Coronavirus help and support

The Coronavirus (COVID-19) outbreak is a significant concern for UK businesses. We wanted to update you on what help is available to you and how we can support our clients at this difficult time.

Update from Friday 20th March:

Coronavirus jobs retention scheme (CJRS)

In his headline measure introduced as “unprecedented for a government of this nation”, Sunak announced a new a grant from HMRC to employers to cover furloughed workers and keep people on payroll rather than laying them off.

The key points as we currently understand it are:

  • Furloughed workers are employees who were on the payroll at 28th Feb, who do not work in the business but are kept on the payroll
  • Employees need to be designated as “furloughed workers” and notified of this change
  • This is subject to existing employment law and depending on their employment contract, may be negotiable
  • The earnings and the furlough status are reported online to HMRC
  • HMRC will reimburse 80% of furloughed costs, up to a cap of £2,500 per month
  • The job retention scheme will be backdated to 1 March, with no limit on the amount of funding and is open initially for “at least three months”
  • Furloughed workers are expected to return to work in due course

At the moment our understanding is that the remaining 20% does not have to be paid to the employees by the employer but can be voluntarily paid. 

What we don’t know:

  • if furloughed status can be designated to the directors of close companies
  • how the furloughed wages are calculated for people on flexible contracts
  • the timing of the repayments by HMRC
  • how the £2,500 earnings cap is defined (is it gross employee salary or total cost the company)

VAT holiday

The government deferred any VAT payments due from 20 March 2020 until 30 June 2020.  Taxpayers will be given until the end of the 2020/2021 tax year (5th April 2021) to pay any liabilities that have accumulated during the deferral period. VAT refunds and reclaims will be paid by the government as normal.  This is an automatic offer with no applications required.

We don’t know: if VAT is paid via direct debit, whether the direct debit needs to be cancelled.

Income Tax holiday

Income tax payments have been deferred.  Those which were originally scheduled for 31 July 2020 have been automatically been deferred until January 2021. 

What we don’t know:  the guidance says this is limited to self-employed people so it may not be available to close company directors or shareholders.

Universal Credit

The government removed the minimum income floor for universal credit which means self-employed workers can access benefits equivalent to SSP for employees.

Business loan scheme

The coronavirus business interruption loan scheme was expanded from six months interest-free to 12 months interest-free. These loans will be available from Monday 23rd March.

 Government Support

 6 days after announcing £12bn of support to help the economy through coronavirus, yesterday the government announced a plan that was 30 times bigger.

 Currently, support available can be categorized as follows:

·         a statutory sick pay relief package for SMEs

·         a 12-month business rates holiday for all retail, hospitality and leisure businesses in England

·         small business grant funding of £10,000 for all business 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

·         the Coronavirus Business Interruption Loan Scheme to support long-term viable businesses who may need to respond to cash-flow pressures by seeking additional finance

·         the HMRC Time To Pay Scheme

·         Individuals can apply for a 3-month mortgage repayment holiday

The loans are £330bn of government-backed loans made available to businesses via two schemes (one for large and one for small/medium businesses).  These should be easily accessible and at preferential rates of interest with no interest payments for the first six months. As it stands, we do not know any more than this. More information will be available in the coming days and weeks, please click on the link below for updated advice:- https://www.british-business-bank.co.uk/ourpartners/supporting-business-loans-enterprise-finance-guarantee/

For the grants, 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.  For the retail, hospitality and leisure business grants, 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 by 20 March.

Business as usual at West Lancs Accountants

Firstly, we’re happy to support you on a case by case basis without charging for this additional work. So, for example, if you are in an industry that has been severely affected already (travel, tourism, hospitality, etc) we’d be delighted to help with some short-term cash flow projections or just act as a sounding board. Please let us know if you need any support like this and we can chat it through.

We are still working flexibly from the office and home. We have undertaken remote working since 2017, so this is nothing new to us. All team members have remote access to our office server and telephone lines will be open as usual.

If you need to drop something into the office, please call 01695 35 1695 before you leave to make sure there will be someone in to meet you.

All meetings going forward will be moved to the telephone or video conference by default. We’ll ask what you prefer when we book the appointment.

We are here for you

Every small business owner will have different issues, and different needs.  We are here if you want to chat through your concerns or if you want a sounding board to put things in perspective.  So if you’d like a chat see our contact details here.

What we can offer

Help with cashflow forecasts:  It’s likely to be a worrying time at the moment, but having a cashflow forecast in place will help you to focus on what you can control, help you make the right decisions and provide well needed reassurance and confidence.

Funding for you:  We can help arrange short and long term finance for your business.

Advice on remote working: If you want some tips or tech advice on setting up your business for remote working, we are the right people to ask!  

How can your business prepare?

The best approach is to be proactive and ensure that you have an effective mitigation plan for the impact of the virus.

Firstly, it’s important to keep up to date with the Government guidance on COVID-19.  Check this webpage regularly for updates. 

Ensure your business has prepared contingency plans and internal communications so that staff are well informed on the virus and work place health and safety 

  • Review your business risks and contingency plans
  • Update your financial plans to consider the impact of the outbreak
  • Check your supply chain and stock levels.  Is it resilent?  Do you need to investigate alternative suppluers?
  • Review your cash flow.  Do you need access to short term funding?
  • Check your insurance: does it include business interruption for public health closures and infectious diseases?  Do you have loss of income cover?
  • Review HR policies for working from home and sick policies
  • Consider travel arrangements and your visitor policy
  • Check your IT infrastructure can cope with remote working

Focus on what you can control:

Let’s assume that we are looking at a temporary period of economic downturn.  What costs can you control?

For example:

  • Can you get a break clause or rent free period in your lease?
  • Can you delay future planned spend?
  • Could you temporarily reduce your employment costs?
  • Monitor your stock levels carefully in the face of a downturn of sales
  • Can you offer to deliver to your customers, if they can’t visit you?
  • Can you sell online instead of face to face?
  • Review your accounting records for costs you can cut now
  • Look at cancellation clauses and break clauses on any monthly subscriptions

Review your overheads:  If you are predicting cashflow difficulties, it is sensible to review your overheads in the business and pause any spending you feel may not be necessary at this time. The first thing to do is categorize expenditure (both personal and business) into “essential” and “nice to have”. Once you have those numbers you can better appraise your situation and we can support you further with short term cash flow forecasts.

HR:  You may need to make difficult decisions about staffing.  Contact your normal HR support for advice on this.

Banking and Finance:  Contact your bank, either your dedicated manager if you have one or your business call centre to discuss your options should you need a new or increased overdraft limit, asset finance, credit cards or other forms of temporary finance.

Other potential funding sources

In addition to government support, alternative funding sources are available.  Please note these are only a few of the options available to you and these do not form a recommendation by WLCA

Capital On Tap – https://www.capitalontap.com/en/

Funding Circle – https://www.fundingcircle.com/uk/

Iwoca – https://www.iwoca.co.uk/

NatWest Rapid Cash – https://rapidcash.natwest.com/

Satago – https://www.satago.com/

Personal Advice

Please put you and your family’s health first.  Everything else can wait.  The NHS website is a good place for up to date advice – NHS

Travel Advice

Don’t make any non-refundable travel or accommodation bookings and keep an eye on updates for any events you’re planning on attending.  For international travel restrictions keep an eye on FCO guidance for updates.  This is important as if the FCO says don’t travel and you do, you may not be covered.