further claims, it can offset the overpayment against the amount of its next claim. HMRC has now confirmed arrangements for employers that are no longer claiming grants from the scheme but which need to repay an overpayment.

In these circumstances, an employer needs to call HMRC to obtain a payment reference number. The money owed can be paid by Faster Payments, CHAPS or Bacs to HMRC’s accounts.

Further guidance can be viewed here.

How is the scheme applied to someone whose pay varies monthly?

If the employee has been employed for a full twelve months prior to the claim, you can claim for the higher of either:

  • the same month’s earning from the previous year
  • average monthly earnings from the 2019-20 tax year

If the employee has been employed for less than a year, you can claim for an average of their monthly earnings since they started work. Those who started in February should have their pay calculate pro-rata.

As an employer, it is your responsibility to calculate how much of an employee’s salary you can claim for, including the amount of Employer National Insurance Contributions and minimum automatic enrolment employer pension contributions you are entitled to.

Are employees returning from parental leave eligible?

Employees returning from statutory maternity and paternity leave in the next few months will remain eligible for furlough through the Coronavirus Job Retention Scheme (CJRS).

Since 10 June, it has no longer been possible to furlough an employee for the first time, with the Government set to introduce part-time furlough from 1 July onwards. To facilitate this, the scheme will only be available to employers that are using the CJRS and employees that have previously been furloughed.

Because workers must complete 21 days of furlough to be eligible for part-time furlough, this means that the cut-off date for employees to be placed on furlough leave was Wednesday 10 June.

However, employees returning from parental leave will be eligible for the CJRS as they return to work, with further details set to be announced by the Government imminently.

Does the scheme apply to directors?

Yes, directors of a company can be furloughed. The guidance provides an exemption for company directors who are also furloughed employees to carry out duties “relating to the filing of company accounts or provision of other information relating to the administration of the director’s company…”. This may include Companies House submissions and other statutory duties.

During this period directors should be careful to avoid anything that could be mistaken for work, including posting promotional material on their social media feeds.

We operate in the public sector, how does the CJRS apply to IR35?

It may be appropriate to furlough IR35 contractors deemed employees “in a small number of cases”.

Public sector organisations have to confirm this with both a contractor’s Personal Service Company (PSC) and the fee-payer and agree between the parties that the contractor will not carry out work for the organisation during the period of furlough.

The fee-payer – usually the agency that pays the PSC – will have to apply for a furlough payment of 80 per cent of the monthly contract up to the £2,500 cap and the employer National Insurance Contributions (NICS).

The fee-payer will then need to pay the furlough payment in respect of wages to the PSC via PAYE and make the necessary tax and NIC deductions.

The PSC will have to report the payment to the contractor as deemed employment income via PAYE using box 58A on the PAYE Real Time Information return.

If a contractor opts to furlough themselves as an employee or director of their PSC, and they are still receiving an income from a public sector organisation, including through the CJRS, they must deduct this income from their reference pay for the CJRS.

An employee was made redundant or resigned before the end of March. Can they be rehired and then furloughed?

If employees were made redundant or stopped working for a business on or after 28 February 2020, they can be re-employed, furloughed and a claim made via the CJRS.

This applies to employees that were made redundant or stopped working for you after 28 February, even if you do not re-employ them until after 19 March.

The employee must have been on your payroll as at 28 February and had been notified to HMRC on an RTI submission on or before 28 February 2020.

For continued use of the scheme an employee must also have been furloughed by the 10th June to be eligible as the scheme closes to new employees on 30th June and they must have been previously furloughed for at least three weeks.

After the 30th June, an employer cannot furlough more employees than any previous time in one go until the scheme ends.

An employee has indicated that they need to care for another and has asked to be furloughed, can they claim?

Employees who are unable to work because they have caring responsibilities resulting from coronavirus (COVID-19) can be furloughed.

How does the CJRS work with those employees on Statutory Sick Pay?

If your employee is on sick leave or self-isolating as a result of Coronavirus, they can claim Statutory Sick Pay. The CJRS is not intended for short-term absences from work due to sickness, and there is a three-week minimum furlough period. However, if an employer wants to furlough employees for business reasons and they are currently sick or self-isolating, they are eligible to do so, but these employees should no longer receive sick pay and would be classified as a furloughed employee.

How should I inform employees that they are being furloughed?

HM Revenue & Customs (HMRC) has now made it clear in their latest guidance that employers must confirm in writing to their employee that they have been furloughed.

If this is done in a way that is consistent with employment law, that consent is valid for claiming the CJRS.

There needs to be a written record, but the employee does not have to provide a written response. This written record must be kept for at least five years to evidence a claim.

Can apprentices continue to train and be furloughed?

The CJRS allows staff members to undertake volunteer work outside of the business and take part in training courses, as long as the activity doesn’t generate income for the company. Apprentices can be furloughed like any other member of staff.

I am intending to furlough more than 20 employees, are there any special considerations, as with redundancy?

Collective consultation requirements may need to be considered. This broadly means that where 20 or more employees are to be put on furlough leave and would be dismissed if they do not agree to the resulting change in terms of employment, they should be consulted collectively.

How do I select who to furlough?

The CJRS is intended for those employees who would otherwise be made redundant and it should, therefore, be offered to those whose roles are not critical to the business. Businesses must follow existing employment law so as not to discriminate against employees.

If a person hasn’t been furloughed for the minimum period (three weeks) by 30th June they cannot be furloughed.

I only want to furlough my staff for one or two weeks; can I do this?

Originally employees could only be furloughed for a minimum period of three consecutive weeks. Employees can be furloughed multiple times, but each separate instance should have been for a minimum period of three consecutive weeks.

From 1 July employers will be able to make new flexible furlough agreements with employees that enable them to return to work on a part-time basis, while the employer will still be able to claim a CJRS grant for the hours not worked. Only employees who have been furloughed for a full three-week period up to this point will still be eligible to be furloughed.

How is performance pay, such as tips and bonuses, calculated under the scheme?

The CJRS does not cover performance-related pay, but employers can voluntarily top up pay to reflect this if they wish to.

Can agency staff and those on zero-hours contracts be furloughed?

Employees can be on any type of employment contract, including full-time, part-time, agency, flexible or zero-hour contracts to be eligible for the Coronavirus Job Retention Scheme. Depending on the arrangement with the employment agency, it may be down to them to furlough the member of staff.

How does the CJRS apply to maternity pay and shared parental leave?

Those who are contractually obliged to enhanced maternity, adoption or shared parental pay are eligible for the scheme, but not those on statutory maternity pay. They will be paid in the same way and cannot be additionally furloughed.

I have had to reduce the hours of some staff members – can I use the scheme to make up the difference?

If an employee is working, but on reduced hours, or for reduced pay, they will not be eligible for this scheme and you will have to continue paying the employee through your payroll and pay their salary subject to the terms of the employment contract you agreed.

Can staff who have undergone TUPE be furloughed?

New employers since 19 March 2020 can claim under the CJRS if either the TUPE or PAYE Business Succession Rules apply to the change of ownership of the business. Groups of companies that have consolidated their payrolls into a new PAYE scheme after 19 March 2020 can also furlough employees and claim under CJRS.

We have decided to reduce the hours of our workers, can we claim for the difference?

If an employee is working, but on reduced hours or reduced pay, they will not be eligible for the CJRS.

If employees rely on salary sacrifice for employer pension contributions, will HMRC pay the full amount of the employer pension contribution for which the pay is sacrificed?

The reference salary should not include the cost of non-monetary benefits provided to employees, including taxable Benefits in Kind. Benefits provided through salary sacrifice schemes that reduce an employee’s taxable pay should so not be included in the reference salary.

An employee has refused to be furloughed, what can I do?

In the majority of cases, it will be in the employees’ interest to accept an offer of furlough as it means that their role would otherwise be made redundant. Employers have a variety of options open to them including reducing their working hours, reducing their pay, short-time working and layoffs and in some cases redundancy. Remember that existing employment rules continue to apply so you must consider whether your actions could lead to a claim for unfair dismissal or discrimination.

How does the CJRS affect holiday pay?

Employees can take holiday whilst on furlough and they should be paid as normal. The Working Time Regulations (WTR) obligates employers to pay time taken as annual leave at the normal rate of pay or, where their rate of pay varies, calculated based on the average pay they received in the preceding 12 weeks.

The CJRS guidance confirms you can make a grant for an annual leave furlough day in the same way as any normal working day. This would still be paid at 80 per cent of normal rates (capped at £2,500 per month) as you are in effect ‘topping up’ for those annual leave days by paying the difference between that and their normal pay to your employees

Although furloughed employees are not working, they continue to accrue annual leave, as per the terms of their employment contract.

How are bank holidays accounted for?

Where staff are furloughed over a bank holiday period, and they usually take bank holidays as part of their holiday allowance, employers must pay them on top of their furlough for this. If staff usually work bank holidays this does not apply.

What records need to be kept?

The written agreement that the furloughed employee will, under the current terms of the scheme, cease all work must be retained until 30 June 2025 and:

  • State the main terms and conditions;
  • Be incorporated either expressly or implicitly in the contract of employment; and
  • Be either made or confirmed in writing.

It is widely expected that HMRC will audit use of the scheme retrospectively over the coming months and years, with potentially hefty penalties for those found to have acted improperly.

Is the CJRS taxable?

Grants from the various Government schemes to provide support during the Coronavirus outbreak are taxable in the same way as other income. Payments made under the CJRS are considered to be taxable income.

The position had been set out in the various guidance documents for the schemes but has now been underscored by a series of Government amendments to the Finance Bill 2020.

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Self-Employed Income Support Scheme (SEISS)

What is on offer via the SEISS?

The first Self-Employed Income Support Scheme (SEISS) will pay self-employed individuals an amount equivalent to up to 80 per cent of their average monthly trading profits, capped at £2,500, to cover at least the three months from March.

This is being paid in a single lump-sum and based upon tax returns from 2016-17, 2017-18 and 2018-19. Applications for the current round of funding remain open here until 13 July 2020.

A second round of funding available for applications from August will be 70 per cent of average monthly trading profits, capped at £6,570 and paid in a single instalment.

Will I be eligible?

For the first round of funding a self-employed individual must have trading profits of no more than £50,000 and must receive the majority of their income from self-employment. Trading profits will either be based on an average of the 2016-17, 2017-18 and 2018-19 tax years or where a person has only been self-employed for just over a year, their trading profits and total income in 2018-19.

Therefore, you must also have submitted a Self-Assessment Tax Return for 2018-19. Anyone who has missed the deadline will have four weeks from 26 March 2020 to do so before they become ineligible for the scheme.

People who pay themselves a salary and dividends through their own company will not be eligible for the scheme but could be eligible for the Coronavirus Job Retention Scheme if they use PAYE.

Alongside these existing conditions, HMRC has said that self-employed people will have to confirm that their trading has been adversely affected by Coronavirus. To assess this the tax authority will use a ‘risk-based approach’ to compliance.

To get an idea of whether an individual may be eligible for the funding, HMRC has created a new online tool that allows the self-employed and their agents, such as accountants, to check. To use the tool please click here.

To use this service, individuals will need:

  • Their Unique Taxpayer Reference (UTR) and their National Insurance Number
  • To ensure their details are up-to-date in their Government Gateway account.

Once an individual, or their agent, has completed the eligibility check they will be given a date from which the individual can submit their claim. In many cases, individuals will also have been contacted in advance by HMRC to confirm their eligibility.

HMRC has now clarified that in order to qualify for the second grant, a self-employed individual must confirm that their trading has been adversely affected by the coronavirus outbreak on or after 14 July 2020.

This means it is possible for a self-employed individual not to have qualified for the first round of funding by virtue of not having been adversely affected, but to qualify for the second round because they have subsequently been adversely affected. This might be in circumstances where they become unwell with Coronavirus in July and are then unable to trade as a consequence.

However, this also means that some self-employed individuals who were able to confirm that their business was adversely affected for the first round of funding may find that this is no longer the case and so do not qualify for the second round of funding.

The criteria to qualify for the scheme otherwise remain unchanged.

Can I continue to work if I receive a grant from the SEISS?

Self-employed individuals will still be able to do business while they receive a grant from the scheme. This differs drastically from the Coronavirus Job Retention Scheme, which requires employees not to work to be eligible.

My volume of work/ income hasn’t gone down, can I still apply?

The scheme is only intended for those who have lost trading profits due to COVID-19.

How can I apply?

The claims service for SEISS is now available online to those that are eligible. You can begin this process by clicking here.

If, as your accountants and agents we file your tax return you may not have a Government Gateway Account.  However, when making your claim you will be given the option to create an ID as part of the application process.

When will the first payments be made?

Individuals that are eligible for the scheme will see the grant paid into their bank account by 25 May, or within six working days of completing a claim.

I am unable to wait for a payment, is there anything I can do now?

Self-employed people are eligible to apply for a Business Interruption Loan if they think they meet the criteria.

Alternatively, the Government has changed the rules around Universal Credit and Employment Support Allowance to ensure self-employed people can access the support they need immediately.

Applications for both these benefits can be found online if needed, as can details of the Business Interruption Loan.

How will HMRC calculate trading profits?

HMRC will use turnover figures provided on tax returns and then to calculate trading profit, it will deduct expenses including:

  • Office costs
  • Travel costs
  • Clothing expenses
  • Staff costs (for example, in the case of a partnership)
  • Things bought to sell on
  • Financial costs, such as insurance or bank charges
  • Costs of business premises
  • Advertising and marketing, such as website costs
  • Train courses
  • Business expenses deducted through the trading allowance
  • Capital allowances used to buy assets used in the business
  • Qualifying care relief
  • Flat rate expenses.

HMRC will also take into consideration:

  • any business expenses deducted through the trading allowance
  • capital allowances used to buy assets used in your business
  • qualifying care relief
  • flat rate expenses

Any losses carried forward from previous years and the personal allowance will not be deducted from trading profits.

HMRC will also consider other income reported on your self-assessment return. Your total income is the total of all your:

  • income from earnings
  • trading profits
  • property income
  • dividends
  • savings income
  • pension income
  • miscellaneous income (including social security income)

At the same time, HMRC has confirmed that it will not deduct losses carried forward from previous years from trading profits, nor will it deduct an individual’s personal allowance.

Is the SEISS taxable?

Grants from the various Government schemes to provide support during the Coronavirus outbreak are taxable in the same way as other income. Payments made under SEISS are considered to be taxable income.

The position had been set out in the various guidance documents for the schemes but has now been underscored by a series of Government amendments to the Finance Bill 2020.

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Coronavirus Statutory Sick Pay Rebate Scheme

What does the scheme offer?

The Coronavirus Statutory Sick Pay Rebate Scheme will repay employers Statutory Sick Pay that they have paid to current or former employees for periods of sickness starting on or after 13 March 2020.

Some employers may be contractually obliged to pay more than the current rate of SSP through top-up payments, but HMRC has confirmed that the scheme will only cover the current statutory rate.

The reimbursement scheme covers up to two-weeks of SSP starting from the first day of sickness if an employee is/was unable to work because they either have/had coronavirus, are shielding in line with guidance or are self-isolating at home. Employees do not have to have provided a doctor’s fit note for you to make a claim.

Who is eligible for the scheme?

To be eligible for a repayment of SSP, an employer has to:

  • be claiming for an employee who is eligible for sick pay due to coronavirus
  • have a PAYE payroll scheme that was created and started on or before 28 February 2020
  • have had fewer than 250 employees on 28 February 2020.

The scheme covers all types of employment, including agency workers and those on flexible or zero-hour contracts.

Connected companies and charities can also use the scheme if their total combined number of PAYE employees was fewer than 250 on or before 28 February 2020.

How do I apply?

To make a claim, employers will need:

  • Their employer PAYE scheme reference number
  • Contact name and phone number for queries
  • UK bank or building society details of an account that can accept a Bacs payment
  • The total amount of Coronavirus SSP paid to employees
  • The number of employees concerned
  • The start and end date of the claim period.

Employers must keep records of the following for three years after the date they receive payment from HMRC:

  • The dates the employee was off sick
  • Which of those dates were qualifying dates
  • The reason they were off sick
  • The employee’s National Insurance number.

Employers can claim from both the CSSPRS and the Coronavirus Job Retention Scheme (CJRS) in respect of the same employee. However, claims cannot be for the same period.

To make a claim, please click here.

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Business Rates

Can businesses get a rates holiday and a grant?

Businesses in the retail, hospitality and leisure sector can benefit from both. Hereditaments can apply for the funding available and also pay no rates for 2020-21.

How does the relief relate to empty property relief?

If empty property relief is already being claimed then the 100 per cent discount for retail, leisure or hospitality will not increase the value of the relief in tax year 2020/21.

If the local authority had been notified that the property was empty and unused between 1 January and 31 March 2020 then relief from the 2019/20 rates bill would be available for this period.

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Grants

I am already in receipt of the Small Business Rate Relief, which grant is best suited to me?

All businesses in England in receipt of either small business rates relief (SBRR) or rural rates relief (RRR) in the business rates system will be eligible for a grant of £10,000.

Hereditaments included in this scheme are those which on the 11 March 2020 were eligible for relief, including those with a rateable value between £12,000 and £15,000 which receive tapered relief.

I work in the hospitality sector and I understand I may be eligible for funding, which grant should I use?

Grants are generally considered to be a taxable form of income, they can be the taxed the same as any other forms of income, such as money earned through trade, via Corporation Tax.

Where a grant is for expenditure that appears in your profit and loss account and you can defer the grant income, such as through the acquisition of a fixed asset, then you may not have a tax liability on the income as it will be matched with its intended expenditure (i.e. expenditure will cancel out income in your accounts).

In the case of the latest Government COVID-19 grants, it is most likely that you will have to pay Corporation Tax as they are not linked to the acquisition of an asset and cannot be deferred. It is therefore important that you account for this income accurately so that you pay the correct amount of tax in future.

I am not eligible for either grant, can I access support any other way?

The Government has made additional financial support available to the UK’s smaller business owners, who may have been excluded from existing schemes, via the creation of Local Authority Discretionary Grants.

More than £617 million has been made available to councils and local authorities, which will have the discretion to offer funding to:

  • Small and micro businesses, as defined in Section 33 Part 2 of the Small Business, Enterprise and Employment Act 2015 and the Companies Act 2006.
  • Businesses with relatively high ongoing fixed property-related costs
  • Businesses which can demonstrate that they have suffered a significant fall in income due to the COVID-19 crisis
  • Businesses which occupy a property, or part of a property, with a rateable value or annual rent or annual mortgage payments below £51,000.

Local authorities have been asked by the Government to prioritise grants to businesses that shared operate out of shared spaces, regular market traders, small charity properties that would meet the criteria for Small Business Rates Relief, and bed and breakfasts that pay council tax rather than business rates.

Local authorities have also been given discretionary powers to make payments to other businesses based on local economic need. A decision on who will receive funding will be down to the discretion of each local authority.

To be eligible a business must be small (under 50 employees) and be able to demonstrate that they have experienced a significant drop in income as a result of the COVID-19 pandemic restriction measures.

These include grants of £25,000, £10,000 and small grants of under £10,000 that can be made at the discretion of local authorities.

So far more than 614,000 business properties have benefitted from the grant funding schemes – receiving more than £7.5 billion.

It is hoped that those who missed out on initial grants will be supported by this latest change to the rules. Further details of the scheme are expected shortly.

How is income from grants taxed?

Grant income is outside the scope of VAT, therefore no VAT is payable when you receive a grant, but you may be able to reclaim VAT from any asset paid for via a grant, as long as it is within the ‘normal’ VAT rules.

Is grant income subject to VAT?

Grant income is outside the scope of VAT, therefore no VAT is payable when you receive a grant, but you may be able to reclaim VAT from any asset paid for via a grant, as long as it is within the ‘normal’ VAT rules.

Can charities apply for these grants?

Charities that otherwise would meet the necessary criteria, but whose bill for 11 March was reduced to nil by a local discretionary award are still eligible for the RHLG, according to the guidance.

Are there any businesses that are excluded from grant funding?

Hereditaments that are occupied for personal use, such as private stables, beach huts, moorings, car parks and parking spaces are excluded from both schemes.

Additionally, businesses that were in liquation or were dissolved as of the 11 March cannot apply for either scheme.

How do I apply for support via these grant funds?

Neither scheme has a mandatory application process. Instead, businesses should be contacted by their local authorities who will outline how they can claim a grant.

In some cases, where a business has an existing direct debit to pay business rates, local authorities can handle the application automatically or they may request additional details via an online form.

If you are not contacted by your local authority and believe you are eligible, we recommend that you speak to the relevant officer at your council to find out how the funding is being delivered.

I am renting a space in a building but my landlord pays my rates through the rent. Am I eligible for grants?

The grants are given to the ratepayer, who would presumably be the landlord in this case. Unless the rateable value of the hereditament is less than £15,000 (in England) the landlord would not qualify for the grant. The landlord would, in any case, need to decide whether to pass on any grants received.

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PAYE Liability Deferral

Is PAYE payable monthly by companies deferred?

No, businesses in financial distress, and with outstanding tax liabilities, may be eligible to receive support with their tax affairs through HMRC’s Time to Pay Service.

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Self-Assessment Payment Deferral

Can I defer my self-assessment payment?

Income Tax Self-Assessment payments due on 31 July 2020 will be deferred until 31 January 2021 for self-employed individuals.

Taxpayers have the option to defer their second payment on account if they are:

  • registered in the UK for Self Assessment and
  • finding it difficult to make the second payment on account by 31 July 2020 due to the impact of Coronavirus

Those who can still make the payment by 31 July 2020 as normal should do so.

Taxpayers do not need to tell HMRC that they are deferring their payment on account.

Choosing to defer will not stop an individual from being entitled to other Coronavirus support that HMRC is providing.

Those who chose to defer must make their second payment on account on or before 31 January 2021.

I am not self-employed but I still report other income via self-assessment, can I seek a deferral?

Yes, you can delay making your second payment on account. If you choose to delay, you’ll have until 31 January 2021 to pay it.

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VAT Deferral Scheme

Does the VAT deferral scheme apply to payments on account or just quarterly payments?

All VAT payments, apart from import VAT and VAT MOSS, have been deferred by three months from 20 March 2020 until 30 June 2020. During this period, businesses will not need to make VAT payments to HM Revenue & Customs (HMRC).

Businesses will have until 31 March 2021 to pay any liabilities that have accumulated during this period. The deferral is automatic and businesses do not need to apply to be able to benefit from it.

However, you must cancel any direct debit manually with your bank immediately to make use of this deferment or HMRC will continue to take payments.

Can I still reclaim VAT during this period?

HMRC will continue to process VAT reclaims and refunds as normal during this time.

I didn’t cancel my direct debit. Can I get a refund?

Taxpayers that wished to defer VAT payments, but did not cancel their Direct Debits in time can claim a refund, according to HM Revenue & Customs (HMRC).

The tax authority has confirmed that taxpayers that intended to defer VAT payments due between 20 March 2020 and 30 June 2020 that were unable to cancel their Direct Debit to HMRC could now do so. 

To obtain a refund, taxpayers should submit a Direct Debit Indemnity Claim to their bank. On this submission, all they must state is that they want to claim a refund under the Direct Debit Indemnity Scheme (DDI) and HMRC has said it will honour the request. 

HMRC has also said that there will be no time limit in making this request, but businesses are encouraged to do so soon to obtain a quicker refund. 

Taxpayers can also request repayment from HMRC directly rather than contacting their bank, but they must ensure that their bank details are updated using the tax authority’s online service.

Due to COVID-19 restrictions, Payable Orders are not being issued and it may take up to 21 days for a refund to be received if the Direct Debit Indemnity Claim process is not used.

What happens when the VAT deferral period ends?

HMRC is due to provide further guidance on the payment of tax at the end of the deferral period next March. 

Businesses also need to make arrangements to pay VAT falling due from 1 July 2020 to 31 March 2021.

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Other business costs

I am struggling with my commercial rent, what can I do?

As part of the Government’s Coronavirus Act 2020 (the Act), new measures were introduced to protect commercial tenants. Section 82 of the Act bans the forfeiture of commercial leases until 30 June 2020 for non-payment of rent, thus preventing evictions.

The Government has also temporarily banned the use of statutory demands (made between 1 March 2020 and 30 June 2020) and winding up petitions presented from Monday 27 April, through to 30 June, where a company cannot pay its bills due to coronavirus. This will help ensure these companies do not fall into deeper financial strain.

The Government is also introducing new legislation to provide tenants with more breathing space to pay rent by preventing landlords using Commercial Rent Arrears Recovery (CRAR) unless they are owed 90 days of unpaid rent.

I am unable to keep up with credit card payments, is there any support on offer?

The Financial Conduct Authority (FCA) has fast-tracked new measures that force banks to freeze loans and credit card payments for up to three months to help those individuals whose finances are affected by the Coronavirus outbreak. This includes:

  • A three-month repayment freeze on loans;
  • A temporary freeze on credit card and store card debt up to three months; and
  • Zero-interest for three months on up to £500 for customers affected by Coronavirus using an arranged overdraft for up to three months.

The FCA wants to ensure that “consumers are no worse off and not paying more than they would have under previous prices.”

It is recommended that you speak with your lender to ensure you can make use of these facilities.

I cannot afford to pay the finance on company vehicles, what are my options?

Businesses and individuals currently repaying finance on vehicles are to be granted a payment holiday under new measures from the Financial Conduct Authority (FCA).

The financial watchdog is currently consulting with motor finance firms to grant a three-month freeze.

Motor finance companies have also been asked to halt repossessions and not end loan agreements with customers who are “experiencing temporary financial difficulties due to coronavirus”.

You are recommended to speak with your lender to find out what options are available to you.

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Insolvency

I have an existing Voluntary Arrangement with HMRC, but I am struggling to make payments can I defer these?

HMRC recognises that businesses will already have been in a formal VA when the crisis began and that the impact of the economic slump is likely to affect their ability to trade and meet the obligations of the existing arrangement.

HMRC will support an automatic minimum three-month break from contributions from customers impacted by Coronavirus. The tax authority has also said that any deferral of tax that the business is entitled to under the Government’s COVID-19 financial support package will not be deemed a breach of a VA.

Am I permitted to keep trading if my business I at risk of insolvency?

The Government has retrospectively suspended restrictions around wrongful trading from the 1 March 2020 for three months.

Under English law, where a company continues to trade, even in the face of unavoidable insolvency, the company’s directors can be found personally liable for the losses suffered to creditors as a result, potentially leading to a court-ordered contribution to the assets of the insolvent company.

By suspending the rules, directors of struggling business who continue to operate, in the full knowledge that they face the prospect of insolvency, will not be penalised for doing what they can to keep their business operational.

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Fraud

I keep being contacted by various banks and organisations with offers of support if I provide my financial information, are these potentially fraudulent?

Various organisations, such as Action Fraud, the ICAEW and the police have issued warnings regarding an increase in fraud as a result of the pandemic. This can take various forms including fraudulent invoices, advanced fee fraud for services and phishing.

To give you some idea of the scale of the danger, the National Cyber Security Centre (NCSC) is understood to have already removed more than 2,000 online coronavirus scams over the last month, including 471 fake online shops selling fraudulent coronavirus-related items, 555 malware distribution sites set up to inflict significant damage to visitors and 832 advance-fee frauds.

In light of this, you and your employees must take additional care at this time and seek additional verification on all transactions. If you remain unsure of whether a communication or request is fraudulent, seek professional advice.

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Working from home

Many of our staff members are working from home. Can I reimburse them and get tax relief?

Employers can reimburse costs tax-free where there is a ‘homeworking arrangement’ between an employer and an employee and the employee must work at home under the terms of these arrangements.

A notable exception here is costs that are unaffected by whether or not an employee is working from home or not, like mortgage repayments or rental payments.

Similarly, the cost of existing broadband connections cannot be reimbursed tax-free, although new connections can be, where the employee does not already have a broadband connection.

In circumstances where the employer does not meet the additional costs of an employee working from home – such as heating, water and electricity – but requires the employee to work from home, it may be possible for the employee to claim tax relief in respect of these costs. Expenses for both personal and business use are not eligible for tax relief.

Employees can use HMRC’s online tool to determine whether particular expenses would be eligible for tax relief. The tool can be viewed here.

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Companies House

I need to file companies house documents, but I am unable to due to the pandemic. Can I defer?

Businesses affected by the COVID-19 pandemic can apply to Companies House to request an extension to file their accounts, reports and confirmation statements.

Companies House is offering a maximum extension of three months for struggling businesses, but they must meet stringent conditions, including a rule that an appeal to extend must be lodged before a company’s current filing deadline.

Appeals will be treated on a case-by-case basis and the process will mirror the existing criteria based on cases for unforeseen poor health.

Companies House has made it clear that any company accounts filed late will still incur an automatic penalty.

I am the director of a company and I have had to be furloughed, do I still need to undertake my statutory duties, such as filing accounts with Companies House?

Directors of a company that are furloughed are not permitted to do work for the business that generates an income, but they are permitted and expected to fulfil their duties under the Companies Act, including statutory annual accounts.

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Dividends

Our directors are paid through a combination of dividends and a salary. Can dividends still be paid if the business is in financial difficulty?

There are strict rules governing the circumstances in which a company may pay a dividend to its shareholders. Companies must have sufficient profits to pay the dividend at the time it is paid, so you must be confident that you are currently in profit and that these profits are equal to or greater than the amount of the payment. You should also ensure that provisions for Corporation Tax have been considered.

I wish to cancel dividend payments that have previously been agreed, to help with cashflow, am I able to do this?

Whether a board can do this with ease will depend on the type of dividend agreed upon. An interim dividend is decided on and announced by directors, which only becomes a binding obligation to shareholders of a company once it is paid.

A final dividend is one which is recommended by directors to shareholders that is approved by shareholders via an ordinary resolution and which is binding at the point of approval.

This latter classification of dividend may be more difficult to cancel and could be more likely to lead to action through the courts or other legal disputes, which is something businesses should be aware of. It is best to discuss the cancellation of dividends with those affected and to explain the needs of the business.

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Audits

How should the impact of COVID-19 be reported during an audit?

The impacts of COVID-19 on an audit report or financial statement will vary depending on the individual business and should be considered on a case-by-case basis. The ICAEW has said there is “no standard response to COVID-19 with regard to audits or disclosures in the accounts”.

The Financial Reporting Council have also confirmed that they will not be providing boilerplate wording to be used in audit reports in respect of the coronavirus pandemic and stressed the importance of the auditor ensuring any disclosures they do make are entity-specific and useful to users of the financial statements.

Accordion

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