Relief and support for businesses

The current coronavirus pandemic appears to be accelerating and is undermining many businesses’ key trading assumptions. We have looked to summarise the practical steps businesses should be looking to take to mitigate the issues and the measures currently outlined by the Government to support businesses at this time.

Coronavirus Job Retention Scheme

For employees who would have otherwise been laid off, HMRC will reimburse 80 per cent wages up to a £2,500 per month cap. Employees status must be changed and designated as 'furloughed' workers. Businesses should check contracts of employment as to their ability to change employee status seeking legal advice as appropriate. HMRC will set up a new online portal for reimbursement and therefore repayments may be delayed in the short term.   

Find out more here.

Business rates retail discount 

This is increased to 100 per cent in the year 2020/21 for occupied retail, leisure and hospitality properties with no rateable limit on the relief. Local authorities will apply automatically to the next council tax bill. Local authority guidance on eligibility can be found here.

Retail, Hospitality and Leisure Grant

Businesses in the above sectors with property with a rateable value of less than £15,000 will receive a grant of £10,000, or between £15,001 to £51,000 will receive a grant of £25,000. Local authorities are publishing details on their websites and will contact businesses automatically if properties are eligible.  

Coronavirus Business Interruption Loan Support (CBILS)

CBILS provides an 80 per cent guarantee against loans of up to £5m to businesses with a turnover less than £45m. Businesses must have a borrowing proposition which the lender considers, were it not for the pandemic, would be viable and able to trade out of short term to medium term difficulties. Fees or interest for the first 12 months are paid by the government. Borrowers remain 100 per cent liable for the loan and lenders will include personal assets in security assessment (excluding primary residence) so personal guarantees may still be requested. 

Find out more here.

Covid Corporate Financing Facility

Larger business may access a new lending facility being provided by the Bank of England (BoE). Via the BoE businesses will be able to sell short term bonds (with a maturity of less than one year) at current commercial terms as a means of raising funds. The scheme will be in place for 12 months. 

Guidance can be found here.

HMRC Time To Pay Arrangements (TTP) & VAT Deferral

Businesses were able to take advantage of an automatic VAT deferral and make no payments in the period 20 March to 30 June 2020. The does not have to be applied for and businesses will be able to settle this either by 31 March 2021 or by way of 11 interest free payments during the course of the 2021-22 financial year. Refunds and reclaims will be paid as normal. 

Further guidance is available from here.

Statutory Sick Pay (SSP) reclamation for businesses

Businesses with under 250 employees will be able to reclaim expenditure for any employee, who for a period of up to two weeks, has claimed SSP because of coronavirus. This includes self-isolation and employees will not have to provide a doctors fit note. As existing systems are not set up to accommodate employer refunds of SSP, the government is working to set up a mechanism for this.  As such, there is likely to be an unquantified delay in receiving the refund.

One off grant of £10,000 

Specifically aimed at small businesses that already pay little or no business rates under the existing Small Business Rate Relief (SBBR), a one off grant of £10,000 has been made available for these businesses (also including those which qualify for Rural Rate Relief). 

Insurance

The Government declared coronavirus a notifiable disease, a key criteria to allow business interruption insurance claims. However, the Association of British Insurers has indicated that many businesses lack the appropriate cover in their policies. It is worth confirming your position with your insurance broker.

Credit insurers have indicated they will be supportive and work with businesses including the extension of terms on an individual basis although certain insurers are notifying customers operating within high-risk industries of cancellation of cover. It is worth confirming your position with your insurance broker.

Key performance indicators

Monitor key performance indicators, notably daily sales, cash collection etc to identify any rapidly deteriorating situations. This will ensure you are accurately informed of the impact on your business and allow you to review the available options to counter any issues.

Cash management 

Many businesses will never have been presented with a set of events in which day to day cash management is required. In the current environment preparing a daily receipts and payments cashflow combined with a medium-term integrated forecast is a sensible step. It will allow you to manage cash to mitigate any issues and ensure no short-term funding issues.

Business operations 

Review and critically appraise your customers and supply chain. Identify who may be most at risk, the potential impact on your business through stress testing, and how you could lessen the shock.

Stress test

Stress test your forecasts for a variety of worst-case scenarios, identify what tools you have to manage cashflow and the key timelines. In a worst case, work out the timelines and cash impact of potentially trading out.

Stakeholder engagement

The Government has clearly stated it will take all steps to address the issues to businesses of coronavirus. They have put in place several practical steps to ensure UK banks and HMRC are supportive in the current environment. It is important all stakeholders are engaged with appropriately so that businesses avail themselves of the available resources and reliefs.

For more information on how we can help your business with the disruption of coronavirus, please contact