News

Summer Statement

The Chancellor, Rishi Sunak continued with his campaign to support the business and jobs community today, 8 July 2020, as firms engage with the disruption caused by the coronavirus outbreak and the measures taken to control infection.

The main thrust of his announcements during his Summer Economic update concerned his nominated Plan for Jobs 2020, details are listed below.

He also announced measures to support the hospitality and tourism industry including a novel voucher scheme and a temporary reduction in VAT. Again, details are provided in the following update.

In an attempt to boost the flagging property market Stamp Duty is being temporarily reduced in England and Northern Ireland. Separate announcements on this topic are awaited for Scotland and Wales who have their own Stamp Duty regimes.

Details of these announcements follow:

  1. Job Retention Bonus: employers that bring back an employee that was furloughed, and continuously employ them through to January 2021, will be paid a £1,000 government bonus per employee retained. Employees must be seen to be gainfully employed during this period and be paid at least £520 a month, on average, from November 2020 to January 2021. All furloughed employees returned to employment in this way will be available for the £1,000 bonus. 
  2. Kickstart scheme: this new scheme will cover the wages (plus associated costs) of new jobs created for any 16 to 24-year-old – at risk of long-term unemployment – for six months. These will have to be new jobs, of at least 25 hours a week and paid the National Minimum Wage. Employers will need to offer kickstarters training and support to find a permanent job. Employers can apply to be part of this new scheme from next month – August 2020 with first jobs starting in the autumn. Government has made an initial £2bn available for this scheme, but there is no cap on the number of places made available.
  3. Apprenticeships: for the next six months government will pay employers to create new apprenticeships. The amount payable will be £2,000 for each apprentice. A new bonus to take on apprentices aged over 25 has also been announced. This will amount to £1,500 per appointment.
  4. Green jobs initiatives: as an incentive to create jobs in the green jobs’ market a number of new grants have been announced. From September 2020, homeowners and landlords in England will be able to apply for a grant to make their home more energy efficient. The £2bn Green Homes grant will cover at least two-thirds of the cost up to £5,000 per household. For low income households these grants will cover all costs up to £10,000. There will also be a further £1bn allocated to make public buildings greener.
  5. Boost for the housing market: Presently, in England and Northern Ireland (different amounts apply in the regions) no Stamp Duty Land Tax is payable on residential property purchases below £125,000. From today – for a temporary period to 31 March 2021 – this threshold is increased to £500,000. It is projected that this will reduce the average stamp duty bill by £4,500. Regional variations may apply. Purchasers buying a second residential property will still have to pay the 3% Stamp Duty Land Tax for property purchases up to £500,000.
  6. VAT reduction for hospitality and tourism: for the next six months VAT charged on food, accommodation and attractions (such as eat-in or takeaway food in restaurants, cafes, pubs, cinemas, theme parks and zoos) will see VAT reduced from 20% to 5%. This will apply from 15th July 2020 until 12th January 2021.
  7. Eat Out to Help Out discount: for the month of August 2020, meals eaten at any participating business Monday, Tuesday or Wednesday, will be 50% off up to a maximum discount of £10 per head including children. To access the discount businesses will need to register and can do so through a website to be opened next Monday, 13 July 2020. Businesses will be able to claim the money back weekly with the money in their bank accounts within 5 working days. 

As we manage the cautious steps to emerge from lock-down, still wary of COVID-19, the new incentives announced by Rishi Sunak should be welcomed.

As more details emerge on the various schemes announced today they will be published accordingly.

Source: HM Treasury Thu, 09 Jul 2020 05:00:00 +0100

Reclaiming VAT after deregistration

Businesses can close a VAT registration for two main reasons. For example, the business has stopped making taxable supplies or a voluntary deregistration can be made by businesses that does not expect its taxable turnover to exceed the deregistration limit. The current deregistration limit is £83,000.

A business that deregisters will be required to submit a final VAT Return for the period up to and including the VAT deregistration date.

Regardless of the reason for deregistration, businesses remain eligible to reclaim input tax relating to the time when the business was VAT registered after the final VAT return has been submitted. Such a claim is made using form VAT 427.

The form can be used to:

  • reclaim VAT paid (input tax) on purchases when you were VAT registered
  • reclaim VAT paid (input tax) on certain services you bought after you cancelled your VAT registration
  • get relief on the VAT you paid to HMRC (output tax) on bad debts that you identified after you cancelled your VAT registration.
Source: HM Revenue & Customs Wed, 08 Jul 2020 05:00:00 +0100

Corporate Insolvency and Governance Bill receives Royal Assent

The Corporate Insolvency and Governance Act 2020 (the Act) received Royal Assent, with most provisions coming into force on 26 June 2020. The Act addresses numerous issues arising for businesses from the COVID-19 pandemic to give distressed businesses the breathing space they need to get advice and seek a rescue

Some of the key provisions of the Act are as follows:

  • introduces temporary easements for Annual General Meetings (AGMs) and filing requirements for public limited companies (PLCs)
  • introduces new corporate restructuring tools to the insolvency regime to give companies the time they need to maximise their chance of survival
  • temporarily suspends parts of insolvency law to support directors during this difficult time

Under the secondary legislation, companies will temporarily receive an automatic extension for:

  • confirmation statements
  • registrations of charges (mortgage)
  • event-driven filings, such as a change to your company’s directors or people with significant control

Most companies will also be given more time to file their accounts. If a company is eligible, Companies House will update the filing deadline automatically and the new deadline should be adhered to. Companies do not need to apply for an extension.

Source: Companies House Wed, 08 Jul 2020 05:00:00 +0100

SEISS further update

HM Treasury has published a further Treasury Direction made under the Coronavirus Act 2020, ss. 71 and 76, which modifies and extends the effect of the Self-Employment Income Support Scheme (SEISS).The Direction mainly deals with the expansion of the SEISS for a final three-month period to 31 August 2020, officially referred to as the SEISS extension. The eligibility criteria remains largely unchanged.

The SEISS extension grant will be calculated based on 70% of eligible earnings (previous quarter 80%). This will result in a maximum grant for the three-months of £6,570 (Previous quarter £7,500) paid in a single instalment. The application process for the SEISS extension will open from 17 August 2020 and close on 19 October 2020. The revised guidance provides further details on the amended rules for new parents and reservists.

It is also important to note that claims for the first grant for the quarter March-May 2020 closes on 13 July 2020. In order to claim the first grant, the business in question must have been adversely affected by the pandemic on or before 13 July 2020. Likewise, in order to claim the SEISS extension (June-August 2020) the business must have been adversely affected by Coronavirus on or after 14 July 2020. A self-employed person can claim for the second grant, to August 2020, even if they had not claimed for the first grant.

Source: HM Treasury Wed, 08 Jul 2020 05:00:00 +0100

Finance Bill 2020 progress

The government’s Finance Bill 2020 (formally known as Finance Bill 2019-21) has now completed its passage through the House of Commons and the 1st reading at the House of Lords took place on 2 July 2020. This stage is a formality that signals the start of the Bill's journey through the Lords. The date for the 2nd reading of the Bill, where a general debate on all aspects of the Bill will take place has not yet been announced.

The Bill is known as a 'Money Bill' which means that the further stages of the Bill namely, the committee stage, report stage and third reading at the House of Lords are usually formalities. Once these steps have been completed, the Bill will receive Royal Assent and become an Act of Parliament known as Finance Act 2020.

The Bill contains the legislation for some of the tax measures that were announced when the Chancellor of the Exchequer presented his Budget to Parliament on Wednesday 11 March 2020. This includes the reduction in Entrepreneurs’ relief lifetime limit, changes to main residence relief, increased R&D credits and the introduction of the Digital Services Tax. In addition, a number of important amendments and new clauses to the Bill were introduced at the report stage concerning the Coronavirus pandemic.

Source: HM Government Wed, 08 Jul 2020 05:00:00 +0100

UK VAT claims by non EU businesses

There are special rules for businesses established outside the EU submitting a claim for VAT incurred on goods or services bought in the UK. The exact rules that determine what VAT is refundable can be complex. There are also a number of conditions which must be met in order for a claim to qualify.

The deadline for the submission of a refund request for expenses incurred in the UK by non-EU businesses during the period 1 July 2018 – 30 June 2019 was 31 December 2019. HMRC has reported that due to the impact of Coronavirus there are some delays in making repayments. HMRC generally aims to process and refund overseas VAT claims within 6 months of the submission deadline of 31 December 2019 i.e. by 30 June 2020. HMRC now expects to pay valid 2018-2019 claims by 30 September 2020. HMRC will contact claimants whose VAT claims will not be paid by 30 September 2020 either because further information is needed or for any other reason.

HMRC is also reminding those concerned that claims for 2019-20 need to be submitted by 31 December 2020. One of the conditions for making a claim is for the claimant to obtain the required certificate of status from their official issuing authorities. This may not be possible due to measures taken by jurisdictions in response to Coronavirus. Claimants who submitted their VAT refund claim without a certificate of status will not have their claim rejected, but it will be put on hold until 31 December 2020. HMRC should be contacted for further case specific advice if obtaining a certificate of status before 31 December 2020 is likely to be problematic.

Source: HM Revenue & Customs Wed, 08 Jul 2020 05:00:00 +0100

Reminder of businesses not opening 4 July 2020

There are business sectors that have not yet been given permission to reopen in England. There has been no indication given as to when these businesses will be able to reopen.

Government guidance lists the following businesses that currently need to remain closed, as government assessment suggest that they cannot yet be made sufficiently COVID-19 Secure:

  • nightclubs
  • casinos
  • bowling alleys and indoor skating rinks
  • indoor play areas including soft-play
  • spas
  • nail bars, beauty salons and tanning salons
  • massage, tattoo and piercing parlours
  • indoor fitness and dance studios, and indoor gyms and sports venues/facilities
  • swimming pools and water parks
  • exhibition or conference centres – where they are to be used for exhibitions or conferences, other than for those who work for that venue.

It looks unlikely that these types of businesses will be able to reopen until the virus is under control. These type of 'close proximity' businesses cannot usually operate whilst following strict social distancing requirements.

The UK government is only responsible for lifting lockdown restrictions in England. This is because health is a devolved matter, which means that Scotland, Wales and Northern Ireland are responsible for their own policies in relation to public health matters.

Source: HM Government Wed, 08 Jul 2020 05:00:00 +0100

Reminder of businesses opening since 4 July 2020

A reminder that since 4 July 2020, many business sectors have been given permission to reopen in England. The businesses are expected to follow COVID-19 secure guidelines.

The categories of businesses that have been allowed to reopen include:

  • hotels, hostels, bed and breakfast accommodation, holiday apartments or homes, cottages or bungalows, campsites, caravan parks or boarding houses
  • places of worship
  • libraries
  • community centres
  • restaurants, cafes, workplace canteens, bars, pubs that are self-contained and can be accessed from the outside
  • hair salons and barbers, including mobile businesses
  • cinemas
  • theatres and concert halls
  • funfairs, theme parks, adventure parks and activities
  • outdoor gyms and playgrounds
  • museums and galleries
  • bingo halls
  • outdoor skating rinks
  • amusement arcades and other entertainment centres
  • model villages
  • social clubs
  • indoor attractions at aquariums, zoos, safari parks, farms, wildlife centres and any place where animals are exhibited to the public as an attraction
  • indoor and outdoor areas of visitor attractions including, gardens, heritage sites, film studios and landmarks

The UK government is only responsible for lifting lockdown restrictions in England. This is because health is a devolved matter, which means that Scotland, Wales and Northern Ireland are responsible for their own policies in relation to public health matters. The other governments have generally taken a more stringent view in regard to reopening businesses with different roadmaps for easing the various restrictions. 

Source: HM Government Wed, 08 Jul 2020 05:00:00 +0100

Tax Credits updates required this month

Families and individuals that receive tax credits should ensure that they review their tax credit claims by 31 July 2020. Claimants who do not inform HMRC about relevant changes in their circumstances by the deadline date may have their payments stopped.

HMRC has sent tax credits renewal packs to tax credit claimants and is encouraging recipients who need to respond to do so online. All renewal packs should have been received by the end of June. A renewal is required if the pack has a red line across the first page and it says, 'reply now'. If the pack has a black line and says, 'check now', recipients will need to check the details are correct. If the details are correct the tax credit awards will be renewed automatically. The self-employed, those in receipt of taxable social security benefit or those who have other income may need to review their total household income and advise HMRC if the income held is incorrect.

As part of the package of measures to tackle the Coronavirus outbreak, the government in April announced that the basic element Working Tax Credit payments would be increased from an expected £1,995 to £3,040 for the 2020-21 tax year starting on 6 April 2020. This increase of £1,040 is an increase equivalent to £20 per week for the current tax year. The actual maximum additional amount that Working Tax Credits recipients receive depends on their individual circumstances, including their level of household income.

Source: HM Revenue & Customs Wed, 08 Jul 2020 05:00:00 +0100

Redundancy process map

Acas has published a process map for employers who are having to consider making redundancies due to coronavirus. The interactive tool has been designed to help employers better understand redundancy processes, required steps and good practice when engaging with employees. It also provides details of options and alternatives to making redundancies and prompts employers to consider further support they can provide to their staff.

The tool simply provides an overview of the steps and processes involved, but it does link to more detailed Acas guidance and information on managing staff redundancies.

As part of ensuring a redundancy process is both fair and complies with statutory requirements, employers must:

  • be confident there is a genuine redundancy situation, i.e. there is an actual or intended closure of the business, there is an actual or intended closure of the business at a particular workplace, or the requirements of the business for employees to carry out work of a particular kind have ceased or diminished or are expected to cease or diminish
  • undertake meaningful individual consultation in all cases, which will involve holding a series of individual meetings with affected employees, the purposes of which are for the employer to  explain their proposals and the reasons for them and to give staff a reasonable opportunity to put forward their own suggestions, ask questions and generally have their say before any final decisions on redundancy are taken
  • undertake statutory collective consultation with appropriate representatives, i.e. trade union or elected employee representatives, where the proposal is to dismiss as redundant 20 or more employees at one establishment within a period of 90 days or less – and the Secretary of State will also need to be notified, according to prescribed timescales, on form HR1
  • fairly select those employees who are to be made redundant – this will include identifying the relevant selection pool and the proposed objective and non-discriminatory selection criteria and then applying a fair scoring system to those criteria in order to select who is to provisionally be made redundant
  • give due consideration to suitable alternative employment and other alternatives to compulsory redundancy – employers need to carefully focus on the various ways in which redundancy could be avoided
  • not issue any redundancy notices until the consultation process (both individual and, where applicable, collective) is complete
  • preferably give a right of appeal against any redundancy decision.

Employers must also ensure that statutory minimum notice and statutory redundancy payment obligations are met on redundancy, together with any enhanced contractual obligations.

Source: ACAS Tue, 07 Jul 2020 05:00:00 +0100