Chancellor announces new Job Support Scheme and package of business support measures

The Chancellor, Rishi Sunak, has announced a new job protection scheme and a range of new business support measures.

Announcing his Winter Economy Plan at a hastily arranged statement in the House of Commons, Mr Sunak said: “Our task now is to move to the next stage of our economic plan, nurturing the recovery by protecting jobs through the difficult winter months.”

The statement came the day after plans to hold an Autumn Budget were scrapped because rising numbers of confirmed cases of Coronavirus and various new restrictions across the UK meant the Treasury no longer considered it appropriate to make long-term plans.

Against this background of increasing case numbers and fears of further new restrictions on the horizon, employers’ groups and trade unions alike had been pushing for new measures to be introduced to replace the Coronavirus Job Retention Scheme (CJRS), which ends in just five weeks’ time.

The upturn in cases reignited widespread fears about the economic impact of the crisis and the possibility of a wave of redundancies being announced in the coming days.

Employers making between 20 and 100 redundancies must begin consulting at least 30 days in advance, meaning the last day they could begin the process before being required to bring staff back from furlough on full pay at the beginning of November is just a week away.

Around three million of the 9.6 million workers ever furloughed are thought still to be furloughed from their jobs, with the scheme having cost £39.3 billion up to 20 September 2020.

As he rose to deliver the statement, just two months after his Summer Economic Statement, the pressure was on Mr Sunak to deliver the “creative and imaginative” solutions to protect jobs and businesses the Prime Minister had promised just 24 hours earlier.

Job Support Scheme

Saying that it is “fundamentally wrong to hold people in jobs that only exist inside the furlough”, the Chancellor announced the launch of a new Job Support Scheme (JSS).

The scheme will come into effect on 1 November 2020 for six months and will apply to employees who work a minimum of 33 per cent of their usual hours. The Government and the employer will then pay one-third of the remaining amount each, with the employee forgoing the pay they would have received for the remaining one-third of their usual hours not worked. The Government contribution will be capped at £697.92 per month.

The scheme means that employees working one-third of their usual hours and not affected by the cap will receive at least 77 per cent of their usual wages, according to the Treasury.

The Chancellor confirmed that the JSS is open to all small and medium-sized enterprises and to larger businesses that have been “adversely affected by COVID-19”, subject to certain conditions such as not making capital distributions including dividends while using the scheme.

The scheme will be open to employers, irrespective of whether they previously used the CJRS. However, the employees they claim for cannot be on a redundancy notice.

Additionally, the Chancellor confirmed that employers will be able to use both the JSS and Coronavirus Job Retention Bonus at the same time. The Coronavirus Job Retention Bonus, announced earlier this year, will provide employers with a one-off £1,000 grant in respect of every employee they bring back from furlough and pay an average of £520 a month between 1 November 2020 and 31 January 2021.

The JSS bares a strong resemblance to the German Kurzarbeit scheme, which was first introduced after the 2008 financial crisis and was reinstated earlier this year. The scheme, which is in some ways less generous than the CJRS, is credited with being effective in saving jobs at a much lower cost to the taxpayer. Both the CBI and TUC had advocated variations of the German scheme.


Self-Employment Income Support Scheme

The Chancellor moved on to announce a six-month extension to the Self-Employment Income Support Scheme (SEISS) for those self-employed individuals currently eligible.

A third grant will cover the three months from November to the end of January, paying 20 per cent of average monthly profits, capped at £1,875.

Meanwhile, a fourth grant will cover the period from February to the end of April, with the level set to be determined at a later date.

Self-employed individuals and members of partnerships to whom all of the following apply are currently eligible for grants from the SEISS:

Carry on a trade that has been adversely affected by Coronavirus;

  • Traded in the tax year 2018-2019 and submitted a Self-Assessment tax return on or before 23 April 2020 for that year;
  • Traded in the tax year 2019-2020;
  • Intended to continue to trade in the tax year 2020-2021;
  • Have trading profits of less than £50,000 and more than half of their total income comes from self-employment. This can be with reference to at least one of the following conditions:
    • Trading profits and total income in 2018-2019
    • Average trading profits and total income across up to the three years between 2016-2017, 2017-2018, and 2018-2019.

The scheme is not available to people working through their own limited companies.


Bounce Back Loans and Pay as you Grow

Moving away from direct support for employment and self-employment, the Chancellor said the second challenge facing the economy is the effect of the crisis on businesses’ cash flow.

He announced the extension of the Bounce Back Loan Scheme (BBLS) through Pay as you Grow (PAYG), which will allow all businesses in receipt of BBLS loans the option to repay over a period of up to 10 years, nearly halving their monthly payments.

There will also be an option for businesses to move to interest-only repayments for up to three six-month periods or to take one six-month payment holiday. The six-month payment holiday will only be available to businesses that have already made six payments.

The BBLS provides loans of between £2,000 and £50,000, up to a cap of 25 per cent of turnover and backed by a 100 per cent Government guarantee to the lender. The Government covers interest payments for the first 12 months of the loan, with the borrower only required to make repayments after that period.

The deadline for businesses to apply for loans under the BBLS has also been extended until 30 November 2020.


Other loan schemes

Addressing the other business loan schemes announced since the beginning of the crisis, the Chancellor confirmed that repayments under the Coronavirus Business Interruption Loan Scheme (CBILS) can be extended to a term of up to 10 years.

CBILS is available to UK-based businesses with turnovers of up to £45 million, offering loans of up to £5 million, backed by an 80 per cent Government guarantee to the lender, with the Government also covering interest and fees for the first 12 months.

As with BBLS, the Chancellor confirmed the deadline for applying for CBILS will be extended to 30 November 2020, as will the deadlines for the Coronavirus Large Business Interruption Loan Scheme (CLBILS) and the Future Fund.

He said that the Treasury is working on “a new, successor loan programme, set to begin in January.”

Meanwhile, he said that the Bank of England’s COVID-19 Corporate Financing Facility will remain open until 22 March 2021.


Extended tax deferrals

The Chancellor moved next to deal with outstanding taxes owed by businesses and individuals to HM Revenue & Customs (HMRC), following deferrals earlier in the year.

He confirmed a VAT deferral ‘New Payment Scheme’ which will allow businesses that deferred VAT between March and June 2020 an option to spread payment in 11 equal instalments over the 2021-2022 financial year. The payments had been due in full by the end of March 2021.

The scheme will be open to all businesses that took up the offer of a deferral, but they will need to opt-in to benefit from the extended repayment period. HMRC is expected to put this process in place early in the new year.

He then moved to announce similar arrangements for individuals who deferred their Self-Assessment payments on account in July 2020. Those with up to £30,000 of self-assessment liabilities will be able to arrange an additional 12-month repayment plan through the HMRC self-service Time to Pay facility. This means the deferred payment will not need to be made in full until January 2022.


Extended VAT cut for Tourism & Hospitality

Finally, the Chancellor confirmed an extension to the temporary five per cent rate of VAT for certain goods and services in the tourism and hospitality sectors from 13 January 2021 to 31 March 2021, after which the rate will revert to 20 per cent.


Conclusion

The extent of the Chancellor’s announcements will have taken many people by surprise, having far exceeded once again the measures that were trailed in advance of his speech.

However, it remains to be seen whether these measures will be sufficient to match the scale of the economic challenge in the months ahead.

The Chancellor will hope that the JSS, in particular, will help avert a wave of redundancy announcements in the coming weeks as the CJRS comes to an end.

Link: Winter Economy Plan

HMRC sends thousands of letters to employers for ‘incorrect’ CJRS claims

HM Revenue & Customs (HMRC) has been writing to thousands of employers, asking them to review the Coronavirus Job Retention Scheme (CJRS) claims they have already made for errors – often without specifying what is wrong with the claim or indicating which claim is incorrect.

The tax authority estimates that as many as 10 per cent of claims either contain errors or are fraudulent and it is understood to be taking swift action against those that do not comply with the rules of the scheme.

The numerous changes to the scheme during the last few months have made the management of claims difficult, which is why there are likely to be a large number of very small errors being uncovered by HMRC.

Although HMRC has said its main focus is on fraudulent claims and not innocent errors, it has said that it has identified more than 27,000 CJRS claims that require review – with 11,000 initial enquiries launched so far.

The letter from the tax authority says that the employer’s CJRS claim appears to be incorrect. However, no details are provided as to how much the overclaim is or which employees are affected.

In fact, it doesn’t even detail which CJRS claim the employer has submitted that is suspected of being incorrect, meaning that employers or their agents have been left with the task of reviewing the details of every CJRS claim submitted for the months from April to August to identify any errors.

In the first instance, employers must respond to HMRC by telephone, if they think the CJRS claim was correct. They will then be assigned an HMRC officer who will deal with their case.

Within some of the letters received, it says that if a reply is not forthcoming by 22 September HMRC will open a compliance review which could trigger penalties. It is not yet known if this is a fixed date for all enquiries, but businesses should attempt to make contact by any dates given in the correspondence they receive from HMRC. If the deadline given to a business has passed and they haven’t responded it is important that they still contact HMRC at the earliest opportunity once they have sought professional advice.

Nevertheless, businesses must take action before this date. Where an employer believes that a CJRS claim is incorrect they should first seek advice from their agent before replying to HMRC by email.

Once they have contacted HMRC they will then be instructed how to make a formal disclosure. However, businesses can instead make a voluntary correction of earlier CJRS claims should they wish.

No penalty will be applied for errors in a CJRS claim if the excess grant is corrected voluntarily within the later of:

  • 90 days from the receipt of the grant, and
  • 20 October 2020.

There are also no penalties for submitting an inaccurate CJRS claim which resulted in a grant that was lower than the employer was entitled to.

If you receive a letter from HMRC regarding an incorrect CJRS claim you must contact our team immediately so that we can review the claims you have made so that you can respond appropriately to HMRC.

Government reinstates advice to work from home ‘if you can’

The Prime Minister has reinstated the advice for people to work from home if they can, following an increase in the incidence of Coronavirus in recent weeks.

The advice, which was first issued in March 2020, was withdrawn at the beginning of August, with people encouraged to return to city centre offices as part of an effort to bolster businesses, such as shops, cafes and coffee shops that depend on trade from office workers.

Since then, many businesses have invested heavily in making offices COVID Secure, with changes to layouts, the introduction of screens, increased cleaning regimes and one-way systems amongst the measures introduced.

The Prime Minister underlined that people who cannot work from home, such as retail and construction workers, should continue to attend their places of work as usual.

The new guidance is expected to be in place for up to six months.

Government introduces legal duty to self-isolate, with big penalties for employers that prevent staff from following the rules

Speaking in the House of Commons, the Health Secretary, Matt Hancock, has announced a legal duty to self-isolate for people who have tested positive for COVID-19 or are asked to do so by NHS Test and Trace.

People who fail to comply with this requirement will risk fines of up to £10,000 in cases of repeated offences or the most severe breaches.

The new measures also include a crackdown on employers that prevent staff from following the rules on self-isolation, with employers also potentially receiving fines of up to £10,000 for the most serious breaches.

Mr Hancock said: “NHS Test and Trace will make regular checks on those who are self-isolating, and we will crackdown on employers who try to prevent staff from following the rules.

“Over the past few months, self-isolation has been instrumental in breaking the chain and blunting the force of this virus. We know that it works. With winter ahead, we will support everyone to do what is right to help stop the spread of the virus.”

At the same time, he announced payments of up to £500 for those on low incomes who are required to self-isolate.

Event and conference re-openings no longer allowed to go ahead

Plans for the phased reopening of stadiums, business events and conferences on 1 October will now no longer go ahead.

The Government’s ‘rule of six’ will also be extended to indoor team events and the number of people able to attend a wedding will be limited to 15. However, up to 30 people can still attend a funeral under the new rules.

Those hosting events or meetings at hospitality venues also need to be aware of new rules regarding the wearing of face coverings and the 10pm curfew.

Hospitality industry faces new restrictions to curb second wave

In recent weeks, many businesses within the hospitality sector have been enjoying a relaxation of COVID-19 restrictions.

However, from 24 September 2020 pubs, bars and restaurants will have to close at 10pm, as part of the Government’s attempts to limit a second wave of Coronavirus infection.

The same measures apply to takeaways, however, deliveries will be permitted to operate past this curfew.

Hospitality venues will also only be able to offer table service from this date, while staff and customers in indoor hospitality must now wear face coverings. Customers can only remove face coverings once they are seated and are consuming food or drinks.

As with other indoor venues, initial fines for not wearing a mask when required to will increase from £100 to £200.

If you operate a hospitality business and are concerned about the implications of these new measures, please seek advice.

Government to reinforce COVID Secure guidance with new direct legal obligations

To ensure workplaces that remain open prevent the spread of Coronavirus, the Government will introduce a direct legal obligation for businesses in England that requires them to follow the latest guidance to the letter.

During his speech to Parliament on the new measures, the Prime Minister, Boris Johnson, said that businesses could face fines and potential closure if they were found to be in breach of official COVID Secure guidance.

Alongside this new legal obligation, the Prime Minister confirmed that it would now be mandatory for retail workers to wear a mask in the workplace at all times, as well as taxi drivers and their passengers.

The Government will also increase the initial fine for not wearing a mask in required locations, such as shops, supermarkets, public transport, taxis and indoor hospitality from £100 to £200. Fines relating to the ‘rule of six’ will also increase at the same rate.

Businesses that are concerned about the financial implications of these legal obligations and the penalties involved should seek advice at the earliest opportunity.

HM Revenue & Customs (HMRC) writes to 3,000 employers over furlough claims

HM Revenue & Customs (HMRC) is reportedly writing to 3,000 employers over claims they have made for grants from the Coronavirus Job Retention Scheme (CJRS).

The ICAEW Tax Faculty says that HMRC began issuing the letters at the end of August to businesses that are suspected of having claimed more than they were entitled to or grants for which they were not eligible.

The letters invite employers to contact HMRC following a review of their claims and provide an opportunity for repayments to be made without penalty.

It is thought that further employers will be contacted by HMRC in the future.

To date, 9.6 million jobs have been furloughed by 1.2 million employers at a cost of £35.4 billion.

Link: HMRC targets 3,000 employers over CJRS claims

Four in five SMEs are confident over their Coronavirus recovery

Four in five UK small to medium-sized enterprises (SMEs) are confident that they will recover from the Coronavirus pandemic, according to research by Starling Bank and the Great British Entrepreneur Awards.

The data indicates that 75 per cent of business owners are feeling more confident than they did in July as lockdown measures ease.

While the COVID-19 pandemic has presented many challenges for SMEs, with one in five considering closure, many have changed their business model to adapt to the changing business landscape.

In total, 39 per cent of firms say that they’ve changed their line of business, with many either shifting to an online business model or prioritising digital products and services.

The research asked 314 SMEs in the UK several questions on their current business confidence and found that two-thirds of business owners believe that they will either return to or improve upon their pre-Coronavirus performance by the end of 2021.

Experts have praised the innovation, tenacity and determination of SMEs to adapt to the challenging circumstances to ensure that they can recover and rebuild their business.

Anne Boden, Founder and Chief Executive of Starling Bank, said: “Small businesses are essential to the nation’s efforts to build back the economy as we emerge from the Coronavirus crisis.

“Despite the challenging conditions they face, it’s heartening to see that many are proving so adaptable and resilient.”

Link: Bounce back Britain – 80 per cent of UK SMEs confident they will recover from Covid despite gloomy economic forecast

The first Child Trust Funds (CTFs) can now be claimed

The first Child Trust Funds (CTFs) are set to mature in September allowing those turning 18 to access their fund for the first time.

CTFs were tax-free children’s savings account set up by the Government, which were available to those born between 1 September 2002 and 2 January 2011.

Parents or guardians of a child who was eligible for CTF would have been sent a starting payment voucher by HMRC of £250, or £500 for those on a low income, which could be used to set up a CTF account.

Once an account was set up, further deposits could be added up to £9,000 (2020-21) each tax year.

However, it is believed that thousands of potential CTF holders do not know they have one or have forgotten that one was set up in their child’s name.

Each account is managed by a ‘registered contact’ who can tell the account provider how to invest the fund and run the account, change the address and other personal details, change the type of account and move the account to another provider. They cannot, however, access funds in the account themselves.

When a child turns 16, they are allowed to take control of the account, but cannot withdraw money from it until they turn 18, at which point they can withdraw funds or transfer it to a different savings account. They can also continue saving into their CTF account should they wish to.

When a CTF was set up, the parent or guardian should have received the child’s Unique Reference Number, which will also appear on annual CTF statements. This will also include details of the account type and the provider. These account statements should have been received regularly once the account was set up.

However, some CTF accounts were set up by HMRC on behalf of the child and as a result, many children turning 18 may not be aware that they have a CTF account.

Any child born between 1 September 2002 and 2 January 2011 who is turning 18 can check to see if they have an account by filling out a form on the gov.uk website by clicking here.

The scheme was replaced by Junior ISAs when it came to an end in 2011. As with CTFs, a Junior ISA cannot be accessed until a child turns 18. Money in a Junior ISA is also tax-free and up to £9,000 can be deposited into an individual account during the 2020-21 tax year.

Link: Child Trust Fund