This update is written and posted on 14 May 2020 and is likely to quickly become out of date. We will endeavour to update information as it becomes available.
Previous updates and other useful information can be found at our WEBSITE
Businesses are starting to move away from concentrating solely on survival and are now shifting their focus towards recovery. Most businesses are working through how they will operate, moving to what a new normal will be for a period of time and considering how to implement social distancing whilst achieving maximum capacity and productivity in this new world.
The Government has published its road map out of the lock down, together with guidance to help employers, employees and the self-employed understand how to work safely during the coronavirus pandemic. In consultation with industry, the Government has produced guidance to help ensure workplaces are as safe as possible. These 8 guides cover a range of different types of workplaces and sectors and can be found at HERE
Employers need to consider carefully how they will protect their workforce from the risk of contracting the virus at work. A return to work, will not be "business as usual" with employers having a duty under health and safety legislation to take the necessary steps to safeguard the health, safety and welfare of their employees and those who will be required to visit their business premises. The changes and adoption of new practices are likely to involve some costs, which need to be factored into cash flow forecasting (we keep saying these are key), however tax relief should be available.
Planning is not just making the workplace safe and adopting new working practices. Businesses will have to review their supply chains and the logistics of getting product and services to their markets. For example, as a result of the crisis, do previous suppliers still exist, are they opening now or remaining closed, working at reduced capacity, etc.?
A survey by the British Chambers of Commerce (BCC) reveals that Britain’s smallest businesses would need less than a week's notice to restart operations. The BCC's coronavirus business impact tracker found that only 3% of businesses said they would need more than three weeks' notice to get back up and running once lock down restrictions are eased.
It is being reported that the Covid-19 pandemic will change how businesses will work going forward. For example, with home working potentially being the norm for many employees, businesses will require less space and may consider downsizing. It is probably too early to take a view on this at this stage. However (landlords close your eyes), one of our clients, in addition to requesting a rent holiday, has secured a rent deduction, even though none was due under the rental agreement. With the fallout from the pandemic, which may see the closure of a number of businesses, businesses not requiring as much space as previously for whatever reason, may find landlords willing to retain a paying tenant, even if the rent is reduced.
Don’t Get Scammed
We have reported regularly on the increased level of fraud and scams arising from the Covid-19 crisis, as criminals take advantage. At the end of April, Action Fraud reported that it had received more than 800 reports of virus-related scams and more than 3,600 reports of phishing emails with total losses of £2m. The link below will take you to our article highlighting the main types of scams, measures to protect the business and some free training link HERE
Self Employed Income Support Scheme
The Government’s scheme to support the self-employed and partners of partnerships who have trading profits less than £50,000, went live yesterday. It is a phased in process with taxpayers being given a specific date when an application can be submitted. The key point, if you are eligible to make a claim, is the requirement for a Government Gateway id and password.
We have contacted our clients who we believe are eligible and HMRC are also contacting taxpayers regarding claims. More information about the scheme, can be found in last week’s update HERE which includes links to HMRC’s information and eligibility checker.
Job Retention Scheme (aka Furlough Scheme)
The Chancellor has announced an extension to the employee support scheme to 31 October. While workers will continue to be paid 80% of their wages until the end of July, the Chancellor said changes will then be introduced with the burden of paying salaries shared between the Government and employers. Further information to be released on the changes by the end of the month, but it is expected that one change is that the rigid condition of being unable to work will be amended, with an employee being able to work part-time under a phased return to work. Details of the Chancellor’s announcement can be found HERE
The claims process has been operating for three weeks, with HMRC putting a lot of resources into the scheme, including checking claims. As the claims process has “bedded” in, HMRC have updated their step by step guide for employers at the start of this week. It is worth reviewing the guide to check your processes, paperwork and claims are in order. The updated guidance can be found HERE
Work Place Pensions
The Pension Regulator has published new Covid-19 guidance for employers, including information on automatic enrolment and how to calculate pension contributions where a salary sacrifice arrangement is in place. The guidance urges employers to pay their pension contributions on time where they can, however it makes it clear that there is support for struggling businesses. For instance, there has been an extension to the period in which pension providers must report payment failures, from 90 days to 150 days, to give trustees and providers more time to work with employers to bring payments up to date. The guidance can be found HERE
Also, do not forget that every three years employers must complete a re-declaration of compliance to show they have met their duties under the Work Place Pension Rules. Employers must also put certain staff who have left the “company” pension scheme back into it. This is called automatic re-enrolment. An employer’s re-enrolment date falls within three months of their staging date. The Pension Regulator is sending out notices to remind employers of their obligations, details of which can also be found on their website
Taxing a pay cut
We flagged in our newsletter a couple of weeks ago the risks of taking a pay cut to help your company or asking your employer to make a donation to a charity on your behalf, which could result in a tax charge. This raised a lot of queries! The problem arises due to Section 203A Income Taxes Earnings Pension Act 2003 introduced in April 2017 to tackle tax avoidance. The legislation removes the Income Tax and NICs advantages where benefits are provided through arrangements in which the employee gives up the right to an amount of earnings in return for a benefit. For example, provision of a company car in return for salary sacrifice arrangements. In the current crisis employees and directors may be forgoing salary. However, under section 203A, there needs to be a written agreement put in place in advance for the reduced amount taking effect, which may have been missed in these difficult times. HMRC is being lobbied to relax or amend the legislation to prevent individuals getting caught with a tax liability when they are trying to do what is best for the business.
Miscellaneous
- Government Support Trade Credit Insurance Guarantee – Businesses with supply chains that rely on Trade Credit Insurance and who are experiencing difficulties maintaining cover due to the Coronavirus outbreak will get support from the Government.
More information of non-Government funding opportunities, which we update regularly, can be found HERE
We know that this is a very difficult time for all businesses and some difficult decisions are having to be made. We have spoken to many of you and for those we have not, we would like you to know that we are here ready to help if you need us to provide advice, deal with queries, or just be a business sounding board.
Contact us here
#Stay Alert, #Control The Virus #Save Lives
