Henry and Banwell Chartered Accountants > News > General News > Corona Virus / Covid-19 Business Advice

Corona Virus / Covid-19 Business Advice

  • Posted by: Michael Winkelmann

Here is an update on Henry and Banwell’s plans in what is a rapidly changing situation.

We have also added notes on the measures taken which are to help small businesses.

The advice has been updated to reflect the Chancellor’s announcement on 20 March 2020 and we will add further updates daily.

Our offices in Bristol and Bath remain open and some staff are already working from home so all services can be provided as normal over the coming months. Broadband will be under pressure so our ability to reply may be delayed, please bear with us.

We can also offer Skype and Zoom calls if required.

Government continues to make announcements regarding the impact of the COVID-19 virus and we address the economic measures below. Please note there is always a delay to

the ‘how ‘ part of any announcement and we will update as we learn more.

Summary of important points for business:

  1. Coronavirus Job Retention Scheme
    1. HMRC will reimburse 80% of ‘furloughed workers’ ( employees who are stood down) wage costs, up to a cap of £2,500 per month. HMRC will do this by paying a Grant , starting in April 2020 and firms will need to apply.
    2. HMRC are working on a system to manage this so we have no details at the moment.
  2. Goverment have announced Business interruption loans ( CIBLS) –see below.
  3. High Street banks will be offering support.
  4. Business grant of £10,000 if you quality for Small Business rate relief – see below.
  5. Sickness pay – 14 days of sickpay related to Covid-19 will be paid by Government  (software yet to be updated so keep a record).
  6. Business rates exemption for 2020/21  – see below.
  7. Staff – HMRC will pay businesses a grant
  8. Business premises – Rent may need to be renegotiated on a temporary basis to assist cashflow.
  9. Bank Base rate has dropped to 0.1% ( from previous reduction to 0.25% ).
  10. Insurance – Government has finally order hospitality businesses to close but standard business interruption insurance policies are dependent on damage to property and will exclude pandemics. You need to check the terms of your policy if you have this insurance as it is an ‘opt in’ and often not taken up due to cost.
  11. Time to pay (TTP) arrangements – this has been reintroduced and allow you to negotiate with HMRC about spreading the payment of taxes.
  12. Self-employed – So far there has been little support in this area compared to employees and may lead to Freelancers setting up Limited companies so they can go on a payroll. See what is available below.
  13. VAT Payments will be delayed until after 30 June 2020.

To update you on the latest Government measures and practical steps that businesses can take now to protect themselves economically as much as possible.

GOVERNMENT SUPPORT (as at 23 March 2020)

Whilst many of the measures mentioned below are new, some already exist or have simply been extended.

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.

How to access the scheme

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 as existing systems are not set up to facilitate payments to employers.

Business loans – application details to be announced on 23 March 2020

( Loans are referenced ‘ CIBLS’ – Corona Virus Business Interruption Loan Scheme)

 Small and medium sized businesses (turnover under £12.9 million and 250 employees or less) can now apply for loans of up to £5 milllion under the coronavirus business interruption loan scheme. This is similar to the Enterprise Finance Guarantee (EFG) scheme and, like EFG, is delivered by the British Business Bank. Further details will be made available on their website as they are published;

https://www.british-business-bank.co.uk/ourpartners/coronavirus-business-interruption-loan-scheme-cbils/

Business grants

Businesses that are entitled to Small Business Rates Relief or Rural Rates Relief are now entitled to receive a grant of £10,000, administered by the local authority to whom they apply for the relief, without the need to make an application for the grant. Please note local authorities will have already your contact details.

A firm can benefit from business rate relief if its property’s rateable value is less than £15,000. This would typically not apply to individuals working out of big offices, nor those working from a home office, but rather those working from a property separate to their house with a low rateable value.

The Chancellor also announced a £25,000 grant for retail, hospitality leisure businesses operating from premises with a rateable value for tax purposes of between £15,000 and £51,000. Whilst no detail has been given on how this is to be administered we would advise contacting the local authority to whom rates are paid to ensure that this grant is received by those entitled to it.

Statutory sick pay

The Chancellor announced last week that statutory sick pay will be extended to cover from day one of someone being off sick due to coronavirus for a period of two weeks without the need for GP sick note. This will be recovered by businesses through their PAYE and National Insurance monthly returns.

Employment allowance (EA)

EA is available for employers with a total qualifying employer’s (secondary) Class 1 National Insurance Contributions (NICs) of less than £100,000 per year. The EA was £3,000 for 2019/20 but has been increased to £4,000 for 2020/21.

EA is administered as de minimis state aid so anyone in a sector that already receives state aid needs to check the amount of aid they are receiving and their de minimus threshold/ ceiling to ensure that they qualify.

Time to pay (TTP) arrangements

HMRC has reintroduced TTP, having very quietly phased it out for many businesses over the last 3 years. Businesses and the self-employed who are struggling financially and have tax liabilities to meet can call the HMRC dedicated helpline to discuss a TTP arrangement on 08000 159 559.

Business rates holiday

Where the rateable value of a Business premises is between £15,000 to £51,000 there will be a one-year business rates holiday 2020/21 for the retail, hospitality and leisure sector. This is automatically in place and being administered by the local authority to who you pay your rates to.

PRACTICAL ADVICE

What can businesses do to help themselves during this difficult time? We have a number of suggestions to minimise costs and try to keep cashflow at manageable levels

Services and supply contracts

If a business is closed during the coronavirus outbreak then management need to look closely at all of the service and supply arrangements and only pay for those which the business is bound into and which are necessary.

Arrangements with landlords

Rent is often the biggest expense for any business so, if you have concerns about being able to meet your rental obligations speak to your landlord before you fall into arrears. Most leases require any variations to be agreed in writing and signed by all parties so please ensure that any arrangements you agree with your landlord are properly formalised in accordance with the terms of your lease to ensure you are fully protected.

Any necessary supplies and services where the business is not bound into a contract should be reviewed and renegotiated to minimise the ongoing cost. Remember, your suppliers are in the same position as you and will wish to preserve their own cash inflows as much as possible.

Zero hours contracts

Employers generally have no responsibility to offer work to casual staff and those on zero hours contracts. Unless such staff are essential to a continuing business activity this is an expense that is easily avoided

Contracted hours staff

These are full and part-time employees who, generally, will have to be paid whether they work or not, unless you can require or persuade them to take unpaid leave and/or holiday.

If contracted hours staff are self-isolating due to coronavirus then the only obligation will be to pay them two weeks statutory sick pay, unless their contract provides otherwise. As mentioned above this can be recovered for up to 2 weeks without a GP sick note from NIC returns. To continue receiving sick pay after this period the employee will need a sick note from their GP.

Staff

It is always an option to seek to lay off staff or place them on short time to reduce the cashflow burden. Specialist employment advice should be taken before such measures are implemented as employees can acquire a statutory right to redundancy if they are laid off or placed on short time. Redundancy obligations could increase the burden on cash flow instead reducing it. 

Self-employed and low earners

  • Self-employed individuals and people earning below the Lower Earnings Limit of £118 per week are not eligible for Statutory Sick Pay.
  • These individuals can make a claim for Universal Credit or Contributory Employment and Support Allowance.
  • Special measures apply for the duration of the virus outbreak.

The requirements of the Universal Credit Minimum Income Floor will be temporarily relaxed for those who have COVID-19 or are self-isolating according to government advice. This is to ensure self-employed claimants will receive support.

People will be able to claim Universal Credit and access advance payments upfront without the current requirement to attend a jobcentre if they are advised to self-isolate.

A contributory Employment and Support Allowance will be payable, at a rate of £73.10 a week if you are over 25. This may be claimed by eligible people affected by COVID-19 or self-isolating in line with advice from Day one of sickness, rather than Day eight.

CONCLUSIONS – Keep calm and carry on

If you need help or advice please feel free to contact us , we are here to help and please remember the whole country is affected so everyone is in a similar position to you.

Finally, we believe this will be a tough period and we will get back to a ‘new’ normal. In the meantime we need to preserve what we have for when that happens rather than abandon it.