Coronavirus update

Coronavirus Job Retention Scheme (CJRS)

The option to furlough staff on a part-time basis commenced from 1 July. In order to qualify, staff must have been furloughed by 10 June.

In addition to the increased flexibility, the costs of furloughing staff will start to increase from 1 August, becoming increasingly expensive for employers until the scheme finally ceases on 31 October. The below table summarises the potential costs for employers:

Employers should consider whether the cost of furloughing employees is sustainable and consider whether action is required ahead of 1 August to mitigate these costs.

Self-Employment Income Support Scheme (SEISS)

This scheme is being extended. If you’re eligible for the second and final grant, and your business has been adversely affected on or after 14 July 2020, you’ll be able to make a claim in August 2020.

You can claim for the second grant even if you did not make a claim for the first grant.

Claims for Corporation Tax repayments

HMRC has recently accepted that, due to the exceptional circumstances some businesses are facing as a result of Coronavirus (COVID-19), claims for repayment of corporation tax for prior periods based on anticipated losses before the current accounting period has concluded will be considered. This would be particularly relevant in the retail, leisure & tourism and food and drink industries.

Detailed evidence will be required and HMRC will review each application based on its own facts and circumstances.

Businesses that missed the VAT deferral can claim refund

Part of the initial widespread Government support to assist businesses navigate the COVID-19 pandemic, was to allow taxpayers to defer VAT payments due between 20 March and 30 June 2020 until 31 March 2021.

If businesses failed to cancel their direct debits in time, these VAT payments will have been automatically collected.

HMRC have now announced that those businesses are able to claim a refund of the VAT that was paid. Please note that this will fall due for payment on 31 March 2021, so provides a short-term boost to cashflow.

HMRC advise that the quickest way for businesses to make a claim, is to submit a Direct Debit Indemnity Claim to their bank, ensuring that they state they want to claim a refund under the Direct Debit Indemnity Scheme (DDI). HMRC confirms that there is no time limit in making this request.

Construction Industry Reverse VAT charge postponed

A further five-month delay to the introduction of the domestic reverse VAT charge for construction services has been announced due to the impact of COVID-19.

The reverse charge for VAT on construction services was originally due to come into force on 1 October 2019, but its introduction was later pushed back until 1 October 2020. The new measures are now expected to come into force on 1 March 2021.

The reverse-charge system is designed to require a VAT-registered business to account for the VAT due when buying certain services from its suppliers. The business then pays the VAT to HMRC by making an adjustment to their VAT return rather than paying the VAT to the supplier.

The advantage of a reverse charge is that there is no risk of a fraudulent supplier invoicing for work that it has purportedly supplied together with VAT, which it then fails to account for to HMRC.

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