Tag: COVID-19

Is my business still viable? you could get up to £5000 to help your business recover

Wrongful Trading

Some directors will have big decisions to make, both immediately and in the coming weeks and months as the various government initiatives begin to unwind. Such decisions may include which creditors should be paid,
whether the losses currently being incurred are sustainable and if the company can continue to trade in its present format.

The current Coronavirus Job Retention Scheme comes to an end on 31 October which means for those businesses with 20-99 employees, any employers looking to make redundancies will hopefully have provided
the requisite 30 days’ notice to employees. On 30 September the Government lifted the temporary suspension on personal liability on directors for wrongful or insolvent trading.


In brief, wrongful trading occurs when directors have continued to trade when they knew, or ought to have known, there was no reasonable prospect of the business avoiding insolvency and the directors did not take
every step to minimise the potential loss to the company’s creditors. In the event that wrongful trading occurs and the company enters insolvency, the directors could be held liable for the company’s debts from the point
they knew or ought to have known the company was insolvent.

The above was an extract from a newsletter from RSM http://www.rsmuk.com

The Government will Support Viable Jobs

The Coronavirus Job Retention Scheme (CJRS) known as Furlough ends tomorrow 31st October 2020 and on the 1st November 2020 the Job Support Scheme (JSS) starts.

When JSS was announced in September, Rishi Sunak, said the scheme would directly support ‘VIABLE’ jobs.

The implication is that if the jobs aren’t viable and the business can’t continue that the business should not claim JSS.

JSS is complicated, take a look at this example from HMRC for an employee on fixed salary

Calculation example 1: fixed hours and fixed salary employee

An employee has worked full time, from Monday to Friday, for A Ltd since 2011, and is paid £2,250 gross at the end of every calendar month. The employee has always been contracted to work 37.5 hours per week. A Coronavirus Job Retention Scheme grant was not claimed for the employee.

A Ltd is a small employer and meets all the eligibility criteria to qualify for Job Support Scheme.

The employee enters into a JSS Open temporary working agreement with A Ltd on 2 November 2020 to work Mondays and Tuesdays (7.5 hours each day, equating to 15 hours per week) from 2 November 2020 to 31 December 2020, at which point the position will be reviewed. The employee’s pay for the working hours in November is £945.

A Ltd calculates the amount of the JSS Open grant for the pay period 1 November 2020 to 30 November 2020 (one calendar month).

The employee’s usual hours are calculated for the days on which the employee is on a JSS Open temporary working agreement within the pay period (2 November 2020 to 30 November 2020). The employee’s usual hours are calculated by A Ltd to be 155 hours:

The steps to calculate the fixed employee’s usual hours are:

  1. The greater of the number of hours contracted for at the end of the last pay period before 23 September 2020 (37.5) and the number of hours contracted for at the end of the last pay period before 19 March 2020 (37.5): 37.5
  2. Divide by the number of calendar days in the repeating working pattern, including non-working days: 7 37.5÷7=5.36
  3. Multiply by the number of days which the employee is eligible to be claimed for under JSS Open: 29 days x 5.36 = 155.44 rounded to 155 usual hours.

The employee did not take any time off in November, so the actual hours worked in November are 67.5 hours. A Ltd calculates that the employee didn’t work for 87.5 hours of their usual hours for November.

To calculate the percentage of hours worked: (67.5÷155) x 100 = 43.55%

A Ltd checks that the employee can be claimed for under Job Support Scheme. In November, the employee worked for 43.55% of their calculated 155 usual hours for November. Because the employee is working at least 20% of their calculated usual hours for November, providing other Job Support Scheme conditions are met, a claim can be made for the employee.

A Ltd calculates the employee’s Reference Salary as £2,250 for the pay period. The maximum Reference Salary that can be covered under the scheme is £3,125 per calendar month. The cap does not affect the calculation here because the Reference Salary is less than £3,125.

To work out the overall amount that A Ltd must pay the employee for their non-working hours in each pay period:

  1. Start with £2,250 (the reference salary for the pay period)
  2. Divide by 30 (the number of calendar days in the pay period)
  3. Multiply by 29 (the number of days subject to a Temporary Working Agreement in the pay period)
  4. Divide by 155 (the number of usual hours for the JSS Open days in the pay period
  5. Multiply by 87.5 (the number of non-working hours for the JSS Open days)
  6. Multiply by 66.67% = £818.59

This is made up of a 5% employer contribution, and a 61.67% government contribution which A Ltd can reclaim.

To work out the government contribution to the employee’s pay for the non-working hours: 1. Start with £818.59 (the total pay for the non-working hours) 2. Divide by 66.67 3. Multiply by 61.67 = £757.20

The employee’s total gross pay for November will be £1,763.59 (£945 + £818.59).

https://www.gov.uk/government/publications/the-job-support-scheme/the-job-support-scheme

Going Concern Accounting

If the business is about to go into liquidation or the directors plan to end the business then the accounts can’t prepared on a going concern basis.

The basis used for businesses which aren’t a going concern would generally be the break up value.

Directors may also include notes in the accounts to explain the status of the company.

In order to prove that business is not insolvent it will need need cashflow projections, budget and business plans, otherwise the directors risk being personally liable if the business fails.

We have lots of templates to help in preparing what is needed and can also assist in the preparing them. https://www.bicknells.net/client-resources

Government Recovery Grant of up to £5000

You can now apply for the amount of £1,000 – £3,000 or £5,000 in exceptional circumstances

Dorset LEP – The closing date for applications is the 31st January 2021 or when the total budget of £550,000 is allocated, whichever is first. We advise you to apply as soon as possible as we expect there to be a huge demand.

Dorset SME recovery grant can be used for eligible project costs, which may typically be:


# 1-2-1 specialist advice which SMEs could call on to address their immediate needs in response to the
impact of COVID-19 e.g. HR, accountants, legal, financial, H&S, IT / digital or sector specialists etc.


# For the visitor economy, this could also include productivity improvements such as enhanced use of digital
tools such as yield management software, mentoring, networking or other measures.

# It could also support to develop innovative delivery in a socially distanced economy – for example, new ways of delivering cultural events and festivals that are so critical to the visitor experience; and / or


# Purchase of minor equipment to adapt or adopt new technology in order to continue to deliver business activity or diversify in response to COVID-19.

​https://www.dorsetgrowthhub.co.uk/recovery-grant

steve@bicknells.net

What are Government Backed Business Bounce Back Loans?

Small businesses will benefit from a new fast-track finance scheme providing loans with a 100% government-backed guarantee for lenders, the Chancellor announced today (Monday 27 April).

Rishi Sunak said the new Bounce Back Loans scheme, which will provide loans of up to £50,000, would help bolster the existing package of support available to the smallest businesses affected by the coronavirus pandemic.

The scheme has been designed to ensure that small firms who need vital cash injections to keep operating can get finance in a matter of days, and comes alongside the £6 billion awarded in business grants, supporting 4 million jobs through the job retention scheme and generous tax deferrals supporting hundreds of thousands of firms.

The government, which has been consulting extensively with business representatives about the design of the new scheme, will provide lenders with a 100% guarantee for the loan and pay any fees and interest for the first 12 months. No repayments will be due during the first 12 months.

The loans will be easy to apply for through a short, standardised online application. The loan should reach businesses within days- providing immediate support to those that need it as easily as possible.

https://www.gov.uk/government/news/small-businesses-boosted-by-bounce-back-loans/?

steve@bicknells.net

How we are helping clients to claim the Coronovirus Job Retention Scheme (CJRS)

The government have published new guidance

There’s now updated guidance on how to calculate your claim and a simple step-by-step guide.

There will also be a calculator available when the system goes live on Monday for you to check your calculations online before you make your claim.

 

General information about the scheme
• To be eligible for CJRS an employer must agree with the employee that they are
a ‘furloughed worker’.
• Employees must be notified that they have been furloughed.
• Employees must be furloughed for a minimum of three weeks.
• The employee cannot do any work for the employer that has furloughed them.
• You can claim 80% of wages up to a maximum of £2,500 per month per furloughed employee.
• A separate claim is needed for each PAYE scheme.
• You can only claim for furloughed employees that were on your PAYE payroll on or before
19 March 2020.
• An RTI submission notifying payment in respect of that employee to HMRC must have been
made on or before 19 March 2020.
• You must have a UK bank account.

 

Watch our Video to find out how we are helping our clients to make claims

Check our website for all the latest information on government support and get free downloadable guides

https://www.bicknells.net/covid-19

steve@bicknells.net

How to Defer VAT – COVID-19

For VAT, the deferral will apply from 20 March 2020 until 30 June 2020.

 

All UK businesses are eligible. How to access the scheme

 

This is an automatic offer with no applications required. Businesses will not need to make a VAT payment during this period. Taxpayers will be given until the end of the 2020 to 2021 tax year to pay any liabilities that have accumulated during the deferral period. VAT refunds and reclaims will be paid by the government as normal.

 

Customers who normally pay by direct debit should cancel their direct debit with their bank if they are unable to pay. Please do so in sufficient time so that HMRC do not attempt to automatically collect on receipt of your VAT return.

 

https://www.gov.uk/government/publications/guidance-to-employers-and-businesses-about-covid-19/covid-19-support-for-businesses

steve@bicknells.net

How to get Extra Time to File Accounts – COVID-19

Companies to receive 3-month extension period to file accounts

during COVID-19

Businesses will be given an additional 3 months to file accounts with Companies House to help companies avoid penalties as they deal with the impact of COVID-19.

From today (25 March 2020), businesses will be able to apply for a 3-month extension for filing their accounts.

This joint initiative between the government and Companies House will mean businesses can prioritise managing the impact of Coronavirus.

There are approximately 4.3 million businesses on the Companies House register, and all companies must submit their accounts and reports each year. Under normal circumstances, companies that file accounts late are issued with an automatic penalty.

As part of the agreed measures, while companies will still have to apply for the 3-month extension to be granted, those citing issues around COVID-19 will be automatically and immediately granted an extension. Applications can be made through a fast-tracked online system which will take just 15 minutes to complete.

To apply use this link https://www.gov.uk/guidance/apply-for-more-time-to-file-your-companys-accounts

When to apply

You can apply to extend your accounts deadline if you cannot send your accounts because of an event that’s outside of your control – for example, because of an unexpected illness or if a fire has destroyed company records a few days before your filing deadline.

How to apply

To apply online you’ll need:

  • your company number
  • information about why you need more time
  • any documents to support your applications (optional)

Why are you applying for an extension?

You can add more reasons later

Illness

COVID-19

Accounting issues

I’m applying for another reason

If your application is based on issues around COVID-19, you’ll be automatically and immediately granted a 3 month extension.

Extension reason

COVID-19

steve@bicknells.net

 

 

Accessing Government Help for COVID-19 Coronavirus

Over the last few days its been hard to keep up with the changes and the additional support being offered by the Government, our phone has been ringing constantly with clients asking for help and wanting to know how to access the Government support.

The Government published guidance on the 20th March 2020 for both Business and Employees available at:

There is also advice at

https://www.gov.uk/coronavirus

https://www.nhs.uk/conditions/coronavirus-covid-19/

https://www.bbc.co.uk/news/explainers

https://www.moneysavingexpert.com/news/2020/03/uk-coronavirus-help-and-your-rights/#mortgagesection

Support for Business

The Chancellor has set out a package of temporary, timely and targeted measures to support public services, people and businesses through this period of disruption caused by COVID-19.

This includes a package of measures to support businesses including:

  • a Coronavirus Job Retention Scheme
  • deferring VAT and Income Tax payments
  • a Statutory Sick Pay relief package for SMEs
  • a 12-month business rates holiday for all retail, hospitality and leisure businesses in England
  • small business grant funding of £10,000 for all business in receipt of small business rate relief or rural rate relief
  • grant funding of £25,000 for retail, hospitality and leisure businesses with property with a rateable value between £15,000 and £51,000
  • the Coronavirus Business Interruption Loan Scheme offering loans of up to £5 million for SMEs through the British Business Bank
  • a new lending facility from the Bank of England to help support liquidity among larger firms, helping them bridge coronavirus disruption to their cash flows through loans
  • the HMRC Time To Pay Scheme

The full details are at https://www.gov.uk/government/publications/guidance-to-employers-and-businesses-about-covid-19/covid-19-support-for-businesses

These are all massive but I think the most useful are

Support for businesses through the Coronavirus Job Retention Scheme

Under the Coronavirus Job Retention Scheme, all UK employers will be able to access support to continue paying part of their employees’ salary for those employees that would otherwise have been laid off during this crisis.

Eligibility

All UK businesses are eligible.

How to access the scheme

You will need to:

  • designate affected employees as ‘furloughed workers,’ and notify your employees of this change – changing the status of employees remains subject to existing employment law and, depending on the employment contract, may be subject to negotiation
  • submit information to HMRC about the employees that have been furloughed and their earnings through a new online portal (HMRC will set out further details on the information required)

HMRC will reimburse 80% of furloughed workers wage costs, up to a cap of £2,500 per month. HMRC are working urgently to set up a system for reimbursement. Existing systems are not set up to facilitate payments to employers.

If your business needs short term cash flow support, you may be eligible for a Coronavirus Business Interruption Loan.

Support for businesses through deferring VAT and Income Tax payments

We will support businesses by deferring Valued Added Tax (VAT) payments for 3 months. If you’re self-employed, Income Tax payments due in July 2020 under the Self-Assessment system will be deferred to January 2021.

VAT

For VAT, the deferral will apply from 20 March 2020 until 30 June 2020.

Eligibility

All UK businesses are eligible.

How to access the scheme

This is an automatic offer with no applications required. Businesses will not need to make a VAT payment during this period. Taxpayers will be given until the end of the 2020 to 2021 tax year to pay any liabilities that have accumulated during the deferral period. VAT refunds and reclaims will be paid by the government as normal.

Income Tax

For Income Tax Self-Assessment, payments due on the 31 July 2020 will be deferred until the 31 January 2021.

Eligibility

If you are self-employed you are eligible.

How to access the scheme

This is an automatic offer with no applications required.

No penalties or interest for late payment will be charged in the deferral period.

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 Covid-19 and have outstanding tax liabilities.

Support for businesses through the Coronavirus Business Interruption Loan Scheme

A new temporary Coronavirus Business Interruption Loan Scheme, delivered by the British Business Bank, will launch early next week to support primarily small and medium-sized businesses to access bank lending and overdrafts.

The government will provide lenders with a guarantee of 80% on each loan (subject to a per-lender cap on claims) to give lenders further confidence in continuing to provide finance to SMEs. The government will not charge businesses or banks for this guarantee, and the Scheme will support loans of up to £5 million in value.

Businesses can access the first 12 months of that finance interest free, as government will cover the first 12 months of interest payments.

Eligibility

You are eligible for the scheme if:

  • your business is UK based, with turnover of no more than £45 million per year
  • your business meets the other British Business Bank eligibility criteria

How to access the scheme

The full rules of the Scheme and the list of accredited lenders is available on the British Business Bank website. All the major banks will offer the Scheme once it has launched. There are 40 accredited providers in all.

You should talk to your bank or finance provider (not the British Business Bank) as soon as possible and discuss your business plan with them. This will help your finance provider to act quickly once the Scheme has launched. If you have an existing loan with monthly repayments you may want to ask for a repayment holiday to help with cash flow.

The scheme will be available from early next week commencing 23 March.

Support for Workers

There is support with

  • SSP
  • Benefits
  • Furlonged Workers
  • Rent
  • Mortgages

The Full details are at https://www.gov.uk/government/publications/guidance-to-employers-and-businesses-about-covid-19/covid-19-guidance-for-employees

The most valuable support is

Furloughed workers

If your employer cannot cover staff costs due to COVID-19, they may be able to access support to continue paying part of your wage, to avoid redundancies.

Claiming benefits

Whether you are currently in or out of work, if you are on a low income and affected by the economic impacts of COVID-19, you will be able to access the full range of the welfare system, including Universal Credit.

From 6 April we are increasing the standard allowance in Universal Credit and the basic element in Working Tax Credit for 1 year. Both will increase by £20 per week on top of planned annual uprating. This will apply to all new and existing Universal Credit claimants and to existing Working Tax Credit claimants.

If you have COVID-19 or are staying at home

You are now able to claim Universal Credit, and if required can access advance payments upfront without needing to attend a jobcentre.

If you are self-employed

You are able to claim Universal Credit, providing you meet the usual eligibility criteria.

To support you with the economic impact of the outbreak, and allow you to follow government guidance on self-isolation and social distancing, from 6 April the requirements of the Minimum Income Floor will be temporarily relaxed. This change will apply to all Universal Credit claimants and will last for the duration of the outbreak.

New claimants will not need to attend the jobcentre to demonstrate gainful self-employment.

Support for rent costs

You should check your eligibility for Universal Credit, which is available for people in and out of work. Support for rental costs will be paid through Universal Credit.

From April, we are increasing Local Housing Allowance rates to the 30th percentile of market rents. This applies to all private renters who are new or existing Universal Credit housing element claimants and to existing Housing Benefit claimants.

Three Month Mortgage break for home owners and landlords

If keeping up with your bills and food on the table may be a challenge, speak to your bank. On Tuesday 17 March, banks agreed with the Chancellor that they will offer ‘forbearance’ (tolerance and help) on mortgages.

This means they all should offer those struggling a three-month ‘holiday’, allowing customers a temporary break from having to make mortgage payments during this time. (Though it’s worth noting this is a voluntary agreement with banks – it isn’t compulsory for them to offer mortgage holidays.)

https://www.moneysavingexpert.com/news/2020/03/uk-coronavirus-help-and-your-rights/#mortgagesection

Renters will also be protected from Eviction.

steve@bicknells.net