As you may have read or seen on the news over the weekend, the Government has introduced the Coronavirus Job Retention Scheme which takes effect immediately. We have summarised the information available to us below:
What does ‘furlough leave’ mean?
Furlough leave is a term which already exists in US labour law and is where an employee is granted a leave of absence, in our case due to an inability for the employee’s company to provide work to them temporarily.
Which businesses are eligible?
All UK businesses are eligible regardless of size.
How does it work?
Employers can place employees on leave, meaning there is no requirement for the employees to perform work as well as presumably requiring employees not to attend the place of work. The Government will reimburse 80% of the wage cost of furloughed workers up to a cap of £2,500 per employee per month. Employers can, but are not obliged to, make up the 20% difference.
When does the scheme take effect from?
It can be retrospectively applied back to 1 March 2020 and is currently likely to remain in effect until 31 May 2020, although this may be extended depending on circumstances in the future. As the employer, you can implement furlough leave immediately.
Is employee’s consent required given, that they won’t be working and should the employer decide not to top up their salary after the Government contribution, resulting in a 20% pay cut?
Where possible, it is advised that you obtain the employee’s written consent to a variation of their contract which includes a 20% pay cut. Given the current situation, some employers may have no alternative to implement furlough leave which brings with it its inherent pay cut. This would naturally be a decision made by the employer and without consent from the employee. The business’ financial position may dictate this.
To encourage consent, employers might point out that the only other alternative is immediate redundancy. This is not a particularly comfortable position for employers to take (as it could result in a drawn out employment tribunal), it is arguably a “least worst case” scenario if it encourages the employee to accept furlough leave.
Could this lead to constructive dismissal claims?
In theory, yes. Ordinarily, a unilateral decision to reduce the worker’s pay, with a statement that entitlement to redundancy pay being delayed is likely to be a constructive dismissal. The Government’s furlough leave guidance makes it clear that employees remain subject to existing employment law and that implementation of furlough leave may be “subject to negotiation”. However, to claim constructive dismissal the employee has to resign. The question would be why would they resign and have no job, as opposed to a job that they can return to when allowed, and 80% of salary? Furthermore, the prospect of a return to full salary in the not too distant future will hopefully be enough to persuade them not to pursue this route.
Who makes the decision to go on furlough leave?
You as the employer.
You are also able to specify which employees the leave is applied to, although this in itself opens up the debate around office politics!
If Kirkwood Wilson completes your payroll for you, then you must ensure you make us aware of the employees that you have furloughed.
Can a furloughed employee perform some work from home?
At this point in time, we expect this to be no. We hope to have some clearer guidance around this over the coming days.
When can the business expect the reimbursement from the Government?
It’s expected the reimbursement portal will be live over the next 2 to 3 weeks, at which time applications will be possible. There is expected to be some delay before the reimbursement takes place, so our best guess at this time is by the end of April.
If the employer pays the 80% of salary and do not top up the additional 20%, could employees have a claim against you for unlawful deductions from wages? And will higher paid employees have a claim for salary in excess of £2,500 per month?
Without a furlough agreement then they could. However, given the load the crisis is likely to have on the tribunal system, any claim made is likely to take several months to conclude. It is hoped that in the meantime employees can recognise the moral imperative of accepting furlough leave given the current crisis.
Does a lack of work not just mean the employee is redundant?
Under normal circumstances a reduction in work or closure of workplace would result in redundancy. Right now, this an unattractive route for most employers to take. Presumably most employers want staff to stay on with reduced pay so that they are in post when things start to return to normality. This appears a more appealing option for the employer than redundancy now and then having to incur the cost of recruiting new staff when business picks up again.
What if the employee insists they are redundant?
This answer is similar to the answer given above in relation to constructive dismissal. The employee would have to leave, bring an employment tribunal claim and then wait for a year for that claim to come to a full hearing. In the meantime they would have no job and no income, making it a very unattractive option for employees. The consideration is that taking a pay cut even for highly paid employees, for a few months is likely to be a better outcome for most employees.
What if we made an employee redundant in March? Can we reinstate them and furlough them?
This would appear to be ok. If payment of notice and statutory redundancy pay was made, the employer would presumably ask for this to be reimbursed before entering into the furlough leave arrangement.
If redundancy is the only option, do the normal rules apply?
Yes. Redundancy is only payable after 24 months’ service. Over this length of service could in theory result in legal action and a claim for unfair dismissal. It is therefore recommended that you use 23 months’ service as the barometer as notice periods can mean employees cross over the 2 years’ service line.
The information contained above is designed to give you some guidance with the new scheme. The information is generic and advice should be taken in each individual situation. There are a great number of uncertainties and assumptions included in the information above and Kirkwood Wilson accepts no liability for any action or inaction taken on the basis of this information alone.
It is important to remember that we, as your accountant, still have many questions surrounding the implementation of the help provided by the Government. As the information is released, we will digest it and pass it on to you, our client. At this time we suggest you keep an eye out for an email from ourselves, as well as following us on Facebook.
Please also remember that during this difficult time, we are here for you. Our staff are on hand to answer any of your questions, so please get in touch if anything is worrying you.
We’re in this together.
Caroline & Dan.
Support for businesses who are paying sick pay to employees:
The Government will pass legislation shortly to allow small and medium-sized businesses and employers to reclaim Statutory Sick Pay (SSP) paid for sickness absence due to COVID-19. The eligibility criteria for the scheme will be as follows:
- This refund will cover up to 2 weeks’ SSP per eligible employee who has been off work because of COVID-19
- Employers with fewer than 250 employees will be eligible – the size of an employer will be determined by the number of people they employed as of 28 February 2020
- Employers will be able to reclaim expenditure for any employee who has claimed SSP (according to the new eligibility criteria) as a result of COVID-19
- Employers should maintain records of staff absences and payments of SSP, but employees will not need to provide a GP fit note
- Eligible period for the scheme will commence the day after the regulations on the extension of Statutory Sick Pay to those staying at home comes into force.
We will keep you fully informed of any developments on when the repayment mechanism for employers will be finalised.
Support for businesses that pay business rates
There will be a business rates retail holiday for retail, hospitality and leisure businesses in England for the 2020 to 2021 tax year.
Businesses that received the retail discount in the 2019 to 2020 tax year will be rebilled by their local authority as soon as possible.
A £25,000 grant will be provided to retail, hospitality and leisure businesses operating from smaller premises, with a rateable value between £15,000 and £51,000.
Any enquiries on eligibility for, or provision of, the reliefs should be directed to the relevant local authority. Guidance for local authorities on the business rates holiday will be published by 20 March.
We will keep you informed of these developments as and when they happen.
Support for businesses that pay little or no business rates
Additional funding for local authorities to support small businesses that already pay little or no business rates because of small business rate relief (SBRR) has been announced by the Government. This will provide a one-off grant of £10,000 to businesses currently eligible for SBRR or rural rate relief, to help meet their ongoing business costs.
If your business is eligible for SBRR or rural rate relief, you will be contacted by your local authority – you do not need to apply.
Funding for the scheme will be provided to local authorities by government in early April. Guidance for local authorities on the scheme will be provided shortly.
We will keep you up to date with the latest news.
Support for businesses through the Coronavirus Business Interruption Loan Scheme
A new temporary Coronavirus Business Interruption Loan Scheme, delivered by the British Business Bank, will launch shortly to support businesses to access bank lending and overdrafts. The government will provide lenders with a guarantee of 80% on each loan (subject to a per-lender cap on claims) to give lenders further confidence in continuing to provide finance to SMEs. The government will not charge businesses or banks for this guarantee, and the Scheme will support loans of up to £5 million in value. Businesses can access the first 6 months of that finance interest free, as government will cover the first 6 months of interest payments.
Details will follow and we will support any clients needing assistance with obtaining this support.
Support for businesses paying tax
All businesses and self-employed people in financial distress, and with outstanding tax liabilities, may be eligible to receive support with their tax affairs through HMRC’s Time to Pay service. These arrangements are agreed on a case-by-case basis and are tailored to individual circumstances and liabilities.
If you are concerned about being able to pay your tax due to COVID-19, call HMRC’s dedicated helpline on 0800 0159 559. Please contact us if you want our help here.
As a family run business, the wellbeing of our team is and has always been paramount. Our priority right now is making sure that our team is safe and that we are able to service all of our clients as usual. We understand that this is an incredibly worrying time, and we wanted to take a moment to assure you that we’re following the advice from the Government, NHS, and World Health Organisation. Things are changing daily and weekly, but here’s a little update from us.
All our team were sent home on Tuesday and by lunchtime, we were all set up and working from home.
We are still taking phone calls as usual on our normal number and Ashleigh is able to help just the same as before. The only difference at the moment is that the person that you need to speak to will have to call you back, which in most cases is straight away.
Emails and all cloud based platforms are still working as usual, so, for example, the process of uploading receipts to ReceiptBank is working as usual. Access to Xero has not been affected.
It has been fantastic to see just how resilient we are as a team, and it really does prove that as a team we can do anything. We are using Teams and WhatsApp to communicate throughout the day as well as scheduling in a team catch up every few days by video call.
Updates to help your business
At the moment, we are all obviously waiting for the daily 5pm update from the Government, and we will try to get something out as soon as possible when the updates are there. These will be posted on our social channels (Facebook, Instagram, and LinkedIn). In between updates, we are of course here to help guide you through this minefield as best as we can.
We hope that whilst everyone’s situation is different, you are able to focus on the positives, no matter how small, and know that this will come to an end.
Stay safe and look after one another.
Caroline and Dan.
Given the recent situation that has arisen with COVID-19, we thought it would be helpful to provide you with our first update following the Government announcements.
SSP is now payable to employees from day one if they are absent due to COVID-19 (rather than having to wait and not receive anything for the first 3 days).
Companies can reclaim SSP payments to employees for up to 2 weeks. Anything over that period will NOT be reclaimable.
We aren’t 100% sure, but we anticipate that the SSP will be reclaimed by receiving a credit against your PAYE liabilities. i.e. there’ll be no immediate cash flow benefit to this, but when PAYE becomes due, the amount payable for a period will be reduced by the SSP refund credited to your PAYE account.
Business Interruption Loans
These loans are available up to £5m.
These will be available from next week and businesses must apply through their high street bank and not with the government.
The loan is basically guaranteed by the government up to 80%. We think this will only be available to businesses who will be able to prove they have experienced losses. You won’t just be able to get a nice cheap loan!
The loan has no interest on it for the first 6 months.
All businesses in the retail, hospitality, and leisure sector will pay NO business rates for the next 12 months. The local authority will deal with these over the next few weeks.
This grant is available to ANY business that is eligible for small business rate relief (SBRR). The business must either rent a property or own a property.
You are eligible for SBRR if your business:
– Has a property with a rateable value of less than £15,000
– And, your business has only one property (generally – in some instances it is still available if you have more than one property).
You can find the business’ rateable value on the rates statement for the year.
Anyone eligible for this grant needs to do nothing; the local authority will contact the business in the coming weeks.
This grant is available for businesses in the retail, hospitality, and leisure sectors that have rateable values between £15,001 and £51,000.
Guidance on this will be provided to the local authority by 20th March so clients can contact them from next week for more information.
Information is coming out daily and we will share as much as possible as soon as it becomes available. Until then, if you have any questions, please don’t hesitate to contact us and we will help wherever we can.
Shopping locally is something we all do, whether it is a conscious effort or another unconscious decision that we make. Being able to pop round the corner for the necessities in life is easy and something that we all rely upon. We can all agree that we wouldn’t go miles out of our way to buy our shopping for the week, so why would you do this when choosing your accountants? Locality is a crucial element to receiving top quality, reliable services, so we think choosing accountants in Lancashire might be the best decision for you and your business. Read on to see what the team here at Kirkwood Wilson have to say about this.
Benefits of choosing a local accountancy firm
When choosing the right accountancy firm for you, firstly, you want to ensure that you will have easy access to their experts. After all, if you are expected to leave your money in their hands, you want to make sure you can build a secure relationship with your accountant.
By aligning yourself with a local accountancy firm, you are allowing your business more chances to build a strong professional relationship with your accountant than would be possible if you invested in an accountants some distance away from you and your business.
Familiarity helps to strengthen bonds and relationships, which means having a local accountancy firm close to hand could strengthen your professional relationship with your accountant.
Another benefit that many wouldn’t consider is the local economy. By investing in a local accountant, your business will be making a conscious effort to keep money circulating in the local economy. By keeping money within the local economy, the positive impact in terms of jobs and prosperity can have a truly beneficial impact for all the businesses and people in the area.
Why choose an accountants in Lancashire?
Here at Kirkwood Wilson, we have many clients in and around the Burscough, Lancashire area and we know the true value of working with local clients. The team at Kirkwood Wilson put their clients first, as an utmost priority. We are happy to say that we tailor our services and packages around you to ensure you receive a bespoke package that is exclusively tailored to your needs.
We pride ourselves on our ability to offer high-quality services, from reliable business advice to up-to-date digital accounting services. For more information on the best accountants in Lancashire or advice on our digital accounting services, contact us today.
Moving away from manual accounting practices, miscellaneous receipts, and excel spreadsheets can be a daunting task. However, getting up to date with the era of digitalisation, will not only make your business compliant with HMRC ‘Making tax digital’ (MTD) initiative but, can also reap numerous benefits for your business. Here at Kirkwood Wilson, we are specialists in digital accounting and are here to take you through the benefits of digital accounting and explain how our expertise can benefit your business today!
What is digital accounting?
As of April 2019, all VAT registered businesses over the taxable turnover threshold of £85,000 were required to keep digital tax records and submit VAT returns via MTD compliant software. This initiative prompted a roll out of digital accounting software and a surge of online cloud accounting systems. HMRC also advised that companies that earn below the VAT threshold can also sign up for MTD for VAT voluntarily, as it would soon be a requirement for all businesses.
Digital Accounting provides the opportunity to transition your business away from manual bookkeeping to keeping all of your business’s financial information in an electronic format. Digitising your accounts will get you ahead of the game and will make tax returns, invoicing, and making payments a much simpler task.
At Kirkwood Wilson, we are a Xero gold partner and experts in Xero online. Xero is an online, cloud accounting system and also compliant with MTD. We are also experts in Sage and QuickBooks, so we can help you make the best decision about which software is most suitable for your business.
So, what are the benefits of digitising your accounts?
- Streamline your business processes
- Increased reliability – digital accounting allows you to keep your data secure
- Suitable for all businesses and industries.
Streamline your business processes
Manual accounting practices always involve a risk of human error and it is virtually impossible to store financial information in one place. This becomes a struggle when it comes to compiling a report or financial summary.
A digital accounting system will store your all of your information in one place, which gives your business access to real time financial data; from cash flow to balance sheets in a few clicks.
Xero online will provide you and your employees with instant access to your finances from any location and any time, as long as you have access to an internet connection. It can also provide daily summaries of your finances, send invoices, track projects, and so much more, saving you valuable time to focus on other business operations.
Increased reliability – keeping your data secure
Digitising your accounts and using an MTD compliant online accounting system will offer more reliability than manually handling paper documents in a filing cabinet. In the event that your business’s financial information goes missing, there will be no need to worry after digitising your accounts and years of financial information won’t be lost in a flash.
With digital accounting you can backup your data securely, meaning that all information is stored in a remote location and can be retrieved any time of the day.
Suitable for all businesses and industries
Of course if you are under the taxable threshold of £85,000, you might be hesitant or not see the urgency to digitise your accounts, as the April 2019 deadline did not apply to you.
However, it is worth bearing in mind that digitising your accounts will move your business into the 21st century, allowing you to focus on your core operations. In addition with HMRC’s mission to be “one of the most digitally advanced tax administrations in the world”, it won’t be long until your tax returns will be required to be digitalised.
Additionally, we understand that it is important for businesses with numerous departments to be interlinked and up-to-date with key financial information. With paper-based accounting, it can be a timely process updating all departments on the latest financial reports. With online accounting software, any stakeholder, with access rights, can access financial information, leading to fluidity throughout your business.
How can Kirkwood Wilson help in making your accounts digital?
As experts in digital accounting, we can offer you expert advice about Xero online cloud accounting system. One of our experts can talk you through the range of benefits that Xero has to offer. We can also advise, how best to integrate digital accounting practices within your business and how to make you HMRC Making Tax Digital compliant.
Not only do we specialise in Xero, here at Kirkwood Wilson we understand that online accounting systems can be daunting, especially with the varied options and platforms available. We also offer training in QuickBooks and Sage to help you decide on the best approach to digitising your accounts.
To find out more about digital accountancy or enquire about our digital accounting services including Xero, Sage and QuickBooks training, contact Kirkwood Wilson today Call 01704 546 000 or email email@example.com.
HMRC’s ‘Making Tax Digital’ (MTD) policy has been introduced to enable businesses and individuals to organise their taxes correctly by utilising modern digital software. Xero is making tax digital, through their cloud-based ‘making tax digital’ compatible software. As we all know, in today’s modern age most things are moving online to make life easier and to provide a more environmentally friendly, paper-free approach to filing documents. This is why HMRC’s Making Tax Digital was conceived and in order to accurately implement this policy, Making Tax Digital compatible software is a big must for you and your company.
Making tax digital compatible software
A significant element of HMRC’s Making Tax Digital policy is that businesses are required to implement a fully digital tax system. Therefore, it is vital that appropriate software is installed and utilised to comply fully. This is where Xero comes in.
As provided on HMRC’s list of Making Tax Digital compatible software, Xero has been verified as completely MTD compliant.
Is Xero Making Tax Digital Complaint?
Xero has specifically created new features that are designed with you in mind to ensure that the Making Tax Digital implementation is as easy and pain-free as possible. These new features are available in every package that Xero has to offer – at no extra cost. This is why we recommend Xero as the most suitable option when you’re considering ‘Making Tax Digital’ compatible software.
Xero and Making Tax Digital
Since Xero has been working closely with HMRC over the last three years, they have recently implemented their MTD for VAT solution to assist businesses with becoming HMRC Making Tax Digital compliant and to support them through this changeover. Xero has worked hard to produce a new VAT process that works in line with the MTD policy – just what every business needs!
The new VAT Solution includes:
- Additional reports
- VAT outlines
- The means to post VAT adjustments
- The ability to submit in real-time to HMRC
Xero software has been specially designed to make the move towards Making Tax Digital for VAT as effortless as possible. Xero not only caters to your invoicing, payroll, billing, and expenses needs, but it can also implement your online VAT processing system.
Xero has even put together a free training course for anyone who feels they require a walkthrough of the MTD journey, so they have everything needed to become an expert in MTD for VAT compliance!
Here at Kirkwood Wilson Accountants, we recommend Xero as our number 1 choice for Making Tax Digital compliant software.
It is a common misconception that cloud-based accounting isn’t the safest method of storing your data. Many people are anxious about the security risks that may be encountered if you partake in online accounting. The term ‘cloud accounting’ is simply the phrase used to describe the online servers used to store your sensitive accounting data. Here at Kirkwood Wilson, we’re here to ease any cloud accounting worries you may have.
Worried about cloud security risks? No need!
Instead of utilising traditional accounting methods, such as storing your information on a hard drive or USB, cloud accounting is the perfect method of digitising your financial data whilst also ensuring the security of such information. If you take a moment to consider these traditional accounting methods, you may realise how susceptible they are to being lost, misplaced, or even stolen. You’ll be happy to hear that these factors are not an issue if you utilise cloud accounting.
By investing in cloud-based accounting software, even if your laptop was stolen, all of your sensitive financial data would be automatically stored and backed up without interference or panic. Additionally, and even more reassuringly, no one could access your cloud-based accounting software without your secure login details and password.
The perks of cloud-based accounting software
Many cloud-based accounting software companies, such as Sage and Xero, dedicate themselves to offering 24/7 security protection for your financial data. Xero, for example, is proud to say that their “data is encrypted using industry-standard data encryption” as well as having “multiple layers of firewalls” in place.
Not only are there very limited cloud security risks, but by utilising such software you can have a positive impact on the environment. Think of all the trees that could be saved by going paperless!
Security and data protection are not the only selling points of cloud-based accounting software. There are many more attractive perks! By making use of cloud accounting, you can gain a simple, clear overview of your business and finances, which is aided by constant real-time updates.
If you’re already accustomed to using online banking then you’re halfway there already. There really isn’t much difference!
For more information about cloud-based accounting software, or for a Xero or Sage consultation, contact Kirkwood Wilson today. Call 01704 546 000 or email firstname.lastname@example.org.
As of 1 April 2019, HMRC’s ‘Making Tax Digital’ policy was implemented on a compulsory basis for VAT purposes. This was to enable businesses to keep on top of their affairs and have their financial records up to date, while running more efficiently and smoothly. For many, this policy was the perfect opportunity to reap the rewards of using online accountancy for business.
Digital bookkeeping for business
Many businesses previously struggled when it came to completing their taxes, but gone are the days of endless paperwork and calculations – thanks to the making tax digital for business policy.
This newly implemented scheme was introduced to help businesses become more effective and consistent with their bookkeeping and tax records. Tax recording should now be easier to carry out, with less chance of miscalculations or human errors.
Not only will this process be much simpler for you personally, but the removal of physical paperwork is a great way of minimising your paper waste and actively being more environmentally friendly. Paper filing is definitely something that every office will be glad to see the back of.
One thing that is worth noting is that, as yet, the Making Tax Digital scheme has only been introduced for VAT compliance and for the submission of VAT returns so it has not yet been implemented on a wider scale – which luckily gives you more time to prepare!
Online accountancy for business
Online accountancy for business has many positives when using software like Xero. Xero is designed to make your online accountancy more methodical since the accounting system takes its information directly from your online banking. This eliminates the risk of simple mistakes. Additionally, when used in conjunction with Receipt Bank, Xero is another great way to modernise and streamline your online accounting.
Not only is Xero an excellent piece of software that has been designed to be convenient and easily integrated into your business, but when Receipt Bank is used alongside this platform, you couldn’t ask for a better combination. Receipt Bank allows you to take a simple photograph of purchase invoices and receipts, which can then be attached electronically to statements from your bank feed.
Don’t forget, all of these benefits are very practical when it comes to the end of the month – no more hassle or stress, Xero and Kirkwood Wilson have got your business covered!
Here at Kirkwood Wilson, based in Burscough, near Ormskirk, we are proud to say we are Xero Gold Partners. This means that all of our accountants are specially trained to deliver the highest possible standards of advice, tips, and practical strategies when it comes to all things Xero.
For more information about our digital accounting services, or for a Making Tax Digital consultation, contact Kirkwood Wilson today. Call 01704 546 000 or email email@example.com.
As a method of improving processes and efficiency, HMRC’s aim with their ‘Making Tax Digital’ policy is to go paperless. Gone are the days of filing and keeping paper records – hooray! This blog will discuss how this government policy affects individuals and very small businesses, and what you need to know during this process.
Digital bookkeeping for individuals
Making Tax Digital for individuals is not yet a compulsory scheme for self-employed people and landlords, but there is nothing stopping you from signing up anyway – it is all good practice. It has been previously announced that plans to make Income Tax part of the Making Tax Digital scheme have been pushed back until at least April 2020 – so if you are a self-employed person, you still have time!
For those who want to be ahead of the game, there is an Income Tax pilot scheme. This scheme is aimed at those who are self-employed or rent properties and it lets you keep records digitally and send Income Tax updates to HMRC as opposed to filing a Self Assessment tax return.
This has been introduced to allow individuals to see how much Income Tax they might owe as time goes by. Individuals will have to use relevant and well-suited software to keep their own digital records, and HMRC would expect you to send income and expense summaries every three months.
Online accountancy for individuals
While the Making Tax Digital scheme has been implemented for businesses earning over the VAT threshold and not for individuals, it is worthwhile for the small businesses and the self-employed to acquaint themselves with the upcoming processes and changes. These individuals should take the necessary steps to digitalise their VAT returns to ensure a smooth transition into the digital bookkeeping world, before the widespread implementation.
Due to Brexit throwing a few curveballs into the scenario, HMRC have delayed the Making Tax Digital scheme for individuals, so whilst it is not an immediate worry, it would be worthwhile setting yourself up with the relevant, compliant software to ensure you are ready for this inevitable transition.
Perhaps consider relevant software such as Xero or Sage – both are incredibly helpful and recommended for digitising your tax information.
No need to worry or rush into this, no tax information is required just yet but here at Kirkwood Wilson, we would advise that you take every step possible to familiarise yourself with the upcoming policy changes to ensure that when the time comes, you are fully Making Tax Digital ready!
For more information about our digital accounting services, or for a Making Tax Digital for individuals consultation, contact Kirkwood Wilson today. Call 01704 546 000 or email firstname.lastname@example.org.