First of all, I hope that you and your family are all OK and haven’t been hit with the virus.
I just wanted to give some assurances that we are still fully operational and here to help with the usual work and also any fallout/implications from Coronavirus. We are well aware this is a stressful time for everyone and we are fully committed to help wherever possible. The team are all now working from home but this should have no impact on the work we do for you.
As you are no doubt aware there have been various announcements this week, not least a huge announcement earlier this evening. I’m still in the process of digesting this and what it means so I’ll send a follow up in due course.
However, some key points to bear in mind:
- There is a handy summary of the government’s key announcements here https://www.gov.uk/government/publications/guidance-to-employers-and-businesses-about-covid-19/covid-19-support-for-businesses
- For businesses with premises there is the possibility of a grant of between £10k & £25k. More details are on the webpage linked above. I believe your local authority will be in touch about this if you are eligible. Note, this is a grant and is not repayable.
- Businesses in retail, hospitality and leisure sectors will pay no business rates from April 2020 to March 2021.
- There will be government support for staff wages, but my initial thoughts on this are that it’s not available for everyone. It is only to cover wages of those that would otherwise be made redundant. Individuals would have to be registered as ‘furloughed’. Furloughed means ‘mandatory time off with no pay’ according to the webpage above. From my initial reading this could be massively abused so I would expect there would have to be some form of checks and balances to ensure employees registered as furloughed actually are. At this stage I don’t know a great deal more than that so will keep in touch about this.
- HMRC are being very relaxed about time to pay arrangements for any taxes due, although this is a deferral of tax so it will need to be paid in future.
- VAT payments falling due between today and 30 June do not need to be paid on the usual due dates. Payment will be required by 5 April 2021 though. The idea being it gives a cash flow injection now while other support measures are put in place. You don’t need to apply for this as it is automatically granted.
- There is a Business Interruption Loan Scheme launching, I believe, on Monday. The loans will come from the banks and the government will guarantee 80% of the loan value. This means that the borrower would be responsible for repaying all of the loan, but in the event of default the government would cover 80% of the outstanding balance.
- This should mean that underwriting criteria are relaxed, although to what extent I don’t know. Crucially, there are no repayments or interest due for 12 months. I have heard that these loans will be available for ‘viable’ businesses. I assume this means there will be some underwriting to go through and they are not guaranteed for every application.
- I’m a little torn on what to make of these. If you are in a position where revenues are being deferred due to the virus rather than lost, an interest free (for 12 months) loan makes perfect sense. However using a loan to cover lost revenue could be dangerous as the loan will have to be repaid. Therefore if revenue is simply lost, when things get back to normal the business will have to cover its costs and the loan repayments from its revenues. This could potentially put unmanageable pressure on the business finances. I would suggest giving this some serious thought before taking the loan out.
- On the other hand, it may well make sense to get a loan regardless while they are available and simply sit on the cash. That way if you don’t need it, you simply pay it back before 12 months and it’s cost nothing, but given you peace of mind and security in the meantime.
- Notable areas of silence from the government are for sole traders/partnerships and those that work from home. As things stand these people and businesses seem to have been largely ignored in the support packages. That said, given the pace at which things have changed it is possibile this could be addressed next week.
I think that covers all of the key points so far. I will keep in touch over the coming days and months with any further changes and how these might impact on you. One initial thought is that, whilst the support measures announced are most definitely welcome and helpful, much of the support involves borrowing whether in the form of loans and/or deferring tax payments. As a result it will be very easy to run up eye-watering debts that will, at some stage, need to be paid. Therefore it will be more important than ever to keep a close watch over your financial position and to know where you stand with regard to future liabilities, when they will fall due and how they are going to be paid. Obviously we will help wherever we can to provide clarity over this.
Finally, I would like to reiterate that all of the team here are committed to continuing to help and advise wherever possible. As you no doubt understand this situation will be more critical and stressful for some clients than others. While we will continue to provide our usual service, I’m anticipating a lot more ad hoc work for us than usual. If you need our help urgently we will prioritise this. However by doing this is it may cause some delays with non urgent work. Hopefully you will understand why and be patient with us if some non urgent work takes a little longer to complete than normal. That said, we will still be committed to ensuring that all statutory deadlines are met as normal. If you have any questions or queries with any of the above or anything else please feel free to get in touch with me or any of the team.