As the coronavirus (Covid-19) pandemic progresses, it is clear that necessary social distancing measures are having a dramatic impact on all businesses. Here at Berry & Lamberts, we are experiencing an increasing number of people contacting us with financial concerns relating to this situation and we therefore felt it would be helpful to summarise the support available as at the time of writing - 23 March 2020.
Over the past week the Government has announced a number of measures aimed at assisting businesses to survive through this period of uncertainty. These measures include:
As these are unprecedented measures and have only recently been announced, the detail on implementation is still a little sketchy. What follows is a brief overview of these measures together with some initial comment thereon:
The intention behind this scheme is to try to keep as many people as possible in employment. The Government is promising to reimburse 80% of wage costs, up to a cap of £2,500 per month for those employees who would otherwise have been dismissed by their employer.
This scheme will be available to all businesses.
The details of how employers will be reimbursed these costs is unclear; HMRC are urgently working to set up a system.
Employers will have to designate employees as 'furloughed workers'. Those employees will need to be notified as such. The Government guidance states rather vaguely that “changing the status of employees remains subject to existing employment law and, depending on the employment contract, may be subject to negotiation”.
Information about the furloughed employees will then need to be sent to HMRC though a new online portal. At time of writing there is no information about this portal.
It would appear that the employees will need to remain on payroll, but they should not carry out work. Employers can continue to pay 100% salary, but they will only be entitled to recover 80% of the salary through this scheme.
The scheme is set to run for 3 months from 1st March 2020, but could be extended and it is understood to apply to all employees on payroll as at 28th February 2020.
Things to consider:
Income Tax payments due in July 2020 under the Self-Assessment system will be deferred to January 2021 with no interest or penalties applying. This will be a big assistance to self-employed workers. The payment will need to be paid in January 2021, but should assist with relatively immediate cash flow issues.
VAT payments due in the period 20th March 2020 to 30 June 2020 will be deferred. Taxpayers will be given until the end of the 2020-21 tax year to pay any liabilities that have accumulated during this deferral period. VAT refunds and reclaims will be paid by the Government as normal.
Both of these schemes are automatic and no applications are required.
UK-based businesses with fewer than 250 employees (as of 28th February 2020) will be able to reclaim Statutory Sick Pay (SSP) paid to those employees who have been absent for a period of up to 2 weeks due to Covid -19.
Employers need to maintain records of staff absences and payments. Employees however will not have to produce a GP fit note. If evidence is required by the employer an isolation note from NHS 111 online will suffice.
The rebate scheme has not yet been developed and we are waiting on information.
Businesses in the retail, hospitality and/or leisure sector will receive a business rate holiday in the 2020-21 tax year.
This will apply to properties that are occupied and used for:
Such businesses will see the discount in their next Council tax bill
Those businesses who receive the business rate relief (see 4 above) will also be eligible for a cash grant of:
This applies to each property that you operate from.
Your Local Authority will write to you if you are eligible for this grant.
Small businesses which already receive Small Business Rate Relief, Rural Rate Relief and Tapered Relief on their business rates will also be eligible for a one-off grant of £10,000.
Your Local Authority will write to you if you are eligible for this.
During the week commencing 23rd March 2020 the Coronavirus Business Interruption Loan scheme will launch.
The scheme will be delivered by the British Business Bank and will allow businesses with a turnover of less than £45m per year and who also meet “other criteria” to access loans which will be interest free for the first 12 months (the Government will cover the first 12 months interest payments). The Government will also provide the lenders with a guarantee of 80% of each loan.
Further information on the scheme can be found on the British Business Bank website, found here.
The bank sets out the following eligibility criteria:
There may be further eligibility criteria released during launch week.
A list of the accredited lenders is available here. It includes most major banks and you should approach your bank to discuss your requirements with them.
The scheme will apply to other financial products such as Term Facilities, Overdrafts, Invoice finance facilities and Asset finance facilities.
The British Business Bank is stating that finance terms are from three months up to ten years for term loans and asset finance and up to three years for revolving facilities and invoice finance.
Under this finance facility the Bank of England will buy short term debt from larger companies. As this is unlikely to apply to our clients, we will not go into detail here. Further details are available from the Bank of England here.
HMRC operates a Time to Pay service for those self-employed people and businesses in financial distress. This is operated on a case by case basis. You can contact HMRC’s dedicated helpline on 0800 0159 559.
If you have any queries about the above or wish to speak to a member of our Commercial Team (covering business and employment law) then please telephone 01892 526344 or email firstname.lastname@example.org.
For further information on all our Commercial services, please click here.
We are offering an initial fixed-fee telephone appointment service which gives you one hour of time with a solicitor for £100 + VAT. Please get in touch if you feel this type of appointment would be beneficial.
The contents of this article are for the purposes of general awareness only. They do not purport to constitute legal or professional advice. The law may have changed since this article was published. Readers should not act on the basis of the information included and should take appropriate professional advice upon their own particular circumstances.