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Clarke Nicklin Business Update

I hope everyone is still keeping safe and well.

We had a flurry of activity in terms of governmental announcements at the start of lockdown in relation to businesses and support packages to businesses, with that having settled down for a period of time through the main part of lockdown. It certainly feels we are now in a very different phase with regard to businesses and factors both having an immediate implication, and also businesses needing to assess for the medium and longer term.

Clearly some businesses in certain sectors remain very significantly affected, without the ability to operate to any significant degree. However, more businesses, trades and professions are either considering how they are best operating under a more relaxed lock down, albeit still with the need to ensure social distancing measures are put in place, or are looking at getting operational again.

The government are clearly, and understandably, keen to try and get business activity under way to assist with the overall economy of the country, whilst at the same time needing to recognise support measures need to continue.

An extension and a more flexible position on the furlough scheme has therefore been announced which comes into place from 1 July to allow part time working. In my opinion, this would have been good to bring into place immediately. We are aware of many clients where this flexibility would meant they were more able to look at phased returns of staff, whereas currently a full time return with full costs does not quite stack up financially for them. In addition, the Self Employed Income Support Scheme has also been extended to allow a further second claim.

Many businesses attentions have now therefore turned to needing to reassess their potential income levels against their cost base, and balance this against looking at claims under the support measures to assess how they manage their financial position. Clearly, office and work environments need assessing also, which may have an impact on cost bases, both in the short term and long term. We are helping clients with this process both in terms of assessing how their cost base might be affected, but also the more longer term strategic considerations for some businesses where there thoughts are already turning to how they operate under a “new normal” in the future. Please get in contact with us for any advice and support in this area.

Hopefully both for the sake of the health of the country and also the health of the economy, there wont be an increase in the “R” number, meaning more easing can take place and businesses can be clear on their planning and strategy for the future.

Details of the recent changes to measures announced are as follows.

Coronavirus Job Retention Scheme (CJRS)

The Chancellor stated that in June and July the furlough scheme will continue as before, but employers will be asked to cover National Insurance and employer pension contributions in August.

By September, businesses will pay 10% of wages for furloughed staff, and in October 20%, the UK chancellor said.

This means the subsidy will taper off from August, with businesses expected to pay a greater share of their staff salaries, starting with covering National Insurance and pension contributions.
From September the government will cover only 70% of salaries, to a cap of £2,190 and from October it will pay 60%, to a cap of £1,875. Employers will make up the shortfall to get salaries back to 80% of pre-COVID lockdown levels.

After that, the scheme will close.

Flexible Furloughing of employees

From 1 July, employers can bring back to work employees that have previously been furloughed for any amount of time and any shift pattern, while still being able to claim CJRS grant for their normal hours not worked. When claiming the CJRS grant for furloughed hours employers will need to report and claim for a minimum period of a week. You will be required to submit data on the usual hours an employee would be expected to work in a claim period and actual hours worked. We can assist and make the claims for you.

If your employees are unable to return to work, or you do not have work for them to do, they can remain on furlough and you can continue to claim the grant for their full hours under the existing rules.

The scheme will close to new entrants from 30 June. From this point onwards, employers will only be able to furlough employees that they have furloughed for a full 3-week period prior to 30 June.

This means that the final date by which an employer can furlough an employee for the first time will be 10 June, in order for the current 3-week furlough period to be completed by 30 June. Employers will have until 31 July to make any claims in respect of the period to 30 June.

Further guidance on flexible furloughing and how employers should calculate claims will be published on 12 June.

More information here.

Self-Employed Income Support Scheme

The government’s Self-Employment Income Support Scheme will be extended, giving more security to individuals whose livelihoods are adversely affected by coronavirus in the coming months, the Chancellor announced on Friday 29 May 2020. Rishi Sunak announced the Self-Employment Income Support Scheme will be extended - with those eligible able to claim a second and final grant capped at £6,570.

• Individuals can continue to apply for the first SEISS grant until 13 July. Under the first grant, eligible individuals can claim a taxable grant worth 80% of their average monthly trading profits, paid out in a single instalment covering three months’ worth of profits, and capped at £7,500 in total. Those eligible have the money paid into their bank account within six working days of completing a claim.
• Applications for the second grant will open in August. Individuals will be able to claim a second taxable grant worth 70% of their average monthly trading profits, paid out in a single instalment covering three months’ worth of profits, and capped at £6,570 in total.
• The eligibility criteria are the same for both grants, and individuals will need to confirm that their business has been adversely affected by coronavirus. An individual does not need to have claimed the first grant to receive the second grant: for example, they may only have been adversely affected by COVID-19 in this later phase.

Further guidance on the second grant will be published on Friday 12 June and we will keep you up to date with the details when we know them.

More info here.

Tax Free Childcare and 30 Hours Free Childcare During Coronavirus
To help make sure critical workers can continue to access the childcare they need to enable them to work, even if their circumstances have changed during the Pandemic, the Government have made some temporary changes.

Find out about temporary changes that may affect you if you are applying for, or already getting, Tax-Free Childcare or 30 hours free childcare here.

The changes may affect you if you, or someone you live with, are:
• on furlough
• not able to work or you are working less
• self-employed
• a critical worker

If you are on furlough:
If your employer has no work for you they might be able to keep you on the payroll and put you on temporary leave instead. This is known as being put ‘on furlough’ and you are paid 80% of wages through the Coronavirus Job Retention Scheme.
You should apply, or reconfirm if you already have a childcare account, if your wage, and your partner’s wage if you have one, is:
• at least the National Minimum Wage for 16 hours a week
• below the normal minimum income requirement, but you would normally expect to meet the income requirement


If you are not able to work or you are working less
You should apply or reconfirm if you already have a childcare account if you are:
• getting sick pay or statutory sick pay (SSP) – time spent on sick pay or SSP will count as working and meeting the minimum income requirement
• taking unpaid leave to care for others, such as your children - if you expect your income to meet the minimum income requirement (at least the National Minimum Wage for 16 hours a week) after coronavirus
• living with someone who has coronavirus - you must stay at home - if you expect your income to meet the minimum income agreement (at least the National Minimum Wage for 16 hours a week) after coronavirus
• working less, your hours have been reduced and your wage:
• meets the minimum earnings requirement
• is below the normal minimum earnings requirement but you would normally expect to earn above it


If you are self-employed
You should apply or reconfirm if you already have a childcare account if you are:
continuing to work, and your earnings:
• are above the minimum earnings requirement
• are below the normal minimum earnings requirement but you would normally expect to earn above it

Not able to get work because of coronavirus:
• you may be eligible to claim a grant through the Self-Employment Income Support Scheme - payments made to you through the scheme will count as earnings
• and you are not eligible for self-employed income support but would expect to earn at least the minimum income requirement


If you are claiming Universal Credit
If you are now claiming Universal Credit and were getting:
• Tax-Free Childcare, you cannot apply or reconfirm for Tax-Free Childcare - if you stop claiming Universal Credit you can apply for Tax-Free Childcare again
• 30 hours free childcare, and you meet the revised minimum income requirement or would expect to normally, you should apply or reconfirm if you already have a childcare account


If you missed the 31 March deadline
If you have missed the application or reconfirmation deadline for 30 hours free childcare, you should apply or reconfirm if you already have a childcare account. Local authorities will be able to extend the validity dates on 30 hours codes for eligible critical worker parents during the summer term.

If you are a critical worker and If you are working more
If you are a critical worker you may have exceeded the maximum income threshold of £100,000 per year - If this is because of increased hours as a direct result of coronavirus, you will still be eligible for 30 hours and Tax-Free Childcare for the current tax year.
See more.

Please get in contact with us if you have any questions in relation to the above.

Keep well and stay safe.

Andrew Baggott

Managing Partner

As of yesterday, small businesses and employers who have paid statutory sick pay (SSP) to staff who have taken coronavirus-related leave can now claim the money back.

• Applications were announced by Chancellor Rishi Sunak and officially opened on 26th May.
• If you have fewer than 250 members of staff, you can apply to recover the costs of paying COVID-19 related SSP.
• The repayment covers up to two weeks of SSP from either 13th March 2020 (if an employee had symptoms or was self-isolating because of someone they live with), or from 16th April 2020 if an employee was shielding because of coronavirus.
• To apply, members need to go online via gov.uk and input information on the employees being claimed for.
• After the application is made, HMRC have stated you should receive the money within 6 working days.
• The scheme covers different employment contracts such as full and part-time employees, agency contracts, and employees on flexible/zero-hour contracts.
• Tax agents can make claims on behalf of employers.
• The current rate of SSP is £95.85 per week. Employers may choose to pay more than SSP if they wish, although be aware you’ll only be able to reclaim SSP rate.

I hope everyone is keeping safe and well.

We are edging closer to the Government issuing guidance over the coming weekend on plans for the easing of Lockdown provisions. My expectation is that this will involve a staged easing, with businesses who can continue to operate sufficiently using mainly working from home provisions will be asked to continue to do that, and provisions for businesses to maintain a certain level of social distancing within their staff base. There will be many businesses wanting to understand how their particular business and industry may be affected. The Government will need to spend a lot of time this week going through all of the permutations within different industries and settings to be able to put forward the guidance needed in enough detail to provide sufficient clarity.

In the meantime, business support measures have been in full flow, with some variations and updates being provided. Some key areas are as follows.

Funding

Bounce Back Loan Scheme

As outlined in our message last week, the Bounce Back Loan Scheme has been launched, with the scheme open for applications today. We have already helped a number of clients with their submissions under this scheme. As a reminder, this scheme’s headline details are:

• Loans between £2,000 and £50,000, with a limit linked to 25% of a business’s turnover
• 100% guaranteed by the Government, with no Personal Guarantees
• Interest free for the first 12 months
• An interest rate applied to the facility of 2.5% per annum
• No fees
• Lending period of up to six years
• No repayments in the first 12 months
• Funds expected to be received within 24 hours of application.

There are currently a limited number of lenders within the scheme.

So far our experience is that the online application process is straight forward and asks for some core information which should be readily available for businesses. The turnaround time remains to be seen, although as stated above it is purported to be within 24 hours.

In theory, an application could be made to a bank who isn’t the businesses current bank. However, so far it appears the banks online processes arent set up to deal with these scenarios.

Coronavirus Business Interruption Loan Scheme (CBILS)

The CBILS loan scheme has been widely reported previously, and has been running for a period of time now. This covers lends requested above the £50,000, or in excess of the turnover restriction. The process with this loan scheme varies for different banks and for different amounts. The larger banks within the scheme have recently reported jointly that they have been streamlining their processes and information requirements for submissions, which is clearly welcome to speed up applications and turnaround times.

In relation to the loan schemes, forecasts aren’t necessarily needed, which can help speed up the application process. However, all businesses should consider whether forecasts are required for internal assessment purposes even if not needed for loan applications.

Coronavirus Job Retention Scheme

A great many claims have been submitted under the CJRS, and pay-outs have been coming through from HMRC, which is clearly very welcome for the businesses concerned.

There are still reports of clients having difficulties with accessing online accounts due to apparent login detail discrepancies. HMRC have not been overly helpful in dealing with these types of scenarios. The accountancy press has also reported some issues with businesses being incorrectly refused support under CJRS due to tax arrears. HMRC have confirmed this was incorrect on their part, apologised for the issue, and told businesses they should reapply.

Hopefully such difficulties will be ironed out, although the submission process has in the main been relatively straight forward for most, although the claim calculations can be time consuming under certain scenarios.

Self Employed Income Support Scheme

The full finer details in relation to this scheme are still awaited, and so we will issue further information as this is made available. Please see previous updates or contact us if you wish to discuss any initial considerations in relation to this scheme.

Clarke Nicklin Assistance

Please do not hesitate to get in contact with us in relation to any of the above. In particular, we are helping clients consider whih options are most appropriate for them under funding schemes available, and assisting with application processes and forecast preparation both for funding applications, and also so that internal assessments and “what if” scenarios can be considered by clients. We are also helping clients consider who to approach if their bank isn’t in the loan schemes or they feel a different option might be appropriate.

All the best for now.

Andrew Baggott
Managing Partner

Clarke Nicklin Chartered Accountants are thrilled to announce the promotion of Senior Manager, Gareth Jones, to Director as part of Clarke Nicklin’s further strengthening of the senior team.

Gareth joined the business in 2005 having just graduated with a first class degree in Finance and Accounting and went on to achieve his FCCA qualification. Since joining the firm Gareth has been an instrumental part of the team, advising and supporting clients to achieve their goals and objectives, and moving through various managerial roles within the business.

Gareth will be focussing on overseeing client relationships and will continue to build his portfolio of clients.

Andrew Baggott, Managing Partner of Clarke Nicklin commented “I am delighted to be able to continue to progress our key team members, despite the recent change in working practices under lockdown. This shows we have been able to ensure we continue our culture of focussing on excellence in client service delivery under any circumstances. The promotion of Gareth also encapsulates our focus as a firm in the continued progression and development of our team members. Gareth joined the Clarke Nicklin team as a fresh faced University Graduate, so it is all the more rewarding to have been able to take the promise that Gareth showed all those years ago, and combine his drive and determination with the firms very strong development programme and focus on ensuring individuals achieve their potential to get to this point. Gareth and the firm have both benefited from this combined focus, and we both will do moving into the future as we both continue to go from strength to strength.”

Gareth commented “I’m proud to have spent my whole career working at Clarke Nicklin and am delighted to have taken another big step forward. I’m excited to continue working hard alongside our fantastic staff and partners to continue to nurture our portfolio and help more businesses, especially in such challenging economic times.”

During these unprecedented times Clarke Nicklin’s aim is to keep moving the business forward and continue to deliver excellent advice, support and service to clients.

For more information please contact This email address is being protected from spambots. You need JavaScript enabled to view it.


The VAT registration threshold has been frozen at £85,000 until at least 31 March 2022. This may bring more businesses into the VAT fold if they increase their prices with the rate of inflation.
This threshold can be a harsh cliff edge, as once VATable turnover exceeds it the business must charge VAT on all eligible sales. It must also keep its VAT records in a digital format and submit its VAT returns using MTD-compatible software.
For your UK sales, you must check the cumulative total of your VATable sales (including zero-rated items) for every rolling 12-month period and register for VAT within 30 days, once this total exceeds £85,000.
Do this calculation every month, as if you tally up your sales just once a year for your accounts, you may miss this 30 day deadline. If your sales suddenly take off, you may be too busy to remember to register for VAT within 30 days. If you register later than the law demands, you can suffer a penalty.
For example, say your annual sales (accruing evenly throughout the year) are £83,000. If you increase your prices by 3% in January 2020, by 31 October 2020 your turnover in the previous 12 months will be £85,075 and you will have to register for VAT within 30 days.
You could restrict your price increase to keep your turnover under £85,000, but if your purchase costs are increasing this will cut your profit margins. Alternatively, you could perhaps restrict your sales by taking longer holidays, if you can afford it.
Another idea is to hive off a part of your business into a separate legal entity, so that each new business has turnover under £85,000. However, this must not be an ‘artificial’ split.
The two businesses should have a bank account each, keep separate business records and file separate tax returns. Ideally, the businesses should provide different services or goods to separate groups of customers. There must be separate contracts with any common suppliers.
Many businesses, may wish to register for VAT earlier than needed. Early registration allows you to claim back VAT on your start-up expenses. You can reclaim VAT on services used within the six months before your VAT registration date, and on goods acquired within four years before that date (if they are still held at the date of registration). The VAT paid on an expensive shop refit could be lost if you delay VAT registration for too long.
However, it’s a balancing act – if you register earlier than required, you must account for VAT on sales made after your registration date that could otherwise have been VAT-free.
You can’t change the VAT registration date requested once you’ve applied to register. It’s very important to plan your VAT registration, to ensure the registration date falls at the optimum time for your business.
Businesses that sell digital services (such as eBooks or software) to nonbusiness customers in EU countries are not required to register for VAT in those EU countries, if the total value of their digital sales to other EU countries is less than £8,818, but this threshold only applies while the UK is a member of the EU.
When the UK is no longer treated as a member of the EU, you will need to register for VAT in an EU country if you sell any digital services to non-business customers in EU countries. You will also have to charge the correct rate of VAT on your digital services provided in each EU country where your non-business customers belong.

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Clarke Nicklin House, Brooks Drive, Cheadle Royal Business Park, Cheadle, Cheshire, SK8 3TD. Registered Number OC309225.
The firm is registered to carry on audit work in the UK & Ireland. Details about our audit registration can be viewed at www.auditregister.org.uk under reference number C001178544. The professional rules applicable are the Audit Regulations and Guidance which can be found at www.icaew.com/regulations, and the International Standards on Auditing (UK and Ireland) which can be found at www.frc.org.uk/apb/publications/isa.cfm.