COVID-19 Business Updates

26 March: The Chancellor announced support for those who are self employed or in a partnership and have lost income as a result of coronavirus.

25 March: HMRC has set up a new helpline number. 0800 024 1222

From 25 March, companies can apply for a three month extension.

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

This applies to employees who have been asked to stop working, but who are being kept on the pay roll, otherwise described as ‘furloughed workers’. HMRC will reimburse 80% of their wages, up to £2,500 per month.

'Furloughed' means 'grant leave of absence to', consequently these workers cannot be doing any work and their work will need to be reallocated.

Legislation will allow small-and medium-sized businesses and employers to reclaim Statutory Sick Pay (SSP) paid for sickness absence due to COVID-19. 

The 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

CBILS provides cashflow support for up to 12 months (or possibly more) to cover disruption caused by Coronavirus.

The scheme provides for loans up to £5m for businesses with revenue up to £45m. No interest is payable for the first 12 months as this is settled by the government.

Any small business interested in CBILS should, in the first instance, approach one of the 40+ accredited lenders with their borrowing proposal. The government suggests that the application process should be simple. Here are some FAQs for SMEs. We are working through the details of many more questions.

You will need to give thought to what support you are seeking and the health of your business before the Coronavirus measures came into place.

The CBILS guarantees 80% of the loan and are to the lender. Security to cover the remaining 20% will be required, possibly in the form of Personal Guarantees. The borrower remains liable for 100% of the debt.

The Bank of England can finance working capital by purchasing commercial paper from larger business ‘making a material contribution to the UK economy’.

Businesses do not need to have previously issued commercial paper in order to participate in the scheme. The scheme will operate for at least 12 months and provides a minimum facility of £1m.

CCFF

VAT – It may be possible to spread the quarterly liability over the following three months to spread the cashflow and to roll that forward. You need to pre-agree that with HMRC who may now be prepared to give more given the government directives.

From 20 March 2020 until 30 June 2020 all VAT registered traders can defer VAT payments. This is an automatic offer from HMRC and no application is required.

HMRC has now confirmed that it will not automatically cancel collection of VAT payments by direct debit. Businesses that have a direct debit mandate in place to pay their VAT and wish to defer payment will need to contact their bank to cancel that mandate.

VAT refunds and reclaims will be paid by the government as normal.

Businesses should continue to file their VAT returns by the due date.

PAYE – This is a monthly liability but HMRC may be flexible to paying each month in arrears. This would need HMRC agreement in advance.

It is not yet clear exactly how the Time to Pay policy will work but suggestions include;

• agreeing to pay by instalments
• suspending debt collection proceedings
• cancelling penalties and interest where you have administrative difficulties contacting or paying HMRC immediately

Most businesses are unlikely to be covered, as standard business interruption insurance policies will exclude pandemics but do check the terms and conditions of your policy.

No renter in either social or private accommodation will be forced out of their home during this difficult time.

Commercial tenants unable to pay rent because of coronavirus will be protected from eviction

Mortgage Holiday

This is available to all sectors and buy-to-let landlords but is merely a deferral of the repayments and consequently interest still accumulates on the outstanding loan.

Rent Holiday

Tenants can apply for a rent holiday although it is noted that this is just a deferral and not a waiver of the amounts due.