Losses

Extended carry back

If your business has been adversely affected by the Covid-19 pandemic resulting in a loss, you may be able to benefit from the extended carry-back provisions to generate a tax repayment.

For income tax purposes, losses for 2020/21 and 2021/22 can be carried back for up to three years (to the extent that the loss has not been relieved against other income of the same or the previous accounting period).

For corporation tax purposes, a loss for accounting periods ending between 1 April 2020 and 31 March 2022 can be carried back three years, rather than the usual one.

We can help ensure that you obtain the best possible relief for any losses that you have incurred.

Covid 19 Support

Late in 2021 both the UK and Scottish governments announced additional support for certain business sectors to counteract the impact of the latest coronavirus restrictions. Full details of much of the support has yet to be clarified but should be available mainly to businesses in the hospitality related sectors. Many small businesses will also, once again, be able to take advantage of the SSP refunds available during much of last year.

SSP & Self-isolation

Close to the start of the pandemic the rules regarding the payment of SSP were relaxed in relation to coronavirus absences and a rebate scheme introduced to help small employers recoup some of the costs of SSP. A "coronavirus absence" does not mean that the employee must be infected with coronavirus and includes periods of self-isolation resulting from contact with someone who has tested positive or prior to surgery. Note that self-isolation resulting from returning from another country does not count as eligible. The usual 3 waiting days are ignored but a period of incapacity for work (PIW) must still exist to be eligible.

An employer (with less than 250 employees) can claim up to 2 weeks SSP per employee in respect of coronavirus absences. At current rates this amounts to a maximum of £192.70 per employee. The 2 week limit applies for the duration of the scheme not for each tax year that it covers.

Note that the scheme has been closed on 30 September 2021. Only claims for absences between 13 March 2020 and 30 September 2021 will be eligible.

Self-employment Income Support Scheme

During April you should be contacted by HMRC to let you know that you are eligible for the fourth instalment of the SEISS grant covering the period from 1 February to 30 April 2021. Eligibility criteria for this is different from the first three tranches but the amount due is similar.

To be eligible you must be self-employed or a member of a partnership and have traded in both 2019/20 and 2020/21. Your 2019/20 tax return must have been submitted by 2 March 2021. You may currently be trading but your demand has been reduced due to coronavirus or you may be temporarily closed due to coronavirus. You must declare that you intend to continue trading and your trading profits will be significantly reduced.

To be eligible for the grant your trading profits must be less than £50,000 and at least equal to your non-trading income. HMRC will look at the figures on the latest return but will also consider previous years if necessary to assess eligibility.

The grant will be calculated at 80% of 3 months' average trading profits, capped at £7,500 in total. HMRC will use up to 4 years of submitted tax returns to calculate average trading profits.

As with the previous grants you will need to make the claim yourself through the appropriate portal. Guidance is provided on the gov.uk website if you are in doubt. If you are not contacted by HMRC in the coming weeks but think you should be eligible please get in touch with our office.

Grants for taxis

The Scottish Government announced this week that funding had been made available through local authorities to provide grants of £1,500 to those who have registered taxis or private hire vehicles. The plan is that local authorities will contact those eligible to invite them to apply for the grant. I think, if it was me, I'd be getting in touch with my council to make sure I'm on the list.

Business Interruption Insurance

The ruling by the Supreme Court broadly in favour of the appeal brought by the FCA on behalf of a group of SME's may provide some small businesses with an unexpected financial lifeline. If you have tried to claim on your business interruption insurance as a result of the impact of Covid-19, but been rejected, now may be the time to try again.

It appears that a number of insurers were taking the view that many of these policies did not cover this unprecedented situation and it does seem that some did not. However, the court ruling does give hope that many policies will be valid and the insurers will have to pay out. If you have already made a claim the insurer should be getting back in touch with you but you may wish to make contact now and make sure you are in the queue.

Tax return records

As you know, from Boxing Day we will all be moving into Tier 4 of the Covid restrictions regime. This means that we will have to completely close our office once again and operate entirely from our various homes. This is not a massive change for most of our staff although we have relied on occasional office access to stock up on stationery, swap around client files, and collect/return client paper records. Any such access will be severely curtailed in at least the early part of January and this will make the completion of tax returns especially challenging.

Gathering the information from clients for the returns will be the biggest problem. If you can provide details in an electronic form that would be ideal. If you have records on paper then you may be able to scan or photograph the important stuff and send it attached to an email. If you can only provide the information on paper then it will have to be posted or delivered directly to one of us (hopefully someone will live in the same council area). Should you be in any doubt please give us a call and we'll try to find a practical solution.

We will be stopping work as usual over the festive period from Wednesday 23rd at lunchtime until Monday 4th January.

SEISS

The portal for applications for the latest round of support under the Self Employment Income Support Scheme is now open. If you were eligible for the first and second grants you may be eligible for this one, even if you did not previously submit a claim. To claim you must have had a new or continuing impact from coronavirus between 1 November 2020 and 29 January 2021. You must believe that this impact will result in a significant reduction in your profits. The grant will be worth 80% of your average monthly trading profits for 3 months up to a maximum payment of £7,500 (£2,500 per month).

Remember that to be eligible your trading profits must be no more than £50,000 and at least equal to your non-trading income. You must make your claim on or before 29 January 2021. Please contact a member of our staff if you need assistance.

Job Retention Bonus

As expected, the Job Retention Bonus has been dropped for the time being. There is a vague implication on the government website that it may return in some slightly different guise in the future but that is probably because they just don't know. The Job Retention Scheme will now continue until the end of March so we are unlikely to see a resurrection of the Bonus until after that.

JRS & SEISS

I think the Chancellor thinks I am short of work! Just when I get to grips with the new rules for furloughing or the self-employment support he decides to change everything again. At least these changes are good news.

The furlough scheme has been extended to the end of March 2020. In the first 3 months of the scheme - November to January - the government will pay 80% of the furloughed employees' wages with the employer only paying the national insurance and pension contributions. For the self-employed the SEISS will pay 80% of average profits for the next 3 months up to a maximum of £7,500. Eligibility rules are as I set out in my most recent posts - at least those haven't changed. Yet!

Job Retention Scheme - November

As previously mentioned in the blog, the JRS will now continue for the month of November. The scheme is back to the generous arrangements of paying 80% of normal wages for time not worked and the employer only pays the NI and pension contributions. Employees can be fully or flexibly furloughed as long as they were on the payroll by 30 October and had been included in an RTI submission by that date. It may also be possible to claim for employees on the payroll in September whose employment had subsequently been terminated if they are now re-employed.

SEISS

It now appears that the support for the self-employed through the SEISS is to be enhanced for the month of November at least. Originally the grant would have amounted to 40% of average profits for the 3 month period to end January. Now it will be 80% of profits for November and 40% for the remaining 2 months. It will also be paid earlier, probably around the start of December.

I am slightly concerned about the Treasury's sums. A spokesperson said that this revised support resulted in a grant of 55% for the 3 months - I actually make it between 53% and 54% but who's counting? The maximum grant will be just over £5,000.

Job Retention Scheme - not dead yet

Just as we thought the JRS was dead and buried and the new Job Support Scheme was about to go live the Prime Minister decides that England needs to go back into lockdown and the JRS will live on for another month (at least?). The scheme appears to have reverted to the August version when employers only pay the national insurance and pension costs and the government picks up the 80% of wages to be paid up to the monthly maximum. Some of the guidance is somewhat contradictory but it seems as though the other rules remain the same - only those already furloughed can be furloughed now, part-time furloughing is acceptable, and the maximum number of employees on furlough is still the same as before.

We'll get to grips with the claim details in the coming days and will keep you up to date. No news yet on whether the planned changes to the SEISS scheme for the self-employed will be enhanced or extended - fingers crossed.

Business Grants from the Coronavirus Restrictions Fund

There are currently 2 funds available under this scheme - the business closure fund and the business hardship fund. Grants are administered by local authorities to whom any applications must be made by 3 November (for the current set of restrictions). The amount of grant is dependent upon the rateable value of the premises. To be eligible for the business closure fund your business must have been required by law to close (except for takeaway) under the new restrictions. For the business hardship fund you must be a hospitality business or gym required by the regulations to operate in a restricted way.

SEISS - increased support

As with the Job Support Scheme, then Chancellor has improved the support for the self-employed through the extension to the Self-Employment Income Support Scheme. The extension will last for 6 months from November 2020 to April 2021 with grants paid out in 2 lump sums covering each 3 month period. In the first 3 months the Government will now pay a grant to eligible individuals amounting to 40% of average monthly trading profits capped at £3,750 in total. The level of the second grant will be set in due course.

In broad terms you will be eligible if you were eligible for the first tranches of grant (even if you did not claim) and your trading continues to be affected by the virus.

Job Support Scheme - changed before it starts

The ink had hardly dried on the rules for the scheme when the Chancellor decided to increase the amount of support under the scheme and widen its scope. Employers will now be able to obtain support for any employees working at least 20% of their normal hours rather than the original 33%. Significantly the employer will now only pay 5% of pay for hours not worked and the Government will pay 61.67% up to a cap of £1,541.75 per month. This leaves the employee in the same position as originally envisaged under the scheme but significantly reduces the employer contribution.

SEISS - Last chance

Please remember that the last date for any claims under the SEISS for the second tranche of grants is 19 October 2020. Time is running out.

Sunak's "Winter Economy Plan"

We were expecting a Budget in the coming weeks but that has been abandoned for the moment and instead the Chancellor stood up in Parliament last week to announce his "Winter Economy Plan". Many commentators expected him to announce some kind of replacement for the Job Retention Scheme (furlough) but he went quite a bit further.

The Job Support Scheme will provide grants to employers for those employees they can keep on reduced hours as long as these represent at least 33% of their normal hours. From 1 November, eligible employees will be paid as normal for actual hours then paid 2/3 of normal pay for the rest of their normal hours with half of that paid by the employer and half by the government. For an employee working the minimum 33% of normal hours, they will receive around 77% of normal pay with the employer paying 55% and the government 22%. The grant is capped at £697.92 per month for each employee on the scheme and will last 6 months.

There will also be an extension to the scheme supporting the self-employed. Self-employed individuals who are facing reduced demand over the winter months will be able to apply for a grant of 20% of their average monthly trading profits for three months from November to January. The scheme will continue for a further 3 months but the amount of grant has not been confirmed.

The Chancellor also announced schemes to allow instalment payments for VAT held over from earlier this year and for personal tax payments due in July 2020 and January 2021. He also extended the period of reduced VAT for the hospitality and tourism sectors until the end of March 2021 and improved the terms and guarantees for the business loan schemes.

Full details of all these changes will be provided in the coming weeks and we will include further information on these pages when they become available.

Statutory Sick Pay & Covid-19

There has been a minor change to the rules for recovering SSP where someone is having to self-isolate. It is now possible to reclaim SSP where an employee has been notified by the NHS to self-isolate before surgery.

The current position is therefore that an employer can reclaim SSP for up to 2 weeks starting from the first qualifying day of sickness if an employee is unable to work because they:-

• have coronavirus symptoms
• are self-isolating because someone they live with has symptoms
• are self-isolating because they've been notified by the NHS or public health bodies that they've come into contact with someone with coronavirus
• are shielding and have a letter from the NHS or a GP telling them to stay at home for at least 12 weeks
• have been notified by the NHS to self-isolate before surgery for up to 14 days.

More than one claim can be made for an employee but you cannot claim for more than 2 weeks in total.

Self-employment Income Support Scheme (SEISS)

An initial grant was made available to support self-employed individuals or partnerships, worth 80% of their profits up to a maximum of £2,500 per month. Like the JRS, the scheme was open initially for a period of 3 months. A further grant will now be open for claims in mid-August although it will be worth 70% of profits rather than 80% up to a maximum of £6,570 for the 3 months. Profits will be calculated by reference to your profits in the last 3 years of trading as declared on your tax returns. If you have been trading for less than 3 years then the shorter period will be used as long as you have at least submitted a tax return for 2018/19 showing your self-employed income.

 You will only be eligible if you have lost trading profits due to Covid-19 but you do not have to have stopped work completely. You will not be eligible if your average income exceeds £50,000 per annum or if self-employment is not your main source of income (ie >50%). Claims can be made from 17 August.

Click on the link below or paste the address into your browser, it will take you straight to the relevant page on the gov.uk website.

https://www.gov.uk/guidance/claim-a-grant-through-the-self-employment-income-support-scheme?utm_source=0c40359d-5a02-4692-86d6-3651cae8807d&utm_medium=email&utm_campaign=govuk-notifications&utm_content=daily#claim