Everything you need to know about what Covid-19 means for businesses
What is ACCA doing to support members?
- Guidance for global community: The impact of the Covid-19 pandemic is creating significant challenges for members here in the UK and worldwide. To support our global community, we’ve created an online hub that brings together resources and advice to help deal with the implications. Visit the hub at accaglobal.com/covid-19.
- Policy: ACCA UK’s Policy team is working to develop recommendations and lobby for government policy measures to support members and the businesses they advise. The team also maintains close relationships with a number of government departments and ministers to ensure members have clear and relevant guidance from central government.
- UK Technical Advisory: ACCA UK’s Technical Advisory service remains open to UK members. Due to staff working remotely during this period, queries are no longer able to be conducted via phone. However, members are still able to send queries to firstname.lastname@example.org, where the team are working hard to ensure standard response times remain the same within three working days.
- Remote access and support: We are also using our links with software providers to open up access and support for those needing to work remotely, as explained in the next section.
Support from software providers
Sage has provided the following guidance (updated 1 April 2020):
If practices do not already have a remote access solution in place, they will need to install another instance of their software on a remote machine. We will provide this option to them with no extra charge and give them guidance on how to do this within the coronavirus site. You can access this via sage.com.
Sage is here for ACCA members and students
As the UK responds to the impact of coronavirus (Covid-19), we want you to know that we’re here for you. We’re a partner to more than one million UK businesses, so we are aware of the impact Covid-19 is having right now. Our 3,000 strong UK-based team are already at home and working hard to keep the technology and expert support services you rely on operating normally. We've created the coronavirus hub as a go-to place for all the help you and your clients need - from the latest advice and resources, to daily webinars and live Q&As to support you during this challenging time.
NEW: Sage has launched a UK government funding support tool
Use the tool to find out what financial support options you (or your clients) may be eligible for and how to access them.
Daily webinars on topics that matter
We recognise that clients will need your advice more than ever during these uncertain times, and you rely on us to help answer your queries.
Our Sage experts are hosting daily webinars on payroll continuity and resilience when working from home to keep you updated on how the latest changes affect you and your software. Register here to join.
Sage support resources
Here are all the latest help and support resources for your practice and clients:
IRIS has provided the following guidance (updated 31 March 2020):
IRIS Hosting, our remote working service for desktop users, is not only available to existing IRIS customers but to all UK firms that need to remotely access their desktop solutions. You can read how this will work in a supporting guide.
QuickBooks has issued the following statement on its desktop product:
If any of our customers are encountering difficulties working from home, we ask them to contact our customer success team.
Those with a single user add-on pack licence may install the software for access and use solely by one specific person on: (i) one primary computer and (ii) one additional computer (eg a laptop or a home computer that you own and use in your business) for use by that same specific person.
If you purchased a multi-user licence or add-on pack (i) you may install the software on the number of computers equal to the number of user licences you purchased; and (ii) you understand that access and use of the software is solely for the number of specific persons corresponding to the number of user licences you purchased, with no substitution of such users except as expressly permitted by this section.
Xero has provided the following guidance (updated 24 April 2020):
Xero is working hard to simplify and automate a lot of the new payroll changes to support its customers. The updates include:
- All Xero Payroll customers in the UK can now process furlough leave for eligible current or reinstated employees. The solution lets you easily split out the wage costs of furloughed workers in preparation for the grant claim, which is available for the period from 1 March to the end of June and will be processed by HMRC via your PAYE online account.
- ‘Covid-19 self-isolation‘ has been added as a sick leave option for employees who are required to self-isolate, so they can earn sick pay from day one instead of the usual four consecutive days. HMRC is currently working on a process to help small and medium-sized businesses reclaim two weeks of self-isolation sick pay; once this is ready, Xero will help you capture these records and support the reclaim process.
You can use Xero anywhere you have an internet connection or mobile phone signal. Accessing Xero at home provides you with the same features and data as using it at work.
For more information, read the ‘Use Xero when working remotely' article.
What representations is ACCA making on members’ behalf?
ACCA issued a five-point call to government and has been working with central government departments to improve the support on offer to businesses.
- Our recommendation to postpone the off-payroll working rules has been adopted and calls for time to pay and extension of Companies House deadlines have been partially adopted. Check our coronavirus information and resources home page for updates to our positions and recommendations.
- We are taking a broad range of views and evidence to shape lobbying at email@example.com.
- ACCA UK is also working with lenders and officials at the Treasury to ensure access to finance is straightforward and timely. The team has ongoing contact with the British Business Bank and UK Finance to feed back member insight on access to the Coronavirus Business Interruption Loan Scheme and other sources of finance. We are also discussing concerns with a number of financial institutions.
- Taking forward the issue with the Coronavirus Business Interruption Scheme (CBILS), ACCA was invited to join a small roundtable with Paul Scully MP, Minister from the Department for Business, Energy and Industrial Strategy, to discuss Covid-19 support for business. ACCA was submitted questions for the minister from our practitioner network and invited a further 10 ACCA members to join the meeting. ACCA fed back that applications for CBILSs support were not working as intended, with members reporting onerous applications and requests for information from lenders. Additionally, ACCA highlighted that employers were running low on cash and were concerned with Coronavirus Job Retention Scheme (CJRS) payments not being released in time to meet April payroll commitments. The Mminister reported that efforts to increase the number of accredited CBILS lenders was a department priority. He noted lenders were experiencing difficulty getting smaller loans (less than £25,000) approved but the Department for Business, Energy and Industrial Strategy was taking steps to address this.
- Additionally, ACCA UK launched a survey in collaboration with the Corporate Finance Network (CFN) to identify the short- to medium-term cash pressures on businesses. On Wednesday 15 April we collected results from the first week of the survey, which you can read more about here. Findings based on member feedback were covered in the Financial Times and Radio 4. To inform our conversations with government and lenders on urgent capital support going forward we will continue to collect responses and produce a weekly analysis. We urge members from practice and private sector to share their views and client experiences here.
Who can I talk to if I need further clarity or guidance?
ACCA’s Technical Advisory team remains open for queries via email. We are working continuously to collate queries and seek further guidance from government departments on members’ behalf.
HMRC has set up a helpline for businesses and self-employed people who are concerned about paying their tax due to Covid-19, open Monday-Friday from 8am-4pm. Call 08000 241222 for help and advice.
- England: For non-HMRC-related issues and general business support, call 0300 456 3565 (9am-6pm).
- Wales: Visit Business Wales or call 03000 6 03000 for general enquiries. Social enterprises and businesses can seek further guidance from Social Business Wales on 0300 111 5050 or email firstname.lastname@example.org.
- Scotland: Call the Scottish Government helpline, open Monday-Friday, 8.30am-5.30pm. Call 0300 303 0660 and select option 1 to speak to the Covid-19 team. The Find Business Support website also gives the latest information and advice.
- Northern Ireland: Call the HMRC helpline above (08000 241222) or visit NI Business Info. For help with getting your business online, call the Invest Northern Ireland helpline on 0800 181 4422.
For queries on apprenticeships in England and Wales, the Department for Education coronavirus helpline is 0800 046 8687.
How do I know if I’m an essential worker?
Employers should make every possible effort to provide finance and accounting teams with the digital infrastructure and remote working capabilities to work from home.
Following recent government guidance, those engaged in essential financial activities (including but not limited to payments services, banking, payroll specialists and business financing) and those who work in industries that support essential services (including but not limited to supply chains for food and medical supplies and logistics) and are unable to work from home may continue to travel to and from work, taking precautions to minimise their time spent outside of the home and maintaining a distance of two metres from anyone outside of your household.
How will my residency status be affected by restrictions on movement? (Updated 24 April 2020)
The Covid-19 circumstances are considered exceptional: you have no control over how much time you spend in the UK or when you can return.
If due to Covid-19 your movement in and out of the UK is restricted – for example, due to the closure of borders or being instructed by your employer to return to the UK temporarily – HMRC will disregard a 60-day period of stay in the UK for the purposes of establishing your statutory residence.
Time spent by individuals in the UK between 1 March 2020 and 1 June 2020 working on Covid-19-related activities will not count towards the residence test.
It is expected that if the duration of lockdown is extended, HMRC may review and extend the 60-day period.
How can I manage the interruption and risk in my business?
It is helpful to provide a rounded approach to team wellbeing to create stability as day-to-day working models are disrupted. Managers tend to focus on the element of wellbeing with which they are more familiar; however, when looking at the needs of your team, consider:
Mind: Mindfulness and sharing new working techniques and routines are beneficial. Encourage the use of a designated working area at home so employees can 'go to work' and leave work at the end of the day.
Body: Encourage online fitness and physical wellbeing resources.
Spirit: Consider practical development tools such as online talks and webinars as well as coaching techniques to help to get the best outcome from a challenging situation, particularly where the team members are not in the same location.
Vision: Have a clear vision for the team and accept that your achievable goals and priorities may have changed. Discuss together what the new ‘norm’ will look like in terms of reporting, volume of work and expectations of delivery.
Visit the ACCA coronavirus hub for ideas and support.
Avoiding fraud and scams (updated 27 April 2020)
There has been a surge in opportunistic coronavirus-related scams totalling almost £970,000, according to the National Fraud Intelligence Bureau. Look out for online shopping offers from unreliable websites, emails from unrecognised senders asking you to open an attachment or click a link, and unofficial email addresses claiming to be government departments. The main ways to reduce the risks are:
Don’t click on the links or attachments in suspicious emails, and never respond to unsolicited messages and calls that ask for your personal or financial details.
If you’re making a purchase from a company or person you don’t know and trust, carry out some research first, and ask a friend or family member for advice before completing the purchase. If you decide to go ahead with the purchase, use a credit card if you have one, as most major credit card providers insure online purchases.
Always install the latest anti-virus software and app updates to protect your devices from the latest threats.
HMRC has provided the following guidance:
Stay vigilant about scams, which may mimic government messages such as 'Stay at home' and 'Stay home, stay safe', as a way of appearing authentic and unthreatening. Don’t give out private information or reply to text messages, and don’t download attachments or click on links in texts or emails you weren’t expecting. You can forward suspicious emails claiming to be from HMRC to email@example.com and texts to 60599.
Anti-money laundering (AML) – client due diligence
I have a new client who needs urgent advice. How can I do due diligence and carry out ID checks without paper or face-to-face-meetings?
You can start to ‘establish the client relationship’ where there is an urgent need to do so – for example, cashflow projections for urgent grant applications, or agreeing a Time To Pay arrangement with HMRC. You should carry out as many electronic checks as possible, and still complete the full due diligence process as soon as possible. Every case where you follow this course of action needs to be approved by your money-laundering reporting officer (MLRO), and you need to record that approval. The Consultative Committee of Accountancy Bodies (CCAB) has provided further detail, which you should read.
Completion of CDD for new clients
During the current Covid-19 pandemic there may be circumstances in which a client requires urgent advice in a time frame that does not allow completion of client due diligence (CDD) in sufficient time. Regulation 30(3) of the Money Laundering Regulations 2017 permits this to be completed while establishing the business relationship, provided that the verification is completed as soon as practicable after contact is first established. CCAB has produced a guidance note.
Where can I find intelligence on international Covid-19-related crimes, including fraud, cybercrime, misdirection or exploitation of government funds or international financial assistance?
Firms should look to the latest report from the Financial Action Task Force (FATF), which highlights global intelligence on criminal activity.
Firms may also wish to update their teams on emerging risks and vulnerabilities that could result in criminals finding ways to:
bypass customer due diligence measures
increase misuse of online financial services and virtual assets to move and conceal illicit funds
exploit economic stimulus measures and insolvency schemes as a means for natural and legal persons to conceal and launder illicit proceeds
increase use of the unregulated financial sector, creating additional opportunities for criminals to launder illicit funds
misuse and misappropriate domestic and international financial aid and emergency funding
exploit Covid-19 and the associated economic downturn to move into new cash-intensive and high-liquidity lines of business in developing countries.
In Annex B of FATF's report you can also find how different countries are combating crime as well as risk areas. If you have clients operating within the countries listed, you may wish to review the appropriate advice.
Self-Employment Income Support Scheme (updated 18 May 2020)
What support is available to the self-employed?
The Self-Employment Income Support Scheme will allow the self-employed or a member of a partnership to claim a taxable grant of 80% of their average monthly trading profits, paid out in a single instalment covering three months, and capped at £7,500 in total.
The self-employed can apply for the scheme if they:
- have submitted their income tax self-assessment tax return for the tax year 2018/19
- traded in the tax year 2019/20
- are trading when they apply, or would be except for Covid-19
- intend to continue to trade in the tax year 2020/21
- have lost trading/partnership trading profits due to Covid-19.
In addition, eligibility is also determined by at least one of the following conditions being true:
- having trading profits/partnership trading profits in 2018/19 of less than £50,000 and these profits constituting more than half of total taxable income
- having average trading profits in 2016/17, 2017/18 and 2018/19 of less than £50,000 and these profits constituting more than half of average taxable income in the same period.
If the business started trading between 2016 and 2019, HMRC will only use those years for which they filed a self-assessment tax return.
When will the support be provided?
The claims portal is now open and claimants will have been provided with a date from which to make their claim. Grants should be paid within six working days of the claim being submitted, provided HMRC has the correct bank details. The claims portal can be accessed here.
How are trading profit and total income calculated?
As per HMRC guidance issued, trading profit is the taxable profit (after capital allowances etc) declared on the self-assessment, prior to off-setting of losses brought forward from previous years and personal allowance.
Your total income is the total of all your:
- employment income
- trading profits
- property income
- savings income
- pension income
- miscellaneous income (including social security income).
Further HMRC guidance on calculation of profits can be accessed here.
Can a company director claim this grant?
A director of their own company who is paid through PAYE may be eligible to get support using the Coronavirus Job Retention Scheme. A director/shareholder cannot be treated as self-employed for this purpose.
A director can continue to run their business in terms of performing their statutory duties as officeholders, but they must be furloughed from other day-to-day activities for raising any revenue for the company. Guidance issued up to 6 April 2020 states:
‘Where furloughed directors need to carry out particular duties to fulfil the statutory obligations they owe to their company, they may do so provided they do no more than would be judged reasonably necessary for the purposes, such as, they should not do work of a kind they would carry out in normal circumstances to generate commercial revenue or provide services to or on behalf of their company. This also applies to salaried individuals who are directors of their own personal service company (PSC).’
The chancellor has confirmed that:
‘Work undertaken by a director of a company to fulfil a duty or other obligation arising by or under an Act of Parliament relating to the filing of company accounts or provision of other information relating to the administration of the director’s company must be disregarded for the purposes of ‘cessation of all work in relation to furloughed employees.’
The claim will be only for the 80% of their salary processed through PAYE. Dividends are not included for the calculations of this grant. If a director is furloughed under the scheme, the company should document it and also communicate to the director in writing.
To avoid fraud, there are expected to be cross-checks between the applications for grants against PAYE records for each employer.
Can a self-employed person still work while claiming this grant?
Yes. A self-employed person can continue to trade and be still eligible to claim the income support grant. This is different to the claims made under the Coronavirus Job Retention Scheme, where employees who are being furloughed cannot work at all.
VAT deferred payments (updated 23 April 2020)
To claim the deferral, does the business need to cancel the direct debit authority mandate or will HMRC do that?
If the business wants to take the advantage of the VAT payment deferral and it pays VAT through direct debits to HMRC, it MUST cancel the direct debit in good time. HMRC recommends direct debits are cancelled at least five working days before the filing date for the period the business wishes to defer.
Those businesses that do cancel their direct debit mandates must remember to set up a new one after the deferral period is over.
Read the government guidance here.
Will businesses get VAT refunds in the holiday period?
Yes, businesses will be receiving all VAT refunds as normal.
When will the revised collected date be?
Currently VAT payments are deferred until 30 June 2020. Guidance indicates that taxpayers will be given until the end of the 2020/21 tax year to pay any liabilities that have accumulated during the deferral period, ie 5 April 2021 (unincorporated businesses) or 31 March 2021 (companies). They are likely to get a further extension if the cashflow and the effect on business is unable to support these payments.
Will non-payment of VAT in the holiday period be automatically ignored in VAT default surcharge calculations?
Yes, the non-payment of VAT will be ignored for any VAT default surcharges and interest calculation.
Do I have to continue to file my VAT returns and other VAT compliance documents?
Yes, there are no special exceptions for failure to file and businesses should continue to meet their filing obligations.
How will the VAT holiday work for businesses that pay VAT monthly on the annual accounting scheme?
Businesses do not need to make any payments until 30 June 2020. As the monthly payment does not start until the end of month 4, businesses will eventually be catching up with payments after June 2020.
Normal VAT payments deadlines are:
You must make advance payments towards your VAT bill (either monthly or quarterly) during your accounting period and a final payment when you submit your VAT return.
|Monthly||Due at the end of months 4, 5, 6, 7, 8, 9, 10, 11 and 12|
|Quarterly||Due at the end of months 4, 7 and 10|
|Final payment||Within two months of month 12|
Making Tax Digital (MTD)
Has anything changed regarding HMRC’s digital links ‘soft-landing’ approach?
MTD for VAT went live for most businesses on 1 April 2019. HMRC initially allowed a ‘soft-landing’ approach that was due to end on 1 April 2020 for digital software links to be in place for VAT electronic submissions. This deadline has been extended to 1 April 2021 so that businesses can ensure that their software can provide digital links to the underlying data submissions in respect of their VAT returns. The first VAT period beginning on or after 1 April 2021 will need to have digital links in place mandatorily.
Income tax deferred payments
Will anything change about requesting a deferred payment in July?
Deferral is automatic for the self-employed. They can defer their income tax self-assessment second payment on account for 2019/20 due on 31 July 2020. It is deferred until 31 January 2021.
Will similar deferments be available for corporation tax soon? If so, how will they work?
Deferral can be applied for HMRC’s Time to pay arrangements on a case-by-case basis.
Who should I contact if I can't pay taxes on time?
All businesses and self-employed people in financial distress and with outstanding tax liabilities may be eligible to receive support through HMRC’s Time To Pay service.
You can contact HMRC from Monday to Friday (8am-4pm) via
Telephone: 08000 241222
Professional indemnity insurance advice from Lockton
Am I covered for business interruption?
Business interruption for loss of income is not covered under your professional indemnity insurance and usually sits within a combined or office combined policy.
Will my business interruption policy cover me for lost revenue/profit as a result of Covid-19?
As you may have seen from the Government announcement, most policies won’t cover losses relating to circumstances likeCovid-19. However, we will check your policy wording to see if there is any coverage.
Insurance policies differ significantly, so businesses are encouraged to check the terms and conditions of their specific policy and contact their providers. Most businesses are unlikely to be covered, as standard business interruption insurance policies are dependent on damage to property and will exclude pandemics.
Do I need to tell my office insurance providers if I am closing my offices?
Usually insurers ask that you advise them if your office is likely to remain unoccupied for more than 30 consecutive days. Insurers would recommend that you shut off the water supply to the premises and ensure that any measures to prevent thefts are taken. We would suggest that you notify your insurers of any office closures as soon as possible.
What should I do if my professional indemnity policy is due for renewal?
Some clients don’t have access to printers and scanners now they are working from home, so Lockton is sorting alternative methods for them to renew their policies where they are not required to complete and sign forms.
We understand this is a frightening time for many who are small business owners and most just want reassurance that all will be okay. We will of course make sure we do everything possible to make life as easy as possible for our clients.
Please note that all insurance policies differ significantly. If you are unsure about coverage, please get into contact with your broker or insurers.
Coronavirus Job Retention Scheme (updated 6 May 2020)
Is the claims portal open?
Yes, the online portal for claiming grants to pay employees under the Coronavirus Job Retention Scheme (CJRS) is now open and can be accessed here.
Will agents be able to apply for these grants on clients’ behalf?
Businesses and agents who are authorised to act on behalf of clients for PAYE matters will be able to claim. However, file-only agents, including payroll bureaus, will not be able access the service due to data protection reasons.
How does an agent find out if they are authorised to complete a claim for their client?
Agents who are authorised to act on behalf of clients for PAYE matters online will be able to make the claims. That means that they:
- are registered as an agent with HMRC and have a PAYE agent code
- have enrolled for the PAYE for Agents online service
- have been authorised to act online for PAYE for their client. This could be via an existing FBI2 form or the Online Agent Authorisation process.
If an agent is unsure of the level of authorisation they have, they should check the list of payroll clients in their agent portal. If the client is listed as ‘confirmed’, they can make a CJRS application on their client’s behalf. However if they are not listed, or listed as ‘limited authorisation’ then the agent cannot currently claim on behalf of the client.
How can an agent who is not currently authorised online become authorised?
If an agent is registered with HMRC but has not been authorised to act online for their clients in PAYE, they can seek authorisation to be able to act for the client.
Rather than using paper form FBI2 or the online agent authorisation process, agents can ask their clients to authorise them to act for PAYE through the client’s business tax account. This is a faster route to ensure the right permissions are in place.
Can an employer authorise agents (where they provide filing-only services) quickly to speed up the grant claim?
Yes, an employer that is enrolled for PAYE online services can authorise through its Government Gateway. Activation codes have now been suspended so this is instantaneous.
The steps for the client to authorise the agent are:
- The client signs into HMRC online services (their business tax account or BTA).
- In BTA, select 'Manage account' and select the 'Add, view or change tax agent' option under the heading 'Tax agents'.
- Select 'PAYE for employers' and click continue.
- On the 'Manage who can access your taxes and schemes' page, click the 'Add an agent' link next to the service that you want to assign an agent for (eg PAYE).
- Enter your agent's Government Gateway ID and click continue.
- Click on 'Add agent' to confirm.
You will receive confirmation that the agent has been added on the screen.
What information will be required to make the claim?
To make a claim, you will need:
- to be registered for PAYE online
- your UK bank account number and sort code
- your employer PAYE scheme reference number
- the number of employees being furloughed
- each employee’s national insurance (NI) number
- each employee’s payroll or employee number
- the start date and end date of the claim
- the full amount you’re claiming for including employer NI contributions (NICs) and employer minimum pension contributions
- your phone number.
You also need to provide either:
- your corporation tax unique taxpayer reference
- your self-assessment unique taxpayer reference
- your company registration number.
How long does the claim take and when will we receive the grant money?
The online portal to make claims is relatively straightforward and HMRC has provided clear guidance and examples, which should be read before starting the claim process. As the portal will timeout if no activity is detected for longer than 15 minutes, we would advise you to have all the information to hand before starting the claim.
No confirmation email or text message will be provided at the end of the claim process, so we would advise members to print each screen as they complete it, especially the final screen which will provide a claim reference.
How will claims be assessed and processed?
- Under the scheme, all employers in the UK will be able to access support to continue paying part of employees’ salaries who would otherwise have been laid off during the ongoing crisis. Furloughed workers are employees whose employers cannot cover staff costs due to coronavirus, and as such they have been asked to stop working but have not been made redundant.
- The employer should discuss with affected employees and notify them (preferably in writing) that they have become ‘furloughed workers’.
- The employer will need to submit information to HMRC about furloughed employees via the new online portal as shown above.
- To avoid fraud, there are expected to be cross-checks between the applications for grants against PAYE records for each employer.
- Employers will be required to make one claim for the entire workforce, record how many workers are covered and keep records.
- Grants will be pro-rated if the employee is only furloughed for part of a pay period.
- Claims should be started from the date when the employee finishes work and starts furlough – not when the decision is made, or when they were written to confirming their furloughed status.
Will employers still have to pay employers’ national insurance contributions (NICs)?
HMRC has confirmed that in addition to covering 80% of the regular basic wages (subject to the £2,500 monthly cap), employers’ class 1 NICs due on that element of the wages will also be eligible for reclamation. The payment to employees remaining on the payroll should continue with normal deductions for tax and NICs under the PAYE system.
What happens if the employee does not have a national insurance number (NINO)?
It is possible to claim without a NINO as follows:
Employee has a NINO, but employer doesn’t know it
Where an employee has a NINO but the employer does not know it they should make all reasonable efforts to establish it, including by making use of the RTI NINO Verification Request submission if appropriate.
Employee does not have a NINO
Where an employer has fewer than 100 furloughed employees but has one or more without a NINO, they should contact the Covid-19 Helpline on 0800 024 1222 and process their claim over the phone.
Where an employer has 100 or more furloughed employees, they must instead provide a payroll or employee reference number for any employee without a NINO in their file upload.
Do I have to work out the amount of tax, NI and pension myself or will this be calculated on the PAYE system? And if an employer is eligible for the employer's NI allowance, do they still claim for the employer's NI when making the grant?
The total grant for employer NICs cannot exceed the total amount of employer NICs you are due to pay.
In calculating the total employer NICs in any pay period, the employer should subtract any Employment Allowance used in that pay period. If you have not or do not expect to pay any employer NICs in a pay period as a result of the Employment Allowance, you should not claim any employer NICs costs for furloughed employees in that pay period.
If you expect to exhaust any Employment Allowance in a pay period, then you should claim the lower of the employer NICs grant calculation, and the employer NICs costs that you paid or expect to pay across your entire payroll.
Find out more here.
What about auto-enrolment contributions?
HMRC has confirmed that the minimum employer contributions (currently at the rate of 3% of earnings) will be eligible for reimbursement under the scheme.
Do I need to calculate any amendments if I furlough an employee who is under a salary sacrifice arrangement?
Under a salary sacrifice arrangement much depends on the contract. The minimum employer contributions will be available. Many employers may need to rework the salary post-sacrifice but also to look at their obligation to pay the full contribution to the pension company: read the Pensions Regulator guidance.
What are the implications if the employer fails to make the auto-enrolment pension payment within the stipulated time?
If the employer fails to pay the contribution on time, the pension provider is still required to report employers to The Pension Regulator for failed payments. However, the regulator also understands that these are exceptionally challenging times and for this exceptional period it requires pension providers to report employers for late payment when they are over 150 days late in paying, rather than the previous 90 days. This gives the employer a longer period to bring the payments up to date before being formally reported to the regulator.
What happens to employees with more than one job?
An employee can be furloughed by one employer while continuing to work for another, provided that their employment contracts allow this. If they are furloughed by both employers, each can claim and pay up to 80% of their regular salary.
Can employees who were made redundant be furloughed?
Employees made redundant on or after 1 March 2020 can be re-hired and put on furloughed leave, and the employer will be able to claim up to 80% of their regular salary under the scheme. Employees who were employed as of 28 February 2020 and on payroll (ie notified to HMRC on an RTI submission on or before 28 February) and were made redundant or stopped working for the employer after that and prior to 19 March 2020, can also qualify for the scheme if the previous employer decides to re-employs them and puts them on furlough.
Can the payroll submission for February 2020 be resubmitted to take account of higher remuneration?
ACCA reminds members of their obligations under the Professional Conduct in Relation to Taxation (PCRT) rules. HMRC expects to put in place anti-abuse checks, and any long-term impact as well as obligations under PCRT should be considered before advising clients on resubmission of any information. ACCA expects that members will not be party to any fraudulent claims and only support submission of genuine claims supported by robust commercial evidence.
What are ACCA members' responsibilities when they see that the employers are in breach of furlough conditions (eg they are asking furloughed employees to continue working for the business)?
You should advise your clients that instructing employees to work while furloughed is in contravention of the terms of the Coronavirus Job Retention Scheme. If the client refuses to tell their employee to stop work, you must cease to act for the client.
Find out more by accessing ACCA's PCRT guidance: technical factsheet 166.
Additionally, you will also need to consider your anti-money laundering reporting obligations. If you believe that the employer is making a claim fraudulently or is breaching the furlough conditions knowingly, you should report the matter to your firm’s money laundering reporting officer (MLRO). However, a report may not be required for an innocent error if it is corrected as soon as it is identified.
If you are the firm’s MLRO/a sole practitioner, you should submit a suspicious activity report to the National Crime Agency.
Are directors who are paid annually on PAYE eligible for the CJRS grant?
Only employees on the PAYE payroll as at 19 March 2020 and who were notified to HMRC on an RTI submission on or before 19 March can be furloughed. However, for annual payrolls, if the submission was done after 19 March (say, 31 March), it would be still possible to claim the grant. It may be necessary to establish that the employer has already been using the annual payroll scheme for such directors in previous years.
Employers that operate a yearly payroll scheme with the submission date being after 19 March 2020 might need to call HMRC to process the CJRS application over the phone in order to bypass the online computer checks which obviously assumes if no full payment submission was submitted in the tax year 2019/20 before 19 March 2020 then they are not on payroll. This is presumably intended to prevent bogus claims but inadvertently blocks genuine claims.
Will furlough affect my responsibilities as an employer?
- The scheme is designed with underlying reference to employment law.
- The grant is only given for 80% of the total employment cost and it is a matter for employment law whether the employer is required to pay the top-up. As the employee is under contract of employment, they can expect to receive their salary in full.
- However, if following discussions the employee has agreed to a different arrangement during their furlough period, the employer should consider drafting a new contract of employment.
- An employee does not have to accept furlough if offered. The employer could then make the employee redundant instead, using the usual employment law procedure.
- Because the furloughed employees are not treated as redundant during their furlough period, this would be considered as continuous employment which may trigger two-year service and additional future redundancy costs.
Is there a calculator available to calculate furlough payments for variable-hour staff?
Yes, the calculator can be accessed here.
A step-by-step guide is also available here.
Is the grant taxable?
Payment received under the scheme is taxable income in accordance with normal principles.
If an employee has been furloughed, do they get paid 100% of their salary for a bank holiday or just the 80% furlough amount?
If an employee usually works bank holidays, then the employer can agree that this is included in the grant payment. If the employee usually takes the bank holiday as leave, then the employer must either top up their pay or give the employee a day of holiday in lieu. During this unprecedented time, HMRC is keeping the policy on holiday pay during furlough under review.
RTI submissions (updated 24 April 2020)
Do I have to report the grant if I am using the grant money to pay my employees’ wages?
Yes, the grant should be reported to HMRC via real time information (RTI) through your payroll software, on or before the date that it is paid to your employees.
Do I have to file another Full Payment Submission (FPS) if I have been paying my staff before receiving this grant?
No, you do not need to make another Full Payment Submission for this amount. You should pay employees on their contractual payment date so that those receiving Universal Credit are not affected.
What reports do I have to file if I didn’t pay any wages to my employees in a tax month?
You must submit an Employer Payment Submission stating you have not paid any employees in that tax month. This should be sent no later than the 19th of the following tax month where possible. Do not submit a nil Full Payment Submission (FPS).
How do I amend if I submitted a nil FPS last month when I didn’t pay wages?
The FPS must only include wages you have actually paid to your employees. You will need to submit an Earlier Year Update or closed-year FPS to reflect what you paid in wages. When you receive the grant to pay as wages, you should pay your employees on their contractual payment date for the current tax month. You should also submit a 2020/21 FPS on or before the date you make the payments to your employees.
You must pay employees on their contractual payment date so that employees receiving Universal Credit are not affected by this.
How do I declare the grant received in April but related to March? Do I have to amend my March submissions?
No, if you are making a payment for March and April in your employee’s April wage, you must deduct tax and NICs on that full amount.
You must not backdate the March payment as if it was paid in March.
What does the holiday entitlement change mean?
Employers will need to consider the impact of the statutory holiday announcement. The relaxation allows for flexibility with the statutory holiday entitlement and for four weeks to be carried into the next two years. The Working Time (Coronavirus) (Amendment) Regulations 2020 amends the Working Time Regulations 1998 to create a further exemption relating specifically to Covid-19. The amendment applies where it is not reasonably practicable for a worker to take some, or all, of the holiday to which they are entitled due to the coronavirus. There is a right to carry the four weeks under regulation 13 into the next two leave years. This will not apply to the 1.6 weeks under regulation 13A leave, but this can be carried forward one year by agreement between workers and employers.
This would result in amendments to employment contracts clauses.
Below is ACCA’s pro forma employment contract. The change results in footnote 2, “Statute does not permit the employer to carry forward or to pay any of the basic statutory holiday entitlement being changed”, being amended.
a) You are entitled to .... days paid holiday in each holiday year, including Bank or public holidays which fall on a normal working day. Three days of your holiday entitlement are designated to be taken between Christmas and New Year. All holiday dates are subject to adequate staffing of the office and we reserve the right to refuse dates for business reasons or where you have not given us sufficient notice.
b) The holiday year runs from ............. to ............  You may not carry forward any part of a year’s entitlement without written authority from your line manager, and in any event no more than .... days may be carried forward at the end of any year.  Employees are not entitled to receive pay in lieu of holidays not taken, other than when leaving employment with us.
c) On leaving the firm you are entitled to receive any accrued holiday pay outstanding at the termination date and this will be paid with your final salary cheque. If you have already taken more than this entitlement, a corresponding deduction may be made from your final month’s salary.
1. You need to insert the dates of your holiday year. It is up to you whether you allow any holiday to be carried over, but the statutory minimum of four weeks (20 days), excluding bank holidays, cannot be carried over other than for sickness (up to 20 days) (see Technical factsheet: Dealing with sickness) and where it has not been taken because of maternity leave, so the maximum permitted carry over is any excess you give over the minimum.
2. Statute does not permit the employer to carry forward or to pay any of the basic statutory holiday entitlement.
Can I claim the homeworking allowance? Are expenses incurred and then paid for by an employer taxable?
HMRC has stated that section 316A ITEPA 2003 provides an exemption for payments made by an employer to an employee in respect of the reasonable additional household expenses which the employee incurs in carrying out the duties of their employment at home under homeworking arrangements. It accepts that homeworking arrangements exist where two tests are met:
there must be arrangements between the employer and the employee
the employee must work at home regularly under those arrangements
As employers are requiring their employees to work from home for a limited or even indefinite period of time as a result of a temporary closure of the business premises, then HMRC accepts that for the duration of that period these two tests would be met.
There is nothing in s316A that requires homeworking arrangements to be in place for a particular period of time. HMRC would agree that, if not already working under homeworking arrangements, employees would be covered by the exemption when either the employer agreed they could work from home or from when government advice was announced.
The Treasury has further announced that to support employees who are working from home and need to purchase home office equipment as a result of the coronavirus outbreak, a temporary tax exemption and national insurance disregard will come into effect to ensure that the expense will not attract tax and NICs liabilities where reimbursed by the employer. The expenditure must meet the following two conditions to be eligible for relief:
- equipment is obtained for the sole purpose of enabling the employee to work from home as a result of the coronavirus outbreak
- provision of the equipment would have been exempt from income tax if it had been provided directly to the employee by or on behalf of the employer (under section 316 of ITEPA).
The exemption is a temporary measure and will have effect from the day after the regulations come into force until the end of the tax year 2020/21.
HMRC will exercise its collection and management discretion and will not collect tax and NICs due on any reimbursed payments made from 16 March 2020 (the date the government recommended working from home) to the date these regulations take effect.
This measure has been announced outside the normal fiscal process in order to ensure that employers and employees are able to effectively manage their working-from-home arrangements as soon as possible.
How is HMRC contacting agents if they have questions from the submitted grant claim?
Agents are receiving multiple scam calls where the caller pretends to be from HMRC and asking for more details on the claims. HMRC is aware of this and has advised agents to ask the reason for the call before providing any details over the phone. Scammers are normally threatening agents for the delay of payment processing if they cannot verify details.
Insolvency laws (updated 6 April 2020)
What measures have been put in place to protect businesses from insolvency?
Under proposed legislative amendments, the UK’s Insolvency Framework will add new restructuring tools that mirror the US’s Chapter 11 procedure, a well-established model adopted by countries around the world. This includes:
a moratorium for companies giving them breathing space from creditors enforcing their debts while they seek a rescue or restructure
protection of their supplies to enable them to continue trading during the moratorium
a new restructuring plan, binding creditors to that plan.
Wrongful trading laws to be suspended
Since 1986, the UK’s Insolvency Law has included a prohibition on wrongful trading, which makes it an offence for a company director to continue to trade if they know the business is unable to avoid going into liquidation.
As announced on 28 March 2020:
The government will temporarily suspend the wrongful trading provisions to give company directors greater confidence to use their best endeavours to continue to trade during this pandemic emergency, without the threat of personal liability, should the company ultimately fall into insolvency.
A short moratorium or ‘breathing space’ will give companies in difficulty time to explore options for a rescue.
In a press release the government said:
'The government will temporarily suspend the wrongful trading provisions to give company directors greater confidence to use their best endeavours to continue to trade during this pandemic emergency, without the threat of personal liability should the company ultimately fall into insolvency. Existing laws for fraudulent trading and the threat of director disqualification will continue to act as an effective deterrent against director misconduct. Legislation to introduce these changes will be introduced in Parliament at the earliest opportunity. Provisions will be included to enable the changes to be extended if necessary.’
Charity sector (Updated 30 April 2020)
During the coronavirus pandemic the charity sector will face extremely demanding and ever-changing challenges. Charities’ primary interest must be looking after the public and the communities that they serve. The Charity Commission has provided guidance on many questions, which is regularly updated. Some of the key questions included are:
Do the independent examiners have to disclose this event to the Charity Commission as a matter of material significance?
No, it is necessary to report even though a modified opinion is issued. The charity regulators recognise that at times of national emergency the normal conduct of an external audit or an independent examination may be disrupted.
In times of national emergency, unless the legal duty to report is relaxed by Government, the auditor or examiner must still report matters of material significance. However, where a modified opinion, an emphasis of matter or a matter identified by the independent examiner is due solely to the exceptional circumstances of the national emergency affecting the conduct of the audit or the independent examination, then this is not considered to be reportable as a matter of material significance to the charity regulator. This is because remedying this situation is not in the power of the auditor or examiner, the preparer of the charity’s accounts or the charity regulator.
Examples of such exceptional circumstances are:
- travel restrictions prevent the auditor or examiner from verifying the existence of physical assets such as stock
- access restrictions prevent the auditor or examiner from reviewing accounting records and/or from obtaining the assurances required
- limitations of scope are identified due to the control measures imposed to deal with a national emergency.
Read joint guidance from the UK regulators here.
Can our charity assist with Covid-19?
Yes, it is possible. But charities must check their own governing documents and its objects. Your charity may also have a general object that allows you to act for any charitable purposes, or an object that allows you to support the general benefit of a local area.
If your existing objects do not allow you to help, you may be able to amend your governing document to change them. The Charity Commission has indicated that it will prioritise the requests made for these changes. Any proposed changes should be reasonable, consistent with what your charity does, and should not undermine the existing objects.
How do I get support to pay my charity staff?
Employers will be able to contact HMRC for a grant to cover most of the wages of their workforce who remain on payroll but are temporarily not working during the coronavirus outbreak. Any employer in the country – small or large, charitable or non-profit – will be eligible for the scheme.
Can I use reserves and restricted funds to help my charity through the crisis?
Reserves can be spent to help cope with unexpected events like those unfolding at present. Charities need to identify which of their funds or assets have limits on their use. If these are internal only – for example, your charity has decided to earmark certain funds for a particular purpose – they may be able to reprioritise these.
If there are restricted funds, they can be spent for a defined purpose only: for example, a fundraising appeal may restrict funds to a specific purpose, or, if there is a permanent endowment, it may have restrictions on selling it to release funds. There may be ways to amend these restrictions but accessing or releasing such funds should only be considered if other options such as reserves are not possible. The Charity Commission encourages careful consideration of the wider and longer-term impacts of making such a decision on the financial resilience and donor relationships. Charities should seek professional advice on this if they can. The commission will be as helpful as possible and offer guidance.
All decisions on such financial matters should normally be taken collectively, and significant decisions and action points noted in writing.
Can I cancel or postpone my charity’s AGM or other key meetings?
Trustees can decide to cancel or postpone their AGM and other critical meetings if it is necessary to do so. They should record this decision to demonstrate good governance of their charity. This is particularly important if it is not possible to hold your AGM, which may make it difficult for you to finalise your annual reports and accounts.
Wherever possible, the Charity Commission requires charities to submit their annual reports on time. However, where the situation impacts on the completion of annual returns and accounts, charities with an imminent filing date can call 03000 669 197 (lines are open between 9am to 5pm Monday to Friday).
Can I use video, teleconferencing and the internet in place of face-to-face meetings?
Trustees must check that their governing documents clauses allow virtual or telephone meetings. If not, they may make amendments to facilitate changes in how or when meetings are held. If there is no such clause in the governing document and the trustees decide to hold meetings over the phone or using digital solutions, they should record this decision and that they have done this to demonstrate good governance.
What do I need to report to the Charity Commission?
It is ultimately the responsibility of the charity trustees to continue to report serious incidents using current guidelines, and the trustees must use their judgment in deciding whether an incident is significant in the context of their charity and should be reported to the Charity Commission.
For full Charity Commission guidance, click here.
What if the charity cannot continue to operate because of the financial problems caused by Covid-19?
The trustees must consider all the practical steps that the charity can take to deal with this difficult situation. There are various measures available, including taking financial advice, delaying non-essential projects and speaking to fundraisers or merging with another charity.
Further detailed guidance can be found here.
Issued March 2020 and updated as highlighted.
ACCA legal notice
This information is for guidance purposes only. It is not a substitute for obtaining specific legal advice. While every care has been taken with preparation, neither ACCA nor its employees accept any responsibility for any loss occasioned by reliance on the contents.