These are very uncertain times for our profession with live events being cancelled and, of course, little new being booked. It’s been great to see the community really come together and demonstrate the strength of the PSA over recent days. Despite that support, we recognise that you may be facing financial challenges in the coming months.
The Chancellor of the Exchequer announced a series of measures last week to try to relieve the strain on businesses. We asked Board Member and Chartered Accountant Shaz Nawaz to give us some insight into how to interpret the Chancellor’s statement and some advice on the steps PSA members may be able to take.
Please see Shaz’s analysis below. We hope this is useful. Please do participate in the discussions on our various Facebook groups and reach out to fellow members both for support and to offer support yourself.
Together we stand a great chance of getting through this.
The Professional Speaking Association.
Coronavirus Present Understanding
They have given our specialist details of the deferment procedure, the situation is very fluid and so could change. If you are having financial difficulties due to the coronavirus then you can apply for a deferment of VAT. Currently they are not checking the validity of any information received.
The HMRC telephone number is 0300 200 3853. You will need the following information to hand.
1 VAT number
2 Date of VAT registration
3 Details of the last VAT returns box 5 figure.
4 Name address and post code of the business.
You will then need to explain that your income has been severely depleted/ceased due to the Coronavirus and that you will not be able to pay your VAT debt/liability. Ask for a deferment of 3 months and when this is agreed you will need to cancel your DD if one is set up. HMRC will not chase the debt if this action has been completed but if no action has been taken then they will proceed as normal. HMRC cannot agree a time to pay arrangement if a VAT Return has not been submitted. So, you’ll need to submit the Return before you arrange deferral of the liability.
The specialist unit hasn’t yet been set up yet so any calls on the specialist number are just going through to the normal teams. They are very short staffed.
All businesses and self-employed people in financial distress and with outstanding tax liabilities, may be eligible to receive support from HMRC through the Time To Pay arrangement. This will be viewed on a case by case basis. HMRC’s dedicated helpline number is 0800 0159 559.
Other tax options to consider maybe now or if this crisis continues is:
- De-register for VAT
- Make a claim to reduce the client’s payments on account.
- If you do not have a 31st March/5 April yearend look to see if it will help with your cash flow by changing the year end and bringing forward overlap relief.
- For the self-employed is there a loss situation? Can this loss be utilised by setting off against other income in the year or can it be carried back up to 3 years and trigger off a refund?
- Are you comfortable that you have exhausted areas such as R&D/patent box relief and capital allowances claims?
IR35 Private Sector
The Government have announced that they are now delaying the rolling out of the new private sector IR35 regime until 1st April 2021.
This could release those large companies who have not yet or are in the throes of issuing Status Determinations from having to do so.
Assuming there are contracts still to be fulfilled or entered into, it may enable you, as a PSC, to continue to run these contracts through your existing vehicle. Of course, in theory, the existing IR35 rules could still catch you out. It may cause some clients to delay going into umbrella companies, if that was the option you were considering.
Those employees who follow the Government advice on self-isolating and have to stay at home and cannot work as a result, will be eligible for Statutory Sick Pay (SSP) from day 1 even if they are themselves sick.
Anyone not eligible to receive sick pay, including those earning less than the average of £118 per week, some working in the gig economy, or self-employed, the Government state they may be able to claim Universal credit and/or contributory Employment and Support Allowance. If someone needs money urgently due to the COVID-19 crisis they can apply for an advance.
SME businesses (fewer than 250 employees) will be refunded up to 2 weeks SSP for eligible employees who have been off work due to COVID-19. The Government will be working with employers to set up a suitable repayment mechanism.
There is a 12 month business rate retail holiday for retail, hospitality and leisure businesses for the 2020/21 tax year in England. A £25,000 grant will be provided these businesses operating from small premises with a rateable value of between £15,000 and £51,000. There will be additional funding for local authorities to support small businesses that already pay little or no business rates because of small business rate relief (SBRR) by way of a grant of £10,000.
In Scotland the present situation is that there is 75% rates reliefs for retail, hospitality and leisure businesses with a rateable value of £61,000 or less plus a fixed rates relief of up to £5,000 for all pubs with a rateable value of £100,000 or less.
Businesses in Northern Ireland will not have to pay rates for the next 3 months and household rate bills will be deferred from April until June.
In Wales, retail, leisure and hospitality businesses with a rateable value of £51,000 or less will receive 100% non-domestic relief and pubs with a rateable value of between £51,000 and £10,000 will receive a £5,000 reduction in their bill.
Businesses that have cover for both pandemics and government ordered closures should now be covered, on the grounds that the government and the insurance industry have confirmed the advice given on 17th March would make the claim valid. Businesses should check to see if their insurance policy covers this as many will not.
The Coronavirus Business Interruption Loan Scheme
This will be launched next week by the British Business Bank to support businesses to access bank lending and overdrafts. The government will provide lenders with a guarantee of 80% on each loan to give lenders the confidence to continue to provide finance for SMEs. The government will not charge businesses or banks for this guarantee. Businesses can access the first 6 months of this finance interest free.
Those affected by COVID-19 will be able to have a 3 month mortgage holiday. Lenders should be approached on this matter if the client is affected.
Further help for the self-employed and protection for those tenants in private rented accommodation may follow in due course.
The Chancellor has announced a series of further financial packages to help business and individuals.
They are as follows:
1. A Coronavirus Job Retention Scheme – All employers will be eligible for the scheme. Employers will be able to contact HMRC for a grant to cover 80% of the wages of retained workers who are furloughed (granted leave of absence from work) due to the coronavirus and kept on the payroll rather than laid off. This is initially open for 3 months but can be extended if needed. It will be back dated to 1st March. HMRC are putting this in place now and hope to make the first set of grants no later than the end of April.
2. The Coronavirus Business Interruption Loan Scheme will now be interest free for 12 months as opposed to the original 6 months. These loans should be made available from Monday 23rd March.
3. The next VAT quarter payment will be deferred. No business will pay VAT from now until end of June and you will have until the end of the financial year to repay those bills.
4. The Universal credit standard allowance for the next 12 months will increase by a further £1,000 a year. He is increasing the working tax credit basic element by the same amount.
5. The Chancellor is strengthening the safety net for the self-employed too by suspending the minimum income floor for everyone affected by the economic impact of the coronavirus. That means every S/E person can now access in full, Universal credit at a rate equivalent to SSP for employees.
6. The next SA tax payments will be deferred until January 2021.
7. As well as a 3 months mortgage payment holiday, the Chancellor, by increasing the generosity of housing benefit and Universal credit, Local Housing allowance will cover at least 30% of the market rent.
Shaz Nawaz 23rd March 2020