Coronavirus – surviving the crisis

Thursday, March 19th, 2020

At Copia Wealth & Tax, we see ourselves as more than “just accountants”. We have had a number of discussions with our clients about the impact of the Coronavirus outbreak and it is clear business owners are rightly concerned and somewhat confused about what support and help is out there to see them through this crisis.

As a result, we have set out below some guidance which we hope you will find useful in formulating your ongoing strategy.

What if your employees contract the virus?

According to a government press release issued 3 March 2020, up to one-fifth of employees may be absent from work during peak weeks of the present outbreak. Obviously, you will not want infected employees in the workplace and any employees who develop symptoms of high temperature or a continuous cough should stay at home with their household for 14 days.

You will need to review your contracts of employment with affected staff to determine your liability to cover sick pay.

Statutory sick pay (SSP) amounts to £94.25 per week (2019-20) and for staff who qualify, it can be paid for a maximum period of 28 weeks. If you have payroll software the management of SSP is normally included.

The Government will pass legislation shortly 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:

•             this refund will cover up to 2 weeks’ SSP per eligible employee who has been off work because of COVID-19

•             employers with fewer than 250 employees will be eligible – the size of an employer will be determined by the number of people they employed as of 28 February 2020

•             employers will be able to reclaim expenditure for any employee who has claimed SSP (according to the new eligibility criteria) as a result of COVID-19

•             employers should maintain records of staff absences and payments of SSP, but employees will not need to provide a GP fit note

•             eligible period for the scheme will commence the day after the regulations on the extension of Statutory Sick Pay to those staying at home comes into force

It remains unclear when the repayment mechanism for employers will be finalised.

You may also benefit from contingency planning. How can you reorganise tasks if key staff are incapacitated? Spending a little time to plan for these possibilities may save you head-aches should staff be unable to work.

Have you considered Home Working arrangements?

Is it possible to organise a home working scheme for staff? This will not be feasible for all staff, production workers or retail staff for example, but staff that spend their days in front of a computer screen could be supplied with a laptop and work from home. You could also consider implementing hosted desktops that will enable staff to access systems from any internet-enabled device.

Where appropriate, there are a wealth of online meeting services e.g. GoToMeeting or Zoom that could be utilised to keep in touch with home workers.

Do you depend on the services of sub-contractors?

If yes, you may want to organise a list of alternative contractors you can call on if needed. This should help to minimise disruption if your present sub-contractors are unable to work.

How secure are your supply lines?

You may want to consider sourcing alternative suppliers if your present supply lines are adversely affected by the virus. It may be worth looking at suppliers based in countries where the virus has not taken hold or is recovering from the outbreak.

Should you be rethinking your business plans?

It is difficult to gauge the potential impact of the spread of the Coronavirus which has now been declared a pandemic. We are already seeing a downturn in global, and therefore UK, economic activity. This, combined with any Brexit fallout, may indicate that the time is right to rethink your business plans for 2020.

It is well worth preparing a cash flow forecast to consider how long it is going to be before lack of cash is going to create a problem although it is difficult to come up with key assumptions in creating this as there is no previous similar experience to refer back to.

Be prepared to change tack.

For example, if restaurant table covers drop due to cancellations, launching or promoting an existing home delivery (take-away) service could help to maintain turnover. Likewise, retailers suffering from drops in footfall could create or promote an existing, online shop.

What are the government doing by way of grants or tax breaks?

In the Budget and subsequently, there has been a string of announcements made on how businesses are going to be supported through the crisis in addition to the SSP announcement referred to above. Whilst information on timing and the method of accessing support are still emerging, the key announcements are below:

Support for businesses that pay business rates

There will be a business rates retail 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.

A £25,000 grant will be provided to retail, hospitality and leisure businesses operating from smaller premises, with a rateable value between £15,000 and £51,000.

Any enquiries on eligibility for, or provision of, the reliefs should be directed to the relevant local authority. Guidance for local authorities on the business rates holiday will be published imminently.

Support for businesses that pay little or no business rates

Additional funding for local authorities to support small businesses that already pay little or no business rates because of small business rate relief (SBRR) has been announced by the Government. This will provide a one-off grant of £10,000 to businesses currently eligible for SBRR or rural rate relief, to help meet their ongoing business costs.

If your business is eligible for SBRR or rural rate relief, you will be contacted by your local authority – you do not need to apply.

Funding for the scheme will be provided to local authorities by the government in early April. Guidance for local authorities on the scheme will be provided shortly.

Support for businesses through the Coronavirus Business Interruption Loan Scheme

A new temporary Coronavirus Business Interruption Loan Scheme, delivered by the British Business Bank, will launch shortly to support 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 6 months of that finance interest-free, as the government will cover the first 6 months of interest payments.

This is set to be available by 23rd March. There are eligibility restrictions – please see here:

Your first port of call to find out about accessing is probably going to be your existing bank.

Support for businesses paying tax

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.

If you are concerned about being able to pay your tax due to COVID-19, call HMRC’s dedicated helpline on 0800 0159 559. Please talk to us if you want our help here.

There is a page on the Government website which is being regularly updated with guidance for businesses – here:

https://www.gov.uk/government/publications/guidance-to-employers-and-businesses-about-covid-19/covid-19-support-for-businesses

We suggest you visit this regularly to keep up to date with developments.

What happens if you are personally affected? How we can help…

Let us hope that the UK government is successful in containing the Coronavirus outbreak and limiting disruption to your business. In the meantime, here are a few ways we could possibly help if you are unable to work:

•             If you are unable to maintain in-house accounting functions – bookkeeping, VAT, credit control and payroll for example – consider outsourcing. We know your business and could step-in to help keep records up-to-date and meet those important filing deadlines.

•             We can help you rethink your business plans and if necessary, help you organise additional funding if it should be required. We can offer an online meeting with business and funding providers available to discuss your issues and potential solutions to provide you with expert suggestions and some piece of mind – just contact us to make arrangements.

•             We are well connected to the local business community. If you need to source alternative suppliers or sub-contractors, we may be able to recommend someone.

•             We can recommend online meeting software that you could use in place of face-to-face meetings with suppliers and customers.

•             As a member of the TAG Accountants community, we have access to expertise covering a number of business areas some of which may be useful right now, including:

–              HR

–              Cost reviews

–              Legal services

–              Health and safety

–              Insolvency and recovery advice

–              Business funding

–              Mortgages

–              Corporate finance

The team at Copia Wealth & Tax is here to help – it is in our DNA. Just call 01902 783172 to access us – we are still working and available even if some of us are working remotely. We will listen to your concerns and provide whatever support we can to get you through these difficult times.