Coronavirus Financial Support
AS OF 12/06/2020, THIS PAGE IS NO LONGER BEING UPDATED – THIS IS TO REFLECT A REFOCUSSING OF BCC ACTIVITY ONTO CORONAVIRUS RECOVERY AND BUSINESS AS USUAL ACTIVITY.
Access to finance is one of the most pressing challenges for businesses during the Coronavirus pandemic, including ceramic manufacturers.
A range of business support measures have been made available. Further information from Government is available from their Coronavirus business support hub, particularly the financial support for businesses page and their business support finder tool which uses a very short questionnaire to signpost relevant support.
The measures include the following:
Business Finance for Small and Medium-sized Businesses
Coronavirus Business Interruption Loan Scheme (CBILS) [UK-wide]
The Coronavirus Business Interruption Loan Scheme (CBILS) – now open – supports businesses, with an annual turnover of up to £45m, to access loans, overdrafts, invoice finance and asset finance of up to £5 million for up to six years. The government will cover the first 12 months of interest payments and any lender-levied charges, so SME businesses will benefit from no upfront costs and lower initial repayments. As with any other loan facility, the borrower remains fully liable for the debt.
The scheme is being delivered through over 40 accredited commercial lenders, backed by the Government-owned British Business Bank. The government provides lenders with a partial guarantee of 80% on each loan to give lenders further confidence in continuing to provide finance to SMEs. The remaining 20% is provided by the lender.
In response to feedback received since the its launch, the scheme was amended on 3rd April so that all viable SME businesses affected by Coronavirus, and not just those unable to secure regular commercial financing, are now be eligible. It is expected that the scheme will run for an initial period of 6 months. The government has indicated that there is no maximum cap set for the amount of total lending to be supported through the scheme.
Eligibility conditions include a business must:
- Be UK-based in its business activity;
- Have an annual turnover of no more than £45 million;
- Have a borrowing proposal which the lender would consider viable, were it not for the current pandemic (N.B. the viability tests have recently been modified – the previous requirement for lenders to also consider whether the provision of finance will enable the business to trade out of any short-term to medium-term difficulty has been removed);
- Self-certify that it has been adversely impacted by Coronavirus;
- Not have been classed as a ‘business in difficulty’ on 31 December 2019, if applying to borrow £30,000 or more.
Finance terms are up to six years for term loans and asset finance facilities and up to three years for overdrafts and invoice finance facilities. Lenders may require security for the facility, although where the facility is for less than £250,000, personal guarantees will not be taken. For facilities above £250,000, the taking of security is required although the taking of personal guarantees remains at the discretion of the lender. Where personal guarantees are required, these exclude a principal place of residence, and recoveries under these are capped at a maximum of 20% of the outstanding balance of the CBILS facility after the proceeds of business assets have been applied. This applies to all customers that have secured a loan under the scheme since its launch on 23rd March. There are no guarantee fees for SMEs.
To apply, businesses should check the British Business Bank website to find out which lenders are able to provide the type of finance you are looking for. As noted above, access to the scheme has now been opened up to businesses facing cashflow difficulties who previously would not have been eligible for CBILS because they met the requirements for a standard commercial facility. You may therefore wish to consider re-contacting your lender. If one lender turns you down, you can still approach other lenders within the scheme. However, they won’t be familiar with your company, so your ability to ‘shop around’ may be limited.
The CBILS Scheme has been authorised under the European Commission’s Temporary Framework for State aid measures. A key restriction this has placed on the scheme is that it cannot be used where an applicant was an ‘undertaking in difficulty’ as at 31st December 2019.
The full rules of the Scheme and the list of accredited lenders is available on the British Business Bank website. Further FAQs and a quick eligibility checklist have also been published. The CBILS Lenders Toolkit is also useful; as is the page on UK Finance.
The British Ceramic Confederation is growing increasingly alarmed that, despite the recent changes to the scheme, CBILS loans are still not being approved quickly enough or at all. Government and the banks must bring in further, urgent reforms to fix the scheme to stop businesses going bust. We believe the government guarantee must be increased from 80 to 100% to achieve this. Members are asked to continue sharing their experiences of CBILS with us. Given the viability tests have recenty been modified, it may also be worth going back to your bank if you were rejected earlier. If members have any concerns with how individual banks are behaving, companies need to contact their local Bank of England agent promptly. The agents are talking to individual banks on a daily basis where there are problems.
Coronavirus Future Fund [UK-wide]
The Coronavirus Future Fund – now open – issues convertible loans between £125,000 to £5 million to innovative companies, subject to at least equal match funding from private investors.
These convertible loans may be a suitable option for businesses that typically rely on equity investment and are unable to access other government business support programmes (e.g. CBILS) because they are either pre-revenue or pre-profit.
The Government has made £250 million available for the Future Fund, and will keep this amount under review. The scheme is is being delivered by the British Business Bank and is open for applications until the end of September 2020.
Eligibility conditions include a business must:
- Be a UK-incorporated limited company. If the company is a member of a corporate group, it must be the ultimate parent company.
- Have raised at least £250,000 in equity from third-party investors in the last five years.
- Not have any of its shares or other securities listed on a regulated market, a multilateral trading facility, a recognised investment exchange and/or any other similar market, stock exchange or listing venue.
- Have been incorporated on or before 31 December 2019
- Have at least one of the following true: i) half or more employees are UK-based; or ii) half or more revenues are from UK sales.
Coronavirus Bounce Back Loan [UK-wide]
The Coronavirus Bounce Back Loan Scheme (BBLS) – now open – helps small and medium-sized businesses affected by Coronavirus to borrow between £2,000 and £50,000 (up to a maximum of 25% of annual turnover) for six years. The government will cover the first 12 months of interest payments (meaning you pay 0% for the first year) and there aren’t any fees to access the scheme, so businesses benefit from no upfront costs. The interest rate for the facility is set at 2.5% per annum, so all businesses will benefit from the same, low rate of interest. As with any other loan facility, the borrower remains fully liable for the debt.
The scheme is being delivered through a range of British Business Bank accredited lenders and partners. The government provides lenders with a full (100%) guarantee on each loan.
Eligibility conditions include a business must:
- Be UK-based in its business activity;
- Have been negatively affected by Coronavirus.
- Not have been an ‘undertaking in difficulty’ on 31st December 2019.
Loan terms are six years, but early repayment is allowed, without early repayment fees. Lenders are not permitted to take personal guarantees or take recovery action over a borrower’s personal assets (such as their main home or personal vehicle).
To apply, businesses should approach a lender, ideally via its website. In the first instance, you should approach your own provider. You may also consider approaching other lenders if you are unable to access the finance you require. Applications for the BBLS are based on a short online application form (7 questions) that requires you to certify your eligibility and ability to repay the loan, without the need for forward looking financial forecasts.
You cannot apply if you’re already claiming under the Coronavirus Business Interruption Loan Scheme (CBILS). However, if you’ve already received a loan of up to £50,000 under CBILS and wish to transfer it into the Bounce Back Loan scheme, you can arrange this with your lender until 4th November 2020.
The full rules of the scheme and guidance on how to apply is available on the British Business Bank website. Further FAQs have also been published. The BBLS Lenders Toolkit is also useful; as is the page on UK Finance.
The BBLS Scheme is designed to be fast for lenders to process and quick and easy for businesses to access. If successful, the cash is expected to land in the borrower’s account within a matter of days.
The Confederation welcomes this announcement as it should help the smallest businesses that need vital cash injections to quickly get the finance needed to stay afloat during the crisis. Swift delivery is now key.
Help from Small Business Commissioner on late payment support [UK-wide]
It is more important than ever to ensure small businesses are paid on time. Many small businesses are reaching out for assistance, with disputes over delayed payments or in some cases, non-payment because of the financial hardship being experienced by all sectors during this difficult time. As many small business owners are directly or indirectly impacted by Coronavirus, they are eager to get back on their feet, so keeping on top of the business basics and maintaining cash flow by getting the money in for work carried out or goods supplied is paramount. The Small Business Commissioner has helped small businesses recover over £7.2m owed to them (Dec 17 – May 2020) and £0.5m specifically during the coronavirus crisis. For further information, visit the Small Business Commissioner website. Email here if you are looking for general advice and email here if you have a complaint against a firm regarding non-payment.
Business Finance for Large Businesses
Coronavirus Large Business Interruption Loan Scheme (CLBILS) [UK-wide]
The Coronavirus Large Business Interruption Loan Scheme (CLBILS) – now open – supports businesses with an annual turnover above £45m to access loans, asset finance, revolving credit facilities (including overdrafts) and invoice finance for up to three years. Companies with a turnover between £45-250m can borrow up to £25m; whilst those with a turnover of more than £250m can borrow up to £200 million (was originally £50m). As with any other loan facility, the borrower remains fully liable for the debt.
Companies borrowing more than £50m through CLBILS will be subject to restrictions on dividend payments, senior pay and share buy-backs during the period of the loan, including a ban on dividend payments and cash bonuses, except where they were previously agreed.
The Scheme is being delivered through a series of accredited lenders, backed by the Government-owned British Business Bank. The government provides lenders with an 80% partial guarantee on individual loans to give banks the confidence to lend to many more businesses which are impacted by Coronavirus. The remaining 20% is provided by the lender. The loans are offered at commercial rates of interest. Unlike the CBILS scheme, facilities are not interest or fee free for twelve months. However, borrowers are expected to benefit from a proportionate reduction in pricing as a result of lenders receiving capital and risk benefits.
Eligibility conditions include a business must:
- Be UK-based in its business activity;
- Have an annual turnover in excess of £45 million;
- Self-certify that it has been adversely impacted by Coronavirus.
- Not have received a facility under the Bank of England’s Covid-19 Corporate Financing Facility (CCFF).
- Have a borrowing proposal which the lender: a) would consider viable, were it not for the Coronavirus pandemic; and b) believes will enable you to trade out of any short-term to medium-term difficulty.
Finance terms are from three months to three years. It is expected that lenders will follow their normal credit policy when assessing security generally. However, under the scheme, lenders will not take personal guarantees of any form for facilities below £250,000. For facilities above £250,000, personal guarantees may still be required, but claims cannot exceed 20% of losses after all other recoveries have been applied.
To apply, businesses should check the British Business Bank website to find out which lenders are able to provide the type of finance they are looking for. You may also want to consider using a broker to find the right type of finance for your needs. If one lender turns you down, you can apply to other lenders in the scheme.
The full rules of the Scheme and the list of accredited lenders is available on the British Business Bank website. Further FAQs and a quick eligibility checklist have also been published. The CLBILS Lenders Toolkit is also useful; as is the page on UK Finance.
The Confederation welcomes the announcement that this critically-important new loan scheme is being expanded both in terms of the scope of its coverage and the size of the loans available. These changes fill an important gap in government support. It’s now essential that this enhanced support reaches companies in difficulty as quickly as possible.
Covid-19 Corporate Financing Facility (CCFF) [UK-wide]
The Covid-19 Corporate Financing Facility (CCFF) scheme – now open – provides funding to large UK businesses in order to support their liquidity and working capital by purchasing short-term debt in the form of commercial paper (an unsecured, short-term debt instrument) of up to one-year maturity. The scheme, coordinated jointly by HM Treasury and the Bank of England (BoE), will be funded by central bank reserves and will operate for at least 12 months.
The facility is intended to provide financing on terms comparable to those prevailing in markets in the period before the Coronavirus economic shock and is open to companies that:
- Can demonstrate they were in sound financial health prior to the shock (defined as companies that had a short or long-term rating of ‘investment grade’, as at 1st March 2020, or equivalent) and;
- Make a material contribution to the UK economy (e.g. companies with significant employment, revenues and headquarters in the UK).
If firms do not have an existing credit rating from the major credit ratings agencies, they are advised to speak to their bank in the first instance. If that bank’s advice is that the firm was viewed internally as equivalent to investment grade as at 1st March 2020, this is good evidence of CCFF eligibility.
The minimum issue size under the CCFF is £1 million nominal, there is no maximum limit. When submitting an offer, the offer amount should be expressed in increments of £0.1 million nominal.
CCFF participants that wish to borrow money beyond 12 months will be subject to restrictions on dividend payments, senior pay and share buy-backs during the period of the facility, including a ban on dividend payments and cash bonuses, except where they were previously agreed.
In order to access the CCFF, you will need to contact your bank. It is important to note that not all banks issue commercial paper. If your bank does not issue commercial paper, UK Finance have published a list of banks that are able to assist. Companies that have never issued commercial paper previously are able to participate.
The scheme will operate for an initial period of 12 months and the Bank will provide 6 months’ notice of withdrawal of the facility. More information can be found here.
The British Ceramic Confederation understands that the CCFF scheme seems to be working reasonably well. Applications are largely sitting with the Bank of England, who are processing them.
Coronavirus Job Retention Scheme (CJRS) [UK-wide]
The Coronavirus Job Retention Scheme (CJRS) – now open – allows UK employers, of any size, that cannot maintain their current workforce because operations have been severely affected by Coronavirus to furlough employees (i.e. put them temporary leave of absence) and apply for a government grant that covers the majority of their wages.
The scheme is designed to enable employers to retain their employees, avert redundancies and ensure the long-term recovery of the economy. All employers throughout the UK are eligible to claim. It will be in place for eight months starting from 1st March 2020. During this period, the scheme will evolve as it is gradually withdrawn, although employees will still continue to receive the same 80% of their salary (up to £2,500 per month) throughout. The following will apply for the periods people are furloughed:
- March to June. The UK Government will pay 80% of employees’ usual monthly wage costs (up to a cap of £2,500) plus the associated Employer National Insurance contributions (ER NICs) and minimum automatic enrolment employer pension contributions. Employers are not required to pay anything, but can choose to fund the 20% difference between this payment and the normal salary. This applies even if an employee on furlough is then below National Living Wage / National Minimum Wage (providing they are not doing any training during this time). Claims can be made for any type of employment contract, including: full-time, part-time, agency, flexible, zero-hour contracts and apprentices. During this period, furloughed employees cannot undertake work for or on behalf of the organisation (except for statutory duties). During this period, if an employee is working, but on reduced hours, or for reduced pay, they will not be eligible for this scheme. Any employees placed on furlough must be furloughed for a minimum period of three consecutive weeks. Employees can be furloughed multiple times, but each separate instance must be for a minimum period of three consecutive weeks. If contractually allowed, your employees are permitted to work for another employer whilst you have placed them on furlough. The furlough scheme will close to anyone who hasn’t been furloughed for 3 weeks by 30th June. This means that the last date for employees to be furloughed for the first time is 10th June, to enable them to complete the minimum 3-week furlough period by 30th June. You will then have until 31st July to make a claim for any periods of furlough up until 30th June.
- July. From 1st July 2020, employers will be able to bring previously furloughed employees back to work on a part-time basis (‘flexible furloughing’). This is a month earlier than previously announced. Individual companies will have complete flexibility to decide the hours and shift patterns of returning employees. Companies will be responsible for paying the ‘normal’ wage, tax, NICs and pension contributions for the proportion of hours that employees work and can apply for the CJRS grant to cover the proportion of normal hours that they are still furloughed for. Employers will be required to submit data on the usual hours an employee would be expected to work in a claim period and actual hours worked. The minimum length of a furlough will also be reduced to one week. Also, for periods starting on or after the 1st July, the maximum number of employees you can claim for in any period cannot be higher than the maximum number you have claimed for in a previous period. For example, if your highest single claim for periods up to 30th June was for 100 people, you can’t claim for more than this number in later periods. Further guidance on flexible furloughing and how employers should calculate claims will be published on 12th June. We understand webinars offering more support on the changes will also be available to book online from 12th June.
- August. From 1st August, employers will need to contribute towards the wage costs of your furloughed employees until the scheme ends on 31st October. In August, the UK Government contribution towards wages will remain 80% (subject to the cap), but employers will be required to pay ER NICs and pension contributions.
- September. The UK Government will pay 70% of wages (up to a cap of £2,187.50). Employers will be required to pay ER NICs and pension contributions, as well as 10% of wages to make up the 80% total.
- October. The final month of the scheme – unless another extension is rolled out – will see the government pay 60% of wages, up to a cap of £1,875. Employers will pay ER NICs, pension contributions and 20% of wages to make up the 80% total.
A Government factsheet with more details is also available. CJRS grants are not classed as State aid.
To use the CJRS, you will need to:
- Check if you can claim. To be eligible, you must have: i) created and started a PAYE payroll scheme on or before 19th March 2020; ii) enrolled for PAYE online; and iii) a UK bank account. To access the scheme, you will need to designate affected employees as ‘furloughed workers,’ and notify your employees of this change in writing – changing the status of employees remains subject to existing employment law and, depending on the employment contract, may be subject to negotiation. Employers must select employees for furlough in line with employment and equalities laws and must agree with the employee that they are a ‘furloughed worker’. If there are more than 20 employees affected, employers will need to consult staff representatives (‘collectively consult’). Employers may need to seek legal advice on the process. The ACAS Coronavirus webpage contains further useful guidance on these aspects.
- Check which employees you can put on furlough. You can only claim for furloughed employees that were employed on 19th March 2020 and who were on your PAYE payroll on or before 19th March 2020. This means a Real Time Information (RTI) submission notifying payment in respect of that employee to HMRC must have been made on or before 19th March 2020.
- Calculate 80% of your employees’ wages. This calculator can be used to work out what you can claim for most employees who are paid either regular or variable amounts each pay period (for example, weekly or monthly).
- Claim for your employees’ wages online. Claimants need to be registered for PAYE Online and will need the Government Gateway user ID and password (which you got when you registered for PAYE online). To support your claim, you’ll need to provide information about your business and employees, including: i) employer UK bank account number and sort code; ii) employer PAYE scheme reference number; iii) number of employees being furloughed; iv) National Insurance (NI) number for each employee; and v) start date and end date of the claim. If you have fewer than 100 furloughed staff you will need to input information directly into the system for each employee. If you have 100 or more furloughed staff you will need to upload a file (.xls .xlsx .csv .ods) with information for each employee. When preparing to make a claim you need to decide the length of the claim period. In deciding what your claim period is, it helps to think about how frequently you run your payroll. You can’t make more than one claim during a claim period. This means you should include all of the employees that you want to furlough for that claim period, because you won’t be able to make another claim for the same period or one that overlaps, and you can’t make changes to your claim once it is submitted. If you do not finish your claim in one session, you can now save a draft. You must complete your claim within 7 days of starting it.
- Report a payment in PAYE Real Time Information. To ensure employees’ wages are correctly reported to HMRC you should check if you need to report payments on the PAYE Real Time Information system.
Once you’ve submitted your claim, you’ll get a claim reference number on screen. You should print or note down the reference number as you will not get an email confirmation. HMRC will verify your claim and may need to contact you for further information. You will receive the grant in six working days. Employers are asked not to contact HMRC unless it has been more than six working days since you made the claim and you have not received it in that time. Any crucial queries should be directed to agents, representatives or HMRC’s webchat service – details here. HMRC does not have the facility to answer questions raised by employees, who will need to raise any queries they may have directly with their employers.
You must keep a copy of all records and your calculations for six years in case HMRC need to contact you to discuss these.
If you’ve made an error in a CJRS claim that means you received too much money, you must pay this back to HMRC. HMRC have updated the application system so you can tell them if you have over-claimed in a previous claim – when you apply you’ll be asked if you need to reduce the amount to take account of a previous error. Your new claim amount will be reduced to reflect this. You should then keep a record of this adjustment for six years. If you have made an error in a CJRS claim and do not plan to submit further claims, HMRC are working on a process that will allow you to let them know about your error and pay back any amounts that you have over-claimed. HMRC will update guidance when this is available.
A step-by-step guide; pre-recorded HMRC webinars; and live HMRC webinars are also available. Additional guidance has been produced outlining how holiday entitlement and pay operate during the Coronavirus pandemic.
The Confederation strongly welcomes the furloughing scheme. It is an unprecedented intervention which, for the first time in our history sees government helping to pay people’s wages. It is a genuine business lifeline. It is right that the scheme should evolve to allow flexible furloughing to match Government’s phased approach to re-opening the economy. However, in order to be able to furlough employees from July onwards, those employees will already need to have been furloughed by 10th June. This may be highly disruptive or severely limiting for those companies utilising a furlough rota under which some employees have not been furloughed yet.
Coronavirus Statutory Sick Pay Rebate Scheme for SMEs [UK-wide]
The Coronavirus Statutory Sick Pay Rebate Scheme – now open – will allow businesses with under 250 employees to apply to HMRC to recover the costs of paying Coronavirus-related Statutory Sick Pay (SSP) to current or former employees.
The repayment will cover up to two weeks of the applicable rate of SSP, starting from the first qualifying day of sickness, if an employee is unable to work because they either: i) have Coronavirus symptoms; ii) cannot work because they are self-isolating because someone they live with has Coronavirus symptoms; iii) are shielding and have a letter from the NHS or a GP telling them to stay at home for at least 12 weeks; or iv) are self-isolating because they’ve been notified by the NHS or public health bodies that they’ve come into contact with someone with Coronavirus.
You can claim for periods of sickness starting on or after:
- 13th March 2020 – if your employee had Coronavirus or the symptoms or is self-isolating because someone they live with has symptoms.
- 16th April 2020 – if your employee was shielding because of Coronavirus.
- 28th May 2020 – if your employee has been notified by the NHS or public health bodies that they’ve come into contact with someone with Coronavirus.
A ‘qualifying day’ is a day an employee usually works on. The weekly rate was £94.25 before 6th April 2020 and is now £95.85. If you’re an employer who pays more than the weekly rate of SSP you can only claim up to the weekly rate paid.
Employers are eligible to use the scheme if:
- You’re claiming for an employee who’s eligible for sick pay due to Coronavirus;
- You had a PAYE payroll scheme in operation before 28th February 2020;
- You had fewer than 250 employees across all PAYE schemes on 28th February 2020;
- You’re eligible to receive State Aid under the EU Commission Temporary Framework.
Employees do not have to give you a doctor’s fit note for you to make a claim. But you can ask them to give you either:
- An isolation note from NHS 111 – if they are self-isolating and cannot work because of Coronavirus.
- The NHS or GP letter telling them to stay at home for at least 12 weeks because they’re at high risk of severe illness from Coronavirus.
The scheme covers all types of employment contracts, including: i) full-time employees; ii) part-time employees; iii) employees on agency contracts; iv) employees on flexible or zero-hour contracts; or v) fixed term contracts (until the date their contract ends).
You can claim back from both the Coronavirus Job Retention Scheme and the Coronavirus Statutory Sick Pay Rebate Scheme for the same employee but not for the same period of time for that employee.
The HMRC guidance includes more information about eligibility; using an agent to do PAYE online; State Aid limits; how to claim; and the records employers must keep (for at least 3 years). There is an SSP calculator to calculate your employee’s SSP. HMRC are also running a number of live webinars providing an overview of the scheme.
HMRC Time to Pay Arrangements (TTP) [UK-wide]
All businesses in financial distress, and with outstanding tax liabilities (including PAYE, NIC and Corporation Tax), 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. Any business that pays tax to the UK government and has outstanding tax liabilities is eligible. You do not need to miss a deadline, only to have an outstanding liability with HMRC to access a TTP arrangement.
If you have missed, or are worried about missing, your next tax payment due to Coronavirus, please call HMRC’s dedicated helpline: 0800 024 1222 (Mon-Fri). Further details are available here. Although you will need to provide an explanation, there is no requirement for detailed cash flow forecasts.
The Confederation is aware that some firms have had challenges accessing support through the helpline. HMRC are aware of this and are urgently assessing options to ensure the helpline is sufficiently staffed whilst many handlers are unable to take calls due to self-isolation. However once connected, feedback from members and others is that HMRC has been very helpful and fast in dealing with Coronavirus-related TTP requests. This has already been a critical step for several BCC member companies.
Deferring Valued Added Tax (VAT) Payments [UK-wide]
Government has announced an optional temporary deferral of Valued Added Tax (VAT) payments between 20th March 2020 and 30th June 2020 to help businesses manage their cash flow. All VAT-registered businesses are eligible. You can only defer:
- Quarterly and monthly VAT returns’ payments for the periods ending in February, March and April;
- Payments on account due between 20 March 2020 and 30 June 2020;
- Annual accounting advance payments due between 20 March 2020 and 30 June 2020
The deferral does not cover payments for VAT MOSS or import VAT.
This is an automatic offer – you do not need to tell HMRC that you are deferring your VAT payment. You can opt into the deferral simply by not making VAT payments due in this period. You do not have to prove financial hardship.
If you choose to defer your VAT payment as a result of Coronavirus, you must pay the VAT due on or before 31st March 2021. HMRC will not charge interest or penalties on any amount deferred. Should you wish, you can continue to make payments as normal during the deferral period. HMRC will also continue to process VAT reclaims and refunds as normal during this time.
Businesses that have a direct debit mandate in place to pay their VAT and wish to defer payment will need to contact their bank to cancel their mandate. Please do so in sufficient time before the direct debit is due to be collected. Businesses will also need to remember to reinstate their direct debit mandate once the deferral is over. It is important to note that businesses should continue to file their VAT returns on time.
Deferring import VAT and duty payments due on 15th April [UK-wide]
HMRC has announced that the payment of import VAT and duties due on 15th April can, subject to a financial hardship test, be delayed. Unlike the VAT deferral (see above), which is an automatic offer, businesses will need to explain how Coronavirus has affected their finances and cash flow.
Many importers have a duty deferment account (which allows the payment of import VAT and duties to be suspended until the 15th day of the month after the import). If such a business is experiencing severe financial difficulty because of Coronavirus and is unable to pay the customs duties and import VAT due on 15th April 2020, they can contact HMRC for approval to enter an extended payment period without having their guarantee called upon or their deferment account suspended. The account holder should contact the Duty Deferment Office 03000 594243 or by email email@example.com or the COVID-19 helpline on 0800 024 1222. Where HMRC agree to an extended payment period, interest will not be charged on the outstanding payments provided they are paid in full by the agreed date.
Importers who do not use an Import VAT and Duty deferment account but are experiencing financial difficulties as a result of Coronavirus should also contact HMRC to request a time to pay extension to the payment deadline at the time the payment is due. If the request is approved, the conditions, including the length of time offered, will depend upon the importer’s individual circumstances and may require the holding of a guarantee for the period of the time extension. This cannot be offered to non-registered importers. For further information, please contact the Customs Debt Policy inbox – firstname.lastname@example.org.
This is welcome news for many importers and could help a number of technical ceramics / refractory manufacturers that import industrial minerals from outside the EU. However, we are disappointed by the short time afforded to react. It remains to be seen whether a similar easement will be allowed for deferment payments due in subsequent months.