As you can imagine, many of our clients have already been asking what they can do to mitigate and deal with the consequences of Coronavirus
We have pulled together a list of these FAQs and will continue to add to them as we get more queries and provide answers as more information becomes available. We don’t as yet have any idea how long Coronavirus will impact our economy. No one is expecting a quick resolution and the timeframe could be anything from a few months through to a year or so.
Q: During the past few weeks, the government has advised of a range of measures to help businesses survive the Coronavirus pandemic. One of these was a new funding pot (Coronavirus Business Interruption Loan Scheme or “CBILS”) substantially underwritten by the Government. How do I get access to this?
R: The funding pot is now available to businesses, but banks are now working fast to decipher the guidance issued to them on 23 March 2020 and to be able to deploy capital under CBILS. Businesses eligible under the scheme must, amongst other criteria, have a turnover less than £45m, operate in the UK and in a sector that is eligible for CBILS. The loan can be up to £5m and will be interest free for the borrower for a period of 12 months. Businesses must still be able to demonstrate a sound borrowing proposal, but do not have sufficient security to meet standard commercial lending criteria’s. We have already started dialogue with many of the main lenders to understand their requirements and the process to be followed to tap into this money. We can work with you to develop a robust plan and present your case in the most coherent way. Please call the partner you deal with or one of the directors in the corporate finance team – Chris Brazier.
Q: I am concerned about the impact of falling sales on my business. What should I do?
R: It is vital to get on top of your cash flow and do some contingency planning. You should prepare a set of financial projections including some sensitivity analysis assessing the impact of a percentage reduction in sales and over different periods of time. We can help you pull together or update a financial model including a P&L, Balance Sheet and Cash Flow with the ability to flex the assumptions and run the necessary “what if” scenarios.
Q: Some of my largest cash outflows are the quarterly payments of VAT and the annual corporation tax liability. I am concerned that these big spikes in my cash flows will be very difficult to manage against the backdrop of reduced activity. Has the Government introduced any additional resources to help me manage these liabilities and enable them to be paid over a longer period of time?
R: HMRC is automatically deferring VAT payments in the period 20 March 2020 to 30 June 2020. See our Coronavirus deferring VAT payments FAQs blog.
In addition, HMRC have always had a “time to pay” (“TTP”) arrangement for those businesses which have difficulty in funding their tax liabilities. The Government has indicated that additional resources will be made available to these teams to deal with an increase in requests to them. They have also introduced a new helpline specifically to deal with the impact of Coronavirus (Covid-19 Tax Helpline.
Our experience so far is that HMRC is being sympathetic to the current challenges being faced by businesses, but each case will still be determined on its merits.
Q: Certain industries (i.e. the entertainment sector) will be allowed to cease payment of business rates for a time – over what timescale and who will qualify?
R: In the budget statement, the Chancellor increased the rates discount for small businesses in the retail sector to 100% for tax year 20/21, and also extended it to the leisure and hospitality sectors, providing some respite for these sectors. An application doesn’t need to be made and local authorities will administer the discount automatically. On 23 march the government released the following guidance for business re: eligibility.
In addition, there are a number of one-off grants available for businesses in the above sectors. Please see our blog post for a summary of the details.
Q: If we need to make any redundancies, is there any Government help likely to be available with this process?
R: It will be important to follow the correct process, with a consultation period for affected staff, before any decisions are taken in respect of potential redundancies. You will be under an obligation to pay statutory redundancy to staff that you are making redundant. The government has launched the Coronavirus Job Retention Scheme (CJRS) to support businesses keep employees during this crisis on the payroll. Further details are set out in the Coronavirus Job Retention Scheme Coronavirus Job Retention Scheme CJRS blog.
Q: Do I have to pay sick pay if my employees can’t come to work?
R: In the recent budget, the Chancellor temporarily extended statutory sick-pay to include those people who are unable to work because they have been advised to self-isolate, as well as people caring for those within the same household who display COVID-19 symptoms. Under normal circumstances the employer can only pay SSP if provided with a fit note from the employee’s GP. However this will be temporarily superseded by obtaining a notification from NHS 111 which can be used as evidence for absence from work where necessary. In addition, the Government have also stated that SSP will be payable from the first day away from work, and not from day four as is currently the case, in an attempt to encourage people to self-isolate as soon as it is necessary. Employers with fewer than 250 employees are going to be able to claim back the first two weeks’ worth of SSP per employee. There isn’t a mechanism for this yet: the announcements just say that it will be set up ‘as soon as possible’, ‘over the coming months’.
Q: If I am self-employed, will I be able to claim SSP?
R: The self-employed will have to go through the benefits system, but can claim from the first day of illness or isolation instead of waiting for seven days. They can be classed as having limited capability for work too. The government has announced the self employed (and those no eligible for SSP) can now more easily make a claim under Universal Credit and ‘New Style’ Employment and Support Allowance.
Q: We have had a major trade show cancelled, having already paid a large deposit, and we are not insured due to it being exempted as a “force majeure”. Is there any advice you can give to try and recoup this money?
R: Many insurers have a force majeure in their contract. It may be worth checking with your bank if the amount was paid on credit card. If the trade show is a regular event the organiser may accept the deposit as payment up front for the next show.
Q: Where can I get advice on the steps I should be taking to deal with the impact of Coronavirus?
R: A number of business organisations have provided a guide to actions that should be taken including the CBI and the British Chambers of Commerce. The Government’s own website is being continually updated with the latest events and recommendations.
Additionally you can call the partner at Roffe Swayne who deals with your affairs and (s)he can discuss how we can help you.
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