COVID-19 | US & UK Tax Adviser EDA Professional

COVID-19

COVID-19 Latest Government Updates


Please be aware that Scotland has different lockdown measures to the U.K.
In light of the guidance laid out by the government in the past week, I’d like to address some key areas for you that may be applicable for your business:
Firstly, here is a link to the information from HMRC which explains all the below matters: 
https:// www.gov.uk/government/publications/guidance-to-employers-and-businesses-about-covid-19
Please take some time to read the most up to date guidance each day. Otherwise, I’d like to clarify the key areas you may be concerned with:

Furlough Step by Step Guide



This step by step guide will take you through five sections:
Step 1: Essential information
Step 2: Before you make your claim
Step 3: Calculating your claim
Step 4: Making a claim
Step 5: What to do next

Click here to view the step by step guide for employers.


IRS Online Tool for Non-Filers



A significant turning point was reached in the development of the IRS’s delivery infrastructure for the CARES Act Recovery Rebates. On Friday 10th April, the IRS created a public online tool for non-filers to register for CARES Act aid.

Please see the registration tool for non-filers.

Please see the link below to find further information about the IRS announcement and online tool in full. The announcement includes information about who should use the tool. Additional, it is a link to the tool itself, which is called “Non-filers: Enter Information Here.”

Director Inclusion



As a director you may also be run on the PAYE scheme of your company. Government guidelines now indicate that you may also be eligible for 80% of the wages declared on your PAYE scheme up to £2,500.
To be eligible for the scheme you will need to:

- Have stopped work completely due to COVID-19
- Include yourself in the furloughed workers declaration that the government is looking to launch end of April 2020

Directors run on a basic salary
If you are run on a basic salary and your income is made up through dividends form the company, then you will only be able to receive 80% of the basic monthly salary figure run on payroll.
It is in your power as a director of a company to nominate your own salary, providing it does not make your company insolvent. If you therefore wish to increase your salary for April 2020, to try and qualify for the new furlough COVID-19 rules, you may do so.
However, the government have not stipulated precisely how directors of companies will be treated, and therefore by increasing your salary, you will increase the tax and NI due by the company without necessarily being able to have this covered by the support provided under the scheme by the government.
We believe HMRC may look carefully at changes to payrolls if they are not maintained going forward.
To be eligible for the scheme you will need to:
- Have stopped work completely due to COVID-19
- Include yourself in the furloughed workers declaration that the government is looking to launch end of April 2020

Employer NI & Pension Contributions



Very simply, the employee retention scheme will now cover the employer NI and basic contributions for employees up to 80% of their salary.


Furlough Process



To furlough your employee we recommend you follow these 2 steps:
Click here to view the step by step guide for employers.

- Have a verbal conversation whereby you explain that the employee has to be sent home due to the COVID-19 impact and they cannot complete their work from home. Therefore they are being furloughed form a specific date.
- Explain that the scheme put in place by the government to assist employers with furloughed employees will cover 80% of their monthly wages
- If, as their employer, you are going to cover the optional 20% difference you can explain that too
- Issue the employee a letter or email stating they are being placed on furlough in line with the government guidelines for companies closed due to COVID-19. Specify the date they are being put on furlough and specify if they will receive 80% of their pay up to the value of £2,500 or if you will top up their salary to 100%.

Paying Wages:



You will have heard that the government are looking to cover retained workers who have been sent home – The proposed scheme covers 80% of the employees wages, the other 20% will need to be covered by the employer. Workers will need to be declared as furloughed.
It is not yet clear if Directors fall into this field – but we would think it unlikely that you are able to furlough yourself. However, we anticipate that if you are eligible, then those run on basic salaries will only be covered for 
80% of the basic salary declared.
The government are looking to have this scheme in effect by the end of April. However they have not implemented the process as yet. They are looking to back date this to the start of March. But for now, employers will be expected to cover the wage costs as normal.
HMRC have stated: “HMRC will reimburse 80% of furloughed workers wage costs, up to a cap of £2,500 per month. HMRC are working urgently to set up a system for reimbursement. Existing systems are not set up to facilitate payments to employers”

VAT:



If you are VAT registered and have a return(s) period end March, April, May, June 2020 then you can defer the payment of the VAT liability due. The deferred liability will be due to be paid by the 5th April 2021. However, the return will still need to be processed and submitted on time in order to avoid penalties. So we will be working with you as normal on this. You do not need to register for the deferral, it is automatically available as a choice from 20th March 2020.
VAT repayments will be processed and sent out as normal.

Grant for Small Businesses Paying Little or No Rates



The government will provide additional Small Business Grant Scheme funding for local authorities to support small businesses that already pay little or no business rates because of small business rate relief (SBBR), 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.
You are eligible if:
  • - your business is based in England
  • - you are a small business and already receive SBBR and/or RRR
  • - you are a business that occupies property

How to access the scheme
You do not need to do anything. Your local authority will write to you if you are eligible for this grant. Any enquiries on eligibility for, or provision of, the reliefs and grants should be directed to the relevant local authority.

Business Interruption Loan



The British Business Bank have launched to support primarily small and medium-sized business- es to access bank lending and overdrafts.
The government will provide lenders with a guarantee of 80% on each loan (subject to a per-lender cap on claims) to give lenders further confidence in continuing to provide finance to SMEs. The government will not charge businesses or banks for this guarantee, and the Scheme will support loans of up to £5 million in value.
You are eligible for the scheme if:
  • - your business is UK based, with turnover of no more than £45 million per year
  • - your business meets the other British Business Bank eligibility criteria

How to access the scheme
The full rules of the Scheme and the list of accredited lenders is available on the British Busi- ness Bank website. All the major banks will offer the Scheme once it has launched. There are 40 accredited providers in all.
You should talk to your bank or finance provider (not the British Business Bank). If you have an existing loan with monthly repayments, you may want to ask for a repayment holiday to help with cash flow.
The scheme will be available from early next week commencing 23 March.

Self-Assessment Tax:



Income tax payments on account, usually due by 31st July each year are being deferred until 31st January 2020. This is automatic offer and requires no application.
We are waiting on any further support for self employed workers. We should hear further by to- morrow (Friday 26th March).

Cash grants for retail, hospitality and leisure businesses



The Retail and Hospitality Grant Scheme provides businesses in the retail, hospitality and leisure sectors with a cash grant of up to £25,000 per property.
  • - For businesses in these sectors with a rateable value of under £15,000, they will receive a grant of £10,000.
  • - For businesses in these sectors with a rateable value of between £15,001 and £51,000, they will receive a grant of £25,000.

Eligibility:
You are eligible for the grant if:

  • - Your business is based in England;
  • - Your business is in the retail, hospitality and/or leisure sector

Properties that will benefit from the relief will be occupied hereditaments 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

How to access the scheme:
You do not need to do anything. Your local authority will write to you if you are eligible for this grant. Any enquiries on eligibility for, or provision of, the reliefs and grants should be directed to the relevant local authority.


US taxes



The deadlines to FILE and PAY federal income taxes are extended to July 15, 2020.
The IRS has established a special section focused on steps to help taxpayers, businesses and others affected by the coronavirus. This page will be updated as new information is available. For other information about the COVID-19 virus, people should visit the Centres for Disease Control and Prevention (CDC) (
https://www.coronavirus.gov) for health information.
Other information about actions being taken by the U.S. government is available at 
https://www.usa.gov/coronavirus and in Spanish at https://gobierno.usa.gov/coronavirus. The Department of Treasury also has information available at Coronavirus: Resources, Updates, and What You Should Know. Individuals and businesses will have an extra 90 days to pay the IRS if they owe additional in- come tax for 2019, Treasury Secretary Steven Mnuchin said Tuesday.
Normally, taxpayers owe the amount due by April 15. But as part of the government’s response to the coronavirus, individual and small business filers will be able to defer payments of up to $1 million and corporations can defer up to $10 million -- without incurring interest or penalties. But taxpayers should still file their federal returns by April 15, Mnuchin said.
“We encourage those Americans who can file their taxes, to continue to file their taxes on April 15 because for many Americans you will get tax refunds. We don’t want you to lose out on those tax refunds,” Mnuchin said.

Taxpayers can still request a six-month extension to file returns, like they could in any other year. The new deadline announced Tuesday applies to federal tax income payments only. It’s up to states to set their own deadlines.
Some states are making changes due to the coronavirus. In California, individuals will have until June 15 to both file and pay their state taxes.


FAQ’s



a. Can we change the current payrolls to increase the level of pay? – No, HMRC will be monitoring and it will most likely impede claims and result in prosecution. If a company or business are behind with tax payments to HMRC that could also impede any claims they make.
b. Can directors make themselves redundant? – they can presumably go down to one director but if on a basic salary and dividend and they close completely they will presumably be treated as self-employed and must claim benefits from the state.
c. Can I furlough staff immediately? – Yes, but HMRC systems are not in place so they will have to pay as normal in the meantime. The scheme is expected to go live by the end of April.
d. If you or your company comes under extreme financial pressure, then you may need insolvency advice.
We appreciate the difficulties that everyone is now facing.

Significant changes at EDA Professional Services LTD



We are still open for business. Please see below changes we have made going forward:
  • - We will still meet with our clients via bluejeans video conferencing.
  • - Due to the volume of calls we are receiving, we have decided to charge for phone calls with our existing clients, to ensure efficiency and high productivity at EDA. The first 15 minutes will be free of charge. £25 plus VAT will be charged for each 15 minutes thereafter. Same theory applies for video conference meetings.
  • - New client meetings: We will be charging a non-refundable £50 plus VAT for initial client meetings. This will be offset against the final invoice if EDA services are chosen.


If you require further assistance, or if you have any questions, then please contact us

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