Further to our update of 23rd March we have some additional, practical advice based on our findings over the last week and we have detailed this below:
Stamp Duty payment changes
HMRC has announced that it has introduced a temporary electronic service to replace the usual Stamp Duty payment process. Stamp Duty must now be paid electronically (cheques will not be processed) and the taxpayer must then email details of the transaction to HMRC, including an electronic copy of the document that would otherwise have been stamped. HMRC has also stated that it will accept electronic signatures while these measures are in place. HMRC will send a confirmation letter by email.
Companies House has also confirmed that, following the purchase of a company’s own shares, HMRC will issue a letter confirming the duty has been paid. Unstamped SH03 forms accompanied by the HMRC letter will be accepted by Companies House.
Further details of the new payment process are available here
Please note that this only applies to stamp duty on shares and not to Stamp Duty Land Tax on property transactions.
Update on grants for “furloughed” workers
Further to our previous news alert on 23rd March – Previous article – HMRC have now issued some clarification on the details of the grants available to employers who put workers on leave (“furlough”).
The on-line claim service is expected to be launched by the end of April.
Employees must have been on the payroll as at 28 February 2020, but it is now confirmed that flexible/zero-hour employees are eligible, as well as employees made redundant since 28 February, as long as they are re-hired.
The maximum grant is the lower of (a) 80% of the employee’s “regular wage” (excluding bonuses and commissions) and (b) £2,500. In addition, employer national insurance and minimum auto-enrol pension contributions on this amount may be claimed, giving a maximum grant per employee per month of £2,804.
Employees on variable pay, such as those on zero-hour contracts, who have been employed for more than a year prior to the claim may be paid the lower of 80% of (a) the average monthly earnings in the 2019/20 tax year and (b) the actual month’s earnings from the same month in the previous year, subject to the £2,500 limit.
Any grants received will be subject to tax (corporation tax or income tax) for the employer.
The guidance says nothing explicit about owner-directors, but our current understanding is that they can be included in the scheme, but only in respect of their earnings subject to PAYE (not dividends).
Remember also that no furloughed employee (including a director) can perform any work for the employer while on furlough, although it would appear that voluntary work and training may be done provided that it does not constitute the provision of a service to the employer or contribute to revenue generation for the employer.
Finally, there is nothing in the provisions to prevent a furloughed worker from undertaking work for another employer, although that is likely to be forbidden under most employment contracts without the employer’s permission.
HMRC’s official guidance is here
and the Institute of Chartered Accountants’ guidance is here
Coronavirus Business Interruption Loan Scheme (“CBILS”)
As set out in our previous news alert on 23rd March, the CBILS is available to provide finance to small and medium sized entities with turnover of less than £45 million. These loans are interest free for the first 12 months, have no arrangement fees and are open to businesses which have a borrowing proposal which the lender:
- would consider viable, were it not for the COVID-19 pandemic; and
- believes will enable the business to trade out of any short-term to medium-term difficulty.
The Big Four banks have said that they will not request personal guarantees from shareholders of companies borrowing less than £250,000 but guarantees or security are likely to be required otherwise.
Anecdotal evidence regarding the effectiveness of CBILS
We have spoken to a number of clients for whom obtaining finance under the CBILS has not been an easy process. In particular, the problems have fallen into three camps:
- Not all banks have yet signed up to be CBILS accredited lenders. This is particularly true of some challenger banks and alternative finance providers but means that businesses who bank with them are struggling to access the scheme. Nevertheless, we understand that more lenders are looking to become accredited over the next few weeks.
- Some banks appear to be applying lending criteria as rigidly as before and may be reluctant to balance risk and return under the scheme by raising interest rates for higher risk borrowers.
- Some companies with more than one lender are struggling to provide security to the primary lender under the CBILS because they have already granted security to other lenders. This seems to be a particular issue for private equity backed businesses.
If you are having difficulty accessing finance under the CBILS, please let us know as we have contacts who may be able to assist.
If you want to discuss any of these points or have any other concerns in regard to business support please don’t hesitate to contact us.
