Chris Downing, Director of Inspire, the business and tax advisers, answers your questions.

Question: How do I go about placing my employees on furlough and utilising the government’s Coronavirus Job Retention Scheme?

Answer: The Coronavirus Job Retention Scheme is a reimbursement to employers for the cost of paying employees, whilst they have no work from them. As such, the employee’s wage should be administered in the normal way through the payroll. The amounts are then returned to the employer by HMRC. The government will fund 80% of wages, up to a maximum of £2,500 per month.

The good news is that virtually any UK organisation with employees can apply for the scheme, including:

• Businesses
• Charities
• Recruitment agencies (agency workers paid through PAYE)
• Public authorities

Furloughed employees must have been on your PAYE payroll on 28 February 2020, and can be on any type of contract.

HMRC is expected to have the scheme up and running by the end of April, but claims can be back-dated to 1 March 2020 (although the scheme only applies from the date employees stop working).

It’s important to remember that to be eligible for the subsidy, when on furlough, an employee can not undertake work for or on behalf of the organisation. This includes providing services or generating revenue. While on furlough, the employee’s wage will be subject to usual income tax and other deductions.

We strongly recommend that if you are considering utilising the scheme that you seek HR advice first, as to not make any error in application which could be used against an employer later down the line, despite your best intentions now.

You can read more about the guidelines and criteria for the Job Retention Scheme here.

Question: I have a tax bill due soon, is there any way I can defer the payment?

Answer: The government announced a package of measures to support businesses. Among these is a HMRC helpline for businesses and individuals who are unable to pay their tax due to the Coronavirus. Help could include the agreement of a deferral period. The HMRC helpline number is 0800 0159 559. Our advice is to contact HMRC as soon as you can to make the necessary arrangements.

At the end of March, HMRC changed its guidance on who can defer their second payments of Income Tax. Originally it was only self-employed individuals, now it is all tax payers under self-assessment. For Income Tax self-assessment, payments due on 31 July 2020 may now be deferred until 31 January 2021. This is an automatic offer with no applications required.

Question: Should I contact my bank for further help?

Answer: Further assistance could be available from your bank. Banks will look at a business’ requirements on a case-by-case basis and decide how much and what type of assistance could available. The Coronavirus Business Interruption Loan Scheme (CBILS) is now available for SMEs through many lenders, including high street and challenger banks and smaller, specialist local lenders. They can provide a loan of up to £5m in the form of term loans, overdrafts, invoice finance or asset finance. Banks may also be able to offer loan repayment holidays. Speak to your bank contact to assess your options.

An important note of caution here, if your business was trading poorly or making losses before the virus, then the banks may find it hard to help you. If this were the case then a conversation with an insolvency practitioner is advised to ensure that you are honouring your duties as a director and are not putting yourself at risk.

For the latest resources for business on Coronavirus support, visit Inspire.

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Got a question for Chris? The team at Inspire has much experience at advising business owners in good and more challenging times. Call 01202 717867 or email [email protected].