Winter Economy Plan by Rishi Sunak: At a glance - CECA Scotland
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The Construction Industry
Joint Taxation Committee JTC
JTC NEWSLINE
Issue 143 October 2020
Winter Economy Plan by Rishi Sunak: At a glance
Given the current resurgence of coronavirus, it l Bounce-back loans: ‘pay-as-you-grow’:
came as no surprise when the Treasury loan repayments may be extended from six to
announced that this Autumn’s budget has ten years. Existing business loan schemes to
been cancelled. This announcement was later remain open until 30 November 2020 with a
followed by an economic statement, the ‘Win- new scheme for January 2021.
ter Economy Plan’, made by the Chancellor, l Payment instalment options for business-
Rishi Sunak. es who have deferred their VAT until 31 March
l A new ‘Job Support Scheme’ (JSS) to re- 2021 and for taxpayers who deferred income
place the Coronavirus Job Retention scheme tax payments on account to 31 January 2021.
(CJRS) which ends on 31 October. This is to l An extension to the VAT cut for those in
be mirrored for the self-employed. the hospitality and tourism industries until
March 2021. n
COVID-19: Job Support Scheme l Employees must work at least 33% of their
‘usual’ hours. This applies for the first three
The employee Job Support Scheme (JSS) months of the scheme and will then be
scheme replaces the Coronavirus Job reassessed.
Retention scheme (CJRS) which ends on 31
October 2020. It opens on 1 November 2020 How is the JSS calculated?
and will run for six months. l The employer pays the employee their
usual contracted wages for actual hours
Employers using the Job Support Scheme will worked, this must be a minimum of 33% of
also be able to claim the Job Retention Bonus usual hours.
if they meet the eligibility criteria. l For each hour not worked by the
Who is eligible? employee, the government and employer will
l All employers with UK bank accounts and each pay a third of the usual hourly wage for
Pay-As-You-Earn (PAYE) schemes even if that employee. The government contribution
they have not used the CJRS. will be capped at £697.92 a month.
l The scheme applies to all small and l Where the government contribution has
medium-sized enterprises (SMEs). Large not been capped employees will earn a mini-
businesses are only eligible if they can show mum of 77% of their normal wages.
that their turnover is reduced due to l The grant will not cover Class 1 employer
COVID-19. NICs or auto-enrolment pension contributions
l Employees must be on an employer’s which will remain payable by the employer.
PAYE payroll on or before 23 September 2020. l ‘Usual wages’ will follow a similar
Real-Time Information (RTI) submissions calculation methodology as for the CJRS.
notifying employee payments to HMRC must More guidance is expected in due course.
have been made on or before 23 September o Employees who have previously been
2020. furloughed under the CJRS will have their
l Employees must not already be on notice underlying usual pay and/or hours used to
of redundancy when the employer starts using calculate usual wages and not the amount
Continued overleaf
the scheme for them. they were paid whilst on furlough.
1JTC NEWSLINE
Issue 143: October 2020
COVID-19: Job Support Scheme contd from December 2020. It should be done online
through Gov.uk
For example: l Grants will be payable monthly in arrears.
HMRC have issued the following example and A claim can only be submitted in respect of a
table to show how much employees will given pay period and only after payment to the
receive compared to their normal earnings employee has been made.
depending on much work they do, and how l Employers must agree on the new short
much it will cost their employer. time working arrangements with their staff,
Beth normally works five days a week and make any changes to the employment contract
earns £350 a week. Her company is suffering by agreement and notify the employee in
from reduced sales due to Coronavirus. Rather writing. This agreement must be made
than making Beth redundant, the company put available to HMRC on request.
Beth on the Job Support Scheme, working two l Employee payments must have been
days a week (40% of her usual hours). reported to HMRC via an RTI return.
l Employers can move their employees on
l Her employer pays Beth £140 for the days and off the scheme.
she works. o They do not have to work the same
l For the time she is not working (three days pattern each month.
or 60%, worth £210), she will also earn 2/3, or o Each short-time working arrangement
£140, bringing her total earnings to £280, 80% must cover a minimum period of seven
of her normal wage. days.
l The Government will give a grant worth l HMRC have said they ‘expect’ large
£70 (1/3 of hours not worked, equivalent to employers not to make capital distributions
20% of her normal wages) to Beth’s employer such as dividend payments and share
to support them in keeping Beth’s job. buybacks whilst they are using the scheme.
l Employees cannot be made redundant or
Hours 33% 40% 50% 60% 70% put on notice of redundancy during any
Employee period in which their employer is claiming JSS
Worked for them.
Hours 67% 60% 50% 40% 30% l Grants can only be used as
Employee reimbursement for wage costs actually
Not Working incurred.
Employee 78% 80% 83% 87% 90% The government is warning employers that
Earnings HMRC will check claims and payments may
(% of normal be withheld or will need to be paid back if a
wages)
claim is found to be fraudulent or based on
Gov’t Grant 22% 20% 17% 13% 10% incorrect information.
(% of normal
wages) l There is no requirement for the employer
Employer 55% 60% 67% 73% 80% to have previously furloughed workers under
Cost the CJRS.
(% of normal l The scheme can be used alongside the
wages) Job Retention Bonus. n
How to claim
l The scheme will be open from 1
November 2020 to the end of April 2021.
l Employers will be able to make a claim
2JTC NEWSLINE
Issue 143: October 2020
COVID-19 Self-Employment Income l The terms of Coronavirus business
Support Scheme (SEISS) interruption loans to be changed such that the
government’s guarantee is extended to ten
The Chancellor announced an extension to the years.
COVID-19 Self-Employment Income Support l All business loan schemes are to remain
Scheme (SEISS) grant on 24 September 2020. open for new applications until 30 November
l The SEISS Grant Extension provides for 2020.
two additional grants to self-employed individu- l A new loan scheme is being devised for
als who are currently eligible for the SEISS. January 2021. n
l The grant extension offers critical support
from November 2020 to April 2021.
l The first additional grant will cover the peri-
Deferred tax bills
od from 1 November 2020 to 31 January 2021
and is less generous than the initial SEISS Businesses who deferred VAT payments which
grants. were due between 20 March 2020 and 30
o The first to cover November 2020 to June 2020 to 31 March 2021 will now be able
January 2021 will be based on 20% of to pay these in eleven interest-free
average monthly trading profits, capped at instalments.
£1,875.
Taxpayers who deferred their July 2020
o The details of the second grant,
Income Tax payments on account to 31
covering February to April 2021 are to be
January 2021 will now be able to pay these
announced in due course.
over a twelve-month period. This applies to
l The government will set the level of the
taxpayers with liabilities under self-assessment
second additional grant and provide details in
of up to £30,000.
due course.
l The grants will be subject to Income Tax No specific announcement has been made
and National Insurance. about whether interest will be charged, I am
l Currently, limited information is available unable to find any information either way yet.
on the qualifying conditions for the grant n
extension. It is anticipated that some of the
conditions under the initial SEISS will continue
to apply. n VAT and the hospitality and tourism
sectors
Business funding and cashflow The temporary VAT cut, to 5%, for the
hospitality and tourism sectors, was due to end
l Under the new ‘pay-as-you-grow’ terms of on 12 January 2021 but has been extended to
the bounce-back loan scheme loan 31 March 2021. n
repayments may be extended from six to ten
years.
l Business who have taken bounce-back
loans move temporarily to interest-only
payments for periods of up to six months (an
option which they can use up to three times),
or to pause their repayments entirely for up to
six months (an option they can use once and
only after having made six payments) without it
affecting their credit rating.
3JTC NEWSLINE
Issue 143: October 2020
COVID-19: Package to support and who start to self-isolate from 28 September will
enforce self-isolation receive backdated payments once the scheme
is set up in their local authority.
The government has announced a support
payment of £500 for lower-income earners This financial support comes as the
required to self-isolate and new fines for those government places a legal requirement on
breaching the rules. people to self-isolate when instructed to by
NHS Test and Trace and introduces tougher
A support payment of £500 will be available fines for breaking the rules. n
for people on lower incomes who cannot work
from home and have lost income. There are
also new fines for those breaching self- New grants for local COVID
isolation orders starting at £1,000 and
increasing up to £10,000 for repeat offences.
lock-down businesses
The government has announced new grants
From 28 September those people on lower
of up to £1,500 for businesses that have been
incomes required to self-isolate will be
forced to close due to local COVID-19 lock-
eligible for the Test and Trace Support
down orders.
payment of £500 to help defer costs. The
government says it is in recognition that Speaking in the House of Commons Chief
self-isolation is “one of the most powerful tools Secretary to the Treasury announced that
for controlling the transmission of Covid-19”. It the new funding will be available every three
adds that just under 4 million people who are weeks for each business property. Payments
in receipt of benefits in England will be eligible will be triggered when central government
for this payment. implements a local lockdown due to a high
incidence of coronavirus.
The increased fines of to £10,000 specifically
include those who prevent others from Where there are lockdowns applied by local
self-isolating including business owners who authorities, the local authority will be
threaten self-isolating staff with redundancy if responsible for distributing grants to
they do not come to work. businesses.
A number of steps will be taken to make sure Grants will be worth up to £1,500 for every
that people are complying with the rules: three weeks the lockdown applies. Smaller
l NHS Test and Trace call handlers making businesses will receive £1,000. The payments
regular contact with those self-isolating, with are currently available to businesses in Black-
the ability to escalate any suspicion of burn, Darwen, Pendle and Oldham as part of
non-compliance to local authorities and local an ongoing trial scheme.
police.
l Using police resources to check Details
compliance in highest incidence areas and in l Any businesses still closed at a national
high-risk groups, based on local intelligence. level (e.g. nightclubs), will not be eligible.
l Investigating and prosecuting high-profile l If a business occupies a premise with a
and egregious cases of non-compliance. rateable value less than £51,000 or occupy
l Acting on instances where third parties a property or part of a property subject to an
have identified others who have tested positive annual rent or mortgage payment of less than
but are not self-isolating. £51,000, it will receive £1000.
l If a business has a rateable value more
Local authorities will administer the self-
than £51,000 or part of a property subject to an
isolation support schemes and are
annual rent or mortgage payment of more than
expected to be in place by 12 October. Those
£51,000, it will receive £1500.
4JTC NEWSLINE
Issue 143: October 2020
New grants for local COVID other organisations to meet the minimum as a
lock-down businesses contd group before they can apply.
l Local authorities will also receive an l They must then appoint a representative
additional 5% top-up amount of business for the group who can claim up to £300 for the
support funding to enable them to help other administrative costs of acting.
businesses affected by closures which may not Other such organisations could include:
be on the business rates list. Payments made l Similar employers
to businesses from this discretionary fund can l Local authorities
be any amount up to £1500. Grants may be l Trade bodies
less than £1000 in some cases.
l Local authorities will be responsible for This requirement will make the scheme much
distributing grants to businesses in less attractive to many small and medium
circumstances where they are closed due to sized employers who will not be looking to
local interventions. create 30 placements or more.
l Further eligibility criteria may be The other key eligibility criteria for the scheme
determined by local authorities. are:
l As with other COVID business grants, l The jobs must be new jobs and must not
local grants to closed businesses will be treat- replace existing/planned vacancies or cause
ed as taxable income. n existing employees/contractors to lose or
reduce their employment.
l The roles must:
Kickstart Scheme open for o Be a minimum of 25 hours per week, for
applications six months.
o Be paid at least the National Minimum
The government’s ‘Kickstart’ job creation Wage for the age group.
scheme aims to help young unemployed o Not require people to undertake
people. It is now open for applications. extensive training before they start.
Kickstart was announced by the Chancellor in l Each application should set out how the
his summer economic update. employer will help workers develop their skills
The scheme can be used to create new and experience, including support to:
six-month job placements for 16-24 year-olds o Look for long-term work including
currently on Universal Credit and at risk of support with CV and interview preparations.
long-term unemployment. o Develop basic skills, such as
attendance, timekeeping and teamwork.
Grant funding is available for: l Once a job placement is created, it can be
l 100% of the relevant National Minimum taken up by a second person after the first
Wage for 25 hours a week, plus associated successful applicant has completed their
employer National Insurance Contributions six-month term.
(NICs) and minimum auto-enrolment pension
contributions. If the employer is creating more than 30 job
l There is also a payment of £1,500 per job placements or if they are the representative for
placement for setup costs, support and a group of employers the application can be
training. made online.
Any organisation, irrespective of size, can l Applications have to be considered by a
apply if the scheme conditions are met. There panel and responses could take up to a month.
is a minimum of 30 placements required to l Initial payments will be made once the
apply. employer has confirmed to the DWP the young
l Employers creating less than 30 person has started work, is enrolled on their
placements will have to group together with payroll and is being paid through PAYE. n
5JTC NEWSLINE
Issue 143: October 2020
Sub-contractors worked for main money received except where money was paid
contractor not customer out directly to sub-contractors.
A case that points out the dangers of ‘splitting HMRC raised a VAT assessment for £22,615
‘a trade to keep contractors and on the basis that the whole contract was
sub-contractors below the VAT threshold. supplied by Marshalls to the customer and the
HMRC are aware and challenging industry contractors worked for Marshalls.
poor practice. Marshalls appealed the assessment on the
In Marshalls Bathroom Studio Ltd basis that its customers were aware from
(‘Marshalls’) v HMRC [2020] TC07753, the the outset when a sub-contractor was to be
First Tier Tribunal (FTT) found that output tax involved. The customer was involved in the
was due on payments made by Marshalls’ process of deciding whether to engage a
customers directly to sub-contractors because sub-contractor or wait for the in-house team,
the sub-contractors were working for with Marshalls merely taking a co-ordinating or
Marshalls. introductory role.
Marshalls provides the design, manufacture, The FTT found that Marshalls was not
supply, and installation of bathrooms. On its acting as an agent for the customer or for the
website, it claims to provide a full service: “We sub-contractors. Instead, the fitting supplies
provide the complete service from initial were by Marshalls to the customer, with the
discussion to planning and designing.....” sub-contractors supplying their services to
Marshalls.
l Marshalls provided the customer with a
quotation but made no mention that it uses The FTT found these were on the basis of:
sub-contractors. l The contractual relationship was between
l The work was done by Marshalls and in the customer and Marshalls.
some cases, Marshalls sub-contracted fitters, l The decision as to whether to hire
plumbers and tilers. These were non-VAT sub-contractors was made by Marshalls
registered. without reference to the customer.
l An invoice was raised on completion and l The first time a sub-contract was
customers were requested to make direct mentioned to the customers was when
payments to any sub-contractors who had payment was made.
provided their services. l After job completion, any complaints were
l Marshalls treated the supplies as VAT- made to Marshalls. n
inclusive and accounted for output tax on
PAYE: PSA payments due by 22
The Institute of Chartered Accountants in
October 2020 England and Wales’ (ICAEW’s) Tax faculty has
Employers with a PAYE Settlement warned that employers who are yet to receive
Agreement (PSA) in place should ensure their a payslip from HMRC confirming the amount
payment in respect of 2019/20 is made to owed under their PSA for 2019/20 should
HMRC by 22 October 2020 to avoid interest make payment based on the
and late payment penalties. calculations they submitted to HMRC to
ensure payment is made on time. n
If payment is being made by post, this should
reach HMRC by 19 October 2020. Electronic
payments must clear HMRC’s bank account
by 22 October 2020.
6JTC NEWSLINE
Issue 143: October 2020
COVID-19: Three-month extension is extended from nine to twelve months and is
for SAO filings based on a company’s original financial
year-end date.
Companies House is temporarily extending the
accounts filing deadline for companies filing This means that a private company with a
accounts from 27 June 2020 to 5 April 2021 financial year-end of 31 December will have up
(inclusive). Companies utilising this extension to 31 December 2020 (instead of 30
will also have an extra three months to deliver September 2020) to file its 2019 accounts at
their Senior Accounting Officer (SAO) filings. Companies House and deliver its SAO filings
to HMRC.
The change was introduced in response to
Covid-19 through Statutory Instrument The Institute of Chartered Accountants in
2020/645 which came into force on 27 June England and Wales (ICAEW) Tax Faculty
2020. The new regulations affect filings of recommends that businesses which have an
accounts and other documents and are aimed HMRC Customer Compliance Manager inform
at relieving some of the burdens on them in advance of their original SAO filing
businesses during the pandemic so that they deadline if they intend to take advantage of the
can focus on continuing to operate. extension. This will help maintain a good
working relationship with HMRC and keep
Private companies usually file their accounts them updated on the status of compliance. n
and deliver their SAO filings (if applicable) by
nine months after the end of their financial
year. Under the new regulations, this deadline
If you have a query on any item in newsline contact
Tel: 020 8874 4335
or liz@thetaxbridge.com
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