Guidance for Clients 24.03.20

Please find below further updates regarding the ongoing situation.

UK Government Alerts

The government are offering email updates – you can register for these using the link below

https://www.gov.uk/email-signup?link=/government/topical-events/coronavirus-covid-19-uk-government-response

UK Government Support

As a recap following yesterday’s email, the following measures have been put into place by the UK Government:

Coronavirus Job Retention Scheme (more details below)
Deferring VAT and Income Tax payments (more details below)
Reclaim of Statutory Sick Pay
Small business grant funding of £10,000 for all businesses in receipt of small business rate relief or rural rate relief
Grant funding of £25,000 for retail, hospitality and leisure businesses with property with a rateable value between £15,000 and £51,000 (more details below)
Coronavirus Business Interruption Loan Scheme (more details below)
HMRC Time to pay scheme.

We are taking calls and emails so please contact us if you would like to discuss any of these measures.

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:

Designate affected employees as ‘furloughed workers,’ and notify your employees of this change – changing the status of employees remains subject to existing employment law and, depending on the employment contract, may be subject to negotiation

Submit information to HMRC about the employees that have been furloughed and their earnings through a new online portal (HMRC will set out further details on the information required)

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 – we will bring you more news on this as it becomes available to us

Payroll actions to be carried out:

You must agree with your employee that they agree to Furlough
Obtain an email from your employee and note on file
Send your employee a letter confirming the details (we have an example letter, but this has not been legally approved as yet)

Deferring VAT and Income Tax payments

VAT

The deferral will apply from 20 March 2020 until 30 June 2020.
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.

If you pay by direct debit and wish to take advantage of this deferral, we would recommend cancelling your DD instruction.

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.

Cash Grants for Retail

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:

your business is based in England
your business is in the retail, hospitality and/or leisure sector

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

as shops, restaurants, cafes, drinking establishments, cinemas and live music venues
for assembly and leisure
as hotels, guest and boarding premises and self-catering accommodation Accessing the scheme:

You do not need to do anything. Your local authority will write to you if you are eligible for this grant.

Coronavirus Business Interruption Loan Scheme

A brief outline of the scheme is as follows:

The scheme provides the lender with a government backed guarantee potentially enabling a ‘no’ credit decision from a lender to become a ‘yes’.
The borrower always remains 100% liable for the debt.
Up to £5m facility: The maximum value of a facility provided under the scheme will be £5m, available on repayment terms of up to six years.
80% Govt. guarantee
At the discretion of the lender, the scheme may be used for unsecured lending for facilities of £250,000 and under. For facilities above £250,000, the lender must establish a lack or absence of security prior to businesses using CBILS. If the lender can offer finance on normal commercial terms without the need to make use of the scheme, they will do so.

You should initially approach your own bank / finance provider via their websites as phone lines are likely to be busy.

Further guidance can be found from the British Business Bank;

https://www.british-business-bank.co.uk/wp-content/uploads/2020/03/British-Business-Bank-CBILS-FAQs-for-SMEs-FINAL.pdf

Some banks now have their websites up and running – typically the following details and requirements are as follows:

Loan Term – 1-6 years
Overdrafts are not available via this scheme but they can be considered through the normal process
A personal guarantee is required for 100% of the loan. This is in addition to the 80% government guarantee
12 month fixed rate loan at 0% – (capital repayments only to be paid) after which it will switch to the variable rate

Security;

£25k – £100k – short form guarantee
£100k – £250k – short form guarantee & debenture
£250k+ Full personal guarantee, Debenture + security if available (your home will not be taken as security)

Government Scheme Rules:

Maximum loan amount – 25% of your 2019 turnover or 2x your 2019 wages bill – whichever is greater
Serviceability will be assessed on your 2019 year end accounts, up to date management information and forecasts if available

Banks are likely to require the latest 3 year’s financial statements and a forecast to show future affordability. We are here to help you with this process, so please call or email us. We have a number of tools available to give you information based on future scenarios to help you assess your requirements.

SUPPORT FOR THE SELF EMPLOYED
Further announcements are expected in due course and we will give updates as we become aware of these.