Coronavirus Business Interruption Loans Scheme (CBILS)

Coronavirus Business Interruption Loans Scheme (CBILS)

The Coronavirus Business Interruption Loans Scheme (CBILS) is a potential option if you need funds to be able to pay yourself until the CJRS pays out in late April.

Facilities are available under CBILS £1,000 to £5 million, subject to a lender’s criteria. CBILS will be interest-free for the first 12 months, as the Government has guaranteed to cover these payments during this period.

CBILS may also be an option if accessing the CJRS is not appropriate in your circumstances.

  1. To access the scheme, decide which form of finance you require and identify which accredited lenders can offer it. This can be done by using the British Business Bank’s filter tool by clicking here.
  2. This filter allows you to put in the region where your business is based and the type of loan you require and will provide you with a list of suitable lenders.
  3. Research what each lender is offering via their website and decide how much funding you require.
  4. Collate all necessary information to make an application, including an up to date business plan, detailed management accounts and cash flow/financial forecasts.
  5. Make an application with your chosen lender that suits your requirements. The loan application process is likely to differ from lender to lender.

The British Business Bank has indicated that it may be beneficial to seek finance first through a lender that you have an existing relationship with.

Some lenders have advised that they may require personal guarantees from directors against any loans, although this cannot include your main residence.

Holiday rules relaxed to allow annual leave to be carried over to next two years

The Government has announced that existing rules around annual leave will be relaxed to allow workers who have not used their statutory annual leave entitlement this year due to COVID-19 to carry it over into the next two years.

Most full-time British workers are entitled to 28 days holiday each year, including bank holidays.

However, unless allowed for within an individual’s existing work contract or an employer’s workplace policies, this entitlement cannot normally be carried between leave years (the 12-month period during which holiday time is recorded), which means that a worker can lose their paid holiday time if they do not use it.

Employers are required by law to try and ensure their workers take their statutory entitlement in any one year, with penalties issued against those who fail to do so.

The new measure introduced by the Government will allow workers to carry up to four weeks of unused leave into the next two leave years, thus reducing the chance of an employer being penalised and freeing up the time for employees in key sectors.

It is hoped that this change will allow staff to continue working as part of a national effort against the Coronavirus without them losing out on missed holiday.

The changes amend the existing Working Time Regulations that apply to almost all workers, including agency workers, those who work irregular hours, and workers on zero-hours contracts.
Despite the change, there remains an obligation on an employer to ensure that their workers have an adequate opportunity to take their holiday.

This holiday cannot be replaced with a payment in lieu unless the worker is leaving their employment.

Suspension of director liability for wrongful trading

The Government has announced important changes to UK insolvency law that suspends director liability for wrongful trading.

Seeking to provide reassurance to business directors in light of the ongoing COVID-19 pandemic, the Government has retrospectively suspended restrictions around wrongful trading from the 1 March 2020 for three months

Under English law, where a company continues to trade, even in the face of unavoidable insolvency, the company’s directors can be found personally liable for the losses suffered to creditors as a result, potentially leading to a court-ordered contribution to the assets of the insolvent company.

By suspending the rules, directors of struggling business who continue to operate, in the full knowledge that they face the prospect of insolvency, will not be penalised for doing what they can to keep their business operational.

Business Secretary Alok Sharma announced the changes and said they would offer a ‘breathing space’ for companies undergoing a rescue or restructure process to help them avoid insolvency.
On top of this suspension, the Government will also introduce new emergency legislation that will:

  • Create new restricting ‘tools’, including a moratorium, for companies giving them a holiday from creditors enforcing their debts for a period of time whilst they seek a rescue or restructure.
  • Introduce a new restructuring plan, that binds creditors to that plan;
  • Allow companies to buy essential supplies while attempting a rescue or restructure.

The Government hopes that by taking these measures they can reduce the number of contract cancellations, supply chain issues and a wide range of other issues that are affecting the UK economy.

Soft-landing period for MTD for VAT extended to April 2021

HM Revenue & Customs (HMRC) has announced that the second phase of Making Tax Digital for VAT will now be postponed until 1 April 2021.

The first year of MTD was subject to a one-year “soft-landing period”, which has seen HMRC holding back from pursuing businesses that should have signed up.

Similarly, HMRC has taken a lenient approach in cases where businesses that have signed up to MTD have had problems with making their first returns for whatever reason.

However, from 6 April this year, this soft-landing period was due to come to an end. The latest announcement from HMRC in response to the COVID-19 pandemic means that businesses now have until their first VAT return period starting on or after 1 April 2021 to put the necessary digital links in place and comply with the MTD rules fully.

The change also means that penalties for failing to report VAT via MTD will also be postponed. These fines could have been up to £400, depending upon the size of the business.

What expenses are taxable when working from home?

If you or any of your employees are working from home due to Coronavirus because your workplace has closed or you are following advice to self-isolate then you may be able to deduct some of the costs of home working as a taxable expense.

The rules around expenses and whether or not they are taxable differs depending on the type of equipment, service or supply used and so we have covered the main categories below:

Mobile phones and SIM cards (no restriction on private use)

If your company provides a mobile phone and SIM card without a restriction on private use, limited to one per employee, this is non-taxable.

Broadband

If you or your employee already pays for broadband, then no additional expenses can be claimed, but if a broadband internet connection is needed to work from home and one is not already available, then the broadband fee can be reimbursed and is non-taxable.

The broadband must be provided primarily for business use and any private use must be limited.

Laptops, tablets, computers, and office supplies

Where any of these items are used for business purposes and not significant private use, these are non-taxable. Where an employee has bought office equipment or supplies and wishes to be reimbursed, this is taxable and should be reported via PAYE Settlement Agreement.

Electricity or heating

Employees are entitled to a payment or reimbursement of up to £4 a week (increasing to £6 a week from 6 April 2020), which is non-taxable. This is intended to cover additional household expenses incurred when your employee is working from home.

Where a claim exceeds this amount then an employee should check with you beforehand to see if you will make these payments and you should keep receipts.

Employer-provided loans

A salary advance or loan to help your employee at a time of hardship counts as an employment-related loan. Those loans with a value less than £10,000 in a tax year are non-taxable.

Temporary accommodation

If your employee needs to self-isolate but cannot do so in their own home, you can reimburse hotel expenses and subsistence costs, these are taxable.

Use of a private vehicle for business

Employers can pay approved mileage allowance payments of 45p per mile up to 10,000 miles (25p per mile thereafter) free of tax and National Insurance contributions.

If you do not pay mileage allowance, your employee can claim tax relief through their Personal Tax Account.

Reporting expenses to HMRC

Any expenses or benefits which are related to Coronavirus can be reported via a PAYE Settlement Agreement, which will allow you to settle tax and National Insurance contributions on any expenses or benefits, even though the responsibility would usually be on your employee, or on both you and your employee. This applies to Coronavirus related items only, for example, a new desk can go onto a PAYE Settlement Agreement.

Where you are already including benefits in kind in your payroll reporting, you can continue to report expenses and benefit this way, or they can be reported through P11D returns.

It is important to keep a record of all expenses claimed, although you do not have to report of every instance of private use to prove a claim for exemption.

Any non-taxable expenses or benefits should not be reported to HMRC.

Deferral of July Self-Assessment payment

What is it?

The Self- Assessment payment on account that is ordinarily due to be paid to HMRC by 31 July 2020 may now be deferred until January 2021.

Am I eligible?

If you are due to make a self-assessment payments on account on 31 July 2020 then you are eligible for the deferment. The deferment is intended to assist self-assessment taxpayers who are suffering hardship as a result of the coronavirus.

The deferment is optional and any persons still able to pay their second self-assessment payment on account on 31 July 2020 should still do so.

How do I access it?

This is an automatic offer with no applications required. No penalties or interest for late payment will be charged if you defer payment of your July 2020 payment on account until January 2021.
HMRC have also scaled up their Time to Pay offer to all firms and individuals who are in temporary financial distress as a result of coronavirus and have outstanding tax liabilities.

When can I access it?

On 31 July 2020, when your self-assessment payment on account ordinarily due to be paid on that date, may be deferred until 31 January 2021.

Coronavirus update

As well as posing a threat to physical wellbeing, COVID-19 (Coronavirus) is having an impact on client’s finances.

Many of our clients are able to work from home but those who are unable to, are asking whether they are able to claim 80% of their salary, up to a maximum of £2,500 per month, under the measures announced by the Chancellor, Rishi Sunak.

It is important to note that as a Director you are both an employee and an office holder of your limited company. You are not classed as self-employed.

It is our understanding, at this time, that if you are not carrying out any work for your limited company, under the Job Retention Scheme, you will be able to claim 80% of your salary, up to a maximum of £2,500 per month. It is important to note that this will only apply to the existing salary element of your income and not to any dividends you may receive. We must however stress that the detail of this is not yet available and it is therefore subject to change. Further updates will follow as and when we are made aware of the practicalities.

Please visit here for the latest developments.

Hoping you keep safe and well.
Best regards,
Cogent Accountants Limited

Lords astonished by HMRC’s lacklustre evidence in IR35 hearing

The Government’s tax and financial authorities have been accused by the House of Lords of delivering “rough justice” in it‘s approach to the Off-Payroll tax rules.

HMRC and the Treasury were called before the Finance Bill Sub-Committee hearing to explain why the IR35 rules appeared to be forcing genuinely self-employed workers into false employment.

Throughout the hearing, representatives from HMRC and the Treasury failed to provide convincing responses to the question posed to them by the Lords, including queries over the widespread misclassification of contractors, HMRC’s unrealistic compliance cost forecasts, and unsubstantiated estimates of existing IR35 non-compliance.

Throughout the meeting, which was held ahead of the subsequent delay to IR35, the Lords were eager to understand HMRC’s reaction to the predicament that ‘deemed employees’ have been placed into.

Lord Forsyth said: “The result is that the person doing the work is finding that their income is substantially reduced, and this is at a time in the economy where income is already going to be substantially reduced due to Coronavirus. Perfectly honest people will have that cost deducted from their revenue. That is the point.” After being asked about what the Government was doing to support contractors affected by the rule change, Lindsey Whyte, personal tax, welfare and pensions director at the Treasury, was unable to offer anything of relevance.

The Lords also raised the issue of blanket bans on the engagement of limited company contractors, which has been common in the public sector and that has allowed some employers to reduce their compliance requirements and risk.

When questioned on the issue, and the consequent impact on contractors being forced into umbrella and Pay As You Earn (PAYE) arrangements, representatives from HMRC and the Treasury said that their arrangements were “commercial decisions” made by the organisations in question. In response, Lord Forsyth said: “It might be a commercial decision, but it’s as a result of the change that you’ve made. You’re imposing a change that results in contractors’ commercial relationship being destroyed.”

In response, HMRC Off-Payroll reform programme director, Cerys MacDonald said: “The legislation is very clear that this practice is unlawful, and we do expect businesses to take reasonable care in those individual assessments.”

During the hearing, the Lords also questioned the effectiveness, transparency and fairness of the client-led status disagreement process.

Lord Forsyth asked: “How will you do that if the company, as a matter of policy, has decided they’re not going to deal with that?”

HMRC and the Treasury were also questioned about concerns over non-compliance and the actual revenue that would be raised from the change in the rules.

“The Lords clearly understood that the Off-Payroll Tax dishes out “rough justice”, concluded Lord Forsyth.

Trump helped to lose weight through hidden vegetables

Trump’s former physician, Dr Ronny Jackson, has said that in order to help the president lose up to 15 pounds, he hid vegetables in his food.

Dr Jackson said that alongside introducing exercise machines at the White House, he used to put cauliflower in the US president’s mashed potatoes in his failed efforts to help him lose weight.

Despite Trumps own claims that his time on the golf course could be classed as exercise, Dr Jackson tried to help the president shed between 10 and 15 pounds.

Dr Jackson said: “The exercise stuff never took off as much as I wanted it to. But we were working on his diet. We were making the ice cream less accessible; we were putting cauliflower into the mashed potatoes.”

Trump was the oldest incoming US president at the age of 70 and had to have a cognitive test as part of his first medical check-up.

Following the test, Dr Jackson said: “I feel very confident that he has a very strong and a very probable possibility of making it completely through his presidency with no medical issues.”

Coronavirus Precautions – Compliance with Government Instructions

To make sure our team remain safe and to ensure we continue to provide continuity of service throughout this challenging period, we decided on Monday to ask all Cogent staff to work remotely for the time being as per Government instructions.

Thanks to our use of the latest technology, our team can operate remotely, which means that the support and services that you receive will continue to remain as smooth as possible throughout this time.

Our office main number will continue to operate as normal.

Please be assured we will continue to work with you through this challenging time.

Please stay safe and well.

The Team at Cogent

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