COVID and Brexit – planning your way through this potentially disastrous mix

Friday, October 30th, 2020

Here at Copia Wealth & Tax, we are only too well aware that not only do our clients have to deal with the COVID crisis, but also that Brexit has once again reared its head; this time with a “no deal” scenario on the agenda.

Consequently, this month our team of business advisors summarise the various ongoing COVID support schemes and include a 20-point Brexit preparedness checklist given that current transition period will soon be at an end.

A. COVID support update

i) Job Support Scheme (JSS) expansion

Further to the details set out in last month’s article regarding the replacement to the furlough scheme, the Government’s JSS will be expanded to protect jobs and support those businesses required to close their doors as a result of COVID restrictions.

This means businesses whose premises are legally required to shut for some period over winter, as part of local or national restrictions, will receive grants to pay the wages of staff who cannot work, equivalent to two thirds of each employees’ salary (or 67%), up to a maximum of £2,100 a month. Employers will not be required to contribute towards wages and are only asked to cover National Insurance Contributions (NICS) and pension contributions, which tend to be a small proportion of overall employment costs. 

Businesses will only be eligible to claim the grant while they are subject to restrictions and employees must be off work for a minimum of seven consecutive days.

The scheme begins on 1 November 2020 and will be available for six months, with a review point in January. In line with the rest of the JSS, payments to businesses will be made in arrears, via an HMRC claims service that will be available from early December. Employees of firms that have been legally closed in the period before 1 November are eligible for the Coronavirus Job Retention Scheme (CJRS).

The GOV.UK website contains more information; it can be accessed by clicking the link HERE

ii) Extra lockdown grants

In addition to the expansion of the JSS, to support fixed costs, the Government is increasing the cash grants to businesses in England shut in local lockdowns. These grants will be linked to rateable values, with up to £3,000 per month (payments occurring every two weeks), compared to the up to £1,500 every three weeks which was available previously. This could benefit hundreds of thousands of businesses, including restaurants, pubs, and nightclubs.

iii) Job Retention Bonus (JRB)

Guidance for the JRB previously announced by the Government has now been released and covers information about how you can check if your employees are eligible and when you can claim the bonus.

Businesses will be able to claim a one-off payment of £1,000 for every eligible employee furloughed and claimed for through the CJRS. They must be kept continuously employed until at least 31 January 2021. Note that businesses do not have to pay this money to the employee.

To be eligible, employees must earn at least £1,560 between 6 November 2020 and 5 February 2021 and have received earnings in the November, December, and January tax months. Employees must also not be serving out a contractual or statutory notice period on 31 January 2021.

You will be able to claim the bonus from 15 February until 31 March once you have submitted PAYE information for the period up to 5 February 2021. HMRC will let you know how you can make a claim when further guidance is published by the end of January.

You can still claim the JRB if you make a claim for the same employees through the JSS if you meet the eligibility criteria for both.

Further information can be found on GOV.UK by searching ‘Job Retention Bonus Guidance’.

iv) Kickstart grants

The recently announced Kickstart Scheme provides funding to employers to create job placements for 16 to 24-year olds on Universal Credit who are at risk of long-term unemployment.

Employers of all sizes can apply for funding which covers 100% of the National Minimum Wage (or the National Living Wage depending on the age of the participant) for 25 hours per week for a total of six months, associated employer NICS and employer minimum automatic enrolment contributions.

Employers can spread the start date of the job placements up until the end of December 2021.

A Kickstart Scheme application must be for a minimum of 30 job placements. If a single employer cannot provide this many job placements, they can find an existing Kickstart gateway, such as a local authority, charity, Chamber of Commerce, or trade body for help applying.

Further funding is available for training and support so that young people on the scheme can get a job in the future.

The GOV.UK website contains more information: it can be accessed by clicking this link HERE

B. Brexit planning – 20-point checklist

Whilst still trying to come to terms with the impact of COVID and maximising Government support, it is also vital that your Brexit planning does not take a back seat given that the end of the transition period is approaching. There remains major uncertainty as to whether the UK or EU will agree a tariff free trade agreement, but either way, UK business will face additional documentation for importing and exporting goods to the EU from 1 January 2021.

As we are less than three months away from the end of the transition period, planning for these new requirements would be a sensible move right now. In addition, there are also other business matters to consider, such as data protection, intellectual property, and replacing existing agreements with EU suppliers and customers. 

Set out below is a 20-point checklist to help review your Brexit preparedness, which includes Government information to help prepare for 1 January 2021. 

The checklist is relevant if your business imports goods into the UK, exports goods from the UK, involves travel to the EU and/or living and working in the EU, and requires you to stay in the UK if you are an EU citizen.

The Government’s own guidance can be found at https://www.gov.uk/transition

1. If you move goods to or from the EU, register for an Economic Operator Registration and Identification (EORI) number (unless you already have) –  https://www.gov.uk/eori
2. Consider an agent to help with completing import/export forms – www.export.org.uk or if you plan to do it yourself refer to items 3 to 11 below. 
3. If you export goods, see the step by step guide here: https://www.gov.uk/prepare-to-export-from-great-britain-from-january-2021
4. Export rules are specific by sector so review the “The transition period ends in December” Government website to see how your business is affected. There you can get a personalised list of actions and can subscribe for email updates: https://www.gov.uk/transition
5. If you need guidance on the VAT reporting rules for EU sales then review: https://www.gov.uk/guidance/vat-how-to-report-your-eu-sales
6. If you import goods, it is worth reviewing:  https://www.gov.uk/starting-to-import/moving-goods-from-eu-countries
7. There is also a useful step by step guide on importing here: https://www.gov.uk/prepare-to-import-to-great-britain-from-january-2021
8. If you need guidance on paying VAT on imports, it can be found here: https://www.gov.uk/guidance/vat-imports-acquisitions-and-purchases-from-abroad
9. It is worth reviewing HMRC’s YouTube videos on international trade here:    https://www.gov.uk/guidance/help-and-support-for-international-trade
10. You may want to consider registering for “Authorised Economic Operator” (AEO) status, which gives “Trusted” businesses simplified customs procedures. The application does take time and is complex. See:  https://www.gov.uk/guidance/authorised-economic-operator-certification
11. In the event of the EU and UK not reaching a free trade agreement, from 1 January 2021 all exports and imports to the EU will be subject to tariffs. You will need to identify where “inputs” come from and which categories of products they fall into so you can work out the tariffs that will apply. The UK Government have published trade tariffs duty and VAT rates by commodity: https://www.gov.uk/trade-tariff
12. If you currently have business agreements with EU companies, these may need to be redrafted to cover off areas such as customs arrangements, import duties, how VAT is accounted for, definitions such as “Territory”, dispute resolution, and unanticipated administration as a result of Brexit. Consult your lawyer for advice to avoid any potential issues sooner rather than later. 
13. Review all EU employees currently working in your business and ascertain whether they are applying for “Settled status” by 31 December 2020. Your UK employees working in the EU may need to apply for a similar status, see https://www.gov.uk/Government/publications/eu-settlement-scheme-employer-toolkit 
14. If your business has a “.EU” domain name you should check the eligibility to hold such a domain here: https://www.gov.uk/Government/publications/guidance-on-eu-top-level-domain-name-registrations-in-the-event-of-a-no-deal-eu-exit/guidance-on-eu-top-level-domain-name-registrations-in-the-event-of-a-no-deal-eu-exit
15. If you are involved in eCommerce, then read the Government’s EU guidance on this area: https://www.gov.uk/Government/publications/ecommerce-eu-exit-guidance
16. Data Protection – you may need to comply with new license requirements and changes in regulation. The Information Commissioner’s Office (ICO) will update its guidance once the outcome of the negotiations is known. See:  https://ico.org.uk/for-organisations/data-protection-at-the-end-of-the-transition-period/
17. Copyrights – a substantial part of UK copyright law is derived from the EU copyright framework. Because of this, there are references in UK law to the EU, the EEA, and member states, and some of these references occur in the UK’s implementation of EU cross-border copyright arrangements. If there is no future reciprocal UK/EU deal, it is worth contacting your lawyer to discuss. See: https://www.gov.uk/guidance/changes-to-copyright-law-after-the-transition-period
18. You should also consider the impact on Intellectual Property, see: https://www.gov.uk/Government/news/intellectual-property-and-the-transition-period
19. Similarly, for the impact on Trademarks, see: https://www.gov.uk/guidance/eu-trademark-protection-and-comparable-uk-trademarks
20. It may be worth considering forming a company in the EU to aid with imports/exports – we may be able to put you in touch with relevant contacts if you want to pursue this.

Wolverhampton’s leading accountants are here to help!

The ongoing impact of COVID together with the impending end of the transition period with the EU could generate a potential perfect storm that would have a significant impact on business. 

We suggest that the best policy is to stay informed and to update your planning regularly. With that in mind, the team here at Copia Wealth & Tax are always here to help. If you would like to talk things through in complete confidence with one of our friendly specialists, please call 01902 783172 to book an appointment, or alternatively, just click HERE to contact us using the form on our website.

We look forward to hearing from you, but in the meantime, please stay very safe.