COVID-19 (also known as Coronavirus), and the measures undertaken to prevent its spread, present significant challenges for businesses, charities and individuals.
There is help available:
We will do what we can to support our clients and the wider business community over the coming months. We offer services to examine your organisation and to improve cashflow management.
Business financial diagnostic
We are offering a free business financial diagnostic to help you manage your response to COVID-19. It will help to identify your cash pinch points and methods to mitigate these, and we can also advise on approaching available funders to get the grants and reliefs available to help you.
The process involves a simple questionnaire for you to complete and return, followed by a telephone discussion with us. This is a free service, designed to help businesses survive – it is important that we all help each other.
Contact our team, led by Corporate Finance Partner Paul Mason, on firstname.lastname@example.org and we will get back to you within 24 hours.
Support during illness – businesses and charities
We can provide secondment support to organisations in the event of staff shortages, from the short to the long term.
Support for other accounting firms
We can support other firms if they become unable to deliver a full service, for example due to illness. If your firm needs cover, we can help you to deliver with a white-labelled service.
Even though there is a lack of visibility and information regarding how deep and how long the impact of this will be, we are helping our clients to model different scenarios and the consequent impact on their financial position. As new information comes to light it is important to refresh these forecasts using new data as it becomes available. We will advise on and carry out forecasting for your business.
Use tax reliefs
Cash flow will be significantly impacted for many organisations over the coming weeks and months. It therefore makes sense to claim any relief to which you are entitled. This could lead to cash in your account, or reliefs on your tax bill – all vital support at this time. We will check whether you can claim Research and Development tax relief, creative industry tax reliefs, or capital allowances, for instance.
Review last years’ tax return
We will review your previous tax return to check if there any changes we could make to help you – perhaps you’ve been overpaying Class 4 NICs, or there are capital allowances you could claim.
Change your accounting period
You may be able to change your accounting period to balance revenue over different time periods – this could have benefits when it comes to tax and your year-end reporting. We will advise you on this.
The UK and Scottish Governments continue to announce measures to support people and organisations. You may be able to use:
The Coronavirus Business Interruption Loan Scheme (CBILS)
The CBILS scheme is now open and will provide loans of up to £5m to SMEs (including charities whose trading activities makes up more than 50% of total revenue) subject to certain criteria. CBILS will be provided by the British Business Bank to participating lenders, who will then administer and sanction the loans in line with their normal lending criteria. To find out more about CBILS including an eligibility checker, frequently asked questions and how to apply, please visit the CBILS website here – https://www.british-business-bank.co.uk/ourpartners/coronavirus-business-interruption-loan-scheme-cbils/for-businesses-and-advisors/
We are helping clients prepare their funding propositions to their existing banks. Ensuring the right information is presented in the right way will increase the likelihood of credit approval, and also shorten the time taken to reach that decision. Please contact our team today for advice on 0131 558 5800 or email email@example.com.
- CBILS – the details – https://www.chiene.co.uk/resources/coronavirus-business-interruption-loan-scheme-cbils-details/
- CBILS Frequently Asked Questions – https://www.chiene.co.uk/resources/coronavirus-business-interruption-loan-scheme-cbils-faq/
- Quick Eligibility Checklist – https://www.chiene.co.uk/resources/coronavirus-business-interruption-loan-scheme-cbils-quick-eligibility-checklist/
UPDATE – 03/04/20
The Chancellor has updated the terms of the CBILs scheme to offer support to large and small businesses. Changes made during his announcement include:
- A new Coronavirus Large Business Interruption Loan Scheme (CLBILS) that will provide a Government guarantee of 80% for loans of up to £25 million for organisations with an annual turnover of £45-500 million.
- A ban on banks demanding personal guarantees on loans of less than £250,000 in order to speed up the process of lending and reduce financial risk for applicants.
- “Viable” small businesses affected by COVID-19 don’t have to search for finance before they apply for the Coronavirus Business Interruption Loan Scheme (CBILS).
Further details of these updates can be found on the HM Treasury website here.
Sick pay funding and Coronavirus Job Retention Scheme
The Government will fully fund the cost of two weeks’ Statutory Sick Pay (SSP) for employers with fewer than 250 staff. SSP will be paid from day one where people have the virus or have to self-isolate, or care for those who do.
There will be support through Universal Credit and Employment and Support Allowance for self-employed people and others not entitled to SSP.
HMRC has also published guidance on the Government’s Coronavirus Job Retention Scheme, which includes a package of measures that would see companies receive grants to pay their workers 80% of their salaries – up to a limit of £2,500 a month.
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
Employers will need to designate affected employees as ‘furloughed workers,’ and notify the 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. Employers should 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.
Employers may need to seek legal advice on changes to an employment contract and the furlough process. Employers that look to make a claim will need:
- Thier ePAYE reference number
- The number of employees being furloughed
- The claim period (start and end date)
- Amount claimed (per the minimum length of furloughing of 3 consecutive weeks)
- Bank account number and sort code
- Contact name and phone number
Employers will need to calculate the amount they are claiming. HMRC will retain the right to retrospectively audit all aspects of your claim.
HMRC will check the claim, and if you organisation is eligible, pay it by BACS to a UK bank account.
Employers must pay the employee all the grant received for their gross pay, no fees can be charged from the money that is granted.
Other information about claiming can be found on the HMRC website here – https://www.gov.uk/guidance/claim-for-wage-costs-through-the-coronavirus-job-retention-scheme.
Who can claim?
Any entity with a UK payroll can apply including businesses, charities, agencies and public authorities (but not public sector organisations). Organisations must have:
- Created and started a PAYE payroll scheme on or before 28 February 2020
- Enrolled for PAYE online – this could take up to 10 days – https://www.gov.uk/paye-online/enrol
- A UK bank account
Organisations will need to claim for:
- 80% of employees’ wages (even for employee’s on National Minimum Wage) – up to a maximum of £2,500. Do not claim for the worker’s previous salary.
- Minimum automatic enrolment employer pension contributions on the subsidised wage.
Employers can choose to top up an employee’s salary, but you do not have to. Employees must not work or provide any services for the business while furloughed, even if they receive a top-up salary. Grants will be prorated if an employee is only furloughed for part of a pay period. Claims should be started from the date that the employee finishes work and starts furlough, not when the decision is made, or when they written to confirming their furloughed status.
Employers will still need to pay employer National Insurance and pension contributions on behalf of furloughed employees, and they can claim for these too.
Employers cannot claim for:
- Additional National Insurance or pension contributions you make because you chose to top up your employee’s salary
- Any pension contributions you make that are above the mandatory employer contribution
The way employers work out their employees’ wages is different depending on what type of contract they’re on, and when they started work.
Apprentices can be furloughed in addition to other employees and can continue to train whilst furloughed although you must continue to pay at least the Apprentice Minimum Wage. Other details of the furloughed employees, including those on maternity leave, company directors, agency workers and others, that an organisation can claim for are here – https://www.gov.uk/guidance/claim-for-wage-costs-through-the-coronavirus-job-retention-scheme.
More information on this scheme will follow, when information is available to us. Details can be viewed on the Government web page here: https://www.gov.uk/guidance/claim-for-wage-costs-through-the-coronavirus-job-retention-scheme
Make use of extensions and ‘holidays’
The Government and regulatory bodies have already announced some deadline extensions, and more may be forthcoming.
- Companies House is granting a three-month extension to file company accounts. The extension needs to be applied for in line with Companies’ House usual procedure, but will be granted automatically when COVID-19 is given as the reason for the request. More information can be found here: https://www.gov.uk/guidance/apply-for-more-time-to-file-your-companys-accounts
- Organisations and self-employed individuals in financial distress will be able to negotiate ‘time to pay’ arrangements with HMRC without incurring late payment penalties. This is agreed on a case-by-case basis so will be tailored to individual circumstances and needs
- For individuals in difficulty due to coronavirus, mortgage lenders will offer at least a three-month mortgage holiday during which people will not have to pay towards their mortgage
- The government announced that it is postponing the reforms to the off-payroll working rules, IR35, until 6 April 2021
HMRC has confirmed that for Income Tax Self-Assessment, payments due on the 31 July 2020 may be deferred until 31 January 2021.
You are eligible if you are due to pay your second self-assessment payment on account on 31 July. You do not need to be self-employed to be eligible for the deferment.
The deferment is optional. If you are still able to pay your second payment on account on 31 July you should do so.
How to access the scheme
This is an automatic offer with no applications required. No penalties or interest for late payment will be charged if you defer payment until January 2021.
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. For more information visit the HMRC website here – https://www.gov.uk/government/publications/guidance-to-employers-and-businesses-about-covid-19/covid-19-support-for-businesses#support-for-businesses-through-deferring-vat-and-income-tax-payments
COVID-19: VAT Payment Deferral
On 20 March, the UK Government announced that it would be deferring VAT payments for 3 months until 30 June 2020 in an attempt to ease the tax burden on businesses affected during the COVID-19 pandemic. This is an automatic offer with no application to HMRC required. All UK businesses are eligible, and businesses will not need to make a VAT payment during this period. Taxpayers will be given until the end of the 2020/21 tax year to pay any VAT deferred during this period.
Any VAT refunds and reclaims during this period will continue to be paid by the Government to VAT registered businesses as normal.
UK VAT returns should still be submitted on time and as per the normal filing deadline which is 1 month and 7 days after the period end.
We would advise all clients to consider their cashflow position to determine whether they wish to defer any VAT payments within the deferral period. If clients do wish to defer a VAT payment and they usually pay HMRC by direct debit, we would advise that the direct debit is cancelled to avoid HMRC automatically taking the payment as normal.
Self-Employed Income Support Scheme
Chancellor Rishi Sunak has set out plans that will see the self-employed receive up to £2,500 per month in grants for at least 3 months via a new Self-Employed Income Support Scheme, with those eligible receiving a cash grant worth 80% of their average monthly trading profit over the last three years.
The scheme will be open to those with a trading profit of less than £50,000 in 2018-19 or an average trading profit of less than £50,000 from 2016-17, 2017-18 and 2018-19.
To qualify, more than half of their income in these periods must come from self-employment.
To minimise fraud, only those who are already in self-employment and meet the above conditions will be eligible to apply. HMRC will identify eligible taxpayers and contact them directly with guidance on how to apply.
The income support scheme will cover the three months to May. Grants will be paid in a single lump sum instalment covering all 3 months, and will start to be paid at the beginning of June.
Individuals should not contact HMRC now. HMRC will use existing information to check potential eligibility and invite applications once the scheme is operational.
Those who pay themselves a salary and dividends through their own company are not covered by the scheme but will be covered for their salary by the Coronavirus Job Retention Scheme if they are operating PAYE schemes. More details here – https://www.gov.uk/government/news/chancellor-gives-support-to-millions-of-self-employed-individuals.
Rates relief for retail, hospitality and leisure sectors
- All businesses (not just those with a rateable value of less than £51,000, as previously announced), will pay no business rates for 2020/21
- Those businesses with a rateable value below £51,000 will also be eligible for an additional cash grant of up to £25,000 (i.e. cash payment from the government) per business, to help them through this period
- This means that every single shop, pub, theatre, music venue, restaurant, etc will pay no business rates whatsoever for 12 months and, if they have a rateable value of less than £51,000, they can now get a cash grant as well
Rates relief for others
The 700,000 or so small businesses that are already eligible for 100% business rates relief will receive a grant of £10,000 (not £3,000, as previously announced) to help with business costs.
- UK Government guidance: https://www.gov.uk/government/publications/guidance-to-employers-and-businesses-about-covid-19
- Scottish Government guidance: https://www.gov.scot/coronavirus-covid-19/
- Companies House news and guidance: https://www.gov.uk/government/organisations/companies-house
- HMRC news and guidance: https://www.gov.uk/government/organisations/hm-revenue-customs
It is wise to check with your insurer (or broker) regarding the coverage you have against such events as loss of income and having to close during the outbreak of the virus. You will in particular need to check if your insurance contains Business Interruption cover, and cover for notifiable diseases. COVID-19 is a notifiable disease.
You should contact your insurer if you are in doubt or have any questions.
Much of the guidance above applies to charities – for instance, the extension to filing accounts with Companies House. There are additional charity-specific resources available too.
- OSCR’s guidance is available here: https://www.oscr.org.uk/news/charities-and-coronavirus-an-update-from-the-regulator/
- The Charities Commission for England and Wales has produced guidance which is available here: https://www.gov.uk/government/news/coronavirus-covid-19-guidance-for-the-charity-sector