DMS Posts

Brexit: how small businesses can prepare

The road to Brexit hasn’t been the smoothest journey for small businesses so far and as the new year approaches, there are a number of new rules for businesses on the horizon. Despite some remaining uncertainty surrounding the details of Brexit, we know that the UK’s transition period for leaving the EU will officially end on 31st December 2020 and will not be extended.

As a result, your business may need to make a few changes from 1st January 2021 onwards. Most of these changes will need to take place regardless of the agreement the UK reaches with the EU on its future relationship because the UK will definitely be leaving the single market and customs union.

If any of the following conditions apply to your business, you’ll need to make sure you comply with any relevant new rules from 1st January:

If you sell goods to the EU then you must prepare for new customs procedures.
If you travel to the EU for work purposes, you will need to check if you need a visa or work permit and then apply if necessary.
If you employ overseas nationals, you will need to prepare your business for the implementation of a new immigration system.


If you run a UK business that receives personal data from contacts in the EEA, you may need to take extra steps to ensure that the data can continue to flow legally at the end of the transition period.


If you provide services in the EU, you must ensure that your qualifications are recognised by EU regulations in order to be able to practise or service clients in the EU.


Every business will have different rules to comply with, so the government has created a handy tool to help you identify the actions that your business needs to take. As January is rapidly approaching, we’d strongly recommend that you find out what your responsibilities are as soon as possible.

DMS Posts

CJRS extension: Get the details right

The policy paper that accompanied Chancellor Rishi Sunak’s announcement on 5 November provides us with a little more information, but it promises that more guidance will be produced on Tuesday 10 November. A further announcement will detail whether the full 80% employer funding will continue from January to the end of the scheme.  

Weekly payrolls

The first weekly payrolls for November have already been run, when there was no indication of what reference pay or usual hours calculation was to be used for employees who had not been furloughed previously. Hopefully the new guidance will allow corrections to be made next week and before the vast majority of monthly payrolls are run.

Pay reference periods

For employees eligible for the previous iterations of the CJRS, the reference pay remains as the calculation for CJRS.2 that ended on 31 October. This is the case even if the employer did not make a claim for the employee.

Other employees may be now eligible for CJRS.3 as they either:

  • had earnings for 2019/20 reported on a full payment submission (FPS) from 20 March 2020 to 19 April 2020 (19 April being the deadline for 2019/20 submissions); or
  • had earnings for 2020/21 reported on a full payment submission from 6 April 2020 to 30 October 2020

The pay reference period will be:

  • for fixed-rate employees the last pay period on or before 30 October 2020.
  • for variable pay employees the average over the period from 6 April 2020 to last pay period on, or before, the day before they were furloughed under CJRS.3.

Note: Fixed-rate employees can be treated as variable if they have lots of fluctuating additional pay such as overtime.

Is it fair?

The calculation of reference pay appears more generous for variable-paid than for fixed-rate employees. Any pay rises from 1 November to start of furlough will be ignored for fixed rate employees, but pay will be included in the average for variable pay employees over (potentially) a much longer period if the business doesn’t need to furlough immediately under CJRS.3.

Conversely there doesn’t appear to be the option to use the pay period before the start of furlough if that was higher than the average for a variable pay employee.

There is also a strange outcome where an employee began work in October, as a fixed rate employee on say national minimum wage; they would be furloughed on £8.72 per hour, whereas a colleague employed since February 2020 would only be furloughed based on £8.21 per hour.

Owner managed businesses

Directors who reported their annual payment for 2019/20 to HMRC after 19 March 2020 will now be included in CJRS.3 having been excluded up until 31 October. The rate of earnings reported in the period from 20 March to 30 October 2020 can be claimed, subject to the £2,500 monthly pay cap. Remember this £2,500 cap is pro-rated to the number of furloughed hours as a proportion of usual hours.

With the ability to flexi-furlough being in place from 1 November 2020 this will be more attractive to such directors, but we still face the conundrum of trying to be able to evidence usual hours to support the claim.

Usual hours

For previously eligible employees the usual hours remain as per the calculation for CJRS.2 that ended on 31 October. This is the case even if the employer did not make a claim for the employee.

For newly eligible employees, usual hours will be:

  • for fixed rate employees the contracted hours worked in the last pay period ending on or before 30 October 2020.
  • for variable pay employees the average hours worked between 6 April 2020 and the day before they were furloughed under CJRS.3

The usual hours are based on calendar days in the claim period.

Claim deadline

One of the most concerning differences from the CJRS.2 is the fact that claims for the prior month have to be made by the 14th day of the following month. Thus, claims up to 30 November have to be claimed by 14 December.

This will put an enormous burden on employers and agents and may prove impossible where payments for the month of November are paid in arrears in December with timesheets having to be collated. We will have to see whether an estimated claim is worth making by the deadline, and whether HMRC will allow corrections after 14th of each month.

Claims will be able to be made in advance (I assume as now 14 days before payday) and will pay out within six days. The new claim portal will open at 8am on 11 November.

Employers are not required to submit their RTI returns before making a claim, so we appear to have returned to the ‘pay now check later’ model. There is also no mention in the policy paper of informing employees that their employer has claimed on their behalf as had been the intention with the JSS, but employers using the scheme will be named.

Rehires

Individuals who had a date of leaving reported after the 23 September 2020 can be reinstated if the employer so chooses.

Contract changes

The government has recognised that it has been impossible to put in place furlough agreements from 1 November, given that employers were not aware what the reference pay period would be. Contract changes can be backdated to 1 November 2020 but must be issued by 13 November 2020, but as the new guidance is promised on 10 November this could be challenging.

Claim periods will cover a minimum of seven days and I assume orphan periods will be a feature of the new scheme, where a week split is over two calendar months, meaning there will be less than seven days in the claims. This should be okay as long as it’s preceded or followed by a seven day period of furlough.

Schemes scrapped

The job support scheme will not be coming into effect this tax year and the job retention bonus has been scrapped.

What hasn’t changed from CJRS.1 and CJRS.2?

  • All employment rights continue during furlough, eg accrual of holiday pay and leave.
  • Employees can be included in a CJRS claim when they are off sick, and must be paid at least the level of SSP. Employers can choose to either pay SSP only or furlough pay, and clearly the latter is more beneficial to the employee and employer.
  • Employers can top up furlough pay but aren’t obliged to.
  • Employers will still be liable for employer’s NIC and pension contributions for any unworked hours
  • Employees can train, volunteer, or work for another employer whilst furloughed
DMS Posts, Tax

What support is available for businesses during the second lockdown?

With lockdown number two starting on Thursday 5 November, the government has announced new measures to help businesses keep going. The main announcement is the extension of the Job Retention Scheme, which is reverting back to the levels of support during August, offering businesses more generous financial help than they would have received under the postponed Job Support Scheme. 

Job Retention Scheme  

The Job Support Scheme has been postponed and the Job Retention Scheme has been extended until March 2021. 

Key points of the Job Retention Scheme: 

  • All employers are eligible for the extended Job Retention Scheme. 
  • As long as the employee was on the payroll at 23:59 on 30 October 2020, they can be furloughed.  
  • Employees do not have to have been previously furloughed to be eligible. 
  • Businesses will have the flexibility to bring furloughed employees back to work on a part-time basis or furlough them full-time. 
  • If employers fully furlough employees, the government will pay 80% of their current salary up to £2,500. 
  • If employers choose to flexibly furlough, the government will cover 80% of the hours not worked. 
  • Employers must pay all National Insurance and employer pension contributions.  
  • Employers will need to report and claim for a minimum period of 7 consecutive calendar days. 
  • Employers are still able to choose to top up employee wages above the scheme grant at their own expense if they wish. 
  • The level of support is expected to be reviewed in January 2021.

Increased support in November for the Self Employment Income Support Scheme 

In line with the increased support for employers, the third SEISS grant covering November, December and January will now be 80% of 3 months average monthly trading profits, paid out in a single instalment and capped at £7,500 in total. The grant will be available from 30 November 2020.

Extension to Government-Backed Loan Schemes 

There has been a further extension to the application deadlines for the CBILS and BBLS as well as the CLBILS and Future Fund, giving people more opportunities to access funding if they need it. These schemes will now be extended until the end of January 2021. 

The government has also announced existing Bounce Back loans can be topped up if businesses did not apply for their maximum in their application (to the maximum under the scheme rules) should they need additional finance. Details on how to top up loans have not been given at the moment but we will continue to update this page as further information is announced. 

Grants 

Businesses required to close in England due to local or national restrictions will be eligible for the following: 

  • For properties with a rateable value of £15k or under, grants to be £1,334 per month, or £667 per two weeks; 
  • For properties with a rateable value of between £15k-£51k grants to be £2,000 per month, or £1,000 per two weeks; 
  • For properties with a rateable value of £51k or over grants to be £3,000 per month, or £1,500 per two weeks. 

Mortgage Holidays 

Mortgage payment holidays were set to end on 30 October, however, this has also been extended. Borrowers who have not yet had a mortgage holiday will be entitled to a six month holiday, and those that have already started a mortgage payment holiday will be able to top up to six months without this being recorded on their credit file. 

DMS Posts, Tax

CJRS and SEISS: how to correct an over claimed grant

Unsurprisingly, HMRC has announced how they will be cracking down on fraudulent grant claims. Due to the speed and urgency that claims were made and issued, there are likely to be a number of innocently miscalculated grants and HMRC is requesting that businesses double-check their calculations and notify HMRC within 90 days of receiving any grants, however the penalties will largely be directed at those who deliberately did not comply with the criteria and knowingly submitted fraudulent claims.

HMRC services sign in

This applies to the Coronavirus Job Retention Scheme (CJRS) and the Self Employment Income Support Scheme (SEISS) as well as the Coronavirus Statutory Sick Pay Rebate Scheme and other coronavirus business support grants. In this blog, we have explained how to repay an over claimed CJRS or SEISS grant, when you need to do this and what penalties you may face if you do not comply.

Why would I need to repay part or all of a claim?

Under the CJRS, the main reasons that could trigger a partial or full repayment of a claim include:

  •  grants not used for the purposes for which they are intended;
  •  calculation errors
  •  employees working during periods that they are on furlough.

For those who claimed under the SEISS you will need to repay some or all of your grant if you:

  • received more than HMRC said you were entitled to
  • your business was not adversely affected
  • you did not trade in the tax year 2019 to 2020
  • you did not intend to continue to trade in the tax year 2020 to 2021
  • you have incorporated your business since 5 April 2019

When do I need to inform HMRC about an overpayment?

If you have claimed too much for a grant and have not repaid it, you must notify HMRC and repay the money by the 20 Oc‌to‌be‌r 2020 if you received money you’re not entitled to or if your circumstances changed on or before 22 J‌ul‌y or within 90 days if you received the money after 22 July.

How do I tell HMRC about an over claimed grant?

CJRS: If you are making another CJRS claim, you can report the overpayment as part of the claims process, and the new claim will be adjusted to count for the overpayment. If you are not making any further claims, you will need to contact HMRC who will then provide a reference number for you to make a repayment. Further guidance can be found here.

SEISS: To repay an over claimed SEISS grant you will need to log into your Government Gateway account and fill out the relevant form with your grant claim reference and Self Assessment Unique Taxpayer Reference (UTR) number. Once you have filled this form out, HMRC will give you the details of where to repay the funds.

What penalty could I face if I do not notify HMRC?

For an over claimed CJRS payment that is not paid back within the notification period, you may have to pay a penalty of up to 100% of the amount of the CJRS grant that you were not entitled to receive or keep. HMRC has been very clear that the onus is on the taxpayer to determine if they received an incorrect grant amount.

If you received an overpayment under the SEISS, the penalty will depend on whether you knowingly over claimed or not. If you knowingly applied and received a grant whilst being ineligible, the penalty will be based on the amount you were not entitled to receive along with other factors. If you honestly believed you were eligible, and you later realised this was not the case, HMRC will only penalise you if you have not repaid the grant by 31 January 2022.

DMS Posts, Tax

Self-Employment Income Support Scheme grant extension

The UK Government recognises the continued impact that coronavirus (COVID-19) has had on the self-employed and has taken action to provide support.

The Self-Employment Income Support Scheme grant extension provides critical support to the self-employed in the form of 2 further grants, each available for 3 month periods covering November 2020 to January 2021 and February 2021 to April 2021.

1. Who can claim

To be eligible for the grant extension self-employed individuals, including members of partnerships, must:

  • have been previously eligible for the Self-Employment Income Support Scheme first and second grant (although they do not have to have claimed the previous grants)
  • declare that they intend to continue to trade and either:
    • are currently actively trading but are impacted by reduced demand due to coronavirus
    • were previously trading but are temporarily unable to do so due to coronavirus

2. What the grant extension covers

The extension will last for 6 months, from November 2020 to April 2021. Grants will be paid in 2 lump sum instalments each covering a 3 month period.

The third grant will cover a 3 month period from 1 November 2020 until 31 January 2021. The Government will provide a taxable grant calculated at 80% of 3 months average monthly trading profits, paid out in a single instalment and capped at £7,500 in total. This is an increase from the previously announced amount of 55%.

The Government are providing the same level of support for the self-employed as is being provided for employees through the Coronavirus Job Retention Scheme which has also been extended until March 2021.

The Government has already announced that there will be a fourth grant covering February 2021 to April 2021. The Government will set out further details, including the level, of the fourth grant in due course.

The grants are taxable income and also subject to National Insurance contributions.

3. How to claim

The online service for the next grant will be available from 30 November 2020. HMRC will provide full details about claiming and applications in guidance on GOV.UK in due course.