PLEASE NOTE: The below article details HMRC deferrals & business rate information only. For ALL our latest updates on support available around COVID-19, please visit: www.frenchduncan.co.uk/covid-19. This links to various resources, all of which we are keeping updated as things progress.
This article was first published Tuesday 17th March, last updated 10am Friday 19th June. Please check back regularly, or follow us on Twitter or LinkedIn to keep informed of all the changes.
Reinstate your Direct Debit for VAT (update @ 25th June 2020):
HMRC’s temporary deferment period for VAT comes to an end on 30th June. This means businesses that cancelled Direct Debit arrangements to take advantage of the deferment will now have to ensure that Direct Debits are back in place prior to VAT return payments that become due from July onwards. This will initially affect VAT return periods ending 31 May.
HMRC have now published a new direct debit mandate form for companies who file their returns via Making Tax Digital (MTD) - a link to the form is available by clicking here. Companies who have cancelled their direct debits during HMRC’s VAT deferment period should log into their online account to set up a direct debit. Alternatively, if you require French Duncan to reinstate their direct debit on their behalf, or if you have problems logging into you account to make the change, this form should be used. The original direct debit form for non-MTD companies is also available on HMRC’s website.
If businesses have any outstanding returns which would be due for payment between 20 March and 30 June, these should be submitted as soon as possible, and in advance of reinstating a Direct Debit. A Direct Debit mandate should be reinstated at least 3 to 5 working days before a VAT return is submitted, to ensure that it will be in place in time to collect payment.
HMRC has confirmed that changes have been made to its systems to ensure that VAT deferred between 20 March and 30 June will not automatically be collected when Direct Debits are reinstated. However, business will be required to make arrangements with HMRC to repay this VAT by 31 March and an update to how these repayments will be collected will be notified by HMRC in due course.
HMRC PAYE Deferral Extensions (update @ 12th June 2020):
We are aware of quite a few queries / uncertainties around this, and indeed in our discussions with HMRC there have been a different responses provided. However, what we know so far is:
- Many firms have arranged PAYE deferrals for their HMRC payments, however these have primarily been in relation to months 12, 1 and 2 ie deferral until the end of June Currently deferrals are NOT permitted beyond this date – however we expect that may change in the coming weeks.
- If deferral extensions are to be applied for, it is likely companies (or us acting on your behalf) will need to contact HMRC to arrange this extension before 4th July at the latest.
- In order to be granted a deferral extension, it is VERY LIKELY that you will have to have meet all existing obligations – which primarily will include PAYE payments for your furloughed staff. This is easy to miss in amongst everything else, so watch out!
- Either way, you must contact HMRC to arrange a payment plan (if required) at the end of June and before 4th July.
Payment for Deferred Months (update @ 12th June 2020):
- Any deferred payments will need to be repaid either as a lump sum or on an agreed time to pay arrangement.
- Maximum time to pay is over a 12 month period – however depending on the liability sums and the company circumstances a longer period can be sought from HMRC. Any longer time to pay periods are dependent on the individual company circumstances, industry etc. BUT is down to the discretion of the advisor at the time and is likely to be referred to higher technical teams for approval.
- The time to pay arrangement can be negotiated by an agent over the telephone, so please contact the French Duncan team if you would like us to assist you. We will then liaise with you regarding the set-up of the direct debits required for these repayments.
Business Rates, HMRC payments and Sick Pay:
With COVID-19 / Coronavirus impacting every area of society, the Government has implemented a number of changes around HMRC payments to help support businesses. But what are they all and how might they assist you and your business?
In this article our tax experts from across the firm have created a summary; hopefully an overview of where HMRC will show flexibility (and who to) and what you must do to take advantage of them.
Whilst many businesses will face challenges ahead, we at French Duncan are here to help and support you in the weeks and months ahead - you can contact us at any time.
Time to Pay – VAT, Corporation Tax, PAYE and CIS
These arrangements are agreed on a case-by-case basis and are tailored to individual circumstances and liabilities, however our experience so far has shown that HMRC are being very flexible with payment deferrals. Whilst initially targeted towards specific industries (travel, entertainment, bars, restaurants and hotels), we’ve had clients in other sectors negatively impacted also make successful applications for deferrals. At present HMRC will consider deferring payments for Corporation Tax, PAYE and/or CIS where the business is affected by the virus. Automatic deferment of all VAT has just been announced, covering VAT due over the next three months (see below).
After an initial deferment (where applicable), the business can also apply for further assistance via a Time to Pay arrangement. Typically, instalments of no longer than 12 months can be granted, however under these circumstances we expect there to be special concessions made.
HMRC are prepared to discuss this situation where a business with a current Time to Pay arrangement in place that they now cannot or will struggle to meet due to the disruption caused by the virus.
HMRC will take into account your specific circumstances when considering:
- Agreeing an instalment arrangement (see below)
- Suspending debt collection proceedings
- Cancelling penalties and interest where you have administrative difficulties contacting or paying HMRC immediately.
VAT specific deferment (updated Wednesday 8th April):
- VAT liabilities arising during the period 20 March 2020 to 30 June 2020 will automatically be deferred by 3 months without the need to apply.
- VAT deferred between these dates need not be repaid to HMRC until 31 March 2021 (at the latest). This extended time frame to repay the deferred VAT is automatic and businesses do not need to contact HMRC post 30 June to request permission to utilise this longer repayment period. Companies should ensure, however, that they keep a clear record of the payments they make to repay this debt over the course of the 9 month period.
- Direct debits should be cancelled to ensure HMRC do not automatically collect any VAT due, during the deferment period.
- Businesses which make payments on account should ensure that they cancel any direct debits in relation to interim payments.
- VAT reclaims and refunds will be processed as normal by HMRC and will be given priority.
- Please note, VAT returns MUST still be filed, there is just no need to pay the VAT arising at this time due to the deferral relief.
- This is all in addition to the time to pay offer currently operated by HMRC.
- Phase 2 of Making Tax Digital will no longer go ahead as HMRC have extended the soft landing period in light of COVID-19, meaning all businesses now have until their first VAT return period starting on or after 1 April 2021 to put full digital links in place. Extension of the soft landing period should also mean a continued light touch with regard to penalties for MTD returns. Business should still ensure they maintain all digital links they currently have in place already.
- Overseas VAT registered businesses will benefit from the VAT deferment period, but users of the MOSS scheme are excluded and must account for VAT on sales as normal.
- HMRC are not accepting error correction forms (VAT652) or letters by post due to temporary measures put in place to stop the spread of coronavirus. During this time businesses that need to submit an error correction to HMRC should submit the completed forms via the following email address: email@example.com
Other VAT changes:
- Pay no import duty and VAT on medical supplies, equipment and protective garments (related to supporting COVID-19).
- This relief can be claimed immediately by:
- state organisations, including state bodies, public bodies and other bodies governed by public law
- other authorised non-state bodies.
- If you are from a non-state body you can request authorisation by contacting the National Import Relief Unit (NIRU) by emailing firstname.lastname@example.org for an application form.
Support for Individuals:
Support for Businesses:
- Emergency legislation is being passed that means employees suffering from Covid19 will be entitled to SSP from day 1. The Government have also advised that they will rebate employers but are yet to advise exactly how this will work however, HMRC do advise that "The Government will work with stakeholders over the coming months to set up a repayment mechanism as soon as possible.".
- The eligibility criteria for the scheme will be as follows:
- This refund will cover up to two weeks’ SSP per eligible employee.
- Employers with fewer than 250 employees will be eligible.
- Employers will be able to reclaim expenditure for any employee who has claimed SSP as a result of COVID-19.
- Employers should maintain records of staff absences, but employees will not need to provide a GP fit note.
- The eligible period for the scheme will commence the day after the regulations on the extension of SSP to self-isolators comes into force.
Changes to business rates:
Business Rates – Scottish Businesses:
- Full non-domestic rates relief for retail, hospitality and leisure sectors for one year (provided the property is 'occupied' - in line with any other Government guidelines around advised closures etc.).
- Small businesses in receipt of the Small Business Bonus Scheme or Rural Relief will be eligible for a £10,000 grant. And Businesses in the hospitality, leisure and retail properties with rateable values of £18,000 - £51,000, will be eligible for a £25,000 grant. Loans are now available, click here for more information.
- 1.6% rate relief for all properties.
- The Scottish Government on 30th March expanded this support to also include some furnished holiday let landlords, but including ‘caravans and self-catering accommodation that are the primary income for the ratepayer and let out for 140 days or more in 2019-20'.
Grants are available now via your local authority, click here to visit our page specifically about COVID-19 business loans.
The Scottish Government are also urging local authorities to allow pubs and restaurants to operate as takeaways on a temporary basis by relaxing planning rules to facilitate this.
Business Rates – Rest of UK businesses:
- 2020/21 Business Rates holiday for retail, hospitality and leisure sectors in England (provided the property is 'occupied' - in line with any other Government guidelines around advised closures etc.).
- For businesses operating in the retail, hospitality and leisure sectors operating from smaller premises with a rateable value of £15,000 - £51,000, a £25,000 grant will be available. For businesses operating in the retail, hospitality and leisure sectors operating from smaller premises with a rateable value of less than £15,000, a £10,000 grant will be available. Further information can be found on our page all about Business Loans by clicking here.
- Properties which benefit from the Business Rates holiday will be used wholly or mainly for:
- Shops, restaurants, cafes, drinking venues, live music venues and cinemas.
- Places of leisure and assembly.
- Self-catering accommodation, hotels and guest and boarding premises.
- Rates holiday now extended to include nurseries in England who meet the following criteria:
- The properties are hereditaments.
- Occupied by providers on Ofsted’s Early Years Register.
- Property is used wholly or mainly for the provision of the Early Years Foundation Stage.
No action is required by qualifying businesses. If local authorities have already issued you with your rates notification commencing in April 2020 you will be reissued with a revised notice removing the business rate charge. This will be reissued as soon as possible.
- The Government has advised that all business owners should check the terms of their insurance policy for pandemic and Government-ordered closure cover and unspecified notifiable diseases. The government and insurance industry have confirmed that the advice to avoid pubs, theatres etc should be sufficient to make a claim under their insurance policy if such cover has been taken. COVID-19 has now been added to the notifiable disease list. However, some insurance policies specifically only include specific notifiable diseases to the exclusion of all others and future notifiable diseases. Therefore, COVID-19 may not be covered by your policy. If you are in any doubt as to whether you are covered by your insurance policy you should contact your insurance provider for clarification.
- For businesses operating in the retail, hospitality and leisure sectors operating from smaller premises with a rateable value of £15,000 - £51,000, a £25,000 grant will be available on application to your local authority.
- Businesses which are already paying little or no Business Rates because of Small Business Rate Relief (SBRR) or who are currently eligible for Rural Rate Relief will be eligible for an increased one-off grant of £10,000. Businesses in the category will be contacted by their local authority with no need to apply. Funding will be provided to the local authorities in early April.
- Information on the Coronavirus Business Interruption Loan Scheme, and any other business loans available, can be found by clicking here.
Qualifying businesses will be contacted by their local authorities shortly. Local authorities will be provided with guidance on the scheme shortly. If you have any enquiries on eligibility these should be directed to the relevant local authority.
Need help? Contact us!
For further information on Time to Pay, the 2020 Budget or anything else you can contact our Tax team on 0141 221 2984, or speak to your usual French Duncan contact who will be happy to assist.
For Corporate Tax specific enquiries, you can also contact Eilidh Kennedy.
For VAT specific enquiries, you can also contact Maria McConnell.
For PAYE specific enquiries, you can also contact Linda Kelly.
For Personal Tax specific enquiries, you can also contact Hazel Burt.
Tax helpline to support businesses affected.
A new Business Support helpline has been setup for those concerned about the effect Coronavirus is having on their business and their ability to pay tax. HMRC can be contacted on 08000 241 222.
[N.B. the above number is currently being promoted for Scottish businesses. At time of writing those based outside Scotland are being asked to still call 0800 0159 559, however this may just be an error by HMRC.]
French Duncan are available to assist and advise any clients in negotiating and agreeing a Time to Pay arrangement with HMRC.
To contact HMRC, yourself or for us to do so on your behalf, you will need to know:
- Reference number (e.g. 10-digit Unique Taxpayer Reference or VAT reference number).
- Value of the tax bill you’re finding it difficult to pay and the reasons why.
- How the virus has affected the business.
- The impact it has had e.g. have orders been cancelled, is the office closed?
- Attempts made to raise the money to pay the bill.
- How much you can pay immediately and how long you may need to settle liability.
Despite HMRC not requiring any documentary evidence to prove that a business has been affected by the coronavirus, they will consider your business's industry sector when making their decision.
When contacting HMRC to arrange a time to pay the normal identity checks will be carried out, but you will also need the month ending for last VAT return period and the box 5 figure on the last return.
Other COVID-19 Information:
We also have COVID-19 / Coronavirus blog articles, which will be kept updated, on:
For all our help, support and information around COVID-19 / Coronavirus visit www.frenchduncan.co.uk/covid-19, where you can link to articles business loans, including Coronavirus Business Interruption Loan Scheme (“CBILS”), personal tax & self-assessment, debt assistance & restructuring and much more.