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CORONAVIRUS ECONOMIC PLAN UPDATE:

Coronavirus Job Retention Scheme (CJRS)

On 2oth March the Chancellor of the Exchequer unveiled the CJRS, a temporary scheme open to some UK employers for at least three months starting from 1 March 2020.  It is designed to support employers whose operations have been severely disrupted by COVID-19.

Employers can use the Government Gateway to claim up to 80% of furloughed employees’ (employees on a leave of absence) usual monthly wage costs, capped at £2,500 per month, plus the associated Employer National Insurance contributions and minimum automatic enrolment employer pension contributions on that wage. Employers can use this scheme anytime during this period.

The latest guidance from HMRC can be found here – please bear in mind it has been subject to regular updates and revision.

AND

Self Employment Income Support Scheme (SEISS)

The SEISS will provide a taxable grant of up to 80% of trading profits, with a maximum of £2,500 per month, for an initial 3 months (April-June 2020).  To be eligible you must:

  • Have submitted a 2018-19 SA Tax Return;
  • Have been trading during the current tax year;
  • Be trading at the date of application;
  • Intend to continue to trade from 6 April 2020 – 5th April 2021

From Monday 4 May 2020 HM Revenue and Customs will be contacting sole traders who may be eligible for SEISS.

Updated guidance introduces an additional eligibility criteria that individuals may be eligible if their business has been adversely affected by coronavirus, this may not made clear in the original guidance.  Guidance examples of sole traders being unable to work because of coronavirus include:

  • shielding
  • self-isolating
  • sick leave because of coronavirus
  • caring responsibilities because of coronavirus
  • you’ve had to scale down or temporarily stop trading because:
  • your supply chain has been interrupted
  • you have fewer or no customers or clients
  • your staff are unable to come in to work

Updated guidance as of 4th May is available here but please bear in mind that the guidance has been subject to revision.


ARCHIVE


IR35 Changes Postponed
The Government has announced its changes to off-payroll working rules (aka ‘IR35’) will be delayed until April 2021 as part of its COVID-19 economic response package (link).


BUDGET UPDATE (11th March 2020): 

  • The National Living Wage – The Exchequer will endeavour to increase the NLW to £10.50 per hour by 2024;
  • National Insurance Changes – From April 2020 Ees NIC threshold will increase to £9,500. This will give a tax cut for appx 30 million people and a saving of £2 per week;
  • Employment Allowance – The Employment Allowance will be increased to £4,000 – a tax cut for many eligible small businesses;
  • SSP & Coronavirus The Chancellor of Exchequer announced that statutory sick pay (SSP) will be payable to employees who are advised to self-isolate.  The cost of providing SSP due to coronavirus will be refunded in full by the government for up to 14 days to SMEs;
  • Minimum Wage – The Exchequer will endeavour to increase the NLW to £10.50 per hour by 2024

National Living (Minimum) Wage from April 2020
The new age related minimum wage bands will come into force from April 2020:
– the adult rate 25+ will increase by 51p to £8.72 per hour
– the rate for 21 to 24 year olds will increase by 50p to £8.20 per hour
– the rate for 18 to 20 year olds will increase by 30p to £6.45 per hour
– under 18s increases to £4.55 per hour
– the apprentice rate will increase 25p to £4.15 per hour


PERSONAL LIABILITY of DIRECTORS
The High Court found that claimants could recover their losses directly from company directors because their actions caused the company to breach its statutory (and contractual) duties as an employer.  In Antuzis (& others) v DJ Houghton Catching Services Ltd it was shown the claimants worked in the toughest conditions as chicken catchers:

  • they were paid below the National Minimum Wage;
  • suffered many unlawful deductions from their pay and
  • received no overtime or holiday pay.
  • The court’s decision is a landmark case and has wider implications for directors personal assets where they cause a business to breach its legal responsibilities, consequently fatally harming a company’s viability. The full case can be viewed here

Domestic Reverse Charge for VAT delayed
HMRC announced it will be delaying implementation of DRC for VAT until October 2020.  Further information about DRC for Construction (and the delay) can be viewed here.

There will be a FREE seminar on this nearer the time, you can register your interest through our contact page.


HMRC say due diligence is required when using “Labour Providers”.
HMRC are urging companies to be diligent AND warn that in some circumstances where an umbrella company (or labour contractor) fails they will “ask you to account for unpaid VAT and NICs”!! (see link for more).


National Living (Minimum) Wage from April 2019
The new age related minimum wage bands will come into force from April 2019:
– the adult rate 25+ will increase by 38p to £8.21 per hour
– the rate for 21 to 24 year olds will increase by 32p to £7.70 per hour
– the rate for 18 to 20 year olds will increase by 15p to £6.15 per hour
– under 18s increases to £4.35 per hour
– the apprentice rate will increase 20p to £3.90 per hour


PENSION AUTO-ENROLMENT:  Auto-Enrolment Pension Scheme contribution rates are set to increase for PAYE workers:  The new rates for employers and employees will be 3% and 5% respectively and will take effect from 6th April


Gender Pay Gap Reporting:  Reach Network Limited had no appreciable mean, or median, gender pay gap as at the snapshot date of 5.4.2017 to 4.4.2018 and 5.4.2018 to 4.4.2019.   Our disclosable pay gap is therefore 0%.


HMRC tax take hits £517bn, as evasion clampdown nets £26.6bn
HMRC has reported collecting a record £517.7bn in tax in 2014-15, up by £12bn on the previous year, a 2.4% increase which the department says is down to economic growth and the continued crackdown on tax evasion and avoidance. HMRC Executive Summary can be seen here.


HMRC win £9m MSC CASE:  Managed Service Company Regulations came into play in 2007, nine years later, with time on its side, we are starting to see HMRC bring cases to conclusion.  The “Costelloe” case will generate huge debts for the ‘workers’ involved and potentially ruinous debt transfer consequences for the scheme providers. This case is a reminder not to encourage/promote the use dubious structures. Full case details here.


National Living (Minimum) Wage from April 2018

  • The new age related minimum wage bands will come into force from April 2018:
    – the adult rate 25+ will increase by 33p to £7.83 per hour
    – the rate for 21 to 24 year olds will increase by 33p to £7.38 per hour
    – the rate for 18 to 20 year olds will increase by 30p to £5.90 per hour
    – under 18s increases to £4.20 per hour
    – the apprentice rate will increase 20p to £3.70 per hour

END of UMBRELLA PAYE … as we know it:  from 6 April 2016 new legislation will restrict tax relief on travel and subsistence for umbrella workers subject to Supervision, Direction or Control, see full proposals here;

DEBT TRANSFER RULES:  Where HMRC discovers deliberate non-compliance with the above changes it has been empowered to transfer debts to companies and individuals in the contract chain.

CIS ONLINE: Contractors registered for CIS should note that filing CIS300 online will be a mandatory from April 2016.  [And from April 2017 it will not be possible to verify a subcontractor by telephone.  For further information about forthcoming changes, see CIS Reforms.

ILLEGAL WORKING: The Home Office ‘blitz’ on illegal working has resulted in 257 arrests in just 4 months; with fines of up to £20,000 per illegal worker “Operation Magnify” could raise as much as £1.4 million from construction sites across London and the South East.

DIVIDEND TAX:  From April 2016 the 10% tax credit on dividends will be replaced by a £5,000 tax free dividend allowance, see link.

NATIONAL LIVING WAGE: In April the new NLW will become law: Employees aged 25 or over will be legally entitled to be paid £7.20 per hour.


Enforcing NMW and “Tackling Exploitation”

  • HMRC have already introduced specialist teams to carry out “intensive bursts” of  National Minimum Wage compliance activity in high risk trades and locations across the UK.  And together with BIS they catch, fine and ‘name and shame’ non-compliant employers on their website (see list 1 , list 2 or list 3 for example).
  • These legal sanctions, not to mention bad PR, do not seem to be sufficient to deter many rogue businesses and the Government are intending to up the ante  with its next consultation, Tackling exploitation in the Labour Market (link), which proposes to:
  • Create a Director of Labour Market Enforcement;
  • Introduce a new offence of aggravated breach of labour market legislation (a custodial sentence);
  • Increased data sharing across government departments;
  • Widen the remit &/or increase GLA powers; and
  • Extend the concept of “exploitation” to include deliberate/systematic withholding of wages and spurious deductions
  • The consultation finishes on 7 December 2015, which in theory gives the government enough time to table legislation for April 2016.

Home Office Targeting Illegal Working in Construction

  • A Home Office enforcement campaign has been launched to root out illegal working in the construction industry. ‘Operation Magnify’ is looking to target those businesses in the sector which are employing and exploiting illegal migrant workers. With fines of up to £20,000 per illegal worker Contractors should take this very seriously.
  • Link: https://lnkd.in/e2aAiGP

National Minimum Wage 2015

  • The new age related national minimum wage rate will come into force on October 1st 2015. The following new age bands will apply:
    • the adult rate will increase by 20 pence to £6.70 per hour
    • the rate for 18 to 20 year olds will increase by 17 pence to £5.30 per hour
    • the rate for 16 to 17 year olds will increase by 8 pence to £3.87 per hour
    • the apprentice rate will increase by 57 pence to £3.30 per hour

Compliance Healthcheck
This summer Reach Group engaged the services of one of the UK’s leading professional tax and employment advisors to conduct an audit/review of our contracts, systems and compliance standards.  The audit was a surprisingly interesting exercise and we are delighted to inform our clients that at the end of it we received a “clean bill of health”.

  • Compliance is the single most important activity we undertake to support our clients, it is at the heart of what we do and we will continue to “raise the bar” in this area.

Autoclenz Ltd v Belcher and Others

  • The Supreme Court judgement in Autoclenz Ltd v Belcher and Others found that workers engaged as car valeters (by Autoclenz) were in fact employees and not self-employed as Autoclenz contended.
  • This is a genuine ‘landmark’ judgement which raises several interesting issues for contractors, who engage subcontractors under contracts for services, to consider, not least the veracity of the substitution (personal service) clause. The case once again raises the importance of contract clauses being a true reflection of working arrangements between subcontractor and contractor.
    Reach Group’s employment lawyers recommend that contractors review their contracts with subcontractors: If you do not have a specialist advisor in this field please feel free to contact us.

Visa Restrictions lifted for A2 work-seekers from 1st January 2014

  • Employers in the UK no longer have to apply for work permits for Romanian and Bulgarian workers and the workers themselves no longer require an ‘accession worker card’. Low-skilled workers from these countries are also no longer restricted to existing quota schemes in the agricultural and food processing sectors. Like other EU citizens, Romanians and Bulgarians now have an unrestricted right to live and work in the UK.

CORONAVIRUS ECONOMIC PLAN UPDATE:

 

Coronavirus Job Retention Scheme (CJRS)

On 2oth March the Chancellor of the Exchequer unveiled the CJRS which is planned to allow employers to keep some employees on payroll for up to 3 months, rather than being laid off.  If employees are not working but are not laid off they are “furloughed”.

Subject to government guidance employers can claim a grant of up to 80% of their employees’ wage (capped at £2,500 per month).

HMRC have created a portal for employers to access funds and make claims from 20th April.

Further government guidance can be found here.

AND

Self Employment Income Support Scheme (SEISS)

On 26th March the Chancellor of the Exchequer revealed a support package for the self-employed:  The SEISS will provide a taxable grant of up to 80% of trading profits with a maximum of £2,500 per month for the next 3 months at least.  What we know at the moment is to be eligible you must:

  • Have submitted a 2018-19 SA Tax Return (those that have not filed their SA Tax Return;
  • Have been trading during the current tax year
  • Be trading at the date of application, or would be but for the coronavirus emergency
  • Intend to continue to trade from 6 April 2020 – 5th April 2021 ✓ have lost trading profits due to the emergency

The chancellor said funds would not be available until June but they will be backdated to the date of claim, further information can be found here.

WE WILL POST UPDATES HERE ONCE FULL GUIDANCE HAS BEEN PUBLISHED.

WATCH THIS SPACE!


ARCHIVE


IR35 Changes Postponed
The Government has announced its changes to off-payroll working rules (aka ‘IR35’) will be delayed until April 2021 as part of its COVID-19 economic response package (link).


BUDGET UPDATE (11th March 2020): 

  • The National Living Wage – The Exchequer will endeavour to increase the NLW to £10.50 per hour by 2024;
  • National Insurance Changes – From April 2020 Ees NIC threshold will increase to £9,500. This will give a tax cut for appx 30 million people and a saving of £2 per week;
  • Employment Allowance – The Employment Allowance will be increased to £4,000 – a tax cut for many eligible small businesses;
  • SSP & Coronavirus The Chancellor of Exchequer announced that statutory sick pay (SSP) will be payable to employees who are advised to self-isolate.  The cost of providing SSP due to coronavirus will be refunded in full by the government for up to 14 days to SMEs;
  • Minimum Wage – The Exchequer will endeavour to increase the NLW to £10.50 per hour by 2024

National Living (Minimum) Wage from April 2020
The new age related minimum wage bands will come into force from April 2020:
– the adult rate 25+ will increase by 51p to £8.72 per hour
– the rate for 21 to 24 year olds will increase by 50p to £8.20 per hour
– the rate for 18 to 20 year olds will increase by 30p to £6.45 per hour
– under 18s increases to £4.55 per hour
– the apprentice rate will increase 25p to £4.15 per hour


PERSONAL LIABILITY of DIRECTORS
The High Court found that claimants could recover their losses directly from company directors because their actions caused the company to breach its statutory (and contractual) duties as an employer.  In Antuzis (& others) v DJ Houghton Catching Services Ltd it was shown the claimants worked in the toughest conditions as chicken catchers:

  • they were paid below the National Minimum Wage;
  • suffered many unlawful deductions from their pay and
  • received no overtime or holiday pay.
  • The court’s decision is a landmark case and has wider implications for directors personal assets where they cause a business to breach its legal responsibilities, consequently fatally harming a company’s viability. The full case can be viewed here

Domestic Reverse Charge for VAT delayed
HMRC announced it will be delaying implementation of DRC for VAT until October 2020.  Further information about DRC for Construction (and the delay) can be viewed here.

There will be a FREE seminar on this nearer the time, you can register your interest through our contact page.


HMRC say due diligence is required when using “Labour Providers”.
HMRC are urging companies to be diligent AND warn that in some circumstances where an umbrella company (or labour contractor) fails they will “ask you to account for unpaid VAT and NICs”!! (see link for more).


National Living (Minimum) Wage from April 2019
The new age related minimum wage bands will come into force from April 2019:
– the adult rate 25+ will increase by 38p to £8.21 per hour
– the rate for 21 to 24 year olds will increase by 32p to £7.70 per hour
– the rate for 18 to 20 year olds will increase by 15p to £6.15 per hour
– under 18s increases to £4.35 per hour
– the apprentice rate will increase 20p to £3.90 per hour


PENSION AUTO-ENROLMENT:  Auto-Enrolment Pension Scheme contribution rates are set to increase for PAYE workers:  The new rates for employers and employees will be 3% and 5% respectively and will take effect from 6th April


Gender Pay Gap Reporting:  Reach Network Limited had no appreciable mean, or median, gender pay gap as at the snapshot date of 5.4.2017 to 4.4.2018 and 5.4.2018 to 4.4.2019.   Our disclosable pay gap is therefore 0%.


HMRC tax take hits £517bn, as evasion clampdown nets £26.6bn
HMRC has reported collecting a record £517.7bn in tax in 2014-15, up by £12bn on the previous year, a 2.4% increase which the department says is down to economic growth and the continued crackdown on tax evasion and avoidance. HMRC Executive Summary can be seen here.


HMRC win £9m MSC CASE:  Managed Service Company Regulations came into play in 2007, nine years later, with time on its side, we are starting to see HMRC bring cases to conclusion.  The “Costelloe” case will generate huge debts for the ‘workers’ involved and potentially ruinous debt transfer consequences for the scheme providers. This case is a reminder not to encourage/promote the use dubious structures. Full case details here.


National Living (Minimum) Wage from April 2018

  • The new age related minimum wage bands will come into force from April 2018:
    – the adult rate 25+ will increase by 33p to £7.83 per hour
    – the rate for 21 to 24 year olds will increase by 33p to £7.38 per hour
    – the rate for 18 to 20 year olds will increase by 30p to £5.90 per hour
    – under 18s increases to £4.20 per hour
    – the apprentice rate will increase 20p to £3.70 per hour

END of UMBRELLA PAYE … as we know it:  from 6 April 2016 new legislation will restrict tax relief on travel and subsistence for umbrella workers subject to Supervision, Direction or Control, see full proposals here;

DEBT TRANSFER RULES:  Where HMRC discovers deliberate non-compliance with the above changes it has been empowered to transfer debts to companies and individuals in the contract chain.

CIS ONLINE: Contractors registered for CIS should note that filing CIS300 online will be a mandatory from April 2016.  [And from April 2017 it will not be possible to verify a subcontractor by telephone.  For further information about forthcoming changes, see CIS Reforms.

ILLEGAL WORKING: The Home Office ‘blitz’ on illegal working has resulted in 257 arrests in just 4 months; with fines of up to £20,000 per illegal worker “Operation Magnify” could raise as much as £1.4 million from construction sites across London and the South East.

DIVIDEND TAX:  From April 2016 the 10% tax credit on dividends will be replaced by a £5,000 tax free dividend allowance, see link.

NATIONAL LIVING WAGE: In April the new NLW will become law: Employees aged 25 or over will be legally entitled to be paid £7.20 per hour.


Enforcing NMW and “Tackling Exploitation”

  • HMRC have already introduced specialist teams to carry out “intensive bursts” of  National Minimum Wage compliance activity in high risk trades and locations across the UK.  And together with BIS they catch, fine and ‘name and shame’ non-compliant employers on their website (see list 1 , list 2 or list 3 for example).
  • These legal sanctions, not to mention bad PR, do not seem to be sufficient to deter many rogue businesses and the Government are intending to up the ante  with its next consultation, Tackling exploitation in the Labour Market (link), which proposes to:
  • Create a Director of Labour Market Enforcement;
  • Introduce a new offence of aggravated breach of labour market legislation (a custodial sentence);
  • Increased data sharing across government departments;
  • Widen the remit &/or increase GLA powers; and
  • Extend the concept of “exploitation” to include deliberate/systematic withholding of wages and spurious deductions
  • The consultation finishes on 7 December 2015, which in theory gives the government enough time to table legislation for April 2016.

Home Office Targeting Illegal Working in Construction

  • A Home Office enforcement campaign has been launched to root out illegal working in the construction industry. ‘Operation Magnify’ is looking to target those businesses in the sector which are employing and exploiting illegal migrant workers. With fines of up to £20,000 per illegal worker Contractors should take this very seriously.
  • Link: https://lnkd.in/e2aAiGP

National Minimum Wage 2015

  • The new age related national minimum wage rate will come into force on October 1st 2015. The following new age bands will apply:
    • the adult rate will increase by 20 pence to £6.70 per hour
    • the rate for 18 to 20 year olds will increase by 17 pence to £5.30 per hour
    • the rate for 16 to 17 year olds will increase by 8 pence to £3.87 per hour
    • the apprentice rate will increase by 57 pence to £3.30 per hour

Compliance Healthcheck
This summer Reach Group engaged the services of one of the UK’s leading professional tax and employment advisors to conduct an audit/review of our contracts, systems and compliance standards.  The audit was a surprisingly interesting exercise and we are delighted to inform our clients that at the end of it we received a “clean bill of health”.

  • Compliance is the single most important activity we undertake to support our clients, it is at the heart of what we do and we will continue to “raise the bar” in this area.

Autoclenz Ltd v Belcher and Others

  • The Supreme Court judgement in Autoclenz Ltd v Belcher and Others found that workers engaged as car valeters (by Autoclenz) were in fact employees and not self-employed as Autoclenz contended.
  • This is a genuine ‘landmark’ judgement which raises several interesting issues for contractors, who engage subcontractors under contracts for services, to consider, not least the veracity of the substitution (personal service) clause. The case once again raises the importance of contract clauses being a true reflection of working arrangements between subcontractor and contractor.
    Reach Group’s employment lawyers recommend that contractors review their contracts with subcontractors: If you do not have a specialist advisor in this field please feel free to contact us.

Visa Restrictions lifted for A2 work-seekers from 1st January 2014

  • Employers in the UK no longer have to apply for work permits for Romanian and Bulgarian workers and the workers themselves no longer require an ‘accession worker card’. Low-skilled workers from these countries are also no longer restricted to existing quota schemes in the agricultural and food processing sectors. Like other EU citizens, Romanians and Bulgarians now have an unrestricted right to live and work in the UK.