Month: May 2020 (page 1 of 2)

FCA confirms further support for consumer credit customers

The Financial Conduct Authority (FCA) has confirmed further support for users of certain consumer credit products if they are experiencing temporary payment difficulties due to the coronavirus pandemic.

The measures outline the options firms will provide for credit card, revolving credit and personal loan customers who are coming to the end of a payment freeze. They also outline options for customers who have agreed an arranged interest-free overdraft of up to £500.

In addition, customers yet to request a payment freeze or an arranged interest-free overdraft of up to £500 will have until 31 October 2020 to apply for one.

According to UK Finance, its members have offered over 27 million interest-free overdrafts, provided 992,400 payment deferrals on credit cards and 686,500 payment deferrals on personal loans during the pandemic.

Christopher Woolard, Interim Chief Executive at the FCA, said:

“Since the coronavirus crisis began, we have made support available for those borrowers financially affected by the pandemic.

For those who are now in a position to restart payments, it will be in their best interests to do so. But for those who still need it, the package we are confirming today ensures there is help and further support.”

Loan size increased to £200 million under large business interruption scheme

Several changes to the CLBILS scheme have taken effect from 26 May. The government has extended the maximum loan size available through the Coronavirus Large Business Interruption Loan Scheme (CLBILS) from £50 million to £200 million.

However, companies borrowing more than £50 million through the CLBILS will be subject to restrictions on dividend payments, senior pay and share buy-backs during the period of the loan. This will include a ban on dividend payments and cash bonuses, except where they were previously agreed.

Suren Thiru, Head of Economics at the British Chambers of Commerce (BCC), said:

‘It is good to see the government continue to listen to business concerns and make improvements to existing schemes.

‘These important changes could make a real difference to larger firms in particular, and alongside the other lending support schemes will help ensure that more businesses of all sizes get access to the finance they need to help weather this unprecedented economic storm.’

Future Fund launches to give start-ups coronavirus support

On 20 May 2020, the government launched its Future Fund package, which aims to support start-up businesses not eligible for other COVID-19 rescue measures.

The Future Fund offers government loans of between £125,000 and £5 million to UK-incorporated companies, provided private investors at least match the funding supplied by the state.

The package is aimed at supporting innovative early stage companies not eligible for existing COVID-19 support.

The Future Fund is administered by the government-backed British Business Bank (BBB). The loans can be repaid or converted into shares in the Investee Company in a variety of circumstances, including fundraisings, exit events and upon the maturity of the loans.

The fund is currently due to run until at least the end of September.

Private sector off-payroll reforms given go ahead for April 2021

The introduction of off-payroll rules to the private sector will go ahead as planned next April after an attempt to delay them failed in the House of Commons.

The reforms of the off-payroll rules to the private sector, which are known as IR35 and have applied to the public sector since 2017, was reviewed earlier this year.

They will shift the responsibility for assessing employment status to the organisations employing individuals.

The rules would have applied to contractors working for medium and large organisations in the private sector and were due to come into effect on 6 April this year. Due to the disruption caused by the outbreak of the coronavirus, the decision was taken in March to delay the introduction until 6 April 2021.

An amendment to the Finance Bill, brought by a cross-party group of MPs, was designed to delay the IR35 changes until 2023, but was defeated by 317 votes to 254.

The move to introduce new IR35 rules to the private sector has proved highly controversial, amid claims that the regulations are too complex and that HMRC’s online tool Check Employment Status for Tax (CEST), used to determine whether they apply, is flawed.

Onboarding: Accelerate your process with intelligent automation

Onboarding new clients was a significant pain point for accountant James Byrne. So much so, he designed a system to automate as much of the process as possible. The result? AccountancyManager. Constantly finding new ways to make onboarding even more efficient for accountants is still a priority for us. 

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Automate your letters of engagement

If you’re an ACCA member, sending letters of engagement to new clients is mandatory. Even if you’re not subject to this rule, setting out clear terms makes good business sense. It not only establishes a framework for the work you’ll perform and how fees will be charged, but can detail liability caps and your process for dispute resolution. 

“On accepting an appointment, the practitioner must send the client a letter of engagement… This forms the basis of a contractual relationship between the practitioner and the client.”

ACCA 

With AccountancyManager, creating, sending and chasing letters of engagement is considerably faster than normal. Select the specific services you’re providing your client and AM will automatically compile the correct associated policies, terms and obligations and send them to your client. If your client needs to submit a self assessment tax return as well as company accounts for example, you simply turn this service on and the relevant documents will be added. Continue reading...

HMRC extends late reporting deadline for CGT

HMRC has confirmed it will not charge penalties for the late reporting of capital gains tax (CGT) on disposals of UK residential property by UK residents made by 31 July 2020.

On 6 April changes were made so that if a UK resident sells a residential property in the UK, they now have 30 days to tell HMRC and pay any money owed.

The seller must submit a standalone tax return covering the CGT, which can no longer be included as part of a self assessment return.

Failure to tell HMRC about any CGT within 30 days of completion may incur a penalty, as well as interest on the sum owed.

HMRC stated:

‘To help those selling properties familiarise themselves with the change in the rules and a new online process, HMRC is allowing a period of time to adjust and will not issue late filing penalties for CGT payment on account returns received late up to and including 31 July 2020.

‘For UK residents, this means transactions completed between 6 April and 30 June 2020 and reported up to 31 July 2020. Transactions completed from 1 July 2020 onwards will receive a late filing penalty if they are not reported within 30 calendar days.

‘Interest will accrue if the tax remains unpaid after 30 days.’

Government borrowing could rise to £300 billion

The Centre for Policy Studies (CPS) has suggested that government borrowing may rise to £300 billion in 2020 as a result of the COVID-19 pandemic.

The think tank has been working to estimate the cost of the COVID-19 crisis to the government’s finances, and has incorporated official data from the Office for Budget Responsibility (OBR).

The CPS’s COVID-19 counter has put forward an estimated £127 billion in direct bailout costs and £119 million in indirect costs, such as lower tax revenue. The data is based on the OBR’s three-month lockdown scenario, followed by three months of ‘looser restrictions’.

The CPS stated that, when these estimated costs are added to the £55 billion of borrowing already forecast for 2020, a deficit of £301 billion is produced. This represents 15% of GDP.

Robert Colvile, Director of the CPS, said:

‘The government has acted throughout this crisis to save lives and protect livelihoods. But while it is clear to everyone that extraordinary times require extraordinary measures, they also incur extraordinary costs.

‘It is vital to get the most accurate possible picture of the burden the government is taking on in order to assess the full scale of the rebuilding that lies ahead.’

Government launches support finding tool for business

The UK government launched an online platform to help businesses access financial support during the COVID-19 crisis.

The Coronavirus Business Support Finder Tool will guide businesses through the range of loans, tax reliefs and cash grants to combat the adverse economic effects of the COVID-19 lockdown.

The tool asks business owners to fill out a short online questionnaire. It then directs them to a list of financial support for which they may be eligible.

The tool takes the user through various questions about their business, including location, number of employees and turnover.

Chancellor Rishi Sunak said:

‘We’ve launched an unprecedented package of support to protect jobs, businesses and incomes during these challenging times. Millions are already benefiting and this new online tool will allow firms and individuals to identify what help they are entitled to in a matter of minutes.’

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HMRC releases guidance for self-employed scheme

HMRC has released guidance on the COVID-19 Self-employment Income Support Scheme.

Under the scheme, self-employed individuals will be able to claim a taxable grant based on an average of their earnings over the past three years. To be eligible, workers must have filed all relevant income tax self assessment returns; have traded in the 2018/19 and 2019/20 tax years, and intend to carry on trading in the 2020/21 tax year. Profits, based on an average of the last three years, must be no more than £50,000, and at least equal to any non-trading income, such as employment income, dividends or rental income.

Directors of their own companies who are paid through Pay as You Earn (PAYE) may be able to get support via the Coronavirus Job Retention Scheme.

HMRC began to contact those eligible in early May and invited them to apply online. Payments are scheduled to start later in May and run for three months, but may be extended if necessary.

Government launches small business micro loan scheme

On 4 May 2020 the government launched a micro loan scheme for small businesses as it continues to try and mitigate the economic damage caused by the coronavirus (COVID-19) lockdown.

The Bounce Back Loan Scheme allows small businesses adversely affected by COVID-19 to apply for up to £50,000, with the government guaranteeing 100% of the advance.

Businesses can apply for a minimum of £2,000, up to a maximum of £50,000 with the government paying the interest for the first 12 months.

Businesses will be able to access the loans through the existing network of accredited lenders and the government said it expects most applications to be approved within 24 hours.

Chancellor of the Exchequer, Rishi Sunak, said:

‘I know that some small businesses are still struggling to access credit.

‘They are, in many ways, the most exposed businesses to the impact of the coronavirus, and often find it harder to access credit in the first place.

‘If we want to benefit from their dynamism and entrepreneurial spirit as we recover our economy, they will need extra support to get through the crisis.

‘Some businesses will not want to take on more debt, which is why our focus has been on cash grants, tax cuts and tax deferrals. But for others, loans will be part of the answer.’

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