Covid-19 Coronavirus – Support and help from James Scott

The current Covid-19 coronavirus is affecting us all. Here we take a look at the measures taken by Government to tackle the challenges faced by business over the coming months.

Businesses in the Retail, Hospitality and Sectors

The Department of Business Energy and Industrial Strategy (BEIS) has published fuller detail of the Retail, Hospitality and Leisure Grant (RHLG).

In summary:

  • Payments will be made to the person listed in local authority’s records as the ratepayer for the business premises on 11 March 2020.
  • Businesses operating in premises with a rateable value between £15,000 and £51,000 will receive a grant of £25,000.
  • Businesses with a rateable value of less than £15,000 will receive a grant of £10,000.
  • There is a strong warning against fraudulent claims with a promise of prosecution and claw back for any such payments.
  • Certain premises are excluded on the grounds of private use, such as private stables and beach huts. Car parks and parking spaces are also ineligible.
  • Businesses in liquidation or dissolved as of 11 March aren’t eligible either.

These measures being in addition to the 100% discount on business rates from 1 April 2020 to 31 March 2021.

Full guidance is available here

What should you do now?

You need take no action as the grants will be paid directly from Local Government.

Coronavirus help for the Self Employed

To date the self employed appear to have been left behind in the packages of support announced by Government. Only the minimum income floor for Universal Credit suspension affects the self employed. We understand that is about to change and an amendment to the Coronavirus Bill currently before Parliament was passed by the House of Commons on Monday (23rd March) evening and scrutinised by the House of Lords. It is hoped that the Chancellor will announce provision for the self employed this week.

What should you do now?

You should wait for the Chancellors announcement of the proposed scheme.

Coronavirus Business Interruption Loan Scheme (CBILS)

The British Business Bank published comprehensive details of how the scheme can be accessed.

Eligibility: an SME must be UK-based with annual turnover of less than £45m and have a proposal which would be considered viable by the lender under normal circumstances.

Types of finance available: Term loans, overdrafts, asset finance, invoice finance.

How to apply: via one of the accredited lenders on this list. In the first instance, the British Business Bank is urging businesses to apply online and asking those who don’t need emergency finance to ‘consider the urgency of your need’. More detail is available here.

What should you do now?

In the first instance you should approach your existing bank. Most of the major high street banks have been accredited CBILS lenders as well as some of the challenger banks and specialist lenders.

You will need to demonstrate that your business is viable. We think this will be done in the normal way with the provision of management accounting information, budgets, forecast and a business plans. Cashflow models for the next 17 weeks should be prepared an banks have been instructed to make a realistic assessment of the business assuming that the economy will come back.

Please contact us if you need any assistance with this.

Coronavirus Job Retention Scheme

What we know

Grants of up to £2,500 per employee where those employees are unable to work (are ‘furloughed’) because of coronavirus, covering 80% of salary costs. The scheme is intended to run for three months in the first instance with the first payments expected in early May.The scheme fully up and running by the end of next month. The grants will be paid via HMRC. All UK employers will be eligible.

Triggering furlough leave

The furlough leave can be triggered in 2 ways:

  • by a clause in the existing contract of employment, or;
  • by a Furlough Leave Agreement.

The first is easy and the employer can invoke the clause, the second requires the employer to enter into the signed agreement with their employee.

Some other points to note:

  • During the furlough period the employee must carry out no work for the employer;
  • Reduced hours employees will not qualify for furlough pay;
  • Volunteering to work would dis-entitle the employee to furlough pay;
  • It’s unlikely that a de-minimis level of hours will be allowed as no work should be undertaken during the furlough period;
  • If the furlough pay takes an employee below the National Minimum/Living Wage, pay will need to be made up to ensure compliance;

What we don’t know

At present, no information has been provided on how to apply for the grant.

Though it is generally understood to mean ‘stood down but still employed’, there is as yet no official definition of ‘furloughed’.

It is unclear whether employers will be expected to make up the remaining 20% of salary.

The scheme is to be backdated to 1st March 2020 suggesting that it is designed to cover employees who have already been laid off. Whether this will mean employers re-employing those staff is unclear.

We don’t yet know what pay elements will be included in the 80% reimbursement.

What should you do now?

Along with your business plan, you start to identify who are your potential furlough employees and discuss this with them to seek their agreement. We think it highly unlikely that an employee would not agree, given that the alternative is redundancy. This agreement should be documented in a signed letter.

If you then send them home, the option seems to be paying them 80% of their normal salary with the intention of recovering this once the online portal is open. It may be late April before this is available.

Other key coronavirus business support measures

Automatic VAT and Tax deferral

VAT payments due between 20 March 2020 and 30 June 2020 won’t need to be paid at the usual times and will be deferred until the end of the tax year. Self assessment income tax payments due on 31 July 2020 will now be deferred until 31 January 2021.

Both deferral schemes applying automatically with no application needed.

Statutory Sick Pay reclaim for SME’s

Small and medium sized employers will be able to reclaim SSP for sickness absence of up to two weeks due to Covid-19.

Coronavirus means that it’s not business as usual and we are all in it together, by working together we can overcome the challenges. Please get in touch if you want to discuss any of the issues raised here and above all…

Stay Safe