As a self-employed Barrister, you will have concerns regarding the impact of Coronavirus on your practice and what this means for cash flow, tax and VAT payments.
Below is a summary of the assistance which is currently available during these difficult times.
This information is complete as of 25 March 2020. We are monitoring the position as well but please refer to the key website links on pages 2 and 3 for the most up-to-date information.
Deferral of VAT Payments
VAT payments due between 20 March 2020 and 30 June 2020 will be deferred until the end of the 2020/21 tax year i.e. 5 April 2021. Our understanding is that the VAT Returns must still be submitted within the existing deadlines. It is only the payment that is deferred.
This is an automatic offer with no applications required. However, if you have a direct debit in place for VAT, this should be cancelled so as to avoid payment being taken by HMRC.
Deferral of Income Tax Payments
Self-Assessment payments due on 31 July 2020 will be deferred until the 31 January 2021.
This is an automatic offer with no applications required. No penalties or interest for late payment will be charged in the deferral period. However, if you have a direct debit in place for Income Tax, this should be cancelled so as to avoid payment being taken by HMRC.
Time to Pay service
If you are in financial distress and with outstanding tax liabilities, you may be eligible to receive support with your 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.
HMRC has set up a helpline for businesses and self-employed people who are concerned about paying their tax due to COVID-19: 0800 0159 559.
Providing you meet the usual eligibility criteria, you are able to claim Universal Credit.
Statutory Self-Employment Pay
The House of Commons Public Bill Committee has put forward an amendment to the Coronavirus Bill titled ‘Statutory Self-Employment Pay’.
Should the proposal be accepted, it means that the Government will ‘top up’ the earnings for self-employed individuals by the lower of up to 80% of their monthly net earnings, averaged over the previous three years, or £2,500 per month.
No formal announcement has been made by the Chancellor as yet regarding measures for self-employed individuals so we are currently awaiting further guidance about this proposal.
Payment holidays – Mortgages
The FCA has issued guidance to mortgage lenders in respect of payment holidays.
Customers should be granted a payment holiday for an initial period of 3 months where they experience payment difficulties as a result of COVID-19 and express a wish to receive one.
No additional fees or charges (other than additional interest) should be issued to a customer who has been granted a payment holiday and the provider should take steps to ensure this does not have an adverse effect on the customer’s credit score.
If you can foresee problems with fee receipts over the coming months this will be worth considering.
Payment holidays – Rent
The Government have introduced emergency legislation to suspend new evictions from social or private rented accommodation during the COVID-19 outbreak.
Landlords and tenants are expected to work together to establish an affordable repayment plan for tenants who are experiencing financial difficulties due to coronavirus.
If you are living in a rental property, it is best to speak to your landlord as soon as possible to make suitable arrangements for both parties.
Below are some key Government websites where you can access the latest information.
Specific resources related to business support
COVID-19: support for businesses
- Tax helpline to support businesses affected by coronavirus (COVID-19)
- Guidance for employers and businesses on coronavirus (COVID-19)
- Coronavirus and claiming benefits
- Proposed amendment to Coronavirus Bill – ‘Statutory Self-Employment Pay’
- Mortgages and coronavirus: our guidance for firms
- Mortgages and coronavirus: information for consumers
- Complete ban on evictions and additional protections for renters
General advice and resources in relation to Coronavirus
- Coronavirus action plan
- Coronavirus (COVID-19): what you need to do
- Full guidance on staying at home and away from others
- Travel advice: coronavirus (COVID-19)
Craig Manser FCA (Partner)
Tel: 01323 730631