Job Retention Scheme Pay-outs – where to post these in your books
The Furlough Grant should be treated like any grant and it should be posted it back to the expense code it relates to.
For example, if you receive an apprenticeship grant this should be posted back to the Gross Wages account.
When receiving grants for the Job Retention Scheme these will need to be split between Gross Wages, Employer NI and Pension costs. The figures to use for each category will depend on the claim made.
If we submitted your furlough claim, please contact us and we can help you with finding the figures to split appropriately.
Gateway to the Self Employed Income Support Scheme
If you checked your eligibility after our last update and were found to be eligible you will need to make sure you have your Government Gateway set up to make a claim. https://www.tax.service.gov.uk/self-employment-support/enter-unique-taxpayer-reference
HMRC has specifically said in order to reduce fraud agents won’t be able to apply on our client’s behalf. We only have access to the Agents Gateway so you will need to set one up to claim the funding.
The good news the gateway is very simple to set up:
Instructions on how to create government gateway account
- Go to HMRC’s login page.
- Click the GREEN sign in button.
- Click “Create sign-in details”
- Enter your email address where asked.
- You will now be emailed a confirmation code. Use this code to confirm your email address.
- You will now be issued with a User ID for your government gateway account.RECOMMENDED: Print this page to PDF and file it somewhere safe. The user ID is a digital string so not memorable. Losing this ID can create a lot of work in the future.
An Important Note Regarding Your Furlough Claim – (If submitted by us)
We have been busy submitting Furlough Claims on behalf of our clients and I wanted to raise this point.
I am sure you are aware but when you are submitting your Furlough claim or delegating this to us, you are agreeing that any claim made for employees under the Furlough scheme is in accordance with the Coronavirus Job Retention Scheme terms and conditions and that in order to be eligible for the grant, when on furlough, an employee cannot undertake work for, or on behalf, of the organisation or any linked or associated organisation.
This includes providing services or generating revenue. Full Terms and Conditions are available here: https://www.gov.uk/guidance/claim-for-wage-costs-through-the-coronavirus-job-retention-scheme.
We are not checking the validity of your claim and therefore cannot be held responsible should it later be investigated by HMRC and deemed to be erroneous. It is almost certain that HMRC will be investigating these claims when things return to normal.
Please mind the gap – issues with the government support package
We now know a lot more about the Government Finance schemes available and they are impressive that must be said.
Rishi Sunak and his team have done an amazing job, in a short space of time, giving away money all over the place.
The boat is sinking and the lifeboat has been sent and at the risk of complaining about what colour it is, I wanted to highlight some of the gaps in the funding help.
SME’s in serviced offices or those without an office
A cash grant of £10,000 is available for small businesses with a Rateable Value of £12,000 and under. However, many businesses that rent space in serviced offices provided by operators do not have individual business rates assessments, as they pay a fixed all-inclusive monthly service agreement to their office provider to cover rent, rates, service charges.
These businesses would miss out on this grant. Likewise, any business working from home or without a permanent base.
Self Employed with profits over £50,000 & the newly self-employed
The self-employed Support scheme is set to roll out next month but…
If you earned more than £50,000 (or earned less than half of your income from self-employment) in 2018/19, the Government will check your 2016/17 and 2017/18 tax returns, if you filed them for those years. If on average over the three years you earned more than £50,000 and made more than less than your income from self-employment, you won’t be eligible.
£50,000 may sound like a lot but people tend to live to their means and if they haven’t got savings and can’t work then this could be a real issue.
Finally, the newly self-employed miss out as you had to have filed a 2018/19 tax return.
Bounce back loans New Business
This is the new 100% govt backed loan with a 12-month interest and repayment holiday.
Anyone who started trading from 1st March is not eligible for this loan (although if you converted from a sole trader to a limited company you might be.
If your business is not financially viable you will not be able to access this funding.
If you started work after the 28th February, chances are you cannot be furloughed if your employer can’t afford to keep you are more than likely to be made redundant.
Limited Company directors
There is a misconception that directors of single director companies cannot be furloughed. They can – however their business would have to completely shut down and they can only do statutory duties, nothing revenue-generating so it’s in their best interest not to furlough themselves.
Plus chances are, even if they did furlough, that they are taking their income as dividends. Furlough only covers the PAYE element so you are missing out on most of your income.
Some directors pay themselves annually at the end of the tax year if this is case chances are you can’t be furloughed.
Lowlife scammers are taking advantage of coronavirus to try to defraud people, especially the elderly and vulnerable.
We have seen an example of this in our office and so would warn people to be vigilant.
HMRC are unusually contacting people on the phone to verify claims but you should never give them your bank details and the best advice here is to call them back.
Only business with a rateable valuable under £15,000 or retail leisure and hospitality business with a rateable value less than £51,000 are eligible.
This means many small businesses will miss out for example:
- A client with an industrial unit with a rateable value of £16,000 missed out whilst his neighbour slightly smaller unit rateable value of £14,500 qualifies.
- Restaurants and Pubs with a rateable value of £52,000 miss out – business has ceased under lockdown but there is no help here.
Almost everyone applying for a CBILS loan
Ok so the banks are processing these but it reported that around 21% of everyone who applied is accepted and these figures are from the banks.
A survey released by the British Chambers of Commerce showed that just 2% of respondents had successfully accessed the CBILS programme this week.
So banks are dragging their heels on this big time.
Contrast this to the speed in which bounce back loans are being processed it proves that Banks are capable of moving at speed but choose not to.
Funding Circle and the like can process loans quickly and efficiently (albeit at a premium) the big banks need to adapt not only for themselves to survive but also to help their business customers survive.