In support of the stronger measures announced on Monday, our office premises in Clitheroe are now completely closed and we are working remotely.
As many of you will already know, phone calls are being taken, email queries are being answered and payroll and accounts work continues.
The Coronavirus Job Retention Scheme
The specifics of how this scheme will work remain vague with nothing official being added to the Chancellor’s statement late Friday 20th March.
What we know from the statement and Government Guidance is:
Employees have to be furloughed to be eligible. This means that they have to be asked to stop working because of the effect the current measures are having on business, BUT the employees have to remain on the payroll (meaning their employment hasn’t ceased).
Employment law procedures and requirements remain in place and need to be followed. We cannot provide Employment Law advice. You could look at the ACAS (an independent public body) website here. Their advice is:
To access the scheme, employers will need to designate relevant staff as furloughed workers. The employer needs to get agreement from the worker to do this, unless it’s covered by a clause in the employment contract. The employer can decide who to designate as a furloughed worker. If an employee disagrees with their employer's decision they'll need to talk to their employer and try to come to an agreement. Any furlough agreements should be in writing. It's a good idea to include:
the date furlough starts
when it will be reviewed
how to keep in contact during furlough
A worker will stay employed while they are furloughed, but they must not work.
We are also aware that some HR consultants are posting template letters online. But please take care to use a reputable source if searching for resources online.
The financial help will be by way of a grant at a rate of 80% of an employee’s salary up to £2,500. That is all the information available on the amount at present.
The period covered initially is 1st March to 31st May 2020.
HMRC are working to set up a portal where details of furloughed workers can be downloaded and this will be the basis of the grant payment. We do not know what form this portal will take yet. It may be closely tied to the PAYE system, though our payroll software provider advises that they have received no information. It may be provided via an Excel spreadsheet template, which is the method used with some other HMRC downloads. When we know we will provide everyone with further advice.
Evans Accountants will help clients submit the details and access the portal, when we know what the procedure is.
The estimated date for the government making the first payments is the end of April, so definitely isn’t immediate and will not help cash flow in the next 4 weeks.
Directors and the Coronavirus Job Retention Scheme
Nobody knows whether or not directors can furlough themselves and put themselves on the scheme. One barrister has said in a TV interview that he thinks it is possible, whilst other ‘experts’ have said they don’t think it is. The government haven’t indicated any other scheme for directors.
We think that on the balance of probability directors are included.
However about 90% + of small company directors across the UK are on a salary of around £719 a month, topped up with dividends. This has been the preferred and most tax efficient method for at least 20 years, but with this scheme 80% of £719 is only £575. Dividends are unearned income and not on payroll.
There aren’t any special provisions for the self-employed at present and the advice to date has been to claim benefits. One client did this yesterday and was informed that they were number 56,775 in the queue!
However there is an amendment to the Coronavirus Bill 2019-20 to include Statutory self-employment pay, with a proposed formula of the average of 80% of the average monthly earnings over the past three years or 80% of £2,917, whichever is lower.
See here for the proposal and here for the progress of the bill, which is in the House of Lords as I write (note these hyperlinks are likely to stop working when the bill becomes statute).
The Coronavirus Business Interruption Loan Scheme (CBILS)
Full details of how to apply for this have been released and can be found here.
The application procedure is set out here and the application is made via 40 approved lenders. We think the intention is you start with your current business bank (assuming it is on the list).
The lender needs to be satisfied that the business is viable longer term and that the loan can be repaid.
If the lender would lend on normal commercial terms, without the need for a Government Guarantee, then that is the first option to be taken. However, we are not clear what happens with the interest free period if this happens.
We suggest being very careful if the lender's normal business terms include a personal indemnity or guarantee (which makes you personally liable for the company’s loan in the event of default). If the lender includes this we suggest insisting on going down the government 85% guarantee route.
Please read the guidance in the hyperlinks above carefully as it includes everything that is known about the scheme.
If you need assistance with a Business Plan, please get in touch with us immediately.
We added this to our previous newsletter and want to stress it again.
Coronavirus is an opportunity for scammers and fraudsters, so please BE VIGILENT.
We had a client speak to us yesterday with a supposed phone call from HMRC wanting bank details etc. It was completely fraudulent.
Everyone is distracted and quite likely worried with everything that’s going on and it’s very easy to be caught unawares.
DO NOT HAND OVER ANY BANK DETAILS TO ANYONE YOU DON’T KNOW. THIS INCLUDES ANYONE SAYING THEY ARE FROM HMRC.
BE SUSPICIOUS IF YOU RECEIVE DETAILS OF A SUPPLIER CHANGING BANK DETAILS FOR PAYMENTS.
BE ON THE ALERT FOR ANYTHING SUSPICIOUS.
Help and Assistance from Evans Accountants:
Our aim, as always, is to provide as much information and assistance to clients as possible.
We will send out more updates as and when information becomes available.