Coronavirus: Critical care for clients – and how you can administer

23rd Apr 2020
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Never have businesses needed trusted advisors more, nor has professional guidance been as crucial to help them survive.

Government announcements affecting businesses have been coming through thick and fast, as Chancellor Rishi Sunak has taken to the podium time and again.

We know many accountants’ phones have been ringing off the hook as clients ask for help.

Proactive practitioners have been wading through the announcements, realising that once they gain the knowledge, they can share it among clients and prospects. Many are balancing the needs of clients alongside concerns for their own business and considering how the announcements may benefit them too.

Here, the IRIS Keytime team recaps the main measures that accountants and clients need to be aware and take advantage of, as well as exploring the role for accountants in troubled times.

  • Coronavirus job retention scheme: Where an employee can be put on a period of paid leave but cannot work, as an alternative to being laid off. The Government will pay the lower of £2,500 per month per employee, or 80% of gross regular wages plus employer NICs plus 3% employer pension contributions. In a recent update, it has been reported even owner-managers can benefit from the scheme.

 

  • Coronavirus interruption loan scheme: Delivered through commercial lenders and backed by the British Business Bank, the Government will provide lenders with a guarantee of 80% on each loan. However, after reports flooded in of banks seemingly unwilling to lend, proposing high interest, or tough qualifying criteria, Rishi Sunak made additional moves to free up lending, like banning the need for a personal guarantee for loans under £250,000.

 

  • Time to pay service: The Chancellor scaled up HMRC’s Time to Pay service that allows businesses and the self‐employed to defer tax payments over an agreed period. HMRC allocated 2,000 staff to handling this. The deferment is for up to three months and interest is still payable. This will be particularly useful for those with past corporation tax bills that cannot be paid, and those struggling with the next corporation tax or PAYE.

 

  • VAT deferral scheme: A three-month VAT payment deferment has been granted through to 30 June 2020; this is automatic so no need to apply. VAT will be deferred until the 2020/2021 financial year and there will be no interest or default charges. VAT credits and refund will be paid as normal during the period.

 

  • Income tax deferral scheme: Self-Assessment payments on account due on the 31 July 2020 can be deferred until 31 January 2021. This is another automatic offer with no applications necessary, and you do not need to be self-employed to be eligible.

 

  • Coronavirus self-employed scheme: HMRC will pay self-employed workers for three months equivalent to 80% of their average trading profits up to £2,500 per month. The value is based on average trading profits taken from their last three tax returns. The scheme intends to offer the same sort of support as furlough and should be in place to claim by June. 

 

  • Small Business Grant Funding: The Government is providing funding via Local Authorities to support small businesses that already pay reduced or no business rates due to small business rate relief, rural rate relief and tapered relief. This is a one-off grant of £10,000 to eligible businesses – letters are going out now and payments are already being made.

 

  • Cash grants for sectors: A cash grant for retail, hospitality and leisure businesses of £10,000 or £25,000 will be available to businesses in these sectors. Anticipated that payments will be made in April. Additionally, a business rates holiday has been brought in for these sectors for the 2020/2021 tax year.

 

  • Covid-19 Corporate Financing Facility: The Bank of England will buy short-term debt from larger companies and the scheme will be funded by central bank reserves. It is intended to operate for at least 12 months to safeguard the UK’s bigger businesses and employers.

There is so much for businesses to comprehend and implement; from the word ‘furlough’ entering our vernacular where it wasn’t a few weeks ago, to a loan scheme attracting 130,000 enquiries already, businesses are having to put up a fight. They need their accountant in their corner.

These are tough times and more likely lie ahead, but for accountants up for the challenge, there are clear opportunities to strengthen client bonds and give invaluable support.