Coronavirus: HM Government proposals on tax assistance

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So far as tax is concerned, the Covid-19 assistance packages currently on offer from the Government that are published on business rates, council tax and time to pay are set out below.

Our initial view was that outside of the amendments to business rates, the tax package was not yet particularly helpful or comprehensive. The published documentation targets late payment of tax in the main and offers a time to pay arrangement for existing liabilities. The detail will be coming out next week in all likelihood. 

In recent news the CBI and some business leaders are calling for such things as a holiday from paying VAT (an immediate cost due at the end of the month for most businesses). This would it is understood free up £35bn this quarter. This being an immediate cashflow benefit involving no paper work or waiting time while an application for a grant or loan is considered by the Government. Whether this is being seriously considered will become evidence in the coming days.

But through the day, our conversations with HMRC began to suggest to us that a more helpful approach was being taken by HMRC – in respect of VAT,  PAYE and corporation tax. 

Gateley has its own in-house tax accountants and also client focussed teams on Corporate Tax, Private Client Tax and Capital Allowances (Gateley Capitus). In addition to direct contact with HMRC these teams are watching the publications provided by the Law Society for England and Wales (including the City of London branch), the Law Society for Scotland, local law society branches, the Chartered Institute of Taxation and HMRC/Treasury/Bank of England. Similarly we are watching the Big Four Accountants’ respective websites.

You will have heard of the HMRC Helpline (details below). One point to make immediately is that in practice the HMRC Covid-19 Helpline is completely overwhelmed. But our experience is that if you persist they are proving to be very helpful. You do need to have someone on the line for hours (literally) to ensure your slot in the queue. Patience and tenacity are often great business qualities – never more so now.   

The detail that we have from the published information and our conversations with HMRC is as follows:

PAYE/NICs, corporation tax and VAT - time to pay your tax 

For those who are unable to pay due to coronavirus, HMRC will discuss your specific circumstances to explore:

  • agreeing an instalment arrangement 
  • suspending debt collection proceedings
  • cancelling penalties and interest where you have administrative difficulties contacting or paying HMRC immediately – but it is not clear whether this only covers an inability to raise funds on time to pay the tax or, if a penalty already exists, cancelling the penalty and interest already accrued. If you are in a situation where you believe a penalty or tax liability has been imposed incorrectly it is now arguably worth considering whether to make the point that paying the penalties will jeopardise the survival of the business.  

It is not yet clear what is meant precisely by “due to coronovirus”. What will businesses have to show? Our experience on the Helpline however suggests a very flexible approach is being taken.  

It should be said that given we have no published legislation yet, each business must check with HMRC (use the Helpline) on the following, but HMRC told us that what this all means with regards to CT, VAT, PAYE and NICs is: 

  • If you can pay something please do but you don’t have to for at least three months. So you can hold back if your business needs the cash;
  • In relation to the PAYE costs for the following month, the business will have to ring HMRC again to update HMRC on the situation and apply for a deferral for those costs if needed. A similar approach is being taken with VAT in cases where a business defers the VAT due; 
  • There are no late fees or interest as result of deferring payment.
  • At present the maximum extension available is 3 months but this could be extended depending on how things work out.

The HMRC helpline number - 0800 0159 559 - is in addition to other HMRC phone contact numbers. There are 2,000 experienced  call handlers but the line is already so busy that they are encouraging callers with non-urgent queries to wait a few days.  

When you call you will need the relevant tax numbers and references to hand (eg VAT number, corporation tax reference, PAYE reference) and information regarding the number of the last VAT return, the date of VAT first registration and your postcode. It will be impossible for agents and advisers to talk to HMRC unless they are authorised to do so. 

The arrangements for deferral will be noted on HMRC’s records but all businesses should also keep their own records of such arrangements. We recommend that businesses diarise calls to HMRC to agree further extensions. If for instance VAT is to be deferred for this quarter, diarise a call now for the June payment. Likewise monthly payments of PAYE and NICs should be diarised so that the conversation with HMRC can be had in good time.

The Helpline’s opening hours are Monday to Friday 8am to 8pm, and Saturday 8am to 4pm. The helpline will not be available on Bank Holidays.

Business rate relief/holiday

Some businesses, including nurseries, in England will be eligible for a Business Rates holiday for 1 year from 1 April 2020. 

Retailers – 100% relief

If the business is currently receiving the retail discount for its Business Rates bill, it will receive a revised bill with 100% relief. Retailers who occupy a property in the retail sector with a rateable value of £51,000 or more may be eligible for the 100% discount on its business rates bill. The Local Authority will be contacting these businesses shortly with more information. 

Hospitality or leisure -100% relief

If the business occupies a property in the leisure or hospitality sectors it may also be eligible for the 100% discount on its business rates bill. The Local Authority will be contacting these businesses shortly with more information. 

Nurseries – 100% relief

Nurseries will be entitled to the 100% relief for the next year. Nurseries appear to be responsible for contacting their Local Authority for more information, however. 

Guidance for Local Authorities will be published by Ministry for Housing, Communities and Local Government by 20 March. 

Small business cash grants

Small business rate/ rural rate relief - cash grants

If the business is eligible for small business rate relief or rural rate relief in England, it is entitled to a one-off cash grant of £10,000. 

If the business is in the retail, hospitality or leisure sector in England, then it may also be entitled to a cash grant of £10,000. 

Business in a property with rateable value less than £15,000 – cash grant

The Business will be entitled to a cash grant of £10,000 whether or not it is entitled to small business rate relief or rural rate relief. 

Business in a property with rateable value between £14,999 and £51,000 – cash grant 

The business will be entitled to a cash grant of £25,000. 

The Department for Business, Energy and Industrial Strategy (BEIS) will provide guidance for Local Authorities on how to administer these grants shortly. If the business is eligible  its Local Authority will be in touch in the coming weeks to provide details of how to claim this money. No application is apparently required but it is likely that all LAs will need time to fully understand what the eligibility conditions are.

Council Tax Relief

It may be possible to get financial support from your Local Authority in England to provide Council tax relief from the £500 million Hardship Fund  either through existing Local Council Tax Support schemes, or through similar measures.  The Ministry for Housing, Communities and Local Government will set out more detail on this funding, including allocations, shortly.  Questions from businesses should be funnelled through the Local Authority though it is likely at present they will be on a learning curve too on this.  

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