20th November 2020 – Hillmans Weekly Update
Below I have summarised all the main tax related updates we have seen this week.
- Covid-19 Business Planning Advice
- HMRC to Block SEISS Grants
- Self-Employment Income Support Scheme Grant Extension Update
- Example Board Meeting Minutes to Furlough Staff Outlining Reasoning
- Furlough Guidance for Employers
If you have any queries about this week’s content, or if you need any assistance please do not hesitate to contact me.
I hope you have a good weekend.
Stay safe and well.
Kind regards,
Steve
Steven Hillman BSc (Hons) ACA
Chartered Accountant
Tel: 01934 444100
https://www.hillmans.co.uk/covid-19-updates
Covid-19 Business Planning Advice
As we enter the third week of lockdown in England and reflect on improved testing, new vaccine trial results and a host of experts talking on the news about the timing of rollout and when Covid-19 will no longer be a threat to normality, it is worth remembering our lives are and will remain different for the remainder of 2020 and most of 2021. With that in mind we need to be resilient as individuals, families and businesses.
The latest indicators for the UK economy found nearly half (49%) of currently trading UK businesses reported a decrease in their turnover below what is normally expected for this time of year. On 8 November, overall UK footfall dropped to 33% of the level seen on the equivalent day last year as national restrictions were introduced in England.
Clearly we are living in tough times and it makes sense to take advantage of Government supports both directly such as the extended job retention and self-employed support schemes, deferring tax and using bounce back loans. There are also grants available to help firms with Brexit changes for import and export administration.
We have helped many businesses apply and claim for these supports and if you need any assistance, please contact us.
Business planning for 2021 will be difficult as we don’t know the timings for mass vaccinations and whether they will truly work but there are some practical steps you can take to minimise potential disruption to your business:
1. Review your Budgets and set realistic and achievable targets for the remainder of 2020 and for 2021.
2. Get your employees involved in a discussion of likely trading conditions and get their input on reducing costs and maintaining revenues.
3. Use ‘bottom up’ budgeting where everyone in the business gives input on areas over which they have control – target a 10% cost saving.
4. Review and flowchart the main processes in your business (e.g. Sales processing, order fulfilment, shipping etc.) and challenge the need for each step.
5. Encourage team members to suggest ways to streamline and simplify processes (e.g. sit down and brainstorm about efficiencies and cost reduction).
6. Put extra effort into making sure your relationships with your customers are solid.
7. Review your list of products and services and eliminate those that are unprofitable or not core products/services.
8. Review efficiency of business processes and consider alternatives such as outsourcing certain activities locally or overseas.
9. Agree extended payment terms with all suppliers in advance.
10. Pull everyone together and explain the business strategy and get their buy-in.
Please talk to us about cashflow planning for the next six months, we can help with a template so you can do this yourself or work together to produce estimates for a variety of scenarios.
HMRC to Block SEISS Grants
HMRC have contacted approximately 24,000 self-employed business owners by email who have claimed a self-employed income support grant (SEISS) asking whether they are still trading.
This email was sent last month in October, and those in receipt of an email must respond to HMRC’s email about their business by the 20th November 2020 or they won’t be able to make a further claim for another SEISS grant.
HMRC has only sent emails to taxpayers who it believes have ceased trading, and therefore not eligible for the SEISS grant. Any taxpayers who have received an email, have been asked to respond to HMRC by the 20th November completing an online form (link to the form will be in the email).
We’d advise checking your junk/spam boxes for emails from HMRC ASAP.
Self-Employment Income Support Scheme Grant Extension Update
In a change of policy the Government has announced the Self-Employment Income Support Scheme (SEISS) grant extension in the form of 2 further grants, each available for 3-month periods covering November 2020 to January 2021 and February 2021 to April 2021.
To be eligible for the grant extension, self-employed individuals, including members of partnerships, must:
• have been previously eligible for the Self-Employment Income Support Scheme first and second grant (although they do not have to have claimed the previous grants)
• declare that they intend to continue to trade and either:
• are currently actively trading but are impacted by reduced demand due to coronavirus
• were previously trading but are temporarily unable to do so due to coronavirus
The extension will last for 6 months, from November 2020 to April 2021. Grants will be paid in 2 lump sum instalments, each covering a 3-month period.
The third grant will cover a 3-month period from 1 November 2020 until 31 January 2021. The Government will provide a taxable grant calculated at 80% of 3 months average monthly trading profits, paid out in a single instalment and capped at £7,500 in total. This is an increase from the previously announced amount of 55%.
The Government are providing the same level of support for the self-employed as is being provided for employees through the Coronavirus Job Retention Scheme which has also been extended until March 2021.
The Government has already announced that there will be a fourth grant covering February 2021 to April 2021. They will set out further details, including the level, of the fourth grant in due course.
SEISS Claim Estimator
If you want us to help you estimate your claim then please ask us – we have an Excel SEISS claim estimator.
See: https://www.gov.uk/government/publications/self-employment-income-support-scheme-grant-extension/
Example Board Meeting Minutes to Furlough Staff Outlining Reasoning
Any CJRS Furlough claim may be subject to HMRC retrospective audit and therefore it makes sense to note the date and reasons for the Furlough decision. We appreciate that it will be obvious for some businesses (Government orders closure) but for some businesses especially Director / Shareholder businesses it is prudent to note details. This will also serve as evidence of the date of the decision.
We have uploaded to our website sample board meeting minutes you are welcome to edit and use as you see fit for your business here: https://blog.hillmans.co.uk/2020/11/example-board-meeting-minutes.html
Furlough Guidance for Employers
If you are Furloughing employees from 1 November then you must agree any changes in their terms of employment with them in advance.
Employers should discuss with their staff and make any changes to the employment contract by agreement. When employers are making decisions in relation to the process, including deciding who to offer furlough to, equality and discrimination laws will apply in the usual way.
To be eligible for the grant, employers must have confirmed to their employee (or reached collective agreement with a trade union) in writing that they have been furloughed. You must:
• make sure that the agreement is consistent with employment, equality and discrimination laws
• keep a written record of the agreement for five years
• keep records of how many hours your employees work and the number of hours they are furloughed (i.e. not working)
The employee does not have to provide a written response and you do not need to place all your employees on furlough.
You can:
• Fully furlough employees - they cannot undertake any work for you while furloughed full time
• Flexibly furlough employees - they can work for any amount of time, and any work pattern but they cannot do any work for you during hours that you record them as being on furlough
If you flexibly furlough employees, you will need to agree this with the employee (or reach collective agreement with a trade union) and keep a new written agreement that confirms the new furlough arrangement. You will need to:
• make sure that the agreement is consistent with employment, equality and discrimination laws
• keep a written record of the agreement for five years
• keep records of how many hours your employees work and the number of hours they are furloughed (i.e. not working).
Employees cannot undertake any work for you during time that you record them as being on furlough.
Where consistent with employment law, any flexible furlough or furlough agreement made retrospectively that has effect from 1 November 2020 will be valid for the purposes of a Coronavirus Job Retention Scheme claim as long as it is made according to the conditions above. Only retrospective agreements put in place up to and including the 13 November 2020 may be relied on for the purposes of a claim.
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