Job Retention Scheme and VAT Update

Dear Clients

HMRC published the latest guidance for the Job Retention Scheme on 12th June 2020. Detailed guidance is available here.

This new information is centered around the long awaited part time furlough and more information around the scaling back of the scheme which is scheduled to end at the end of October 2020.
From 1st July, employers can bring back employees from furlough to work for any amount of time and any work pattern while still being able to claim for the hours not worked.
Only employees that you have already successfully claimed a grant previously will be eligible for this scheme.

From 1 August, employers will be required to contribute to the scheme. Find out more here.
We have successfully submitted many claims on behalf of clients and many have discovered that the process is not straightforward and can be challenging for employees whose pay varies.

This is the extract for the official guidance.

Employees whose pay varies:

You should calculate 80% of the higher of either:

• the wages from the corresponding calendar period in the tax year 2019 to 2020
• the average wages for the tax year 2019 to 2020

To calculate 80% of the wages from the corresponding calendar period in the tax year 2019 to 2020:

1. Start with the amount they earned in the same period last year.
2. Divide by the total number of days in this pay period – including non-working days.
3. Multiply by the number of furlough days in this pay period.
4. Multiply by 80%.

If your employee did not work for you in the corresponding calendar period in the tax year 2019 to 2020, you can only use the averaging method to calculate 80% of their wages.

Find an example of claiming for the same period last year.

For more information please contact us

VAT Deferral – option ending on 30th June

As part of the government’s support for businesses during COVID-19, HMRC gave businesses the option of deferring their VAT payments if they were unable to pay on time, without incurring late payment interest or penalties. Payment of VAT falling due between 20 March and 30 June 2020 can be deferred until 31 March 2021.

You must continue to file your VAT return on time, even if you defer payment.

We remind you that the option to defer paying VAT ends on 30 June 2020. This means that VAT returns with a payment due date after 30 June must be paid in full, on time.

If you haven’t deferred any VAT payments, you don’t need to take any further action. If you have deferred paying your VAT and normally pay by Direct Debit you should now reinstate it.
You should do this at least three working days before submitting your VAT return in order for HMRC to take payment. For further details go to GOV.UK and search for ‘Pay your VAT bill’.

HMRC STEP UP COMPLIANCE ACTIVITY

It is also worthy of note that legislation has been drafted to give HMRC the power to claw back grants made under the Job Retention Scheme and the Self Employed Income Support Scheme where the claimant was not entitled to them or where JRS grants were not used to pay furloughed workers.
The legislation also allows for penalties to be levied in cases where the error is deliberate and concealed.
Given the vast sums of money at stake and strong public opinion for it to take action against those abusing the system, HMRC will be under enormous pressure to act promptly to recover amounts over claimed and penalise the abusers of the coronavirus schemes.

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