From the partners and staff at Sandison Easson & Co we owe you all a debt of gratitude during this period.
All of us have family and friends that work in various sectors of the NHS and appreciate the task that will lie ahead.
What we can do to help, as we always have, is with your financial affairs. We understand that your normal working day will be altered and as such the partners and associates will be available night or day to deal with any queries you may have.
All of us are in this together.
We will still be attending to deadlines of tax returns and accounts which will be even more important as financial planning will be on your minds and you will want to focus on dealing with patients.
The Revenue will have some flexibility with regards to tax payments. These are explained below.
Coronavirus job retention scheme
Due to the speed at which this scheme has been rolled out, there remains many areas to clarify but at the time of writing we know the following:
- All of our clients are eligible for the scheme where they employ staff through a PAYE scheme.
- Workers are given a special status of being ‘Furloughed’ (see further information below).
- HMRC will reimburse 80% of their wage cost subject to a maximum of £2,500 per month.
- Effective from 1 March 2020 if you have already had to take steps with your employees.
- HMRC are working on their systems to facilitate the above.
We understand that one of the eligibility criteria will be that a PAYE scheme has to be in place for your employee(s). Many clients pay salaries below the level required to maintain a PAYE scheme and at the time of writing we do not believe that anyone in that position will be eligible for the scheme. Additionally, anyone engaging the services of as secretary on a self-employed basis cannot use the scheme but one would expect your secretary payments to be reduced following a reduction in activity.
Where eligible, HMRC will provide funds to support the worker’s wages and prevent the need to make them redundant.
Where a business does not have sufficient work to retain the services of an employee they can designate affected employees as ‘furloughed workers’. They remain an employee and the terms and conditions of their employment are still enforceable.
Under the scheme, any employee who is furloughed must not carry out work for their employer during the period being claimed.
Under the job retention scheme you continue to pay the furloughed worker through your PAYE scheme. As we understand matters the employee should receive 100% of the pay unless you agree to reduce pay to 80% as this is a variation of contractual terms. Therefore, to pay an employee at the 80% level you would need to go through a process to agree these revised terms with them.
You will need to consider this action now as it will be available for a limited period and staff will need to be informed for contractual requirements and law.
Payment of taxes
Payments due by 31 July 2020 under self-assessment are now deferred until 31 January 2021. It would appear that this is only for the self-employed and some of you will have extracted dividends upon which tax still may be due. From our experience the Revenue will still have flexibility and we have given advice and have access to specialist advice should the need be to extend any tax payments for several months at least should the Revenue insist on only self-employed.
It is not clear at this stage whether the usual payments due in January 2021 will be due at the same time so for now assume that this is the case.
For those entitled to defer, no interest or penalties will be charged during the deferral period. On this basis, it makes sense for most clients to take the deferral option and allow us to complete your 2019/20 tax return before advising you of your tax position for January 2021.
For VAT registered businesses, any payments due between 20 March 2020 and 30 June 2020 are deferred until the end of the 2020/2021 tax year which effectively means 31 March 2021 for companies and 5 April 2021 for the self-employed.