PHTM COVID-19 BULLETIN INFORMATION FOR LIMITED COMPANIES
CORONAVIRUS JOB RETENTION SCHEME
Under the new Coronavirus Job Retention scheme, government grants will cover 80% of the salary of PAYE employees who would otherwise have been laid off during this crisis. The scheme, open to any employer in the country, will cover the cost of wages backdated to 1 March 2020 and will be open before the end of April. It will continue for at least three months and can include workers who were in employment on 28 February.
To claim under the scheme employers must:
• designate affected employees as ‘furloughed workers’ and notify employees of this change. Changing the status of employees remains subject to existing employment law and, depending on the employment contract, may be subject to negotiation; and
• submit information to HMRC about the employees who have been furloughed and their earnings through a new online portal. HMRC will set out further details on the information required.
HMRC will reimburse 80% of furloughed workers wage costs, up to a cap of £2,500 per month.
While HMRC is working urgently to set up a system for reimbursement, we understand existing systems are not set up to facilitate payments to employers. Business that need short-term cash flow support, may benefit from the VAT deferral announced below and may also be eligible to apply for a Coronavirus Business Interruption Loan.
VAT PAYMENTS
The next quarter of VAT payments will be deferred, meaning businesses will not need to make VAT payments until the end of June 2020, however you must still lodge your return on time.
Businesses will then have until the end of the 2020-21 tax year to settle any liabilities that have accumulated during the deferral period.
The deferral applies automatically and businesses do not need to apply for it. VAT refunds and reclaims will be paid by the government as normal.
You will need to cancel any direct debits in place, if this is your method of payment.
16 HMRC TIME TO PAY
HMRC’s Time to Pay scheme can enable firms and individuals in temporary financial distress as a result of Covid-19 to delay payment of outstanding tax liabilities. HMRC’s dedicated Covid-19 helpline provides practical help and advice on 0800 0159 559.
BUSINESS RATES, HOLIDAYS AND CASH GRANTS
• No rates payable for the 2020-2021 tax year for any business in the retail, hospitality or leisure sectors.
• In those sectors, if your rateable value is between £15K and £51k, you'll also receive a cash grant of up to £25,000 per property.
• Any business such as small taxi/private hire bases which get small business rates relief, will receive a cash grant of £10,000
• The rates holiday and cash grants will be administered by local authorities and should be delivered automatically, without businesses needing to claim.
CORONAVIRUS BUSINESS INTERRUPTION LOAN SCHEME
These were available from Monday 23 March. These can now be applied for via your own bank either by phone or online.
They are available for UK-based businesses with turnover of no more than £45 million and can provide for a facility up to £5 million. The borrower remains liable for 100% of the debt.
No interest will be charged for the first 12 months.
INSURANCE CLAIMS
Insurance policies differ significantly, so businesses should check the terms and conditions of their specific policy and contact their providers.
STATUTORY SICK PAY (SSP)
• If you're a director of a limited company with less than 250 employees, you can pay yourself two weeks of SSP if you need to self-isolate subject to meeting the minimum payroll requirement for SSP.
• The government will refund £94 per week, maximum £188, to your company.
• It will also refund SSP for staff of businesses with less than 250 employees for up to two weeks.
HMRC – FILING CORPORATION TAX RETURNS
Companies still need to file their Corporation Tax Returns on time.
COMPANIES HOUSE – ACCOUNTS FILING
Businesses will be able to apply for a three- month extension for filing their accounts.
Under normal circumstances, companies that file accounts late are issued with an automatic penalty. But as part of the agreed measures, while companies will still have to apply for the three-month extension to be granted, those citing issues around COVID-19 will be automatically and immediately granted an extension. Applications can be made through a fast-tracked online system which will take just 15 minutes to complete.
COMPANY DIRECTORS AND SHAREHOLDERS
• A director or company officer is an employee for PAYE purposes.
• A director cannot claim the COVID-19 Grant for the Self Employed by virtue of holding the office of a director.
• Although it may be possible for a company to furlough a director under the COVID-19 Job Retention Scheme there are potential issues for small companies to consider. a) Company law dictates that a director should be engaged under the terms of a service contract with their company.
b) A service contract does not automatically create an employment contract.
• Many director/shareholders are remun- erated in the most cost-efficient method for their company. 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.
This infers that directors will only be eligible for the CJRS based on their salary alone, and only if there is a proven PAYE record.
APRIL 2020
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