Covid 19 related support for new company?

Is there any Covid 19 related support for someone who has just set up his own company?

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My daughter's partner works as an antenna rigger on mobile phone masts.  He was employed by a company in that business up until 31 December 2019 and earned a salary well in excess of £2,500 per month.  During December 2019 he set up his own limited company, stopped being employed by his previous employer and became the sole employee of his own new company.  

On 1 January 2020 his new company entered into a six month contract with his old employer and has been invoicing the old employer for work done on a monthly basis and being paid under CIS rules with deduction of tax.  Once again the amounts involved are well in excess of £2,500 per month.  The intention was for the new company to pay a small annual salary to use up the personal allowance and some dividends on top of that but has not in fact paid any salary or dividends at all yet to ensure all payments fell into the 2020/21 tax year.  He had enough savings to live on for the period January to March 2020 and was anticipating getting an income tax rebate for 2019/20 from the amount he paid through PAYE with the old employer.

Last week his old employer told him that they would be shutting down due to the corona virus outbreak so there would be no work for him from 1 April 2020 and he would not be paid after that.  If he had been paying himself a salary from January to March I think the answer would have been to furlough himself from 1 April 2020 and make a claim under the Covid-19 Job Retention Scheme but as has no salary history to base the claim on I don't think that would work.  I wondered if he could claim in some way under the self-employment rules but that doesn't look likely either as he has no history of submitting self assessment tax returns to base a claim on.  I suppose he might qualify for the small business loan scheme but doesn't want to borrow money that has to be repaid if he can avoid it.

Does anyone know of anything I have missed that might allow him to claim something to help towards his total and fairly immediate loss of earnings?

 

Replies (3)

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By Steve Holloway
27th Mar 2020 16:41

No you haven't missed anything I'm afraid. He certainly isn't self-employed and his lack of salary will preculde him the employment support.

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By ireallyshouldknowthisbut
27th Mar 2020 17:02

Steve is right.

There is going to be a lot of "between two stools" situations I am afraid.

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By paul.benny
27th Mar 2020 17:04

Universal credit, I'm afraid. There is a calculator at turn2us.org.uk (free, anonymous). It's a joint claim, so any income your daughter has will count against them. If they find they're not eligible for UC, he should still be eligible for contribution-based Job Seeker's Allowance.

Might be worth looking at contract with the former employer. Can they actually terminate half way through without penalty? Are there any obligations to provide a a minimum volume/value of work, to give notice of termination?

If he's not already registered for self-assessment, do so right away. If you have all the information, you can submit online as early as the first day of the new tax year. If there is a rebate due, my experience is that they pay within 10 days for April filings.

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