Got a question about tax payments, loans, grants for the self-employed, rates or the job retention scheme? Check out Ian Tongue’s replies to Independent Practitioner Today readers’ common questions.
Q Do I have to pay my taxes as normal?
A That depends on your circumstances.
Any payment due on 31 July 2020 under self-assessment for individuals, whatever the source of the tax, can now be deferred until 31 January 2021.
This is automatic and no action is required, but if you still want to pay HMRC the amount due, then that is fine. It is important to note that, at present, there are no changes to the payments that will be due in January 2021 or the tax return deadline of 31 January 2021 for your 2019-20 tax return.
To allow time to advise you of your liabilities and potentially reduce the payments on account for 2020-21, we strongly advise you to send in your accounting and tax records as soon as possible.
For those that are VAT-registered, whether you trade as an individual, partnership or company, any VAT due between 20 March 2020 and 30 June 2020 is now due by 31 March 2021 which helps with cash flow.
If you have a direct debit in place for payment of VAT during the period 20 March 2020 and 30 June 2020, then it is advised you cancel the direct debit but ensure any payments after those dates are still made. It is important to note that VAT returns must still be filed on time.
Q What about my company’s corporation tax, do I pay this as normal?
A Yes, there are few measures announced to assist companies. To avoid interest charges, you will need to pay your corporation tax by the date advised within your limited company accounts covering letter.
If you are unable to pay your corporation tax, see below.
Q What happens if I cannot pay my taxes?
A Do not panic, just contact us for advice. We can assist you and advise how best to deal with this situation.
If you require additional time to pay taxes, HMRC has been instructed to be sympathetic to taxpayers and allow them additional time to pay and it is more willing to set up payment plans under HMRC’s Time to Pay service.
This service allows businesses and individuals to pay off their debt by instalments over a period and you can delay the first payment for up to three months. These arrangements, however, are agreed on a case-by-case basis and are tailored to individual circumstances and liabilities.
The main ways to setup a payment plan with HMRC are by calling it on 0800 015 9559 or via its webchat service which can be accessed here.
Please be aware, under either route, the wait times can be exceedingly long.
As mentioned previously, it may be possible to reduce tax payments based on the downturn in private practice income. Sending your 2019-20 accounts and tax return information in to us as soon as possible will ensure that we can minimise your tax liabilities.
Q Can I apply for a loan to help my business cash flow?
A Yes, there are two types of support.
Firstly, there is the coronavirus business interruption loan scheme with the Government guaranteeing 80% of the loan.
This loan scheme proved difficult to access as the banks were concerned regarding the remaining 20% and have therefore applied their normal lending polices making access to the scheme difficult.
More recently, the Government have announced the bounce-back loan scheme which carries a 100% guarantee for the banks.
This is proving to be a very accessible scheme with a straightforward application process with funds available in as little as 24 hours. You can borrow up to the lower of 25% of your business income or £50,000.
Q Do I need a ‘business’ bank account for the bounce-back loan scheme?
A Yes, this is a requirement of the application process.
However, we are finding that banks are willing to reclassify accounts as business accounts to allow the application; just watch out for them charging you as a business customer later.
You can always review your banking options at a future date.
Grants for the self-employed
Q I am self-employed for my private practice, am I eligible for the grant?
A Unlikely, this is due to most doctors in private practice having a level of NHS earnings making them ineligible.
Q What about my spouse who is a partner in my business?
A Again unlikely, this is due to the business as a whole being considered for the grant.
Q What about my spouse who runs their own small business?
A Yes, they should be eligible if their trading income is less than £50,000 a year and they meet the other criteria.
The scheme is similar to the job retention scheme and covers up to 80% of self-employed income up to £2,500 per month.
Q Can I obtain help with rates?
If you rent business premises and are paying rates, it may be possible to access a grant. This is not an area we can assist with, but suggest that you contact your local council if you are paying business rates to inquire whether you are eligible for any support.
We hope the above is useful to answer some of the questions you may have and answer others that are relevant to your circumstances. Please do not hesitate to get in touch if you require any assistance.
Coronavirus Job Retention Scheme
Q Have I missed the furlough scheme?
A No, the coronavirus job retention scheme remains open and the system to make claims became live towards the end of April. Claims can be made from the date an employee is furloughed.
The scheme has now been extended until the end of October, which is good news, although the Chancellor is expecting businesses to contribute more from August.
This is likely to mean that the funding reduces from 80% with the figure of 60% being mooted. We will update you as and when further information is available.
Q Can I unfurlough my employee for a short period?
A Yes. However, the minimum furlough period is three weeks. Therefore, if you unfurloughed an employee for a week and then furloughed them again, they would need to be furloughed for a further three weeks to be eligible for the funding.
With co-ordination, you could, for example, provide work to an employee for one week out of four and claim the remaining three weeks.
It is important to note that the one week of employment in the above example is at normal pay levels and once the furlough period starts, consent must be obtained if you are paying the employee at the funding level, i.e. 80%.
The scheme will continue in its current form until the end of July and from the start of August the scheme changes where furloughed workers will be able to return to work part-time with employers being asked to pay a percentage towards the salaries of their furloughed staff.
Q Can my employee take holidays while furloughed?
A Yes, and this is an important consideration the longer the furlough period continues, as the employee continues to accrue holiday while furloughed.
If you require an employee to take holiday, you must give them double the notice of the amount of days you require them to take. As with unfurloughing for a short period, you must unfurlough them and pay them at full pay. Following this, they will need to be furloughed again.
Q Can I make my employee redundant while furloughed?
A Yes, if you decide that the position in question is no longer required, you can make the post redundant.
It is important that correct procedures are adopted with redundancy and the employee is likely to be entitled to a redundancy payment, which our PAYE department can advise you on.
Q Can I furlough my employee if I do not have a PAYE scheme?
A No, a requirement of access to the scheme is a PAYE reference number. A scheme cannot be put in place now to claim.
Q If I take someone on now, can I access the scheme later if required?
A No, if you are taking a new member of the team on after 20 March, you cannot access the scheme.
Q Can I furlough my spouse who is a director of my company?
A Yes, any employee can be furloughed. As with any employee, it is important that they no longer work for the company after being furloughed. In relation to directors only, they are able to carry out their statutory duties as directors during this time, but, in practice, this is limited activity.
Ian Tongue is a partner with Sandison Easson medical accountants