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How to claim your VAT deferral

How to defer VAT payments coronavirus

VAT payments due before the end of June 2020 can be deferred until March 2021.

This is an automatic offer with no applications required. Businesses will not need to make a VAT payment during this period. 

Please remember that the deferred VAT payment will eventually need be paid on or before 31 March 2021 – and VAT returns should be processed as normal.

VAT refunds and reclaims will be paid by the Government as normal.

Cancel your direct debit

However: whilst HMRC does not require you to make a VAT payment – if you pay by direct debit (and  many businesses do) YOU SHOULD CANCEL YOUR DIRECT DEBIT TO ENSURE THAT HMRC DOESN’T AUTOMATICALLY TAKE PAYMENT. 

Murray Patt says:

Many of our clients plan to make use of this VAT deferral in order to conserve cash in their business.  We are keen to remind everyone who is doing so to cancel their direct debit to avoid payment being taken.

If you have any further queries about the coronavirus VAT deferral scheme speak to Murray Patt on 0161 980 8788.

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More clarity about how the ‘80%’ scheme works

We’ve been closely monitoring the support being made available by the Government. In particular, we’ve been keen to get more details about the Job Retention Scheme (often referred to as the ‘80%’ scheme).

Further details on this particular scheme are now available directly here.

Key issues

The main aspects of the scheme which are most relevant to you (based upon our review of the rules and feedback we’ve received from the clients we have been discussing this with in detail) are as follows:

  • There doesn’t appear to be any restriction for directors/family member, which was one of our initial concerns – so everyone may apply.
  • Companies will receive a grant from HMRC to cover the lower of 80% of an employee’s regular wage or £2,500 per month, plus the associated Employer National Insurance contributions and minimum automatic enrolment employer pension contributions on that subsidised wage.
  • Furloughed employees must have been on your company payroll on or before 28 February 2020
  • If the employee has been employed (or engaged by an employment business) for a full twelve months prior to the claim, you can claim for the higher of either:
    • the same month’s earning from the previous year
    • average monthly earnings from the 2019-20 tax year

If the employee has been employed for less than a year, you can claim for an average of their monthly earnings since they started work.

  • You can choose to provide a top-up salary in addition to the grant. Employer National Insurance Contributions and automatic enrolment contribution on any additional top-up salary will not be funded through this scheme
  • Grants will be paid by BACS, after providing your bank account details, although there is no timescale for home quickly companies will be reimbursed.

This is a very rapid piece of legislation and is consistent with the Governments initial announcement. The main issue still not resolved is the timescale from submission of a claim to payment. Be assured that we will keep monitoring the situation and share key details and updates as they emerge.

If you require specific advice and support to implement this scheme in your business please speak directly to Murray Patt.

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How to implement the ‘80% of salary’ ‘Job Retention Scheme’

How to implement the '80% of salary' Job Retention Scheme

In these challenging times and with many businesses looking for answers to questions about the Government backed support, the following information, which relates to payroll & staff costs, may be useful to you:

Support for Businesses through the Coronavirus Job Retention Scheme

  • The scheme will enable businesses to recover 80% of wage costs for employees on ‘furlough leave’ – which is an entirely new concept and is a new class of indefinite leave where the government will reimburse the employer for wage costs.
  • This has been introduced as an alternative for employers who might have otherwise implemented redundancies, lay-offs, unpaid leave or other measures for their employees.
  • All UK businesses are eligible to claim under the scheme. It seems that employees will be covered, but not other workers (such as casual staff or contractors) or the self-employed, although we expect support for these classes of worker to be announced shortly.
  • The government has announced that the scheme is available for at least three months from 1 March 2020 and will be extended if necessary.

 What costs can employers recover?

  • The coronavirus job retention scheme allows for 80% of wage costs to be recovered up to £2,500 per month per employee. There is no limit on the number of employees or the duration. Wage costs are expected to include wages, pension contributions and employer national insurance (NI) contributions, although this has not yet been confirmed.

What do employers need to do?

  • Employers and employees will need to agree the members of staff being designated as ‘furloughed workers’. This should be straightforward because this route will no doubt be more attractive to employees than redundancy, lay off, unpaid leave or a reduction in pay.
  • We recommend employers send a letter/email to each employee concerned and get them to agree to the change in status formally in writing.
  • Employers will then need to submit details to Her Majesty’s Revenue and Customs (HMRC) through a new online portal, which is being set up urgently.
  • The portal is expected to be in place by the end of April, so the 1st claim will cover the months of March & April 2020.
  • The timescale for payments to businesses is not yet known.

Does the employer have to top up the employee’s pay to 100%?

  • No, they do not. Some employers may wish to make up the shortfall, while others may not be able to. This just needs to be made clear to all employees concerned.

What about employees that have already been dismissed or taken unpaid leave?

  • The scheme is backdated to 1 March 2020 and employers are urged by the government to take back anyone they had already dismissed and convert them to this leave instead. Likewise, with anyone who is on unpaid leave.

What situations will this not help with?

  • Furlough leave is recommended for anyone that would have otherwise been laid off or made redundant due to the impact of coronavirus on the employer’s business.
  • It does not help with any situations where employees had agreed to reduce their hours, or to a pay cut but where they are still required to work. There is currently no option to do a mixture of reduced hours and furlough leave.

Support for Businesses who are paying sick pay to employees

All small and medium-sized businesses and employers will be able to reclaim Statutory Sick pay (SSP) paid for sickness absence due to COVID-19.

The eligibility criteria is as follows:

  • The refund will cover up to 2 weeks’ SSP per eligible employee who has been off work because of COVID-19
  • Employers with fewer than 250 employees will be eligible – the size of an employer will be determined by the number of people they employed as of 28 February 2020
  • Employers will be able to reclaim expenditure for any employee who has claimed SSP (according to the new eligibility criteria) as a result of COVID-19
  • Employers should maintain records of staff absences and payments of SSP (if we look after your payroll this matter is already being dealt with for you), but employees will not need to provide a GP fit note. If evidence is required by an employer, those with symptoms of coronavirus can get an isolation note from NHS 111 online and those who live with someone that has symptoms can get a note from the NHS website
  • Eligible period for the scheme will commence the day after the regulations on the extension of SSP to those staying at home comes into force
  • The government will work with employers over the coming months to set up the repayment mechanism for employers as soon as possible

Further information is being provided by the Government regularly and you should keep up to date with these fast moving developments.

If you have any questions please do not hesitate to contact Murray Patt, or a member of my team – we are all working remotely, fully operational and we are available to speak with you.

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Supporting our clients

We're recruiting in Hale for a new accountant

Murray Patt, our founder, is focused on supporting clients in this challenging period:

“Over the last few weeks we have all been shocked with how coronavirus has had an impact on our respective businesses.

“Whilst we are all in unchartered territory I have some basic rules for you to consider, in trying to get through this period. It may be that not all of these are relevant to you, but there will be some aspects which will help you to think clearly going forward.”

My top-ten-tips are as follows:

  1. “Cash is king”. Businesses do not fail through making losses – they fail when they run out of cash.
  2. Forecast your cashflow. Predict your future cashflow as best you can, & schedule this out using excel/similar tools. I recommend doing this for a 12 week period & monitoring it daily vs actual.
  3. Cash injection. Be prepared to inject monies into your business & talk with your bankers at an early stage for support.  Through fundingcircle.com our clients can secure a discount on standard loan rates, with a rapid decision-making process.
  4. Government loan/grant schemes. Whilst these schemes are very welcome, it will take time for them to get up & running – therefore do not rely on them. Further, if they are administered by the banks/local authorities, who are already struggling for staff, then expect them to be slow & cumbersome.
  5. Loan repayment holidays. Talk with your funder(s) & see if you can arrange a payment holiday on your existing loans.
  6. Employment contracts. Review your staff contracts, & see what scope there is to make changes & save cost. However, please consider the knock-on effect on them.
  7. Paying suppliers. Talk with them &, if you can, agree revised terms in the short-term.
  8. Be selective with cancelling discretionary expenditure. We will eventually come out of the other side of this, & therefore do not terminate arrangements now, which you may regret in a few months time.
  9. Plan in advance. If some form of restructuring to your business is required, then the sooner you take some professional advice the better.
  10. Talk, talk, talk. Don’t be afraid to talk with us, & other business owners. The more we share our experiences the better for everyone.

Murray Patt says:

I suspect that things will get worse before they start to improve again, but they will improve – the uncertainty is the timescale for this. The team at AK&Co are there to support you & we will always make time to speak with you. Every day is a steep learning curve, & we will get through this eventually.

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Coronavirus – an update for clients

With the concerns surrounding the COVID-19 outbreak we wish to reassure our clients and contacts that Alexander Knight & Co remains fully operational and open for business.

  • We are following all appropriate UK Government guidance to ensure the wellbeing of our employees, their families and our clients.
  • We have robust contingency plans in place to ensure that client work can continue with minimal disruption. Our plans will ensure the continuity, integrity and level of service that we provide to help you meet your business objectives and priorities during this time.
  • As part of our business continuity plan all our team have laptops and are able to operate remotely if required. They can be contacted via email or phone in the normal way.
  • We operate in a paperless environment and so all client records and transactional documents are held electronically and can be accessed remotely and securely.
  • We are are still operating face to face meetings and site visits but if you would like to use other methods of communication during this time then we have video and/or telephone conferencing services available.

Alexander Knight & Co are here to support you and your business operations during this time.

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How to stand out from the crowd

Accountants Hale

If you run a business then you’ll know how hard it is to capture the attention of your target audience. Getting people to become aware of your product or service is only the start of the battle. Once you’ve got their attention and they are aware that you exist – how do you actually get them to buy?

It’s often said that we are bombarded by at least 5,000 brand messages every single day.

Consciously or unconsciously you are experiencing the results of somebody’s PR and marketing efforts. In this competitive environment you need to work out what ‘message’ you want to send to the market by defining your own brand identity first and then working out which channels to use to market your services effectively.

Brand footprint

Defining a brand in a crowded sector can be daunting task. The very best brands in any marketplace don’t just look good aesthetically – they back it up with great products and brilliant service.

Remember, a brand isn’t just a logo. It’s a promise, it’s your reputation and it’s your personality as a business. It’s these things combined and rolled out across your website, social media, PR and other marketing collateral that defines who you are to you target market.

Defining who you are as a brand is crucial. Most businesses evolve naturally and business personas develop over time It’s important that you define, not just what your brand identity is now  – but where you are going in the future. This is particularly important if you’ve recent acquired a company or merged with another company. Having a cohesive brand identity is essential.

What is your brand promise? 

Are you faster? Are you cheaper? Are you better? Are you more friendly? Are you luxury? Whatever it is that makes you different needs to be clearly understood internally by you and your entire team before you begin the process of externally marketing it.

We defined our own identity at Alexander Knight & Co as the ‘accountants for entrepreneurs’. It has been highly successful in encouraging business owners to contact us, largely because we talk the same ‘language’ and as business owners ourselves we understand the challenges. Our brand is therefore very important to us – and it plays a huge role in not only attracting new clients but also new staff, suppliers and new business opportunities.

In fact, our own brand development has encouraged many new clients to come on board who are in the business of brand-building, marketing and digital services – so we must be doing something right. Our PR company has been very helpful in this process.

Finally, by reading this article, you are experiencing our own PR and marketing efforts to make you aware of our own accountancy practice for business owners like you  – so if you’re in the market for a new accountant – please do drop me a line!

Murray Patt is the founder of accountants Alexander Knight & Co. You can email him: murray@alexanderknightaccountants.co.uk or call (0161) 980 8788.

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Coronavirus tax credits for your business?

Coronavirus tax credits for business

Coronavirus tax credits should be introduced for businesses that suffer from the impact of coronavirus – as well as more measures to assist SMEs.

The Italian government has introduced tax credits for businesses effected by coronavirus and tax experts say the UK should follow suit to lessen the impact for SMEs.

The Government has now announced an action plan which includes help for businesses. In our view, this should include tax credits for firms who have been hit especially hard like in Italy where firms who see a 25% drop in revenue as a result of the virus can secure further tax breaks.

Impact on business

We are in uncharted waters with regards to the impact of the virus on UK businesses. We know that the FTSE100 has been volatile but we also need to look at the impact on SMEs who are the backbone of the economy.

Tax credits should be introduced for firms who get hit hard and they should be announced in the Budget next week. With companies doing their very best to take precautions to protect their staff we must give SMEs all the support and confidence they need.

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Do you want a ‘Budget for the North’ ?

Budget for the North?

It’s good to see some action from the Northern Powerhouse 11 (NP11) which is in the news this week demanding a ‘Budget for the North’.

We know many of our clients will be enthused to hear this influential group of local enterprise partnerships (LEPs) supporting the Northern export market.

All the entrepreneurs, manufacturers and other innovative businesses across the region who we deal with are working hard to ramp up their export activity in 2020.

Let’s hope that the looming Brexit-related trade deals are not going to destroy the hard work already put in and there are very positive negotiations ahead.

Better transport is another key theme the NP11 is pushing. We are in total agreement. We need resources and mobility if we’re going to get anywhere close to southern productivity rates.

However, we were bitterly disappointed to see that the HS2 proposals for north of Birmingham are not forecast to be delivered to passengers in Manchester and Leeds until between 2037 and 2040!

Much of the east to west rail infrastructure was based on HS2 happening. Does that mean our essential transport links aren’t to be improved in the North until that time as well?

What is important right now, is that the Spring Budget on March 11th 2020 is clear and forthcoming with much needed fresh capital for the North. Our team is poised to inform our clients on any good (or bad!) news announced which may affect their business or their personal finances as company directors.

We’d be very interested to hear YOUR views on this. What would YOU like to see in the Budget?

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