Coronavirus & Business Support

The Coronavirus aka Covid-19 pandemic has changed daily life as we know it and thrown everyone into a period of uncertainty.

In light of these circumstances, we have gathered together useful information for financial support that is available if you are self-employed or a business owner who will be impacted and need support during these difficult times.

Firstly, the UK Governments own webpage for financial support available to businesses can be accessed here: https://www.businesssupport.gov.uk/coronavirus-business-support/

So what help is available? Read on for a helpful summary of each scheme valid at the time of writing (4th April 2020)

Coronavirus Business Interruption Loan Scheme

The Coronavirus Business Interruption Loan Scheme supports small and medium-sized businesses, with an annual turnover of up to £45m, to access loans, overdrafts, invoice finance and asset finance of up to £5 million for up to six years.

The scheme will be delivered through commercial lenders, backed by the Government-owned British Business Bank which will provide lenders with a guarantee of 80% on each loan (subject to a per-lender cap on claims). The government will also make a Business Interruption Payment to cover the first 12 months of interest payment and any lender-levied fees, so businesses will benefit from no upfront costs and lower initial repayments.

There are 40 accredited lenders able to offer the scheme, including all the major banks.


Coronavirus Job Retention Scheme

Under the Coronavirus Job Retention Scheme, all UK employers with a PAYE scheme that was created and started on or before 28 February 2020, will be able to access support to continue paying part of their employees’ salary for those that would otherwise have been laid off during this crisis. 
This applies to employees who have been asked to stop working, but who are being kept on the pay roll, otherwise described as ‘furloughed workers’. HMRC will pay employers a grant worth 80% of an employee’s usual wage costs, up to £2,500 a month, plus the associated Employer National Insurance contributions and minimum automatic enrolment employer pension contributions on that subsidized wage. This is to safeguard workers from being made redundant. The Coronavirus Job Retention Scheme will cover the cost of wages backdated to March 1st if applicable and is initially open for 3 months, but will be extended if necessary.

HMRC are currently working to set up a system to pay these grants which they aim to get done before the end of April.

Self-employment Income Support Scheme

The Self-employment Income Support Scheme (SEISS) will support self-employed individuals (including members of partnerships) whose income has been negatively impacted by COVID-19. The scheme will provide a grant to self-employed individuals or partnerships, worth 80% of their profits up to a cap of £2,500 per month.

HMRC will use the average profits from tax returns in 2016-17, 2017-18 and 2018-19 to calculate the size of the grant. The scheme will be open to those where the majority of their income comes from self-employment and who have profits of less than £50,000. The scheme will be open for an initial three months with people able to make their first claim by the beginning of June.

HMRC have stated that individuals should not contact them now as they will use existing information to check potential eligibility and invite applications once the scheme is operational. HMRC will then pay the grant directly to eligible claimants’ bank account with grants expected to start to be paid out by beginning of June 2020. For eligible individuals who have not submitted their returns for 2018-19, they will have 4 weeks’ notice from the date of the announcement to file their returns and therefore become eligible for this scheme.

Coronavirus Large Business Interruption Loan Scheme

The Coronavirus Large Business Interruption Loan Scheme (CLBILS) will provide a government guarantee of 80% to enable banks to make loans of up to £25m to firms with an annual turnover of between £45m and £500m. Facilities backed by a guarantee under CLBILS will be offered at commercial rates of interest.
The scheme is expected to be delivered through commercial lenders. The Government will provide lenders with an 80% guarantee on individual loans for businesses that would be otherwise unable to access the finance they need but businesses would remain responsible for repaying any facility they may takeout.

Lenders will still be expected to conduct their usual credit risk checks, but this scheme allows them to specifically support business that were viable before the COVID-19 outbreak but are facing significant cash flow difficulties, that would otherwise make their business unviable in the short term.

The new scheme will launch later this month and will support a wide range of businesses to access finance products including short term loans, overdrafts, invoice finance and asset finance.

Business Rates Holiday for Retail, Hospitality & Leisure Businesses

Businesses in the retail, hospitality and leisure sectors in England will not have to pay business rates for the 2020-21 tax year. 1. Local authorities will apply the business rates holiday to your bills. For more information please check the guidance on gov.uk.
You can estimate the business rate charge using the business rates calculator.

You will be eligible if:

1. Your business is based in England*, AND

2. Your business is in the retail, hospitality and/or leisure sector. Properties that will benefit from the relief will be those that are wholly or mainly being used:

a. as shops, restaurants, cafes, drinking establishments, cinemas and live music venues,

b. for assembly and leisure; or

c. and hospitality such as hotels, guest and boarding premises and self-catering accommodation. 


Cash Grant for Retail, Hospitality & Leisure Businesses

If your business is in the retail, hospitality or leisure sector, you will receive a cash grant of up to £25,000 per property.
Businesses in these sectors with a property that has a rateable value of £15,000 and under may be eligible for a grant of £10,000 & those with a property that has a rateable value of over £15,000 and less than £51,000 may be eligible for a grant of £25,000. Businesses with a rateable value of £51,000 or over are not eligible for this scheme.

Eligible businesses will be contacted by their local authority, though some local authorities have decided to operate an applications process. Any enquiries on eligibility for, or provision of, the grants should be directed to the relevant local authority. To find your local authority, use this search tool.

You will be eligible if:

1. Your business is based in England*

2. Your business is in the retail, hospitality and/or leisure sector

3. Properties that will benefit from the relief will be occupied properties that are wholly or mainly being used:

  • as shops, restaurants, cafes, drinking establishments, cinemas and live music venues
  • for assembly and leisure
  • as hotels, guest and boarding premises and self-catering accommodation


Small Business Grant Funding

The Government is providing additional funding for local authorities to support small businesses that already pay little or no business rates because of small business rate relief (SBRR), rural rate relief (RRR) and tapered relief. This will provide a one-off grant of £10,000 to eligible businesses to help meet their ongoing business costs. 
Eligible businesses will be contacted by their local authority, though some local authorities have decided to operate an applications process.

You will be eligible if:

1. Your business is based in England* AND

2. In receipt of small business rate relief or rural rate relief as of 11 March AND

3. You are a business that occupies property


Statutory Sick Pay Rebate

Employees who follow advice to stay at home and who cannot work as a result will be eligible for statutory sick pay (SSP), even if they are not themselves sick. The Government will bring forward legislation to allow small and medium-sized businesses to reclaim Statutory Sick Pay (SSP) paid for staff sickness absence due to coronavirus. This refund will cover up to 2 weeks’ SSP per eligible employee who has been off work because of coronavirus.

A rebate scheme is being developed with further details provided in due course.

You will be eligible if:

1. Your business is UK based AND

2. Your business is a small or medium sized and employs fewer than 250 employees as of 28 February 2020.


Business Tax Support

All businesses and self-employed people in financial distress, and with outstanding tax liabilities, may be eligible to receive support with their tax affairs through HMRC’s Time To Pay service which is available now. These arrangements are agreed on a case-by-case basis and are tailored to individual circumstances and liabilities.

Covid-19 Corporate Financing Facility

The Covid-19 Corporate Financing Facility (CCFF) means that the Bank of England will buy short-term debt from larger companies. This will support companies which are fundamentally strong, but have been affected by a short-term funding squeeze. It will also support corporate finance markets overall and ease the supply of credit to all firms. The scheme will be funded by central bank reserves – in line with other Bank of England market operations. It will operate for at least 12 months, and for as long as steps are needed to relieve cash flow pressures on firms that make a material contribution to the UK economy.

Business Rates Holiday for Nurseries

Nurseries in England will not have to pay business rates for the 2020-21 tax year as local authorities will apply the business rates holiday to your bills.

 Properties that will benefit from the relief will be those occupied by providers on Ofsted’s Early Years Register and are wholly or mainly used for the provision of the Early Years Foundation Stage.

You can estimate the business rate charge using the business rates calculator


VAT Deferral Scheme

VAT registered businesses are being supported by deferring Valued Added Tax (VAT) payments due between 20 March 2020 and 30 June 2020. 

This is an automatic offer with no applications required. UK Registered businesses will not need to make VAT payments normally due with VAT returns during this period. Taxpayers will be given until the end of the 2020-21 tax year to pay any liabilities that have accumulated during the deferral period. VAT refunds and reclaims will be paid by the government as normal.

Customers who normally pay by direct debit should cancel their direct debit with their bank if they are unable to pay. Please do so in sufficient time so that HMRC do not attempt to automatically collect on receipt of your VAT return.


Deferral of Self-Assessment Payment Scheme

The Self- Assessment payment on account, that is ordinarily due to be paid to HMRC by 31 July 2020 may now be deferred until January 2021.

 If you are due to make a self- assessment payment on account on 31 July 2020 then you are eligible for the deferment. The deferment is intended to assist self-assessment taxpayers, including those who are self-employed, who are suffering hardship as a result of the coronavirus.

The deferment is optional and any persons still able to pay their second self-assessment payment on account on 31 July 2020 should still do so.
This is an automatic offer with no applications required. No penalties or interest for late payment will be charged if you defer payment of your July 2020 payment on account until January 2021.

HMRC have also scaled up their Time to Pay offer to all firms and individuals who are in temporary financial distress as a result of coronavirus and have outstanding tax liabilities.

If you would like further help & support then please contact us here and we will happily assist.

Xero Hints, Tips & Shortcuts

As if Xero isn’t great enough, these extra hints and tips can help to make the Xero processes even smoother!

Inbuilt Calculator

Within transactions, such as invoices, you can enter a basic arithmetic operation into the fields Quantity, Unit Price and Discount.  Xero then calculates the result when you press enter: 

You can also use the inbuilt calculator in the debit and credit fields in manual journals:

Favourite a Report 

In the ‘Accounting’ menu, select ‘Reports’.  If your preferred report isn’t listed, click ‘More Reports’ to expand a section.  Click the empty star next to the report you want to add to the ‘Accounting’ menu; alternatively click a filled-in star to remove a favourite from the ‘Accounting’ menu. 

Reconciliation Adjustment

In the event of a slight under or over payment when reconciling the bank account, you can make a minor adjustment so the amounts match. The following process posts a reconciliation adjustment account transaction to the system rounding account. 

On the bank reconciliation screen, next to the bank statement line that doesn’t quite match, click ‘Find & Match’.  Find the transaction entered in Xero, then select the checkbox next to the transaction that you want to match with the bank statement line. Click ‘adjustments’ then select ‘minor adjustment’.  Enter the adjustment details and click ‘Reconcile’.

Add accounts from transactions 

You can add Chart of Account codes whilst entering invoices or bills, by selecting the first entry in the drop-down box labelled ‘Add a new account’: 

Find voided items

To find all voided invoices, bills and credit notes, go to the Business menu, then select either Invoices or Bills to pay as appropriate and select the All tab.  Click on the Status column header twice to get a reverse alphabetical list by status which will show ‘Voided’ at the top of the list.

Repeating invoice

If you have regular bills to pay or send regular invoices to customers – use Xero’s repeating invoices or bills.  Set up a template and Xero will automatically create an invoice or bill for you according to the frequency you specify and drop it on the Draft tab (if you need to vary the amount or something else each time) or the Awaiting Payment tab (if the it is the same every time).

Expense claim codes

If there are only a few accounts you want displayed when coding expense claim receipts, limit that number by going to the Accounting menu, selecting Chart of accounts and editing the accounts that you do not want to display by clearing the ‘Show in Expense’ claims option on each account.

Customise report layout

Change the default layout of some reports by choosing your own groupings for accounts or move accounts to be displayed on a different part of the report using a ‘Custom layout’.  The layout can be applied to other organisations you have in Xero or set as the default for all users of an organisation.

Date entry shortcuts

ShortcutShortcut key(s)Date fieldsDue date fieldsExamples
Today’s dateTab
t
 
Tomorrow’s datetom 
Day in the next weeknext [day]If today is Monday, using shortcut: next fri enters the date of the next Friday
Next week (7 days from today)next w 
Next month (today’s date, next month)next m 
Next year (today’s date, next year)next y 
Any month after today’s date (today’s date, for that month)next [month]If today is 20 October 2012, using shortcut: next sepenters 20 September 2013
Date in current month[number]Enter 21 for 21st of current month
Date in a month[number]/[month]
[number]-[month]
[month]/[number]
[month]-[number]
Enter 1/oct or oct/1 for 1 October
Enter 1-oct or oct-1 for 1 October
Enter 3/12 for Mar 12**
First of any month in any year[month]/[year]
[month]-[year]
Enter July/2012 or July-2012 for 1 July 2012
A date next month*[number]If today is 20 October 2012, using shortcut: *12 enters 12 November 2012
Days after today’s date
Days after the invoice or bill date
+[number]
+[number]d
In the date field, enter +2 or +2d for 2 days after today’s date
In the due date field, enter +2or +2d for 2 days after the invoice or bill date
Weeks after today’s date
Weeks after the invoice or bill date
+[number]w 
Months after today’s date
Months after the invoice or bill date
+[number]mIn the date field, enter +1mfor 1 month after today’s date
In the due date field, enter +1m for 1 month after the invoice or bill date
Years after today’s date
Years after the invoice or bill date
+[number]y 

Reverse Charge VAT

The reverse charge procedure has been designed by the HMRC to try to counter some forms of criminal attack on the UK VAT system by means of fraud, such as Missing Trader Intra-Community (MTIC) fraud.

The reverse charge procedure results in, essentially, a business-to-business (b2b) tax-neutral chain of transactions, with the seller no longer having to account for VAT, so it removes the opportunity to steal the VAT in b2b transactions within the UK.  Supplies of relevant goods and services remain subject to the reverse charge until they are excepted from the procedure or are exported or dispatched to another Member State.

Whilst the reverse charge effectively removes VAT in a series of b2b transactions, it still has its own revenue risks.  For example, a buyer disappearing without accounting for the reverse charge output tax.

The reverse charge for specified goods does not apply universally throughout the EU.  Therefore, some taxable persons who use the reverse charge might be acting as conduits (taxable persons who facilitate MTIC fraud in the EU, where the tax loss is in another Member State).

The reverse charge: How the reverse charge works – an example

Example 1: From a VAT registered distributor to a retailer to an end consumer

A VAT registered UK distributor of mobile phones sells a number of mobile phones to a VAT registered UK retailer for a VAT-exclusive value of £6,000, an amount that is above the de minimis limit. The distributor does not charge VAT on the supply (£1,200), specifying on its invoice that the reverse charge applies.

The retailer will account for the distributor’s output tax (£1,200) but will also reclaim the amount as input tax, thus producing a nil net effect. The retailer now sells the mobile phones to members of the general public, charging VAT on the supply as normal.

Example 2: From a VAT registered distributor through a series of wholesalers to final dispatch

A distributor sells a number of mobile phones to a wholesaler (WS1) for a VAT-exclusive value of £6,000, an amount that is above the de minimis limit. The distributor does not charge VAT on the supply (£1,200), specifying on its invoice that the reverse charge applies.

WS1 will account for the distributor’s output tax (£1,200) but will reclaim the tax as input tax, thus producing a nil net effect. WS1 now sells the mobile phones to another wholesaler (WS2) for a VAT-exclusive value of £7,000. WS1 does not charge VAT on the supply (£1,400), specifying on its invoice that the reverse charge applies.

WS2 will account for WS1’s output tax (£1,400) but will reclaim the tax as input tax, thus producing a nil net effect. WS2 now sells the mobile phones to a third wholesaler (WS3) for a VAT-exclusive value of £8,000. WS2 does not charge VAT on the supply (£1,600), specifying on its invoice that the reverse charge applies.

WS3 will account for WS2’s output tax (£1,600) but will reclaim the tax as input tax, thus producing a nil net effect. WS3 now sells the mobile phones to a taxable person registered for VAT in another Member State for a VAT-exclusive value of £9,000. WS3 does not charge VAT on the supply as this becomes zero-rated.

If we look at how this would translate onto the VAT returns, we have:

                                                Distributor        WS1                 WS2                 WS3

Reverse charge output tax*       £0                    £1,200              £1,400              £1,600

Input Tax*                                £0                    £1,200              £1,400              £1,600

Net Tax                                    £0                    £0                    £0                    £0

Outputs                                    £6,000              £7,000              £8,000              £9,000

Inputs                                       £0                    £6,000              £7,000              £8,000

The above assumes that the distributor made no purchases and WS 1-3 made no other purchases or supplies.