Month: June 2021

Furlough scheme ends September 2021

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There are still a significant number of UK employees that are furloughed. Unfortunately, this scheme is scheduled to end 30 September 2021.

Businesses that are struggling to re-establish themselves following the downside effects of repeated lockdown, may be faced with difficult decisions as this deadline approaches. The pundits are expecting a significant rise in the unemployment numbers.

If you have concerns that you may be faced with laying off furloughed staff when the Coronavirus Job Retention Scheme closes, and are unsure how to plan for any changes, we can help.

The key is to create a forecast of business activity – based on current estimates – that highlights profitability, solvency and cash flow. Armed with this information, it will then be possible to try out different what-if scenarios and consider the options this process opens.

It is better to plan for these changes before they happen than to react when the changes have occurred.

Prepare benefit in kind returns to HMRC

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Next month, as you will see from the Tax Diary notes for July, employers that provide any form of taxable benefit to clients will need to prepare and file P11D returns to HMRC. The deadline to file is 6 July 2021.

You will also need to provide employees affected with a copy of their P11D form by the same date. They will need this to check their tax account or to include on their tax return.

Unfortunately, there is one further chore to complete this annual process.

Employers are obliged to pay employers’ National Insurance contributions on the aggregate value of benefits provided to all employees. The way to do this is to complete a P11D(b) return; and again, this needs to be filed by 6 July 2021. NIC class 1A contributions are payable at 13.8% of the total benefits returned and are payable by 22 July 2021 if paid electronically or by 19 July 2021 if you pay by cheque.

If we prepare your payroll, we may undertake this work for you.

If not, do not miss the filing and payment deadlines otherwise you may trigger late filing penalties and interest charges.

Any Class 1A NIC paid is an allowable deduction for tax purposes.

Package holiday refunds

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Package holiday companies have been instructed to respect the refund rights of holidaymakers ahead of the summer period. In a recent press release, this is what the Competition and Markets Authority (CMA) said:

The CMA has published a further open letter to the sector and also sent it directly to the 100 package travel firms with the most complaints about them. The letter reminds the firms of their legal obligations and of the need to ensure refund options are clear and accessible.

Since March 2020, the CMA has received over 23,000 complaints from consumers about refund issues relating to package holidays that could not go ahead due to the pandemic. In acknowledgement of this, the recent letter to the package travel sector sets out what businesses should provide and what customers can expect, including:

  • holidays cancelled by package holiday companies must be refunded within 14 days under the Package Travel Regulations (PTRs).
  • any offer of a refund credit note must be accompanied by the option of a full refund. Customers should be able to exchange their credit note for a refund at any time.
  • people have a right to a full refund where they decide to cancel their package because unavoidable and extraordinary circumstances at the destination significantly affect the holiday they have booked or their travel there.
  • if the FCDO (Foreign, Commonwealth and Development Office) is advising against travel to the package holiday destination when the consumer is due to leave, that is, in the CMA’s view, strong evidence that these unavoidable and extraordinary circumstances are likely to apply. If the consumer is refused a full refund, the package holiday company should fully explain why it disagrees that the holiday or travel is significantly affected.

Update on the Trade Credit Reinsurance scheme

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The government and the Association of British Insurers (ABI) have announced that the temporary Trade Credit Reinsurance (TCR) scheme will close on 30 June as planned.

TCR was designed as a temporary solution for companies struggling to get insurance cover for transactions because of the pandemic. It is now ending in the context of a positive outlook for economic recovery in 2021, an appetite for new business among participating insurers and the continued success of the vaccine rollout.

Participating insurers have indicated to the government that the scheme is no longer required, and they are keen to take back full underwriting control.

The government and participating insurers will continue to work together to ensure there is a smooth transition to the private sector resuming its normal role of providing cover, as agreed with the ABI and participating insurers.

The scheme was a vital and necessary intervention by the government in response to the coronavirus pandemic, providing certainty to businesses across the UK and protecting jobs. The scheme has offered eligible insurers a government-backed reinsurance agreement, covering insurance offered on business transactions within the UK and overseas.

This enabled trade, which required insurance but was unable to get it due to the uncertainty caused by the pandemic, to continue flowing.

Whilst the government scheme is being wound down, insurers have committed in the joint statement between the government and the ABI to:

  • continue to work closely with policy holders and their clients to understand their insurance needs, whilst proactively seeking out relevant information to inform underwriting decisions.
  • give adequate consideration in underwriting decisions to a business’s plans for recovery and prospects for future growth, as well as the impact of the pandemic on different sectors and the ongoing nature of government support.
  • continue to communicate the rationale behind underwriting decisions transparently and in good time.

Similarly, during this period the government has committed in the joint statement to:

  • maintain an open dialogue between insurers and businesses, working collaboratively with both to help ensure the smooth transition of cover back to the private sector.
  • continue to monitor the levels of insurance cover within the market.

Following the conclusion of the scheme, the government will begin work on the review of the Trade Credit Insurance market to ensure that it is leading to fair outcomes for consumers.