Independent practitioners are being advised to exercise caution and take advice before trying to dip into Chancellor Rishi Sunak’s latest business support package.
Vanessa Sanders of Stanbridge Associates
Specialist medical accountant Vanessa Sanders, a partner at Stanbridge Associates, told Independent Practitioner Today: ‘While these measures are there to assist with businesses affected by Covid-19, it is important to take advice before applying for financial help, as the intention for funds is directed to viable businesses struggling for cash flow.
‘It is unlikely to be long before HM Revenue and Customs (HMRC) focuses attention on those who have utilised these funds who did not need to do so because of adequate reserves or funds from alternative sources to trade. Exercise caution and take advice.’
With the autumn Budget now delayed until next year, the interim measures just announced are directed at keeping the economy from suffering an enormous blow during the next few uncertain months.
The main announcement focuses on a new Job Support Scheme and an extension to the Self Employment Income Support Scheme, plus additional flexibility for viable businesses borrowing money as a result of the pandemic.
Mrs Sanders said the Chancellor’s incentives (see below) would soften the potential blow of continuing restrictions to business being able to return to normal, but would by no means offer any certainty about the current situation or provide sustained hope for what the future will look like.
Job Support Scheme
- A new six-month scheme starting from 1 November 2020.
- Designed to support viable jobs which means employees must work at least one-third of their hours, paid as normal, in order to qualify for the scheme. The Government and employer will then each cover one-third of any remaining hours the employee is not working.
- Employees will forgo one-third of their pay for the hours they do not work. So employees working the minimum one-third of their hours will receive at least 77% of their pay.
- The level of the grant will be calculated based on an employee’s usual salary but subject to a cap.
- The scheme will be open to all small and medium-sized businesses, but larger businesses will only qualify if their turnover has fallen as a direct result of the pandemic.
- Business may use this scheme even if they have not previously participated in the Coronavirus Job Retention Scheme (CJRS).
- The Job Retention Bonus, allowing qualifying businesses to claim £1,000 for each CJRS participating employee, will remain. Employers can claim both the Job Retention Bonus and funding through the Job Support Scheme.
Self-Employment Income Support Scheme extension
- Assistance for the self-employed is based on similar terms and conditions as the new Jobs Support Scheme.
- The extended scheme will apply for 6 months from 1 November 2020, with an initial taxable grant made available to those who continue to trade and are currently eligible for SEISS.
- The initial lump sum will cover three months of profits from 1 November 2020 calculated as 20% of average monthly profits, up to a total of £1,875.
- An additional second grant will be available from 1 February 2021 to 30 April 2021, but the level of this second grant amount is subject to review.
Loan deadlines extended
- Businesses who have borrowed under the Bounce Back Loan will be able to benefit from a new Pay As You Grow flexible repayment system.
- This will include an extension in the loan term from six to ten years.
- There will be new options for interest-only repayments for up to six months.
- Repayment holidays will be built in to allow for staggered recovery.
- The Coronavirus Business Interruption Loans will have their Government guarantee extended to ten years.
- The deadline for applying for all the Government’s coronavirus loan schemes will be standardised and pushed back until 30 November 2020.
- A new successor loan guarantee programme is also expected to be introduced early next year.
New VAT payment scheme
- Businesses had the option to defer the payment of any VAT liabilities due between 20 March 2020 and 30 June 2020.
- The deferred payment was due to be paid in full to HMRC by 31 March 2021.
- The Chancellor has now confirmed that businesses will instead be able to make 11 smaller interest-free payments during the 2021-22 financial year.
Self-Assessment payment deadlines
- Taxpayers due to make second payments on account for the 2020 fiscal year had the option to have the payment due date deferred until 31 January 2021.
- It will now be possible to benefit from a separate additional 12-month extension from HMRC on the ‘Time to Pay’ self-service facility for this payment and also for payments due in January 2021 extending the deadline until January 2022.
See ‘Ten tips for independent practitioners returning to work’
See ‘Your questions answered on the latest update to the furlough scheme’