COVID-19 Update 22 March – CJRS and VAT and Self-Assessment Payment Deferral

On 20^th March 2020, the Chancellor, Rishi Sunak announced a further set of measures to help employers and the self employed through the ongoing issues resulting from Coronavirus.

Behind the headline we summarise the key information below:

The Coronavirus Job Retention Scheme:

• The government will assist with covering wages of employees.
• This scheme is open to all employers, regardless of size.
• Employees need to be retained, but classified as ‘furloughed workers’, meaning they are no longer working.
• Employees need to be notified of this change in their status.
• A new online portal is being established for employers to notify HM Revenue and Customs of the employees that have been furloughed and their earnings.
• HM Revenue and Customs will then reimburse the employer with 80% of the furloughed employee’s earnings, up to a cap of £2,500 per month, per employee.
• There is no upper limit on the grants that can be claimed through the scheme.
• Employers can top salaries up should they choose to.
• The scheme is backdated to 1 March and is initially open for 3 months.
• HM Revenue and Customs are the initial point of contact for employers and are currently working on the systems and processes. Further guidance should be available shortly.

VAT payment deferral:

The VAT payment deferral will run from 20 March 2020 to 30 June 2020 and is open to all businesses.

This is an automatic process and no application is required. No VAT payments will be required during this period but and liabilities that accumulate must be paid by the end of the 2020/21 tax year.

VAT refund and reclaims will be paid as normal.

Self Assessment Payment Deferral:

Payments on account that are due for payment by 31 July 2020 are deferred until 31 January 2021. This deferral is open to self-employed individuals only.

Once again, this is an automatic process and no application is required.

Should Coronavirus have affected your trading profit for the 2019/20 tax year, a review of your payments on account could prove beneficial as a reclaim of some or all of your January payment may be possible.

Both the VAT deferral and Self Assessment deferral will aid cashflow for businesses in the short term however, the liabilities will fall due in the future.