Accountants Newsletter Jul/Aug 2020

Employment support update With lockdown gradually easing in most areas, the increasing focus is on safely returning to work. In the meantime, the various Covid-19 measures targeted at employers and employees continue to evolve. The Coronavirus Job Retention Scheme (CJRS), scheduled to run until 30 June, will now close on 31 October 2020. From 1 July, employers have been able to bring furloughed employees back to work part-time, while still claiming for the hours not worked. The following is planned for the months after July: Employees will continue to receive 80% of their wages, up to a cap of £2,500 per month. From 1 July, only previously furloughed employees are eligible for further grants under the scheme. However, the minimum three-week furlough period has been removed. Employees must be paid their normal wage for hours actually worked. Claims cannot straddle months because the rules change on a monthly basis. Other recent measures ■ ■ Extension of the Coronavirus Large Business Interruption Loan Scheme (CLBILS): The maximum loan size has been increased from £50m to £200m, but there are restrictions on dividend and bonus payments if a business borrows more than £50m. ■ ■ Relaxed rules on home-office expenditure: For 2020/21, there will be no tax or NIC liability where an employee buys home-office equipment and the employer reimburses the expenditure. The equipment must be purchased for the employee to work from home as a result of the pandemic. ■ ■ Statutory Sick Pay (SSP) rebate scheme: The online service has recently opened up for claims backdated to 13 March. Although SSP is not normally recoverable, the government is repaying SSP that is related to Covid-19 to businesses with fewer than 250 employees. The refunds are limited to two weeks per employee. Returning to work As businesses gradually reopen, there is a lot of advice available. Here are some planning points to consider: ■ ■ Employee engagement will be essential to make sure they fully understand the new workplace practices. Employees might need a period of adjustment if workers have been furloughed for some time. ■ ■ If your business has continued to operate well with employees working from home, you may be able to save costs in the longer term by moving to smaller premises. ■ ■ Retail businesses need to consider opening for longer, staggering staff shifts and introducing special time slots for older and vulnerable customers. ■ ■ Some shops may need to set up customer reservation processes, with no walk-ins, and only allow card payments. ■ ■ Staff should be reminded that wearing masks will affect those who lip-read and other hearing- impaired customers. Working out ‘the new normal’ for your business and employees may take some time, so ensure your plans are considered and robust. VAT reverse charge delayed The impact of coronavirus on the construction sector has prompted the government to delay the introduction of the VAT domestic reverse charge until 1 March 2021. The measure, which is intended to reduce VAT fraud, means that UK customers who receive supplies of construction services must account for the VAT on these supplies on their VAT returns, rather than the supplier doing so. It prevents suppliers from charging VAT that they then do not pay to HMRC. This is the second delay to the charge. It was originally due to start on 1 October 2019 but it was deferred for 12 months because of concerns about lack of preparation and the impact on businesses. The reverse charge will affect specified building and construction services supplied at the VAT standard and reduced rates that are reported under the Construction Industry Scheme (CIS). It will not apply to zero-rated services. In a change to the legislation, HMRC has said that businesses will only be excluded from the reverse charge as end users or intermediary suppliers if they have informed their subcontractors of this in writing. This will bring certainty for subcontractors about the correct treatment for their supplies. HMRC says it will work closely with the construction sector to provide guidance and support to make sure all businesses will be ready for the new implementation date. EMPLOYMENT VAT Employees will continue to receive 80% of their wages, but from 1 July, only previously furloughed employees are eligible for further grants. C r e d i t: D r a z e n Z i g i c / S h u tt e r s t o c k. c o m Credit: Ant Clausen/Shutterstock.com August Employers will have to pay employer NICs and pension contributions for the hours an employee is on furlough. September Employers will have to top up furloughed wages to 80%, as well as paying NICs and pension costs, with the government paying 70% instead of 80% of wages. October As for September, but with the government paying just 60% of wages.