Monthly Archives: mars 2020

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Template letter for putting your staff on furlough

In order to put your member of staff on furlough, you are required to obtain their written consent and set out the terms and conditions of the furlough arrangement. We are attaching below a letter which you can adapt to your circumstances which will cover the majority of cases. However, if your staff earn more than £36,000, the exact wording may not be appropriate because the maximum recovery of £2,500 per employee also includes Employers NI and pension contributions.

If you want particular advice as to how to deal with employees on a salary above this level, who you intend to put on furlough then please do not hesitate to contact us.

Please note that we accept no financial responsibility or otherwise can be accepted in respect of this letter. It is simply intended to be a guide for you to place staff on furlough correctly given the fact that the status has only been in existence for a week and other documentation is not yet available.

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Some bullet points from the government website about Coronavirus Job Retention Scheme and furloughing employees although nothing about holiday entitlement!

  • Open to all employers who had a PAYE payroll scheme at 28 February 2020.
  • Can cover businesses, charities, recruitment agencies and public sector.
  • Covers full-time, part-time, agency contracts and employees on flexible hours and zero hours contracts
  • Employees have to have been on your payroll on 28 February 2020 – if you made them redundant since then and rehired them they are eligible still.
  • Employees can not work for you while furloughed.
  • The minimum period of furlough leave is 3 weeks and the grant can only be claimed once every 3 weeks even if you pay weekly.
  • Employees will still have tax and national insurance deducted from the payment made to them.
  • Employees can claim 80% (capped at £2,500) plus associated employers national insurance contributions and minimum pension auto enrolment costs.
  • Employers can top up to 80% and pay higher pension contributions but these will not be covered by the grant.
  • Pay for those who pay varies is calculated as:
    • For those with 12 months employment – the higher of the same month’s earnings the previous year or average monthly earnings from the 2019-20 tax year.
    • For those with less than 12 months employment – average of monthly earnings since they started work.
  • Does not include commission, bonus or fees.
  • Can go below national minimum wage or national living wage as they do not apply as employees are not working – but if they do any training while off that time must be paid at NMW/NLW.
  • Employees on statutory sick pay or self-isolating can be furloughed after that.
  • Employee shielding those at higher risk can be furloughed.
  • Employees with more than one job can be furloughed from each job separately and each employer deals with their own claim.
  • Employees on furlough can do Volunteer work or training as long as it does not provide services to generate you revenue.
  • Employees on maternity leave / adoption / paternity / shared parental leave can stay on that – BUT if you pay enhanced payments these are covered and can be claimed under the scheme.
  • Payments received into the business must be included as income in the accounts.
  • No fees can be charged to employees the full grant for the gross pay must be paid to the employee (subject to tax and NI deductions).
  • The scheme is running for 3 months from 1 March.
  • All employment rights continue during furlough.
  • Employees have to be notified in writing and you should keep a copy.

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A message from our insurance broker Joel Davis of Omni Davis insurance

  1. Unoccupied premises;

As mentioned, if insurers are covering any premises, there will always be a condition that the property will be deemed “unoccupied” when a certain period of time has lapsed with the property not being in active use. This is usually 30 days (though sometimes more). When deemed unoccupied the cover is usually reduced or removed altogether.

Insurers Hiscox & Aviva have confirmed that they are extending this to 90 days so as long as all reasonable care is taken to secure properties & all security measures are in use insurers will not reduce cover in the event that your premises are shut down.

Most other insurers will follow a similar change in their stance, but always check with your insurers or broker as I cannot confirm all of the insurers have confirmed this at present.

  1. Instalment payments;

Some finance companies who provide instalment plans for insurance policies will consider what flexibility they can offer. We use Close Premium Finance, for example, and they confirm that they will be willing to discuss any payment plans they hold. There may be the possibility of reducing payments on a temporary basis. However, they were very specific that this will not be possible in all cases and each will be considered individually. 

It is worth checking on instalment plans as all providers will have a different attitude.

In respect to instalment payments directly to insurers we have not had any insurers agree to any payment holidays as they are struggling to remain liquid and the premiums they are collecting are being used to cover their operating costs and to pay ongoing claims.

  1. Reduction or removal of covers;

Some insurers are reviewing if they can or will reduce covers on policies that will then be reflected in premiums. They are not recommending this as a course of action as if there are any business activities ongoing then the cover will still be required & the risk is open ended. Where there is a complete halt to business activities there will likely to be a need to cover buildings or other property against loss or damage.

In respect to policies due for renewal in coming months, it is worth considering whether cover is essential or not. Is it best to lapse the cover with a view to requesting it when we all get back to (as close as we can hope) “business as usual”?  We will be looking for insurers to maintain their covers & premiums as offered if this is the case. However, I would recommend really scrutinising the risk of reducing or removing cover against protecting cashflow.

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Businesses will be given an additional 3 months to file accounts with Companies House

Businesses will be given an additional 3 months to file accounts with Companies House to help companies avoid penalties as they deal with the impact of COVID-19.

From today (25 March 2020), businesses will be able to apply for a 3-month extension for filing their accounts.

This joint initiative between the government and Companies House will mean businesses can prioritise managing the impact of Coronavirus.

There are approximately 4.3 million businesses on the Companies House register, and all companies must submit their accounts and reports each year. Under normal circumstances, companies that file accounts late are issued with an automatic penalty.

As part of the agreed measures, while companies will still have to apply for the 3-month extension to be granted, those citing issues around COVID-19 will be automatically and immediately granted an extension. Applications can be made through a fast-tracked online system which will take just 15 minutes to complete.

Business Secretary Alok Sharma said:

We have outlined a business support package on an unprecedented scale, backing companies and their employees through these challenging times.

But it is important that our support is not limited to financial assistance. We are determined to help businesses in any way we can, so that they can focus all their efforts on dealing with the impact of Coronavirus, and this new offer of a 3 month extension for filing accounts is part of that.

Companies House Chief Executive, Louise Smyth said:

We recognise that these are uncertain times for businesses and that’s why we’re doing all we can to help.

By easing the burden, we can help businesses through this period and enable them to thrive in the future. I would encourage companies who believe they would benefit from this new flexibility to make an application in good time.

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Advice regarding Coronavirus and Mortgage Payment Holidays

For many the biggest financial outgoing will be your monthly mortgage payments. If you’re struggling financially due to coronavirus crisis you may have welcomed the recent promise by the chancellor to implement payment holidays of up to three months for those who are struggling financially.
The mortgage payment holiday will provide flexibility in repaying your mortgage by allowing you to stop or reduce your monthly payments for up to three months. This won’t be suitable for everyone but could provide much needed help if you require this, albeit you need to be aware that this is not free money and you will be required to pay this back when your payments start again after the payment holiday.
The first step will be to contact your lender and not everyone will be granted a payment holiday – most lenders have posted a link specifically for mortgage payment holidays due to Coronavirus on their websites and an online application service. There will be a fast track approval process in place, so you should get a quick decision and we are being informed that individual credit ratings should not be affected.
It’s likely the lender will spread your outstanding payments over the outstanding term of your mortgage, so you will see an increase in your monthly mortgage payments. The shorter the term left on your mortgage the larger the increase will be in your future monthly payments once the mortgage payment holiday is over. As such, you should consider the impact this will have on your future financial commitments.
When consulting the Lender websites, the updates are reasonably consistent and include the following key points to satisfy their eligibility criteria for a mortgage payment holiday:
• Your finances have been affected by coronavirus
• You are up to date with your monthly mortgage payments and not in arrears
• You have consent from everyone named on the mortgage
For Buy to Let Mortgages, the lender may be able to consent to a payment holiday if once again, your mortgage payments are up to date and not in arrears and you can confirm that your tenants are having difficulty in paying their rent due to Coronavirus.
Currently, the lenders can only offer a 3-month payment holiday for this situation. Therefore it is vital that if you are looking to apply for this, you do this at the most appropriate time for you and your individual circumstances. It is also vital that if you feel you need this support that you act fast to ensure that your mortgage does not fall into arrears.
If you are coming to the end of a mortgage product, it is important that you understand that you WILL NOT be able to switch your mortgage to another preferential product with your current lender whilst on a payment holiday.
For those of you who may have exercised the ‘overpayment’ allowance on your current mortgage, you may be able to ‘underpay’ on future monthly mortgage payments up to your overpayment reserve. Once again, you will need to contact your lender directly to arrange this.
Personal Protection
It is more important than ever to keep your existing protection plans in place. News is currently circulating that future protection policies will no doubt have exclusions in place specifically for Covid-19 but also air borne viruses in general, hence the importance of keeping your current plans in place that do not have these exclusions and more importantly, provide the essential cover for you and your loved ones during these very uncertain times.

Please note that the above commentary are the personal thoughts of a mortgage broker and we cannot accept any responsibility for any of the information contained therein

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UK200Group Summary of the UK Government’s policy on ‘Furlough’ and the Coronavirus Job Retention scheme

Q: What does the word ‘furlough’ mean?
Furlough generally means a temporary leave of absence from work. This can be due to economic conditions affecting a particular company or the country as a whole. Until now, the expression has not applied to UK employment law. Due to the COVID-19 pandemic, Furlough leave has been introduced by the UK government as a means to keep employees on the payroll without them required to work. This is different to being laid off without pay or being made redundant. Employees who get furloughed must not work for the employer during their furlough period, however, usually return to their job afterward the issue at hand has been solved, unless redundancies follow.

Q: Which employers does the Coronavirus Job Retention scheme apply to?
Any employer in the country will be eligible for the Coronavirus Job Retention scheme, including Charitable and non-profit organisations. However, this scheme is intended to only apply to employers who cannot cover staff costs due to the coronavirus. This scheme will continue to support financing a part of their employee’s wage which will avoid unnecessary redundancies. Currently, we do know if there is any room for disputes with the HMRC concerning whether the employer can cover staff costs or not. Equally, it’s debateable if a large company with healthy profits, balance sheet and cash flows will be also eligible for this scheme; or whether evaluation of their accounts will be considered and a determination as to whether the employer qualifies. Presumably, public sector employees will not be affected as the scheme only applies to employers who cannot cover costs. It is not known if owners of small businesses who pay their own salary are covered or if they have to furlough themselves. Alternatively change to additionally self-employed workers are not covered by this scheme.

Q: How can employers access the Coronavirus Job Retention scheme?
The Coronavirus Job Retention Scheme is accessible for employers through an online portal. Once the employer accesses the portal, they provide details of the affected furloughed employees and submit this information to HMRC. The exact information required we are unsure of, however, we can assume details will include information about the employee’s earnings and NI number. We recommend employers:

• Select employees affected in a fair way for being furloughed
• Decide whether you would like to pay 80% of their salary or to supplement it
• Gain the employees’ written consent unless contractual provisions already cover lay off
• Stop the employees working from home if they were, or send them home from the workplace

Q: Which employees can be furloughed under the Coronavirus Job Retention Scheme?
Potential furloughed employees are those that would otherwise be dismissed as redundant or laid off as part or all of their workforce. The 80% wage guarantee does not cover zero-hour contracts or casual workers, unless they work on the PAYE system. As stated above, self-employed workers are not covered by this, however, will have easier access to benefits to cover a drop in income; including removal of the income floor for universal credit and easy access to the application process – online and by telephone. Additional measures for the self-employed may follow in due course.

Q: What about part-time employees?
There is no guidance relating to part-time employees. The reason is explained in the example below:

Say an employee works for two employers – Employer A for three days and Employer B for two. If Employer A decides to furlough the employee, they would receive 80% of salary for those three days. However, if Employer B decides not to furlough the employee, meaning they still receive their full wage from Employer B as well. The problem arises if the Employer B offers the employee additional work. As the employee is currently not working for Employer A, in theory they take up extra work from Employer B.

The scheme is intended to help employers and employees who would struggle financially without work. This could lead to abuse of the system in some respects. We hope to receive further guidance on this in due course.

Q: Are payments to the furloughed workers under the Coronavirus Job Retention Scheme a loan or a grant?
The Coronavirus Job Retention Scheme, is a grant which employers do not have to pay back. The scheme is running on a three month basis for the time being and may be extended if necessary. The current details for this system are as follows:

• HMRC will pay 80% of furloughed workers wages, up to a cap of £2,500 per month.
• HMRC are setting up a new online portal for reimbursement.
• The pay will be backdated to wages payable from 1 March 2020.

Q: Do employees have to agree to be furloughed?
Yes, the employer must consult the employee about being furloughed and the employee must agree with the employers decision. Changing an employees work status is always subject to existing employment law at the time. The possibility to lay-off workers is dependent of the wording of the employment contract. However under the Employment Rights Act 1996, lay-offs are a different legal concept and the wording in contracts may enable some employers to impose a furlough period. If there is no lay-off provision in the existing contract the employer will need to agree with the employee that they going to become furloughed because no work is available. Inevitably employees will mostly agree to this as the main alternative would be dismissal by reason of redundancy with a possible delayed of redundancy payment or no redundancy payment (for employees who have worked for less than two years).

There may be some negotiation in minor cases. For example, in sectors like hospitality, some staff may be needed and while others may not. Some employees may resent the fact they are classed as ‘essential’ staff whilst others are being furloughed on 80% of salary. Equally others may resent that they are considered dispensable whilst others are working and receiving their full package.

We recommend all employer discuss all options with employees and stay up to date with the latest information at GOV.UK.

If employees do not agree to be furloughed can we dismiss by reason of redundancy?
Yes, employees can be dismissed by reason of redundancy by the employer if the employee does not agree to be furloughed. In this case the employer must make sure the redundancy definition is met and the proper process followed. If employers feel furlough is likely to be followed by redundancies it may help to select employees for furlough using a process similar to redundancy selection. This would involve using objective criteria, such as a scores matrix based on skills, productivity, previous appraisals etc.

Is an employer required to supplement employees’ salary over the 80%?
No, however, employers can make up the additional pay, but this is not a requirement.

For employees who have been furloughed employers can choose to:
• Only make the salary payment reimbursed by the government
• Pay all of the difference between the grant and the employee’s normal salary
• Pay part of the difference between the grant and the employee’s normal salary

Any extra payment the employer chooses to make will be either the additional 20% of salary, or any amount in excess of £2,500. If management choose to pay more, it will depend upon the business’ overall health and cashflow affecting the ability to fund payments. Concerns about staff retention once the crisis has passed may also affect decisions being made.

The employers affected will have greatly reduced or eliminated income during these three or more months. So many employers will not be able to supplement the government’s payment. There is no reason why employers could not choose to supplement the salaries initially and then choose not to in later months, although presumably then the employee’s consent to the furlough could theoretically be withdrawn. An employee would be unlikely to withdraw consent when the alternative is redundancy.

Will the furloughed employees receive £2,500 exactly?
It is currently unclear if furloughed employees will receive exactly £2,500 until more detailed guidance is issued. However, it is logical that employees who earn under £3,125 a month will receive less than £2,500.
This is due to those earning £3,125 a month, 80% of salary would be £2,500:
• Employees who earn less than £3,125 a month normally, will get 80% of their salary for three months (or more)
• Employees earning in excess £3,125 a month will receive the £2,500 figure which is less than 80% of their salary for those three months (or more) unless the employer chooses to supplement it
• The £2,500 may include employer’s NI and pension contributions, but this is not yet clear. Therefore £2,500 may end up not being the precise maximum gross pay which the employee receives, if for example, pension contributions are then taken into account
• The £2,500 a month figure has presumably been chosen as it is broadly £30,000 a year which is the national median net salary

Can employees work for the employer when furloughed?
Employees must not undertake any work for the employer while furloughed to qualify for the scheme. The grants do not cover the wages of employees working reduced hours due to the virus, and the employees must not work for the employer at all during the furlough period.

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Key points from the Government announcement on Friday 20 March of a package of measures to help businesses deal with the Coronavirus

The Government has announced a further package of measures to help businesses deal with the coronavirus. These include:

• a Coronavirus Job Retention Scheme
• deferring VAT payments
• deferring Income Tax payments

Maintaining cashflow is probably the most important issue for a business at the moment.

Support for businesses who are considering making staff redundant:

The Government has announced a new scheme called “Coronavirus Job Retention Scheme”. Under the Coronavirus Job Retention Scheme, all UK employers will be able to access support to continue paying part of their employees’ salary for those employees that would otherwise have been made redundant during this crisis. To access the scheme employers will have to do the following:
• designate affected employees as ‘furloughed workers’, and notify your employees of this change – changing the status of employees remains subject to existing employment law and, depending on the employment contract, may be subject to negotiation
• submit information to HMRC about the employees that have been furloughed and their earnings through a new online portal (HMRC will set out further details on the information required)
HMRC will reimburse 80% of furloughed workers wage costs, up to a cap of £2,500 per month. HMRC are working urgently to set up a system for reimbursement. However, the furloughed worker must not carry out any work for their employee during this time but they will remain an employee.
Existing systems are not set up to facilitate payments to employers. We will keep you informed of these developments as and when they happen.

Support for businesses by deferring VAT Payments

There will be a VAT payment deferral for 3 months, the deferral will apply to VAT payments due from 20 March 2020 to 30 June 2020. This will apply to all UK businesses.

This is an automatic offer with no applications required. Businesses will not need to make a VAT payment during this period. Taxpayers will be given until the end of the 20/2021 tax year to pay any liabilities that have accumulated during the deferral period. VAT refunds and reclaims will be paid by the government as normal.

No penalties or interest for late payment will be charged in the deferral period.

Support for Self Employed by deferring Income Tax payments

If you are self-employed, Income Tax Self-Assessment, payments due on the 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.
As part of the UK200Group we have access to up-to-the-minute information and can help you get access to the support you need. We’ll be keeping you informed in general terms, but please don’t hesitate to get in touch if you have any questions or concerns.

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Insurance Implications – Covid-19

Insurance implications

Here’s a brief overview of what we understand to be the key issues with business insurances currently. We are yet to receive specific guidance from insurers as they are busy dealing with their own internal adjustments.  

Professional Indemnity issues:

  • Workforce fragmentation from mass homeworking could make it more challenging to oversee compliance and quality and some systems may need refinement to avoid reducing standards.
  • Remote working will increase the opportunities for cyber criminals and constant vigilance is needed. The National Cyber Security Centre has issued an alert on the increase in phishing attacks.
  • If you have Cyber insurance, make sure you have the contact details for the Cyber Incident Response Team in your Business Continuity plan.

Office insurance – Remote working may affect several areas of a typical Office policy.

  • Property – check that your policy provides cover on IT equipment used at the residence of homeworkers.
  • Business interruption (BI) – many policies on the surface provide cover for the financial disruption arising from Infectious Diseases. However, most policies require that someone at your premises is actually diagnosed with the disease and testing is not currently widespread. As a new virus, Covid19 is not on the lists of specified threats Insurers considered when creating their products. BI is unlikely to provide recompense for the reduction in income or any additional costs of changes in working practices.
  • Employers Liability – most businesses have now instructed staff not to attend external meetings or corporate entertainment. A health & safety questionnaire may be useful in creating an audit trail to show that employers have adopted reasonable measure to ensure staff safety while working from the home environment.


If you run corporate events, you may have arranged Event Cancellation cover. In the past cover has been available for cancellation costs due to Communicable Diseases so you may be protected.

If you haven’t arranged Communicable Disease cover in the past, Insurers are unlikely to offer this extension in the near future.

CFC advice on working remotely

Before sending your staff home, make sure you have these points covered. Cybercriminals are already taking advantage of the situation by exploiting people’s weaknesses for information, don’t let them access your system too!

Latest ICO guidance

It’s good to see that the ICO are taking a common-sense approach to data protection, recognising that businesses have many differing priorities short term.

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New Measure to help businesses through the Coronavirus pandemic.

The Government has announced a lot of measures to help businesses through the coronavirus. As most of the ones announced at the Budget came through the tax system I’ve been looking at them in some detail, although things have now moved on. This update is to let you know where we are at the moment.

We had a call this morning to work out where we stand in UK200Group. We’ve identified a few things that need doing: this email is one, and other stuff will be coming out shortly.

The help available is in a number of forms:

  • Business rates reductions, and grants for businesses who have low rate bills
  • Extending SSP, and allowing employers to reclaim it. 
  • Time to Pay being extended
  • Help with business loans.

The details of none of these is clear yet, but what we do know is:

  • Business rates reductions are going through the normal systems, with rates bills being recalculated. They don’t seem to require much action, but equally they don’t seem likely to have much of an immediate impact.
  • Grants for small businesses have been increased:
    • £10k for those who get full rates relief (up from £3k in the Budget)
    • £25k for hospitality, leisure, and retail businesses, which also get a rates holiday for a year
    • The grants are to be administered by local authorities, but details are yet to be released
    • Authorities are meant to be actively contacting businesses to let them know how to claim
    • The systems are not yet set up, so no cash is coming from here for a while.
  • SSP changes mean more workers can claim it.  Small employers can claim it back, but:
    • People seem to be very confused as to who can claim SSP due to the virus. Can you claim it if you stay at home because you’re a bit worried, for example?
    • There’s no clarity yet on what ‘small’ means. I understand that the best guess at the moment is that the 250-employee limit is per PAYE reference, but that seems rather simplistic and I’d expect HMRC to bring in some sort of grouping provisions.
    • It’s academic at the moment as the mechanism is not yet set up. This is to be done ‘as soon as possible’ and ‘over the next few months’. So I wouldn’t rely on getting any cash back from that source in the near future.
  • Time to Pay is being extended, and it looks like HMRC will be a lot more flexible about it. A few points:
    • There’s a dedicated line for this: 0800 0159 559
    • Interest and late payment penalties can be waived
    • Debt collection can be suspended
    • We don’t have a feel yet for how long HMRC will spread payments over
    • HMRC have generally wanted TTP to be a one-off for any given taxpayer. It’s not clear how many tax bills one will be able to defer or spread under the new regime (but see ‘no debt collection activities’…).
    • It’s not clear what happens with existing TTPs.
  • The loans are the big one, and as they’re being delivered through banks they should be the most immediately accessible. Anecdotal evidence is that banks are getting a lot of enquiries. Key issues:
    • The first 6 months of the interest is to be covered by the Treasury
    • 80% of the loan is guaranteed
    • Loans can be up to £5m (up from £1.2m in the Budget)
    • Burdening businesses with debt will be an issue. How much of this is going to be written off in the end? Will it be like student loans?

We’re talking to HMRC and government centrally to try and get early information, and to help steer them in the right direction. Any thoughts you have which could help there would be appreciated.

Key actions for member firms are:

  • Talk to the banks, and see if you can speed up loans for clients
  • Talk to clients and make sure you know what help they need, and they know what they can get
  • Talk to us centrally, so we know what’s happening on the streets.

Contactez nous

The Martlet Partnership LLP
Martlet House
E1 Yeoman Gate
Yeoman Way
West Sussex
BN13 3QZ

Tel.: +44 (0) 1903 600555
Fax.: +44 (0) 1903 600828