Coronavirus update: Contractors
On Friday (20th March) the government announced a further message to help business.
All VAT payments due between 20 March and 30 June 2020 will be automatically deferred until March 2021.
This deferral will apply to all businesses and there is no need to contact HMRC. However, any business that pays VAT by Direct Debit must cancel it, otherwise HMRC will may VAT due as normal.
For the avoidance of doubt, VAT returns should still be submitted on time as usual. For any business that is unable to file on time, a default surcharge may apply, though there may be grounds to appeal assuming it is COVID-19 related.
Self-assessment due 31 July 2020
There was an announcement that Income Tax Self-Assessment payments due on the 31 July 2020 will be deferred until the 31 January 2021. However, it is not yet clear whether this covers everyone under self-assessment or just the self-employed.
Currently we believe that directors, landlords, investors will still need to pay their July payment on account as normal. Those that cannot afford to pay will still be able to use the COVID-19 payment support service.
If it applies, this is an automatic offer with no applications required. No penalties or interest for late payment will be charged in the deferral period.
If you are operating through a limited company you are almost certainly running a payroll. In respect of the government backing of 80% of salaries it applies to employees who would otherwise have been laid off during this crisis. It is unlikely you will be able to make a claim if you are the business owner. We are expecting a lot of anti-avoidance around this. There may be further assistance announced for freelancers by the Chancellor and we will need to see whether he includes personal service companies in that announcement.
Due to your employment you would be eligible for SSP.
You can pay yourself two weeks of Statutory Sick Pay (SSP) if you need to self-isolate subject to meeting the minimum payroll requirement for SSP.
The government will refund £94 per week, maximum £188, to your company and they will also refund SSP for staff of businesses for up to 2 weeks.
Self-employed people can now access full universal credit at a rate equivalent to statutory sick pay.
For mortgage holders you can apply to your borrower for a 3 month mortgage holiday but remember interest will still be building. For renters you can request a month window from your landlord and they are not permitted to evict you during that window
Hopefully you have seen our update on the deferral of the off-payroll rules. This came very late in the day so your contractual position may still be in doubt. The article includes suggested urgent actions you can make.
There has been no change to the government’s position on the loan charge.
More information on these measures and more can be found in our Government Support for Businesses blog. For further advice please get in touch with a member of our Contractors and Independent Professionals team.