Cowgills client Q&A summary – 15 April

On the 15 April we held a Q&A session for clients through Zoom and were delighted to welcome over 40 attendees. Guests were able to hear from a panel of experts at Cowgills.

We have provided a summary of some of the key topics that were discussed. We will be holding future events for clients and contacts, do drop us a line if you would be interested in attending enquiries@cowgills.co.uk

Summary of today’s call

Louise Myers, CG Professional – Furlough and your employees

We are now starting to see businesses at different stages of the furlough process.

Guidance on furlough still remains the same:

• You have to be in agreement with your employees. It is best practice to get confirmation in writing from your employee via a signed letter or confirmation email.
• Furloughed employees cannot work for you but they can work for another employer subject to their contract with you – there may be an existing clause that requires employees to get their employer permission to have two jobs.
• The Government confirmed that the furlough scheme will be available for three months and it applies to employees who were on the payroll as of 28 February [NB. As of 15 April 2020 this date has been changed to 19 March 2020]. Any employees who need to be furloughed but joined after this date are not eligible to be furloughed.
• Employees need to be furloughed for a minimum of three weeks and paid at 80% up to the maximum of £2,500 per month.

During furlough, an employee still accrues holidays, continuity of service and other employment rights.

The HMRC furlough portal is due to open on Monday 20 April. Until the portal is up and running, we are unsure of what is going to be asked of employers.

Two key areas of concern for employers, 1, calculations and 2, holidays:

Calculations

• Fixed salaries should be calculated as of 28 February
• If an employee’s pay varies month by month, pay should be calculated from the average of the 19/20 tax year or the same month the previous year.
• If an employee has contractual bonuses, commission, allowances etc they too should be included in the variable pay calculation.

Holidays

• A maximum of four weeks’ holidays can be carried over for the next two years.
• There is currently no guidance on an employee taking holidays during furlough. I suggest it can be, and an employee’s pay is topped up to 100% for that holiday period.

Key points from questions asked:

• HMRC need to get into a position to forward pay. If employees agree and subject to payroll matters, changing of payday may be an option to help with payments.
• You will be reimbursed separately for furlough payments, they will not be deducted from any liabilities.
• Payslips don’t have to state whether the payment was a furlough payment. If you can change it, it might be a good idea to do so as you will then have another record of employees who were furloughed but this should not be the only record you keep.
• Employers will need to think about how they document their decision to furlough staff.

Lisa Wilson, Cowgills – Tax Observations

Assistance out there in addition to furlough payments.

Two angles to consider, keeping cash in the business and stopping cash getting out.

• We already know that when the portal opens up on the 20 April, it will be incredibly busy. Being a self-service portal it relies on the employer to get the information right to avoid any delays in furlough payments being credited.
• Make sure you have the relevant information for your furloughed employees (PAYE reference numbers, NI numbers etc)
• Do put some resource behind this.
• Stay patient – help from HMRC will be available, it may take time.
• Automatic measures have been put in place.
• VAT holiday’s available until the end of July. Cancel any direct debits but make sure you carry on with your administrative responsibilities.
• Lean on HMRC to agree to Time to Pay arrangements. Keep in mind that this will be a deferral and will need to be paid back at some point.
• Act now, it may be different in a couple of months’ time.

Ben Day, Cowgills – Business Interruption Loan

The last couple of weeks has shown that the Business Interruption Loan Scheme is evolving.

We have seen the Government have put more pressure on banks to get funds out to businesses quicker than they have been doing. We believe banks are in the process of dealing with c.200,000 applications.

All banks are different, for more advice we would recommend you contact your bank as the process isn’t a one size fits all.

What is clear is that you have to have the preparations done before applying for the Business Interruption Loan.

• Cashflow forecasting model – you will receive better terms from the bank if you have a cashflow forecast.
• A bank will want you to prove viability pre and post coronavirus and the steps you’ve made in the interim – The Cowgills team have built a model template and we can roll this out quickly to clients. It is simplified so you have to a tool use and update yourself.
• Basic set of forecasts, the historical viability of the business to show how the businesses financial performance will track during Coronavirus, including the steps taken will be critical for the bank.
• Relatively simple business plan will also need to be put together which we have a template for and are more than happy to sit down with you to discuss this.

Should you require any further assistance do not hesitate to contact us.