Did you read our first frequently asked questions blog last week? If not you can have a read here https://vibrantaccountancy.co.uk/a-run-down-of-the-financial-support-available-during-covid-19/
With the continuous updates we are receiving from the government there’s some new questions we’ve been asked that we’ve shared our answers too. Don’t forget Vibrant only use reliable sources of information many of which are listed here https://vibrantaccountancy.co.uk/covid19-not-fake-news/
As a director of my business can I furlough myself?
Here’s what HMRC say; As office holders, salaried company directors are eligible to be furloughed and receive support through this scheme. Company directors owe duties to their company which are set out in the Companies Act 2006. Where a company (acting through its board of directors) considers that it is in compliance with the statutory duties of one or more of its individual salaried directors, the board can decide that such directors should be furloughed. Where one or more individual directors’ furlough is so decided by the board, this should be formally adopted as a decision of the company, noted in the company records and communicated in writing to the director(s) concerned.
Where furloughed directors need to carry out particular duties to fulfil the statutory obligations they owe to their company, they may do so provided they do no more than would reasonably be judged necessary for that purpose, for instance, they should not do work of a kind they would carry out in normal circumstances to generate commercial revenue or provides services to or on behalf of their company.
This also applies to salaried individuals who are directors of their own personal service company (PSC)
What does this mean? Well directors can only furlough themselves when there is no work for them to do, you cannot be trying to generate income or provide services to clients… however you can file accounts (which you are allowed to defer for 3 months).
I am a tenant, but I don’t think I will have the cash to pay my rent come April, what happens?
Firstly we’d say make sure you’re talking to your landlord already, everything is open for negotiation at the moment so they may already have worked through a solution with their financial advisers for if a tenant can’t pay.
If a commercial tenant is unable to pay rent because of coronavirus interrupting their business, then they will be protected from eviction. These measures, announced by the government, support ongoing conversations between landlords and tenants about voluntary arrangements.
I have an employee who work for 2 organisations, what happens if I furlough them?
HMRC indicate that if contractually allowed, your employees are permitted to work for another employer whilst you have placed them on furlough.
For any employer that takes on a new employee, the new employer should ensure they complete the starter checklist form correctly. If the employee is furloughed from another employment, they should complete Statement C. You can find that information here https://www.gov.uk/government/publications/paye-starter-checklist
So long as your employment contract for employees allows them to get another job (e.g. there’s no exclusive working clause) then they are allowed to do continue to work for their other employee whilst you have furloughed them.
What does the Time to Pay Scheme mean in practise?
All businesses and self-employed people in financial distress, and with outstanding tax liabilities, may be able to seek a ‘Time To Pay’ arrangement. These are evaluated on a case by case basis and tailored to individual circumstances. We advise that you call HMRC’s dedicated helpline on 0800 0159 559 as soon as possible.
At the moment (this could be likely to change) the Time To Pay arrangements look like this:
- Businesses can defer PAYE between 1 and 3 months (they will need a valid reason – for example if the company has temporarily shut down)
- Expectation is the deferral will apply up to and including the April payroll
- If the business can’t pay at this point a formal payment plan can be set up between 3 – 9 months
Can I delay paying my income tax?
Absolutely! If you were due to make a self-assessment payment on 31 July 2020 for your ‘Payments on Accounts’ this will automatically be deferred until 31 January 2021.
All business owners are now eligible so if you are due to pay your second self-assessment on 31 July you can defer or delay your payment. The deferment is optional, if you are still able to pay your second payment on account on 31 July then we recommend that you should do so.
This is an automatic scheme, so no applications are required. No penalties or interest for late payment will be charged if you defer payment until January 2021.
I’m looking at my variable costs and staffing is the highest I have in my business, what do I do?
If labour is your biggest cost then consider reducing contract labour and re-distribute work to your permanent workforce. If you haven’t been able to furlough your permanent team then perhaps encourage employees to take available leave and if necessary, consider offering voluntary or even involuntary leave without pay to preserve cash. Make sure you direct the contractors who are self employed to the SEISS scheme; for further details see here
We highly recommend that you see what relief is available from the government first: preservation of jobs is the governments key initiative. Any company can claim on the job retention scheme more details of which can be accessed here https://www.gov.uk/guidance/claim-for-wage-costs-through-the-coronavirus-job-retention-scheme