The Bar Council has been urgently asking the Government to clarify whether barristers who are self-employed sole traders and chambers which operate as unincorporated Trade Protection Associations (TPAs), qualify for the Coronavirus Business Interruption Loan Scheme (CBILS) and the VAT deferral for businesses. Both were announced by the Government as part of the support measures for businesses during the COVID-19 outbreak. We already know that limited companies, through which some chambers operate, are eligible.
We are pleased that it has now been confirmed these measures do apply to barristers and chambers:
Self-employed sole traders and TPAs are eligible for CBILS as long as the business activity is operated through a business account and satisfies other criteria for the scheme.
The sole trader, TPA or limited company must have an annual turnover of up to £45m and must generate more than 50% of its turnover from trading activity. (The sale of services is considered “trade” by HMRC).
CBILS covers a range of financial facilities including term loans and overdrafts.
To qualify, businesses must submit a borrowing proposal which, were it not for the current pandemic, would be considered viable by the lender, and for which the lender believes the provision of finance will enable the business to trade out of any short-to-medium term difficulty.
Potential borrowers remain 100% liable for the debt. Government guarantees that have been mentioned in information about CBILS refer to the lender, not the borrower.
Applications for CBILS facilities must be made to the participating lenders, not to the British Business Bank.
VAT-registered self-employed sole traders and TPAs, as well as chambers’ limited companies are eligible to defer VAT payments for three months. This is automatic and no application is required.
This is a deferral not a cancellation of the tax due. Taxpayers will be given until the end of the 2020/21 tax year to pay any liabilities that have accumulated during the deferral period.
You must still submit your VAT return as usual. If you normally pay VAT by direct debit, cancel the direct debit with your bank in sufficient time, so that HMRC does not attempt to collect automatically on receipt of your VAT return.
Eligibility for these measures for many barristers and chambers should significantly increase the scope to make financial plans to overcome the immediate effects of this crisis.
We expect the Chancellor may be announcing further measures to support the self-employed. We will keep you updated.