Furlough scheme cut-off date extended to 19 March

The Government’s Coronavirus Job Retention Scheme (CJRS) is due to go operational within the next few days. Yesterday (April 15), Chancellor Rishi Sunak announced that thousands more employees would be able to receive support through the scheme after the eligibility date was extended from February 28 to March 19, 2020.

Under the scheme, employers can claim a grant covering 80% of the wages for a furloughed employee, subject to a cap of £2,500 a month.

Employers can claim for furloughed employees that were employed and on their PAYE payroll on or before 19 March 2020. This means the employee must have been notified to HMRC through an RTI submission notifying payment in respect of that employee on or before March 19, 2020.

The Government’s Coronavirus Job Retention Scheme (CJRS) is due to go operational within the next few days. Yesterday (April 15), Chancellor Rishi Sunak announced that thousands more employees would be able to receive support through the scheme after the eligibility date was extended from February 28 to March 19, 2020.

Under the scheme, employers can claim a grant covering 80% of the wages for a furloughed employee, subject to a cap of £2,500 a month.

Employers can claim for furloughed employees that were employed and on their PAYE payroll on or before 19 March 2020. This means the employee must have been notified to HMRC through an RTI submission notifying payment in respect of that employee on or before March 19, 2020.

Meanwhile, HMRC has said it is preparing for potential abuse of the furlough scheme. Chief Executive Jim Harra has announced a whistleblowing facility so abuse can be reported. The most likely abuse is employees continuing to do productive work while receiving furlough pay.

HMRC will be able to retrospectively audit the claims made and prosecute fraud, said Mr Harra. Where abuse is detected, it will disallow payments, seek recovery of any overpayment and consider criminal action against employers, potentially citing the offence of failing to prevent tax evasion under the Criminal Finances Act 2017.

Harwood Hutton director Adam Stronach says now might be a good time for business leaders to review their policies, procedures, and controls around employee wages to ensure they have “reasonable preventative procedures” in place to address the risk of tax evasion.

The announcement by HMRC of the deferral of VAT payments is a great relief to many businesses, as any VAT payments that are due to be made between 20 March 2020 and 30 June 2020 can be deferred until 31 March 2021.  This will help cash flow when many businesses are struggling due to the effects of the coronavirus,  but it is important to remember that this does not cancel any of the VAT due, it will still need to be paid over to HMRC eventually.

The deferral covers payments due from VAT returns during the deferral period as well as any Payments on Account that are due during the period, but any VAT due to other EU countries under the Mini One Stop Shop (“MOSS”) is not covered and this would need to be paid as normal. There is also no deferral of other indirect tax payments such as Insurance Premium Tax or import VAT, although some imported items have been relieved temporarily from import VAT & Duty.

HMRC has helpfully confirmed that:

• No interest or penalties will apply to the deferred payment, as long as it is paid by 31 March 2021;
• That there is no need to specifically apply for the deferral, its use is automatic;
• All VAT-registered businesses are able to take advantage of the deferral;
• Any VAT repayments that are due from HMRC will be repaid in the normal way and these will not be set off against any VAT due during the deferral period, although repayments may be set off against any VAT debts that exist from before the deferral period

There are a few points that you do need to remember in relation to the deferral. VAT returns need to be submitted by their due date in the normal way and if these are submitted late then a default will be recorded in the normal way, even though no payment may be required. Also if you have a direct debit set up for your VAT payments, you will need to contact your bank to cancel this direct debit. HMRC will not cancel the direct debit and if you do not cancel it, you may find that a VAT payment is taken from your bank account which would mean that you do not obtain the benefit of this deferral.

The VAT due in the deferral period will need to be paid eventually but if you would like a discussion about your VAT position and to explore if you are taking advantage of all the VAT reliefs that may be available, then please give me a call…

HMRC says it will publish official company car tax guidance to reflect clarification given to Fleet News in light of the coronavirus lockdown. Many businesses provide company cars to employees who have been either furloughed or restricted to staying at home and only undertaking essential travel. In many cases their company car will be parked outside unused and some employers are even looking to SORN the vehicle as some will have no road tax, MOT or insurance during the ‘lockdown’ period.

Currently, unless a company car is unavailable for 30 consecutive days, and is available to the same employee before and after the period of unavailability, it is liable to benefit-in-kind (BIK) tax during the whole period.

HMRC told Fleet News that the benefit charge applies where a car is made available for private use, whether or not it is so used.

For example, the spokesman said: “A car kept on an employee’s driveway during a period of furlough would still be considered to be made available. Neither would we accept a SORN declaration as proof of unavailability.

“Ordinarily, we would expect that the car is handed back to the employer so that it cannot be used. However, we recognise that under the current circumstances it may not be possible to hand the car itself back, we would accept that where all the keys (or tabs) are in possession of the employer, and the employee does not have the authority to request the keys are returned to them, the car would be unavailable.”

However, fleet decision-makers have contacted Fleet News saying local tax officials were unaware of measures to allow the handing back of a company car during lockdown.

HMRC has now confirmed that official guidance will be updated soon to reflect the coronavirus changes.

The Association of Fleet Professionals (AFP) says that handing back of company car and van keys or fobs to employers in order to avoid BIK taxation during the coronavirus lockdown needs careful management.

“During lockdown, there are many people facing potential hardship and being able to avoid benefit-in-kind could make a genuine difference to some,” said AFP co-chair Caroline Sandall. “While it has been established in principle with HMRC that key handback is a definite option, there are some points on which we remain unclear.

“The main immediate problem that needs to be avoided is employees simply pushing their keys back through the letterboxes of unattended offices, something of which we have heard several reports. For your employer and HMRC, this doesn’t create an audit trail showing when the key was returned or to who, which is something that may need to be ultimately established to the satisfaction of either or both.

“It also creates a possible fleet management problem for the future. If you run a single or limited badge fleet, you could find yourself with a pile of identical keys and no means of working out how to link them to a particular vehicle. Plus, there is quite a high probability that keys will be lost and replacing them is always expensive.”

Sandall says that there also needed to be questions considered about where company cars were being left while they are being unused.

“There is a health and safety issue here,” continued Sandall. “Clearly, no employee should be leaving their car or van on the road if they don’t have the keys because they may need to move it in an emergency. Even if it is parked on their drive, they may still require urgent access.

“If the vehicle is being parked or stored elsewhere, then security becomes a concern, as does its ongoing condition. There is certainly an argument for the car or van to be properly inspected before it is accepted as being handed back, and that regular checks afterwards are needed.

“Finally, if the crisis situation persists for some months, as seems not unlikely, then you should consider the usual issues surrounding long-term vehicle storage, from flat batteries to seized brakes. All of these matters should be examined by fleet managers.”

The AFP has been discussing the issue of company car tax during the lockdown with interested parties.“While we definitely believe that employers should be facilitating key handback for those who want to take that option, it is a subject that requires careful management and potentially, further guidance from HMRC, including questions around related areas such as benefit-in-kind on fuel,” said Sandall.

“Certainly, it would be useful to be having a dialogue with HMRC to make certain matters clear so that compliant procedures can be established by fleets. We’re happy to act as the lead body on this subject in conversations with the authorities. However, we are also sensitive to the fact that the authorities have more important matters to which they are attending.”

Regarding the cash grants for small businesses, I would advise that the exact position is checked on a client by client basis.

I now know that both Slough Borough Council and the London Borough of Richmond upon Thames are requiring businesses to apply for the grant on their website.

To my knowledge those councils have not communicated this with businesses. Instead I can only assume they are relying on businesses to check the council website themselves.

Cash grants for retail, hospitality and leisure businesses

The Retail and Hospitality Grant Scheme provides businesses in the retail, hospitality and leisure sectors with a cash grant of up to £25,00 per property.

Businesses in these sectors with a property that has a reteable value of up to £15,000 may be eligible for a grant of £10,000

Businesses in these sectors with a property that has a reteable value of over £15,000 and less then £51,000 may be eligible for a grant of £25,000.

Eligibility

You are eligible for the grant if:

• Your business is based in England
• Your business is in the retail, hospitality or leisure sector
• Your business has a reteable value of under £51,000

Properties that will benefit from the relief will be occupied properties that are wholly or mainly being used:

• As shops, restraints, cafes, drinking establishments, cinemas and live music venues
• For Assembly and leisure
• As hotels, guests and boarding premises and self-catering accommodation

How to access the scheme

Eligible businesses will be contacted by their local authority. though some local authorities have decided to operate an applications process.

Any enquiries on eligibility for, or provisions of, the grants should be directed to the relevant local authority.

Limited company contractors are checking if the Coronavirus Business Interruption Loan Scheme is now of help, following small business-friendly changes made by the chancellor.

No longer are loans via the scheme only open to traders refused commercial funding, meaning all “viable” firms hit by the pandemic are now eligible, Rishi Sunak said on Friday.

The chancellor also banned the scheme’s 40 accredited lenders (including the major banks), from asking limited company directors to give a personal guarantee for loans under £250,000.

And similarly based on “feedback,” Mr Sunak removed the need for scheme lenders to offer one of their standard products first, meaning small firms can now apply directly for a ‘CBIL.’

“Opening up the Business Interruption Loan Scheme will help some limited company contractors”, confirms the Association of Independent Professionals and the Self-Employed.

The accessibility boost is largely thanks to lifting the requirement that a loan on commercial terms had to have been rejected already, says chartered accountant Rayanne Armand.