The VAT Deferral New Payment Scheme is now open for businesses that deferred their VAT liabilities that were originally due for payment between 20 March and 30 June 2020. 

The deferred VAT was originally due to be paid on or before 31 March 2021 but businesses that opt into the VAT Deferral New Payment Scheme can pay the outstanding amounts by direct debit over a period up to 11 months.

To avoid interest and penalties being imposed businesses must either:

• Pay all of the deferred VAT by 31 March 2021

          You can pay the deferred VAT in any of the normal ways.  Further details can be found here.

• Opt into the VAT Deferral New Payment Scheme

 
         The online service for opting in went live on 23 February 2021 and will remain open until 21 June 2021.  The first instalment will           be due when you opt in and you can decide on the maximum number of monthly instalments based on when you opt in as                   follows:

HMRC have announced that Self-Assessment taxpayers will not be charged the 5% late payment penalty if the 2019/20 tax is paid or a payment plan is arranged by 1 April 2021.

The payment deadline for Self-Assessment was 31 January 2021 and interest is charged from 1 February 2021 on any amounts outstanding.  The 5% late payment penalty would normally be charged on any unpaid tax that is still outstanding on 3 March 2021 however, because of the impact of the Covid-19 pandemic HMRC are giving taxpayers more time to pay or set up a payment plan.
​
Taxpayers can pay their tax bill or set up a monthly payment plan via their Government Gateway account.  The online Time to Pay facility allows taxpayers to spread the cost of their Self-Assessment tax bill into monthly instalments until January 2022.  If you are unable to set up a payment plan online, you can contact HMRC by telephone on 0300 200 3822.

As announced in November 2020, if you already have a Bounce Back Loan and originally borrowed less than the maximum amount available to you, you may be apple to apply for a top up.
 
As a reminder the maximum that can be borrowed with Bounce Back Loan facility is 25% of a business’ turnover (as declared in the original application) with a cap on the loan of £50,000.  
 
Top Up Features

• One top-up per borrower from their existing lender;
• Minimum top up amount of £1,000;
• The capital repayment holiday runs for 12 months from the initial drawdown date on the original Bounce Back Loan.  For            example, if the initial drawdown date of the original Bounce Back Loan was on 1 June 2020, and the drawdown date of the        top-up was on 1 February 2021, the capital repayment holiday period will run to 31 May 2021.

 
How to apply for a Top Up
Please contact your Bounce Back Loan provider to apply for a top up.

Originally announced in September 2020, Pay As You Grow will enable businesses greater flexibility in repaying their Bounce Back Loans. The Chancellor has recently provided further details on this flexibility.
 
Pay As You Grow will enable businesses who have started repaying their Bounce Back Loans to:
 

• request an extension of their loan term to ten years from six years, at the same fixed interest rate of 2.5%;
• reduce their monthly repayments for six months by paying interest only. This option is available up to three times during the term of their Bounce Back Loan.
• take a repayment holiday for up to six months. This option is available once during the term of their Bounce Back Loan.

 
Borrowers can use these options individually or in combination with each other.
 
Borrowers should be aware that they will pay more interest overall if they use one or more of these options, and that the length of the loan will increase in line with any repayment holidays taken.
 
How to access Pay As You Grow
Pay as You Grow is available to those with a Bounce Back Loan and your lender should contact you three months before your repayments commence to discuss the options available under Pay As You Grow.
 
Note – Pay As You Grow does not apply to CBILS.

The deadline for applications for the Government’s three Coronavirus business interruption loan schemes - the Coronavirus Business Interruption Loan Scheme (CBILS), the Coronavirus Large Business Interruption Loan Scheme (CLBILS) and the Bounce Back Loan Scheme (BBLS) is 31 March 2021.
 
If you think you may need to utilise any of these schemes, we recommend taking action now so you have the best chance of completing your application by the deadline.
 
Ashgates has assisted several clients with successful applications so far and can assist you in this process. If you require advice or assistance, please contact us.
​

HMRC have announced additional details of arrangements for further deferring the VAT that was originally due for payment between 20 March and 30 June 2020. 
​
The deferred VAT was originally due to be paid on or before 31 March 2021 but businesses that opt into the VAT Deferral New Payment Scheme can pay the outstanding amounts by direct debit over a period up to 11 months.

To avoid interest and penalties being imposed businesses must either:

• Pay all of the deferred VAT by 31 March 2021

           You can pay the deferred VAT in any of the normal ways. Further details can be found here

• Opt into the VAT Deferral New Payment Scheme

           The online service for opting in will go live on 23 February 2021 and remain open until 21 June 2021. The first instalment will               be due when you opt in and you can decide on the maximum number of monthly instalments based on when you opt in as                   follows:

​        You must use the online service yourself through the Government Gateway account (we will not be able to do this for you) and             you should not have any outstanding VAT Returns for the last four years. 
 
        Businesses making VAT payments on account or using the annual accounting scheme will need to wait to be invited to use the            scheme which is expected later in March 2021.

If you are unable to make payment by 31 March 2021 or join the VAT Deferral New Payment Scheme then you should contact HMRC on 0800 0241222 to discuss making alternative arrangements.
​
We are here to help, so if you have any queries or wish to discuss the above then please contact us.

Further to previous emails, if you are unable to pay your Self-Assessment tax bill due on 31 January 2021 then you can set up a payment plan online to spread the cost. 
 
If you owe less than £30,000, do not have any other payment plans and your tax returns are up to date then you can qualify for the online scheme.  You can access the scheme by following this link. Interest will be charged on any tax deferred.
 
If you do not meet these conditions, you may still be able to set up a payment arrangement, but you will need to call HMRC on 0300 200 3822 and negotiate this with them. 
 
We are here to help, so if you have any queries or wish to discuss the above then please contact us.

New Lockdown Grants to Support Businesses

Following the Prime Minister’s announcement of the new national lockdown, Rishi Sunak has today announced that businesses forced to close in the retail, hospitality and leisure sector shall receive one-off top up grants.
 
These grants will be paid on a per property basis at the following rates:

• £4,000 for businesses with a rateable value of up to £15,000
• £6,000 for businesses with a rateable value between £15,000 and £51,000
• £9,000 for businesses with a rateable value of over £51,000

 
A further £594 million is being made available to Local Authorities to support businesses that are affected by the new restrictions but are not eligible for the above grants.  Applications for grants should be made to your relevant Local Authority.
 
Self Employed Income Support Scheme (“SEISS”)
 
The deadline for claiming the third round of the SEISS grant closes on 29 January 2021.

To make a claim for the third grant, businesses must have had a new or continuing impact from coronavirus between 1 November 2020 and 29 January 2021 which you believe will result in a significant reduction in your profits between these dates. 

Your business may not have been affected from 1 November to date, but with the new national lockdown now in place this may change and you should consider whether you are entitled to the grant.  The grant is worth 80% of your average monthly trading profits, paid out in a single instalment covering 3 months’ worth of profits, and capped at £7,500 in total. 
​
The grant is claimed through your Government Gateway account and must be made before 29 January 2021.  If you need help in accessing your account then please contact us

Other Continuing Support

As a reminder, the Government are continuing to pay up to 80% of employee wages for hours not work under the Furlough Scheme until 30 April 2021 and access to the various Coronavirus Loan Schemes remains open until 31 March 2021.
 
We are here to help, so if you have any queries or wish to discuss the above then please contact us

Coronavirus Job Support Scheme
The Government has today announced that the Coronavirus Job Retention Scheme will now be extended from 31 March until 30 April 2021. The criteria for the extended scheme remain the same with the Government continuing to pay up to 80% of hours not worked up to the cap of £2,500 per month.

Updated guidance on paying deferred VAT
The Government have updated their guidance on paying any VAT that was deferred during the period from 20 March to 30 June 2020. The deferred VAT was originally payable by March 2021 but following more recent announcements this has now been extended, interest free, to March 2022.
​
To take advantage of the new payment scheme businesses need to opt in by the end of March 2021 through their Government Gateway account and more information on this can be found here.

Coronavirus Loan Schemes
Access to the Coronavirus Loan Schemes (Bounce Back Loan Scheme, Coronavirus Business Interruption Loan Scheme and Coronavirus Large Business Loan Interruption Loan Scheme) have been extended from 31 January until to 31 March 2021.

2021 Budget Speech
The Budget speech has been confirmed to take place on 3 March 2021.
 
We are here to help, so if you any queries or wish to discuss the above then please contact us.

There has been a lot of talk in recent weeks regarding the upcoming Christmas break and the interaction with the Coronavirus Job Retention Scheme (‘CJRS’) with some employers planning to place their employees on furlough while they are on holiday over the Christmas period.
 
The purpose of the extended CJRS is to provide financial support to employers who have been forced to close their businesses or faced a downturn in the volume of work available for their employees due to the resurgence of coronavirus.  The guidance is clear that employees should not be placed on furlough for a period simply because they are on holiday for that period.
 
Employees who are genuinely furloughed due to their employment activities being adversely affected by the pandemic or the measures taken to restrict further transmission can take holiday during their period of furlough without affecting the CJRS grant available.  This holiday can be taken at the request of the employee or, provided the appropriate notice is given, at the employer’s request.  Employees should be paid at their normal rate for any period of holiday with the claim for the CJRS grant being restricted to the grant amounts, currently 80% of their usual pay.
 
Some practical examples:                                              

• An employee has been on furlough throughout November and December due to there being no work available.  The employee has already booked holiday over the Christmas period.  As the holiday is within a much longer furlough period a CJRS grant claim can be made for the period of holiday with the employer funding the top up to 100% of normal pay.

 

• A business has historically opened its offices over the Christmas period (except for Bank Holidays) for staff to attend work.  Due to the coronavirus pandemic there is less work available for employees and therefore the employer decides to give employees notice that the office will close for two full weeks over Christmas and they are required to take holiday.  As long as there is clear evidence that the closure is caused by the coronavirus pandemic directly leading to a reduction in the need for the activities of the employees, then the employer will be able to furlough the staff for this period and claim a grant under CJRS.

 

• A factory has shut down its operations over Christmas for the last five years with employees taking the time off out of their annual holiday entitlement.  As this is an annual occurrence it is likely to be viewed by HMRC as standard practice and therefore not as a result of the current coronavirus pandemic.  A CJRS grant claim should therefore not be made in these circumstances.

 

• A business has plenty of work available and an employee asks for a week off over Christmas, the request is granted and the employer wishes to furlough the employee for the period of holiday.  As the employee is being placed on furlough purely because they are taking holiday then a CJRS grant claim should not be made.

 
Employers deciding to place employees on furlough over Christmas should therefore proceed with care, taking into account the guidance available.  The CJRS Treasury Direction includes a clause that states no CJRS claim may be made in respect of an employee if it is abusive or is otherwise contrary to the exceptional purposes of CJRS.  HMRC has said that it will be checking claims and challenging employers on their reasons for placing employees on furlough to ensure the claim is valid.
 
Finally, employers should also be aware that HMRC have announced that they will be publishing details of CJRS claims made for periods from 1 December 2020.  This will include the employers’ name and Companies House reference (where relevant) together with the value of the claim within set bands which can be found here. Employees will also be able to see on their Personal Tax Account whether a claim has been made for them by their employer.
 
We are here to help, so if you any queries or wish to discuss the above then please contact us.