Coronavirus update 12 – 13 August 2020
Second SEISS claims and other updates
The second Self Employed Income Support Scheme (SEISS) grants can be claimed from next Monday, 17 August and more details are shown below. But firstly a couple of domestic points:
Firstly, we have now decided to make our official opening hours of 9.00am to 4.00pm permanent, although the office is often staffed outside of these times. Invariably one or more of the team are in by 8.00am, but we recommend that any deliveries be made during our normal opening hours. If you wish to arrange a delivery or appointment outside of these hours, please contact us in advance. If you telephone us, please try to call before 4.00pm, as we cannot guarantee to keep the phones manned beyond that time.
We are now happy to arrange physical meetings, but for the time being, these will be held outside. We have a shelter next to our premises which is suitable whilst the weather is clement, and we can also visit clients and meet them in their gardens. We will keep this under review, particularly as we move into the autumn, but we are currently trying to ensure that our office is a safe and secure place for our team.
Most of the team are now working at the office all of the time. However, Carolyn and Debbie both have young children, so their visits are constrained by childcare considerations. Between us, we try and ensure that at least one partner is in the office every day, and excepting holidays, all partners are easily contactable by email. We hope that Carolyn and Debbie will be able to work at the office more often when (if?!) the schools reopen, so things should change in September.
SEISS VERSION 2 - CLAIMS CAN BE MADE FROM 17 AUGUST
Claims for the second SEISS grant can be made from next Monday, and the process will be the same as for the first claim. As well as meeting the income criteria and qualifying dates (see http://www.busbys.co.uk/Coronavirus_Update_4/ ), you will only be able to claim if your business has been adversely affected by Covid-19 after 14 July. The only other change is the amount of grant – it will be equal to 70% of your average quarterly profits, rather than 80%. So those who qualify will receive 87.5% of what they received for the first grant.
As mentioned in previous newsletters, taxpayers must make the claim and we cannot do this for you! We can tell you if we think you are eligible, but then you need to make the claim, and the procedure will be the same as for the first grant. To make the claim itself, you will then need the following:
- Your UTR – this is a 10 digit number that you will find on any correspondence from HMRC concerning self-assessment.
- Your National Insurance Number.
- Your Government Gateway ID and password.
- Your bank details (sort code and account number) into which the grant will be paid. You will also need the exact account name, and the address that the bank has for your account.
- You will also need to confirm that your business profits have been adversely affected by Coronavirus on or after 14 July.
We recommend that you use your business bank account if you have one, as the grant is subject to income tax and national insurance as part of your self-employed profits. When you receive the grant, record it as “other income” in your accounting records. The grant is outside of the scope of VAT, so it does not need to be included on your VAT return.
The process itself should be very straightforward. But do make sure that you can justify the claim that your business profits have been adversely affected on or after 14 July, and keep a record of why you feel that you qualify for the grant. HMRC have suggested the following examples:
You should … keep any evidence that your business has been adversely affected by coronavirus at the time you made your claim, such as:
- business accounts showing a reduction in turnover
- confirmation of any coronavirus-related business loans you have received
- dates your business had to close due to lockdown restrictions
- dates you or your staff were unable to work due to coronavirus symptoms, shielding or caring responsibilities
The link refers to further reasons that can justify the claims. These apply to the first grant as much as the second, and see below for what you should do if you no longer feel that you can justify the claim.
If you did not claim the first SEISS grant, that does not prevent you making a claim for the second grant.
ONGOING SUPPORT FOR EMPLOYERS – CJRS VERSION 2 (FLEXIBLE FURLOUGHING)
I provided details concerning the changes to the Coronavirus Job Retention Scheme that came into effect on 1 July in Newsletter 11 – see https://www.busbys.co.uk/Coronavirus_Update_11/. The changes allow far more flexibility, and the scheme seems to be working very well, particularly for those businesses who reopened in July.
As we have now had this in place for a month and a half, I thought it helpful to quickly remind you of what is now changing, as the government starts to reduce its support.
- Claim periods can no longer straddle a month end, so if your pay date is not the month end, you will need to make two claims for each month.
- Claims must be made by the end of the month following the claim period. So July claims must be lodged by 31 August, August claims must be made by the end of September etc.
- The grants for July can be made on the same basis as for the first version of the scheme. So you can claim 80% of normal pay, plus the associated employer national insurance and pension costs.
- For August, you can only claim 80% of normal gross pay – employers must now cover the NI and pension costs.
- In September the grant falls to 70% of normal gross pay, but you must continue to pay 80% to your furloughed employees.
- October is the final month of the scheme, and then the grant will fall to 60% - but you must still pay any remaining furloughed employees 80% of their normal gross pay.
The CJRS scheme will end on 31 October, and final claims for that month will then need to be claimed by 30 November.
FINAL SUPPORT FOR EMPLOYERS
As mentioned in our Summer Newsletter ( https://www.busbys.co.uk/Summer_Newsletter_2020/), the Chancellor has introduced one final measure to incentivise employers to keep staff on the payroll. A one-off £1,000 per employee grant will be made to employers who still employ a previously furloughed member of staff continuously through to 31 January 2021. This will be paid for any member of staff who was furloughed at any time since the scheme was introduced, as long as they are paid an average of at least £520 per month from November 2020 to January 2021 inclusive. Employers will need to claim the bonus in February 2021.
Further detail has been published, and it is now clear that qualifying employees will need to be paid a total of at least £1,560 from 1 November to 31 January, but they need not be paid as much as £520 each month. But they do need to be paid something each month. So this flexibility will help those who operate seasonal businesses, particularly in the hospitality sector. For example, a restaurant may struggle to justify as much as £520 for a part time worker in January, but will hopefully have been busy enough in December to bring the average pay for all three months up to the threshold.
If you are a Director, and did furlough yourself, do make sure that you take sufficient salary in the qualifying months of November to January, so that you will qualify for the payment. Most owner-managed companies have not qualified for much support during lockdown, so this is a welcome boost.
If you are now having to look at possible redundancies as the support schemes wind down, do make sure you take proper legal advice. There have already been plenty of reports in the news of larger companies being challenged over their redundancy processes, so it is vital that you follow the correct procedures before making anyone redundant.
One point to note concerning any statutory redundancy pay entitlement – this must be calculated on the basis of normal gross pay, and not at the furloughed pay rates.
We cannot advise on this area, but we can recommend suitably qualified employment lawyers if you need help. Investing in the right advice now can ensure that you minimise the risk of employment tribunals, and the penal compensation that can be awarded in unfair dismissal claims.
MADE AN INCORRECT OR EXCESSIVE CLAIM?
HMRC are now actively encouraging all claimants (CJRS and SEISS) to review their claims to make sure that they are correct and justifiable. They have introduced mechanisms for taxpayers and employers to repay excessive claims for both schemes. If errors are notified (unprompted) and repaid within 90 days, there will be no penalties, but thereafter penalties could be applied. HMRC have said “We do understand mistakes happen, particularly in these challenging times, and will not seek out innocent errors and small mistakes for compliance action. We will act, however, against anyone who deliberately sets out to defraud the system or claims money they aren’t entitled to.” HMRC have already made a number of publicised actions against fraudulent claims.
If you are now unsure whether you should have made a claim, then please contact us to discuss the justification, and if applicable, the repayment of an excessive claim. One must assume that HMRC will review claims as and when they have the resources to do so, and so it will be imperative that you have appropriate records to support all claims made.
As always, please do contact us if you have any concerns or queries about Coronavirus support, or any other matters.