VAT paid in error during COVID-19

HMRC have recognised that some taxpayers have encountered problems when trying to take advantage of some of the COVID-19 measures, and have announced details of the procedure for taxpayers who have paid their VAT returns in error (e.g. direct debit not cancelled) when they meant to defer the payment under the COVID-19 VAT deferral easement.

A refund can be claimed if a Direct Debit was not cancelled in time.

The quickest way for customers to claim a refund is to submit a Direct Debit Indemnity Claim to their bank. When doing so they must ensure they state they want to claim a refund under the Direct Debit Indemnity Scheme (DDI). There is no time limit in making this request.

If the customer wants a repayment from HMRC rather than contacting the bank, they must ensure that their bank details are updated using the online services. Due to COVID-19 restrictions, Payable Orders are not being issued.

To confirm, it may take 21 days for the refund to be received if the Direct Debit Indemnity Claim process is not used.

If you need any assistance or support, please contact Bryan

Changes to Furlough

On Friday 29th May 2020, Rishi Sunak announced the changes that would be made to furlough leave and the CJRS (Coronavirus Job Retention Scheme).  He explained that as from 1st July, there would be a more flexible approach to furlough, to allow for part-time work whilst still benefiting from the scheme.

So, what are the changes to the furlough scheme?

June

From the 1st July, employers will only be able to claim for employees who have been on the furlough scheme for a minimum of 3 weeks previously.  This means that, from the 10th June, the scheme will be effectively be closed to employees being furloughed for the first time.  Therefore, if you want to take advantage of the scheme going forward, then you will need to furlough any new entrants by this date.

In June, employers will be able to continue claiming 80% of salary up to a maximum of £2,500 (gross) per month – including NI and pension contributions.

July

On 1st July, ‘flexible furlough’ comes into play.  Employees who are on furlough now have the ability to return to work on a part-time basis.  Any amount of working time or shift pattern can be agreed.

Employees will still receive 80% of their salary up to a maximum of £2,500 (gross) per month.  However, employers will need to pay for any hours worked and NI and pension contributions associated with these hours.  However, you can claim for hours not worked, up to a maximum of 80% of their salary or £2,500 (gross) per month.

August

From 1st August, the employer is responsible for paying ALL NI and pension contributions for hours worked and not worked.  The rest of the scheme remains the same as July.

September

From 1st September, the employee will still receive 80% of salary, up to a maximum of £2,500 (gross) per month, however, the government contribution will be a maximum of 70%. 

This means that the maximum amount an employer can claim via the CJRS is 70% of salary or a maximum of £2,187.50 (gross) per month.

Employers are expected to pay the additional 10% and all NI and pension contributions for hours worked and not worked (up to 80% or a maximum of £2,500 gross per month).

October

From 1st October, the employee will still receive 80% of salary, up to a maximum of £2,500 (gross) per month, however, the government contribution will be a maximum of 60%. 

This means that the maximum amount an employer can claim via the CJRS is 60% of salary or a maximum of £1,875 (gross) per month.

Employers are expected to pay the additional 20% and all NI and pension contributions for hours worked and not worked (up to 80% or a maximum of £2,500 gross per month).

If you would like to inquire about making a Furlough Claim, please contact Nicky@bennewith.co.uk where Nicky will be able to help you.

Second Lump Sum for Self-Employed

29 May: The Chancellor has announced a second and final grant to the self-employed who are eligible for the Self-employment Income Support Scheme (SEISS), based on 70% of earnings and capped at £6,570.

HMRC has confirmed the same eligibility criteria will be used to establish self-employed individuals’ entitlement to a further SEISS grant; the grant will be 70 rather than 80% of average earnings for three months and the maximum amount will be capped at £6,570, down from the £7,500 for the first grant. Applications will open in August and HMRC expects to publish further guidance on 12 June.

The government has not moved to extend the scheme to those who were not eligible for the first payment, for example those who started self-employment since April 2019. The Tax Faculty commented: “This decision will have been driven by the need, in order to avoid abuse, to base the grant on information that HMRC already held when the scheme was announced, with a short period in which outstanding 2018/19 returns could be filed.”

Those claiming both the first and the second grant have to confirm that they meet the eligibility criteria, in particular that their business has been adversely affected by coronavirus. HMRC’s guidance indicates that this includes being unable to work because the taxpayer is shielding, self-isolating or is on sick leave or has care responsibilities because of coronavirus. It also includes scaling down or temporarily stopping trading because the supply chain has been interrupted, the business has fewer or no customers or staff are unable to work.

SEISS (Self-Employment Income Support Scheme)

This week HMRC have started contacting self-employed customers who HMRC think could be eligible for the Self-Employment Income Support Scheme (SEISS), based on the information provided in their 2018 to 2019 tax return. They are inviting customers to use their online checker which will quickly confirm whether they are eligible and will give customers a specific date from which they can make a claim.

How we can help you
1) Ensuring you are aware you may be eligible
2) Helping you to find the details you need using the online eligibility checker on your behalf (or supporting you to use it yourselves)
3) Talking you through why you may or may not be eligible.

As an agent we won’t be able to make a claim on behalf of our clients.
Designing a scheme that enabled agents to apply on behalf of clients would have taken substantially longer to deliver, at a time when speed is the priority. Instead, HMRC have designed the scheme to be as simple as possible for customers to use, and they will calculate the amount a customer is entitled to based on the information they already hold.

How to use the checker
To use the online checker, you or us as your Accountant, on your behalf, will need the Individual’s Unique Taxpayer Reference Number and National Insurance Number. If you are eligible, you will be given a date, between 13 and 18‌‌ May, from which you can apply. This date is assigned randomly to help HMRC manage demand on the service, making sure that everyone who needs to make a claim can do so. You will also be asked to provide your Government Gateway credentials (user ID and password) and check that your bank and contact details are up to date. This is important so that HMRC can remind you by email or text message when it’s your turn to make a claim. If you don’t have Government Gateway credentials, you can set those up simply if you follow HMRC’s guidance and use the SEISS eligibility checker.

There will be no requirement for customers to wait for pins or codes through the post.

Please use the SEISS eligibility checker and get your Government Gateway credentials now if you don’t already have them. This will make applying for the grant quicker and easier when it is your time to apply.

The application process
When the application process goes live on 13‌‌ May, we can continue to support our clients although we cannot complete the claim on your behalf. The application process will show how HMRC has calculated the grant you may be due to receive. You will be able to share this calculation with us. If you, or us, wish to seek a review of this calculation, we can do so on behalf of you as our client. It’s important to note that, according to HMRC, the checker has an extremely high accuracy rate as they use the data you or us has previously provided HMRC with. If you, or us still wish to request a review, HMRC will look at your case from 18‌‌ May and they will explain your eligibility by the end of May.
 
Further information
HMRC’s phone lines will be very busy over the next couple of weeks.

A word about scams
HMRC are aware of an increase in scam emails, calls and texts. Eligible customers will be invited to claim through GOV‌.UK – it is the only service they can use. If someone gets in touch with your claiming to be from HMRC, saying that financial help can be claimed or that a tax refund is owed, and asks you to click on a link or to give information such as your name, credit card or bank details, you should not respond. It is a scam. Suspicious emails claiming to be from HMRC should be reported to them by sending them to phishing@hmrc.gov.uk. Texts should be sent to 60599.

Positive Cash Flows during COVID 19

Ways for businesses to keep a positive Cash Flow During COVID-19

One of the most important ways to keep your business healthy is to ensure positive cash flow. Under normal circumstances, this is not a problem, but due to the Corona crisis, it has become harder for businesses to maintain positive cash flow. For this reason, we have listed 6 ways to make sure there’s more cash coming in than going out.

Before we go down the list, we advise you to take a good look at, or make, your business’ general overview of cash outflow and overheads. On that basis, you can determine if you really need those costs or if you need to negotiate on, for instance, better utility, (cell)phone or internet deals, or better deals with suppliers. Only by taking a good look at your business expenses, you can determine where there are opportunities to improve cash flow.

1. Avoid big discounts

When sales go down, it’s easy to try and ‘solve’ the problem by offering big discounts and hope that sales go up. However, a generous discount doesn’t guarantee that sales will go up – certainly not in a crisis. What it does guarantee, is that profit will go down, which in turn will affect your cash flow negatively. On the other hand: what you could do to positively affect cash flow, is offer a small discount to clients willing to pay immediately instead, or to clients that are thinking of buying a bigger amount of your product or service.

2. Stay on top of receivables

How many outstanding accounts does your company or organisation have? And what is their total value? Chances are that it’s quite a large amount, which is bad for cash flow since it represents money that’s unavailable to you. So, to maintain positive cash flow, you should always manage your receivables closely and put some extra effort into keeping the amount of overdue money as small as possible. Especially during a crisis, every penny is worth the effort.

Especially during a crisis, every penny is worth the effort

3. Use technology to track cash flow

Staying on top of and keeping track of your business’ cash flow is key in maintaining positive cash flow. There are several ways to do this, but we advise you to use accounting software that’s specifically designed to track cash flow. In most cases, this kind of technology also offers real-time insights that’ll help you with budgeting and managing cash flow, as well as keeping an accurate account of what is coming in and going out, expected and projected cash flow, et cetera. In short: investing in the right software allows you to maintain positive cash flow.

4. Get customers to pay faster

Staying on top of and keeping track of your business’ cash flow is key in maintaining positive cash flow. There are several ways to do this, but we advise you to use accounting software that’s specifically designed to track cash flow. In most cases, this kind of technology also offers real-time insights that’ll help you with budgeting and managing cash flow, as well as keeping an accurate account of what is coming in and going out, expected and projected cash flow, et cetera. In short: investing in the right software allows you to maintain positive cash flow.

The goal is to make your monthly cash flow as smooth as possible

5. Negotiate terms with vendors and suppliers

Most businesses focus on keeping accounts receivable as low as possible, but what about maximising the potential of your accounts payable? Especially when you’re not the only business facing a crisis, it can be good to negotiate more advantageous terms or pricing with your vendors and suppliers to improve cash flow. There are several things you can do, like negotiate invoice terms, spread out accounts payable by matching payments to deliverables, or create appropriate terms that sync up with accounts receivable. The goal is to make your monthly cash flow as smooth as possible.

6. Invoice financing

If staying on top of receivables (tip 2) doesn’t pay out, you could consider financing invoices. In that case, a financial services provider pays you the amount per outstanding invoice in advance, so you don’t have to wait on the debtor’s payment. Of course, there are fees to consider, but nevertheless, staying away from cash flow problems and sleepless nights should be worth something.

In the UK almost half of all invoices are paid late, causing businesses cash flow problems

Government support to maintain positive cash flow
Due to coronavirus, the UK government has decided to help businesses manage their cash flow by offering the option to defer all VAT payments (without charging interest or penalties) due between 20 March 2020 and 30 June 2020.

Direct Debits
If you choose to defer your VAT payment as a result of coronavirus, you should cancel your Direct Debit through your bank as soon as possible so that HMRC will not automatically collect any VAT due. You can cancel online if you’re registered for online banking.

More info

Note: Because of the Coronacrisis, financial support from the government is available to businesses. Do keep in mind that this isn’t always a gift, so you should put aside money to be able to refund it in the future.

Coronavirus Job Retention Scheme

During this time, the government have brought in many ways to access help and support with small businesses.  One is the Coronavirus Job Retention Scheme.

HMRC are hosting a webinar later this week.  Please click below to access the registration details.

https://content.govdelivery.com/accounts/UKHMRCED/bulletins/2858066

Please do contact us if you have used this facility with your staff and we complete your payroll for you.

info@bennewith.co.uk

Chancellor unveils new measures to SME loan scheme

The government’s Covid Business Interruption Loan, a funding package, was originally created for firms who were unable to secure regular commercial financing during the economic downturn of the virus.
But now Rishi Sunak has extended CBILS to all viable small and medium business who have faced financial difficulty during the COVID-19 pandemic. The government is also stopping lenders from requesting personal guarantees for loans under £250,000 and making operational changes to speed up lending approvals. Since 23 March, around 1,000 loans worth around £90m have been processed. The number is expected to increase in the coming days and weeks as banks get used to the new system. Rates charged to firms for loans are also expected to be kept as low as possible – given that the Bank of England’s base rate is at a record low of 0.1% and that the state is guaranteeing them. However there will not be a cap on the rates banks can charge. The issue is among those to be discussed when the chancellor holds talks with bank chief executives next week. The chancellor also announced a new measure for bigger companies. The Covid Large Business Interruption Loan Scheme will offer loans of up to £25m to firms with an annual turnover of between £45m and £500m, also 80% guaranteed by the taxpayer. Mr Sunak said: “We are making great progress on getting much-needed support out to businesses to help manage their cashflows during this difficult time – with millions of pounds of loans and finance being provided to hundreds of firms across the country. “And now I am taking further action by extending our generous loan scheme so even more businesses can benefit. We have also listened to the concerns of some larger businesses affected by COVID-19 and are announcing new support so they can benefit too. “This is a national effort and we’ll continue to work with the financial services sector to ensure that the £330 billion of government support, through loans and guarantees, reaches as many businesses in need as possible.” The government is also stopping lenders from requesting personal guarantees for loans under £250,000 and making operational changes to speed up lending approvals. It previously pledged to cover the first twelve months of interest and fees. Adam Marshall, director general of the British Chamber of Commerce, praised the new measures. He said: “We’re pleased that the Chancellor is listening and responding to the real-world concerns posed by firms across the UK who are urgently trying to access financial support. “Improvements to the Coronavirus Business Interruption Loan scheme will help firms get access to cash more quickly, and the announcement of a new loan scheme for mid-sized companies closes a significant gap in existing support. “Chambers of Commerce will continue to work with government and the banks to ensure that support reaches businesses at the front line.” From: https://news.sky.com/story/coronavirus-chancellor-rishi-sunak-unveils-new-measures-to-sme-loan-scheme-11967729
     

An Extension for filing your annual accounts

Companies can apply for an immediate and automatic extension on filing their accounts if they think that COVID 19 will cause delays in filing accounts.

You must apply before the filing deadline.

Follow this link:  https://beta.companieshouse.gov.uk/extensions?_ga=2.234769625.690888286.1585564098-1247673890.1582625672

If you require any assistance, please do not hesitate to contact us:  info@bennewith.co.uk

Self-employed

The Chancellor has announced a new Self-employment Income Support Scheme to support self-employed people who have been adversely affected by COVID-19.

GOV‌.UK has further details about who is eligible for the scheme and how it will work.

Self-employed people do not need to get in touch with HMRC as the scheme isn’t yet open for applications. HMRC will contact eligible customers by the beginning of June, inviting them to apply.

 

Please do get in touch if you need any assistance:  info@bennewith.co.uk