Interaction between CJRS and redundancy
The furloughing scheme is excellent as a measure to prevent redundancies. But its planned cessation on 30 June and the interaction with employment law is a real issue. For, all “large” employers (those with more than 100 staff) are required to have a 90-day (45 days in GB) consultation period prior to embarking on a programme of redundancy.
PPE and VAT
The government has passed emergency legislation to allow manufacturers and retailers to zero rate sales of personal protective equipment (PPE) made between 1 May and 31 July 2020. The main purpose of the measure is to reduce the cost of PPE for nursing and care homes, as well as individuals, who usually aren’t entitled to recover the VAT paid on such purchases.
R&D Tax Credits and CBILS
R&D Tax Credits and CBILS are classed as state aid. Under state aid rules a business is only able to receive one form of state aid for a project. HMRC have issued the following wording on this:
Are new Government support schemes introduced in response to the Coronavirus, such as CBILs, State aids or subsidies? Will they affect a company’s ability to make a claim under the SME scheme?
The Government has notified CBILS as a State aid under the European Commission’s new Temporary Framework for COVID-19. The measure is a fully notified aid, so the restriction on receipt of other State aid (s1138(1)(a) CTA 2009) potentially applies, if the CBILS relates specifically to the company’s R&D expenditure [on a project] rather than being intended more generally to support the company.
This appears to state that if a CBIL is received by a business to help finance a specific project then that project is not eligible for future R&D tax credits (or at least SME R&D tax credits). It may still be eligible for RDEC. However, if the CBIL is used for general business purposes (which seems more likely in most cases) then a project receiving R&D tax credits should still be eligible to receive them in the future.
It should be noted that HMRC have said they will be monitoring claims as they come which shows the answer is not black and white and further guidance is likely to be produced in due course.
We have also created a printable checklist. This should provide a 'blueprint' for businesses when planning all of the necessary steps they should take to manage this crisis. Please click the link below to access our Covid 19 planning checklist.