We recognise fully how difficult and worrying these times are for business owners and the public at large. Although we are Licensed Insolvency Practitioners, being independent and running our own business we are well aware of the pressures of running your own business in normal times – we can only imagine what it must be like for those businesses, through no fault of their own who are struggling as a result of the lockdown. We will do our very best to try and help anyone that is experiencing any kind of financial issue. If you just want to chat a problem through with us, then please just call – there is absolutely no charge for this. Our contact details are found on both this page and our general contact page on this website.
The latest advice is as follows:
Corona Virus Advice for Employers
Business Interruption Loan Scheme
HMRC – Time to Pay Scheme
Deferring VAT Payments
Deferring PAYE Payments
Job Retention Scheme
Support for the retail, hospitality and leisure sector
Changes in Insolvency Legislation
BUSINESS INTERRUPTION LOAN SCHEME
This new scheme will be delivered through the British Business Bank. Our reading of this is that it is very similar to the existing EFG scheme, which this latest scheme will now replace, although any loan will be interest free for the first twelve months.
The Government will provide the lender with an 80% guarantee on each loan, with the maximum loan available being £5m.
The lender will require significant information from any applicant – the details have yet to be published, but we have listed below, what we would reasonably expect to be required:
- A detailed history of your business together with a full explanation of the level of impact that the coronavirus is having on your business.
- Details of the steps that you are taking to ensure that your business’ cash flow is sufficient and what steps you have taken or are planning to take to ensure that trading can continue. This will also involve explaining your supply chain and highlighting any problems that you foresee with both your suppliers and customers.
- How much additional funding you will need and for how long.
- Whether directors/stakeholders are willing or able to provide additional funding
- Details of all other secured and unsecured lending to the business.
- Latest management accounts, last filed accounts, forecasts for the period of the loan
- Summary of aged debtors and creditors.
The scheme is still being developed – we expect it to be operational by the end of March. Full details of the scheme will be published on the British Business Bank’s website – www.british-business-bank.co.uk
HMRC – Time to Pay Scheme
HMRC have set up a dedicated helpline for businesses and individuals experiencing difficulties in paying their taxes. The number is 0800 024 1222.
Any business or individual in financial distress with outstanding tax liabilities may be eligible to receive additional support from HMRC through the Time to Pay offering.
For those that are unable to settle their liabilities due to the Coronavirus, HMRC will discuss your specific circumstances to assist you in.
- A curtailment of any current debt collection proceedings
- Cancelling and adjusting accruing penalties and interest
- Agreeing an instalment arrangement with you.
Please keep in mind the help line is likely to be extremely busy during this time and some patience is likely to be required in reaching a member of staff.
Deferring VAT Payments
The government has confirmed that it will look to help businesses’ cash flows by deferring current VAT liabilities until 30 June this year. This relates to all UK businesses irrespective of whether they are affected by the current crisis. You need do nothing to benefit from this – this is an automatic scheme. However, if you pay by direct debit and wish to be 100% certain that your VAT liability is deferred, you may wish to cancel the current instructions.
Deferring PAYE Payments
the Government have announced that all taxpayers under self-assessment will be entitled to a deferment of their 31 July 2020 payment on account until 31 January 2021.
There will be no requirement to apply for this deferment as it will be automatic, while no penalties or interest will arise in respect of the payment on account during the period to 31 January 2021.
Where individuals do have the funds to make the 31 July 2020 payment by the usual date, they can still make this payment if they wish to dos so. It may be beneficial to cashflow in the long term, if short term cashflow support isn’t required, because there is no indication that the usual amount payable in January 2021 will be reduced in any way. As such any deferment may significantly increase the amount payable in January 2021.
With this in mind, there may be individuals who have already had a reduction in income for the 2019/20 tax year prior to the difficulties encountered as a result of the floods and COVID-19, but would still prefer to make their payment on account in July 2020 to avoid further cashflow issues down the road.
As such there may be scope to reduce the second payment on account which is due by 31 July 2020 towards the tax liability for 2019/20.
Job Retention Scheme
Following on from our briefing yesterday, we have set out further information concerning this scheme.
Furloughed employees must have been on your payroll on 28 February 2020 to qualify.
Employees that qualify include full time employees, part time employees, employees on agency contracts and employees on flexible or zero-hour contracts.
To qualify for the subsidy, employees, when on furlough cannot undertake work for or on behalf of their employer. Whilst on furlough, the employees’ salary will be subject to the usual PAYE and NI deductions.
If an employee is working but on reduced hours, they will not be eligible for this scheme and the employer will have to continue paying them.
To be eligible for this subsidy, the employer should write to all employees that are to be furloughed confirming that they have indeed been furloughed.
Employees on unpaid leave cannot be furloughed unless they were placed on unpaid leave after 28 February 2020.
The employer needs to make a claim for wage costs of its furloughed employees through this scheme. Details of the amounts available were given in yesterday’s briefing paper. Where employees’ salaries vary, the employer can claim for the higher of:
- The same month’s earnings from the previous year
- Average monthly earnings from the 2019/20 year.
All employers remain liable for the employer’s National Insurance contributions and minimum automatic enrolment employer pension contributions in respect of all furloughed employees.
Employers can claim a grant from HMRC to cover wages for a furloughed employee equal to the lower of 80% of an employee’s regular salary or £2,500 per month plus the associated employer NI contribution and the automatic enrolment employer pension contribution.
An employer can choose to top up the employees’ salary in addition to the grant. Any employer NI contribution on the top up will not be covered by the scheme and will have to be paid by the employer.
Information needed to claim.
For an employer to make a claim under this scheme you will need the following information:
- PAYE number
- the number of employees being furloughed
- the claim period – the start and end date
- amount claimed
- your bank account number and sort code
- your contact name
- your phone number
The employer will need to calculate the amount it intends to claim.
You can only submit one claim at least every three weeks, which is the minimum length an employee can be furloughed.
Once HMRC have received your claim and you are eligible for the grant, HMRC will make payment via BACS to your account. This must be a UK bank account.
You must pay the employee the full amount of the grant you have claimed on their behalf for their gross pay. You are not allowed to deduct any fees or other charges from the grant.
Payments received by a business under the Job Retention Scheme are made to offset deductible salary costs. They must therefore be included as income in the business’s calculation of taxable profits.
Employers should discuss with their staff any proposed changes to their employment contracts – this includes the furlough scheme. If sufficient numbers of staff are involved, it may be necessary to engage in collective consultation processes.
A one-off cash grant of £10,000 is available for small businesses who are already receiving small business ate relief. The grants will be administered by local authorities. Your local authority will contact you should you be eligible for this grant.
Small-and medium-sized businesses with fewer than 250 employees can reclaim up to two weeks’ Statutory Sick Pay (SSP) per eligible employee paid for sickness absence due to COVID-19. The rate of SSP is £94.25 per week.
Directors of limited companies can pay themselves two weeks of SSP if you need to self-isolate subject to meeting the minimum salary requirement for SSP of at least £118 per week (£6,136 per annum).
The Government are working to set up the reclaim scheme as soon as possible and the method for reclaiming SSP has not yet been announced. We will continue to provide updates.
Companies House have now confirmed businesses may file their accounts up to three months late if affected by COVID-19, to provide some much-needed breathing space in a time where many businesses are facing intense pressure and uncertainty.
There is one caveat – to benefit from the delay, businesses must act before their original filing deadline. If you do not apply for the extension and your accounts are filed late, an automatic penalty will still be imposed.
The same extension will apply to submission of the corporation tax return.
Our team of finance advisors has almost 125 years of combined knowledge and skills, built from real experience across a range of sectors.
They offer a unique approach to corporate finance in the marketplace, personally managing the whole deal from initial enquiry to the release of your funds. This adds value to the process, enabling us to provide consultancy-based solutions that can be tailored to your business needs.
Our expertise covers a broad range of corporate finance services, including but not limited to, factoring finance, property finance and asset finance.
Our finance team are proud to be full members of the National Association of Commercial Finance Brokers (NACFB). Our team also has individual membership of the following bodies:
- Institute of Business Consulting
- European Mentoring and Coaching Council
- Institute of Directors
They have adopted the codes of conduct and ethics policies of these valuable organisations and continue to maintain their high levels.
As part of this process they ensure that our clients have complete transparency and we clearly set out what we promise to achieve and the outcomes you can expect from their engagement.
We have access to over 200 lenders, from all of the High Street financial institutions that we all recognise, through to large independent financiers specialising in numerous industries and providing limitless product lines that are adapted to suit any business in any industry.
Support for the retail, hospitality and leisure sector
The Government has announced a business rates holiday for these three sectors for the 2020/21 year. To qualify, your business must be based in England and must be in one of these three industry sectors. The definitions are quite strict and to qualify the property from which you operate must be wholly or in the main being used as shops, restaurants, cafes, bars and drinking establishments, cinemas, live music venues, hotels, guest and boarding premises and finally self-catering accommodation. At this stage we are uncertain as to whether it covers Airbnb.
If you fall into the above categories, then there is nothing for you to do. Your Council will adjust your next council tax bill in April 2020. With this being a new scheme, it maybe that your local authority will need to reissue your council tax bill to exclude the business rate charge.
Changes in Insolvency Legislation
As part of the Government’s efforts to support businesses during these troubled times, amendments to certain existing insolvency legislation is being proposed as well as certain new temporary procedures. Alok Sharma, the Business Secretary made this announcement recently and outlined the basis of the proposals. At the time of writing, we only have the outline – as soon as the final details are published, we will upload them.
Effective from 1 March 2020, the Government have temporarily suspended the provisions of Section 214 of The Insolvency Act which sets out the wrongful trading provisions. This suspension is for a period of three months and will therefore expire on 31 May 2020, when the existing provisions will come back into force. The Government have clearly recognised the pressures that the vast majority of directors are now under and will be for the foreseeable future. By temporarily removing the threat of personal liability if found guilty of wrongful trading, it is hoped that directors can have the confidence to use their skills, knowledge and best endeavours during this period to make the decisions necessary to steer their companies through these unprecedented times.
We should stress that it is only the wrongful trading provisions that are being suspended. The current provisions relating to fraudulent trading will still apply. Equally the provisions relating to director disqualification will also still apply. If you are in any doubt as to how any of these issues may affect your business and wish to discuss the matter further, then please contact any one of our partners and senior staff.
As part of this overall package, the Government intend to bring in a new kind of moratorium process. Currently there are effectively two existing insolvency moratorium processes – the 10-day period when applying for an Administration order and the process of entering into a Company Voluntary Arrangement. Under the new proposals, companies in financial difficulty will be allowed a short period of time to review and explore options for either a restructure of the business or some kind of rescue scheme.
Details of this new moratorium scheme are sparse at the moment, although we understand that this review period will be for a maximum of 28 days. The Company will have to appoint a Monitor, which we believe will have to be a Licensed Insolvency Practitioner. Once the Monitor is appointed, it is our understanding that creditors existing at the time of the appointment will be unable to enforce any kind of legal proceeding during the moratorium period.
To qualify for a moratorium, a company will need to demonstrate the following:
- That it is a viable business
- It is not currently insolvent
- It is now experiencing financial difficulties
- It has the necessary funding to trade through the period of the moratorium, or can get access to such funding
- That the moratorium has a better than 50% chance of success
The exit process after the initial 28-day period will undoubtedly be through either formal or informal restructuring agreement with its creditors. If the company manages to ride out the storm through the moratorium, it may be able to simply exit the moratorium and continue as normal. However, we suspect that many of those companies looking for some protection will need a considerably longer period to restructure and trade out of the distressed times. This would probably be through a Company Voluntary Arrangement.
The details on the new moratorium scheme will be published within the next few weeks. We will provide a full detailed explanation as soon as we have the information to hand.
Corona Virus Advice for the Self Employed
Self-Employed Support Scheme
Following on from the Chancellor’s statement last night, concerning help for the self-employed we have set out below our understanding as to what this latest Government help scheme proposes and how those self-employed people that qualify, can actually claim under the scheme.
A taxable grant will be paid to all self-employed people or partnerships worth 80% of their profits up to a maximum of £2,500 per month. This scheme will be open to those with a trading profit of less than £50,000 in 2018/19 or an average trading profit of less than £50,000 from 2016/17, 2017/18 and 2018/19. It is unlikely that the self-employed will qualify if they have only been operating for less than one year.
The scheme will be back dated to 1 March 2020 and will be available initially for three months. Those that qualify will receive a one lump sum payment for the three months around the beginning of June. Payment will be made directly into the self-employed bank account.
This will be an automatic system – HMRC have details of those that qualify on file.
Anyone who qualifies and has yet to file their latest tax return that was due on 31 January this year, will now have a further four weeks to do so. Failure to do so, will exclude them from the scheme.
Those who pay themselves a salary and dividends through their own company are not covered by this scheme but will have 80% of their salary covered by the Coronavirus Job Retention Scheme, if operating through PAYE. Again, this will be limited to a maximum of £2,500 per month.
Sadly, we are now living in extraordinary uncertain times both in our personal lives and economically. No-one knows how long the current situation with Covid 19 will last, although we are all aware of the impact it is having on all our daily lives.
As you might expect, we have been inundated recently with calls from businesses that are both worried and uncertain about the current position seeking guidance on what to do and looking for a better understanding of precisely what help is being made available by the Government. We are constantly monitoring the relevant Government websites and talking to those with a greater insight into the current position.
We will therefore be producing as frequently as possible a briefing on the latest developments and exactly what help is available and how to access such help. We have summarised below all the key information that is currently available. If you want to discuss any aspect of how this may affect you, then please contact us on our main number 0115 838 7330. If we experience difficulties with the lines, then we have set out our respective contact details: