Coronavirus update 3 – 25 March 2020
BUSBYS NEWS – FURTHER UPDATE
As mentioned in our newsletter on Monday, we are now operating our Tenterden office with a minimum level of staff. Nikki Reardon is continuing to provide our payroll service from the office, and others are working at the office from time to time. We are currently taking a flexible approach to office working, and hence our office and telephone will now only be manned on a regular basis from 9.00am to 3.00pm, Monday to Friday. If calling outside of those times, please let us know in advance, if possible, or email if you do not get any response.
Carolyn, Debbie and I are now all working from home, so if you need to speak to us, please email and we will call you back – please also provide the best number to call you on.
Please note that I shall not be available at all tomorrow, Thursday 26 March – certain significant days in one’s life are date certain….
Regrettably we have still not had a great deal of detail to support the initiatives that have been announced so far. We are certainly hoping that the plight of the self-employed is going to be addressed this week, and there is an amendment that is being tabled to the Coronavirus Bill, but as things stand, that is not yet government policy. The Prime Minister did refer to this issue today in his press conference, so I think we can be confident that support will be forthcoming shortly. I will write again as soon as we have absorbed the initial details.
There is, however, a detailed list of businesses that must be closed now, and a list of exceptions which are encouraged to remain open, with a particular emphasis on the health, food and delivery sectors. See https://www.gov.uk/government/publications/further-businesses-and-premises-to-close/further-businesses-and-premises-to-close-guidance for the full detail. There is also an overriding message, which can sometimes be forgotten – unless your business has been ordered to close “the Government has not required any other businesses to close – indeed it is important for business to carry on”.
It is also worth reiterating that you can still travel to and from work. Whilst the emphasis has rightly been on requiring people to work at home if they can, the government have said: “people can travel to and from work, but only where the work they do absolutely cannot be done from home.” It is this guidance that is allowing us to continue to operate from our office.
To keep the length of these newsletters manageable, I am concentrating on changes that have been made since the previous newsletter, so I am only repeating points where appropriate. If I have said nothing on a particular topic, nothing has changed…yet!
SUPPORT FOR EMPLOYERS
No further details have yet been published for the Coronavirus Job Retention Scheme. However, if you are going to furlough staff:
- Make sure you notify them in writing as soon as possible that you would like to furlough them.
- Tell them the proposed effective date of them becoming a furloughed worker. In normal circumstances, that will probably be the date that you notify them.
- However, if you closed your business in the last week or so, and the employees were then laid off (and have not worked since), then you should be able to justify backdating, but only as far back as 21 March – i.e. the day after the scheme was announced.
- You should also be able to backdate furloughing if you made someone redundant after 29 February, but before the scheme was announced on 20 March.
- You must give the employee the opportunity to agree with your proposals, especially if you are only planning to pay them the amount that you can reclaim under this scheme. Any variation in terms of employment must be agreed with the employee, otherwise you may face a claim against you for breach of contract. However, given that the alternative is probably redundancy, one would hope that employees will readily agree. This is really an area on which we would advise you to seek legal advice, and we are more than happy to recommend an employment lawyer to you.
- If an employee says that they do not wish to be furloughed, or they will not accept a salary reduction, then you certainly should take immediate legal advice. You could end up with an unfair dismissal claim if you do not handle this properly.
- When you have agreed that an employee is to be furloughed, do make sure you notify your payroll department or agent, and tell them the effective date. If we deal with your payroll, make sure you advise Nikki.
- Also you will need to decide if you are reducing the employee’s salary straight away, and notify your payroll provider accordingly.
- Although the mechanism to notify HMRC is not yet in place, when it is, claims are going to be made in respect of part of March salaries (that will already have been paid) so clearly it makes sense to furlough employees at the earliest opportunity, if that is what you have to do.
Additionally, to answer a couple of common questions:
- Can Directors be furloughed? We have seen nothing to say that Directors are to be treated any differently to employees. However, if you are the sole Director of a company, then we think that you cannot really say that you are no longer working, as presumably you are having to manage the business. So we would currently advise that a sole Director cannot be furloughed yet. However, if you have more than one Director, and you are at a point where the management of the company is being dealt by just one of the Directors, then we are not aware of any reason why the other Directors cannot be furloughed.
- Can furloughed workers do any work? On the basis of current guidance, the answer is a straight “no”. We hope this will be changed as flexibility has to be the key to riding out this crisis. The government are being widely lobbied by bodies such as the Chambers of Commerce to relax this rule.
- If I have taken on a new member of staff recently, can I furlough them? We have struggled to find any definitive guidance on this from the government, but a number of respected observers (including our Institute) have said that you can only furlough an employee if they were on the payroll on 29 February 2020.
SUPPORT FOR BUSINESSES
As mentioned previously, the next VAT quarter’s payment will not need to be paid until March 2021. So, this will apply to VAT quarters ending on 29 February, 31 March and 30 April. This relief is automatic.
However, we are now certain that businesses will still need to file their VAT returns on time as normal, but will not then need to pay the VAT until next March. Refunds will be repaid as normal.
We also now know that if you pay your VAT by Direct Debit, you have to cancel the direct debit with your bank, if you don’t want to pay. You must do this in sufficient time to stop the payment, so we would recommend doing this by 3 April at the latest. However, if you are still content to pay your VAT as normal (and ultimately it is going to be due), then you should do nothing.
BUSINESS RENT AND INSURANCE
The government have announced that commercial tenants who cannot pay their rent because of COVID-19 will now be protected from eviction. These measures will mean no business will automatically forfeit their lease and be forced out of their premises if they miss a payment up until 30 June. There is the option for the government to extend this period if needed.
However, please note that this is not a rental holiday, and ultimately the rent will be payable. So, like many other measures, this is just to help business cash flow.
If you need to close your premises (or have already done so), please do make sure that you are still fully insured. Many policies do not protect unoccupied premises (or their contents) once they remain empty for more than a certain period of time (21 days normally), so check your policy. If in doubt, contact your insurer or broker to advise you on this.
The grants payable to all businesses with rateable values below £15,000, and the grants paid to those in the retail, hospitality and leisure sectors, will be paid automatically by local councils as mentioned previously. Guidance given by the government to local councils indicate that funds will be paid by the government on 1 April, so one hopes that the local councils will be distributing this money to qualifying businesses fairly soon afterwards.
If you have any questions, please do email your regular contact or at email@example.com. Again, may I also thank many of you for your positive feedback to our newsletters – it really is appreciated.