[UPDATED ON 21 MARCH]
The impact of coronavirus on the country has spiralled in the past few days. Apart from worrying about the health of our families, we’re also worrying about health of our businesses.
I’ll leave the health advice to the experts, but I thought it would be useful to outline some of the help available for your business.
HELP FROM JON DAVIES ACCOUNTANTS
Our staff are working from home but still be available to support your business.
If you do ring the office, the call is on divert to Rachael, our Client Relationship Coordinator. Rachael will take a message and get the appropriate team member to call you back. If Rachael is on another call, we use the wonderful team at Mi PA to cover our calls – again they’ll ask the appropriate team member to give you a ring.
We apologise if there is a short delay, but I’m sure you’ll forgive us just this once given the circumstances.
Or just drop your Client Manager an email and they’ll get right back to you.
Our team all have laptops and work remotely from time to time already, so all of the IT has been tested and you shouldn’t notice any impact on our service.
We use Zoom for video meetings with our clients around the country and are happy to switch any face-to-face meetings to Zoom or a simple, old-fashioned phone call.
If you need to drop off any records, the office building is still open and accepting deliveries. Let us know and we’ll drop in to the office to pick up the records.
And it’s elbow bumps instead of handshakes!
HELP FROM GOVERNMENT
The Government has announced some support for small businesses. The detail is here and is being updated daily
In summary, the main support is:
The Coronavirus job retention scheme
The Government will fund 80% of the wages of any employees that you need to “furlough”. This is to protect employees who you would have laid off otherwise.
The support is capped at £2,500 per worker per month and is initially available for up to 3 months. The Chancellor will reassess at that point.
To be “furloughed”, the employee does need to be off work, ie the funding does not apply to anyone who continues to work in your business. You should also take HR advice.
The funding is only available for employees who were on your payroll at 29 February, but it can potentially be backdated to 1 March.
Deferral of VAT payments
Any VAT payments due to HMRC between 20 March and 30 June 2020 will not need to be paid until 31 March 2021.
If you are on a quarterly VAT return, this means your VAT payments for the quarters ended 29 February, 31 March or 30 April.
This will help with cashflow but please remember that you will have to pay the VAT owing in March 2021.
Deferral of Self-Assessment payments on account
Any payments of account for income tax due on 31 July 2020 will be deferred to 31 January 2021.
Again, this will help with cashflow not, but please remember you will need to pay the tax in January.
Statutory Sick Pay
Statutory Sick Pay (“SSP”) is usually paid to staff from the 4th day off. If a staff member is self-isolating, or has the coronavirus, they are entitled to SSP from the 1st day off.
If you’re a small business, ie with less than 250 employees, the Government will reimburse you for up to 2 weeks at £94.25 per week for each employee who is off.
Business Rate Relief for retail, leisure and hospitality
There will be a 100% discount on business rates from April if your property has a rateable value under £51,000 and your business is in retail, leisure and hospitality.
There will also be a £25,000 grant for retail, hospitality and leisure businesses operating from premises with a rateable value between £15,000 and £51,000.
These reliefs will be administered by your Local Authority, so any queries should be directed to them. Full guidance will be published by 20 March 2020.
£10,000 small business grant
If you are a small business and already claim Small Business Rate Relief, there will be a one-off £10,000 grant from the Government.
Again, these reliefs will be administered by your Local Authority. You do not need to do anything – your Local Authority will write to you if you are eligible.
Full guidance will be published shortly, with the funding provided to Local Authorities in early April 2020.
Coronavirus Business Interruption Loan Scheme
There will be a loan scheme launched on 23 March to support loans up to £5m.
The Government will provide lenders with a guarantee of up to 80% of the loan and not charge for this guarantee.
What does this mean? It means that businesses that might not be accepted for a loan under normal circumstances should now be able to get a loan. However, it will be a loan – not free cash.
The Government will cover the first 12 months of interest payments, so you will not need to pay these yourself.
Delays to paying your taxes
HMRC has a dedicated coronavirus helpline on 0800 0159 559 if you’re struggling to pay a tax bill. You might be able to get a Time To Pay agreement to stagger any tax payments.
If you’re a subcontractor/freelancer, the reforms to IR35 that were due to come in to force in April 2020 have been delayed to April 2021.
Mortgage repayment holiday
If you are suffering financial difficulties, you will be able to apply for a 3-month repayment holiday on a residential mortgage.
This only a “holiday”, ie the capital will remain and interest will be added. However, it may provide some breathing room for those 3 months.
Not every application will be approved as your lender will look at whether it would actually be helpful. The banks have confirmed it will not affect your credit rating.
HELP FROM EACH OTHER
Let’s not forget each other at this time. Help out other local businesses by buying from them and supporting them.
We’ll need each other to get through this – we’ve already spoken to a number of our clients who are seeing the impact. It’s hit the hospitality and travel clients already and will start to hit all of us soon.
WHAT ELSE CAN YOU DO?
From the financial side, we’d recommend that Step 1 is to not panic. This is going to have financial consequences for many businesses but it should be temporary.
In the meantime:
- Look at your costs and cashflow – What can you reduce?
- Can you get a rent-free period?
- Do you need all those monthly subscriptions?
- Can you get a repayment holiday on any loans? The banks are being nudged to do this by the Government
- Can you reduce your employment costs? These need proper HR advice but, as a starter, you might ask staff to take holidays now. If things get worse, you may need to look at lay-offs, reduced hours or redundancies
- Cancel your DDs with HMRC – if you pay VAT by Direct Debit, it’s worth cancelling for the moment. Once you’ve paid, it’s hard to get the cash back. Cancelling the DD gives you a chance to ask for a Time To Pay arrangement
- Review your insurance
- Does your Business Interruption insurance cover a closure if the Government orders venues to close? The Government and the Insurance industry confirmed that advice to avoid pubs, theatres, etc is sufficient to make a claim. However, you will need to check your policy as most are dependent on damage and exclude pandemics. There may be further help for businesses who are not insured – we are waiting for more information.
- Do you have cover for loss of income?
IS THERE ANY OTHER ADVICE?
We’d recommend the following:
As always, we’re here to help if you want to look at your cashflow or funding options.
If you found this useful, please share it using the icons at the side of the page, or leave a comment below.
If you’d like a meeting or a Skype call to discuss this, please get in touch with your favourite Liverpool accountant
- You can ring us on 0151 380 8080
- You can email us at firstname.lastname@example.org