Coronavirus – surviving the crisis – Part 2

Monday, March 23rd, 2020

Following on from Copia Wealth & Tax’s article issued late last week, there have been further developments in respect of Government support for businesses outlined by the Chancellor on Friday evening. Consequently, we thought it would be useful to issue a further update to you setting out the current position.

Exact details of how to access this support are still emerging and we will continue to keep you updated as further information is released.

Before details of Government support, I want to let you know what we are doing at Copia Wealth & Tax to remain operational and available to support you during this crisis.

Copia remains open for business

Health and wellbeing are the most important things right now and so we have made the decision that as far as is practical, our people will be working remotely which is possible due to having hosted desktops set up for our staff.

We will continue to complete your accounts, VAT, payroll and tax returns in a timely manner. 

If you and your people are working remotely and / or struggling to keep your records straight, then please let us know. We can install a variety of Cloud based solutions to help and if you can scan and email documents to us, we can help in posting them.

We suggest you let your customers know that you are still open for business 

If you need anything let us know. Our business depends on your business and we must all pull together during the next few weeks.

Key things to consider

  1. Keep your eye on Government advice:  https://www.gov.uk/government/topical-events/coronavirus-covid-19-uk-government-response
  2. Your main purpose is to protect the health of yourself, employees and customers and then reduce the risk of the financial impact to your business. So, you need to take action now.
  3. Hold a meeting with key team members and develop an action plan, including looking at 3-6 month cash flows.
  4. Summarise the actions and allocate responsibility to make them happen.
  5. Talk to us – we are all in this together. 

Update on business support available

On Friday 21st March, the Chancellor set out a package of measures to support public services, people and businesses through the period of disruption caused by COVID-19.

The package of measures to support businesses includes:

We will continue to keep you informed about the details of each of these packages and how to apply. 

Coronavirus Job Retention Scheme

Under the Coronavirus Job Retention Scheme, all UK employers will be able to access support to continue paying part of their employees’ salary for those employees that would otherwise have been laid off during this crisis. All UK businesses are eligible.

You will need to:

HMRC will reimburse 80% of furloughed workers wage costs, up to a cap of £2,500 per month. HMRC are working urgently to set up a system for reimbursement. Existing systems are not set up to facilitate payments to employers.

Deferral of VAT and Income Tax payments

The Government will support businesses by deferring Valued Added Tax (VAT) payments for 3 months.

If you’re self-employed, Income Tax payments due in July 2020 under the Self-Assessment system will be deferred to January 2021. 

VAT

For VAT, the deferral will apply from 20 March 2020 until 30 June 2020 and all UK businesses are eligible.

This is an automatic offer with no applications required. Businesses will not need to make a VAT payment during this period. Taxpayers will be given until the end of the 2020 to 2021 tax year to pay any liabilities that have accumulated during the deferral period. VAT refunds and reclaims will be paid by the government as normal.

Income tax

For Income Tax Self-Assessment, payments due on the 31 July 2020 will be deferred until the 31 January 2021.

If you are self-employed you are eligible. This is an automatic offer with no applications required.

No penalties or interest for late payment will be charged in the deferral period.

HMRC have also scaled up their Time to Pay offer to all firms and individuals who are in temporary financial distress as a result of Covid-19 and have outstanding tax liabilities.

Support for businesses paying Sick Pay to employees

The Government will make legislation to allow small-and medium-sized businesses and employers to reclaim Statutory Sick Pay (SSP) paid for sickness absence due to COVID-19. The eligibility criteria for the scheme will be as follows:

You are eligible for the scheme if your business is UK based and your business is a small or medium-sized and employs fewer than 250 employees as of 28 February 2020.

Support for business rates payers

Business rates holiday for retail, hospitality and leisure businesses

The Government is introducing a business rates holiday for retail, hospitality and leisure businesses in England for the 2020 to 2021 tax year.

Businesses that received the retail discount in the 2019 to 2020 tax year will be rebilled by their local authority as soon as possible.

You are eligible for the business rates holiday if:

In terms of accessing this support, there is no action for you. This will apply to your next council tax bill in April 2020. However, local authorities may have to reissue your bill automatically to exclude the business rate charge. They will do this as soon as possible.

See: https://www.gov.uk/calculate-your-business-rates where you can estimate the business rate charge you will no longer have to pay and further guidance can be found at: https://www.gov.uk/government/publications/business-rates-retail-discount-guidance

Cash grants for the Retail, Hospitality and Leisure sectors

The Retail and Hospitality Grant Scheme provides businesses in the retail, hospitality and leisure sectors with a cash grant of up to £25,000 per property. For businesses in these sectors with a rateable value of under £15,000, they will receive a grant of £10,000. For businesses in these sectors with a rateable value of between £15,001 and £51,000, they will receive a grant of £25,000.

You are eligible for the grant if:

Properties that will benefit from the relief will be occupied hereditaments that are wholly or mainly being used:

In terms of accessing this scheme, you do not need to do anything. Your local authority will write to you if you are eligible for this grant. Guidance for local authorities on the scheme will be provided shortly. Any enquiries on eligibility for, or provision of, the reliefs and grants should be directed to the relevant local authority.

To find your local authority: https://www.gov.uk/find-local-council

Grants for businesses that pay little or no business rates

The government will provide additional Small Business Grant Scheme funding for local authorities to support small businesses that already pay little or no business rates because of small business rate relief (SBBR), rural rate relief (RRR) and tapered relief. This will provide a one-off grant of £10,000 to eligible businesses to help meet their ongoing business costs.

You are eligible if:

To access the scheme, you do not need to do anything. Your local authority will write to you if you are eligible for this grant. Guidance for local   on the scheme will be provided shortly.

Any enquiries on eligibility for, or provision of, the reliefs and grants should be directed to the relevant local authority.

To find your local authority: https://www.gov.uk/find-local-council

Coronavirus Business Interruption Loan Scheme

A new temporary Coronavirus Business Interruption Loan Scheme, delivered by the British Business Bank, will launch this week to support primarily small and medium-sized businesses to access bank lending and overdrafts.

The government will provide lenders with a guarantee of 80% on each loan (subject to a per-lender cap on claims) to give lenders further confidence in continuing to provide finance to SMEs. The government will not charge businesses or banks for this guarantee, and the Scheme will support loans of up to £5 million in value.

Businesses can access the first 12 months of that finance interest free, as government will cover the first 12 months of interest payments.

You are eligible for the scheme if:

The full rules of the Scheme and the list of accredited lenders is available on the British Business Bank website: https://www.british-business-bank.co.uk/ourpartners/coronavirus-business-interruption-loan-scheme-cbils/

All the major banks will offer the Scheme once it has launched. There are 40 accredited providers in all.

You should talk to your bank or finance provider (not the British Business Bank) as soon as possible and discuss your business plan with them. This will help your finance provider to act quickly once the Scheme has launched. If you have an existing loan with monthly repayments, you may want to ask for a repayment holiday to help with cash flow.

The scheme will be available from early this week commencing 23 March.

We will keep you informed on how to apply as the details emerge. 

Support for larger firms via Covid-19 Corporation Financing Facility

Under the new Covid-19 Corporate Financing Facility, the Bank of England will buy short term debt from larger companies.

This will support your company if it has been affected by a short-term funding squeeze and allow you to finance your short-term liabilities. It will also support corporate finance markets overall and ease the supply of credit to all firms. All UK businesses are eligible. The scheme will be available early in week beginning 23 March 2020. We will provide information on how to access the scheme here shortly. More information is available from the Bank of England: https://www.bankofengland.co.uk/markets/market-notices/2020/ccff-market-notice-march-2020

HMRC Time to Pay Service for deferral of tax payments

All businesses and self-employed people in financial distress, and with outstanding tax liabilities, may be eligible to receive support with their tax affairs through HMRC’s Time to Pay service.

These arrangements are agreed on a case-by-case basis and are tailored to individual circumstances and liabilities. You are eligible if your business pays tax to the UK government and has outstanding tax liabilities.

If you have missed a tax payment or you might miss your next payment due to COVID-19, please call HMRC’s dedicated helpline: 0800 0159 559. If you’re worried about a future payment, please call them nearer the time.

Potential insurance cover

Businesses that have cover for both pandemics and government-ordered closure should be covered, as the government and insurance industry confirmed on 17 March 2020 that advice to avoid pubs, theatres etc is enough to make a claim if all other terms and conditions are met.

Insurance policies differ significantly, so businesses are encouraged to check the terms and conditions of their specific policy and contact their providers. Most businesses are unlikely to be covered, as standard business interruption insurance policies are dependent on damage to property and will exclude pandemics.

Conclusion

Times are going to be tough for at least the next few months – as ever having a coherent plan is the best way to ensure you come out of the other side of this.

Take time out to put an action plan together – use the attached article as a potential agenda to help ensure all relevant areas are considered.

As we have reiterated, the team at Copia Wealth & Tax is here to help even if some of us are working remotely. If you need help call us on 01902 783172 and we will do all we can.