We look at what steps you may be able to implement to minimise the impact of the COVID-19 outbreak on your business.
In the wake of the coronavirus pandemic, the Government announced a series of measures to help businesses and the self-employed in its Budget. This has been followed up with several announcements of further support.
We know there are various funds being made available and support being offered, but what you really need to know is what you and your business can actually access and how to do this.
Bounce Back Loan Scheme
The Bounce Back Loans Scheme is specifically aimed at helping smaller businesses to cope with the coronavirus pandemic.
Where a business is eligible, the loan amounts range from £2,000 up to 25% of the business’ turnover. The maximum loan amount is £50,000.
The Government will provide banks with a 100% guarantee for the loan and pay any fees and interest for the first 12 months, however the borrower will remain 100% liable for the debt.
The loans are simple to apply for and applications may be made through a short online process.
With an interest rate of just 2.5%, these loans are expected to provide critical cash support in these uncertain times.
The scheme is administered by the British Business Bank and further details may be found here. A list of lenders already providing finance through the scheme can be found here.
Applications to use the scheme were due to close at the end of November. However, on 2nd November it was announced that the application window would be extended to 31st January 2021.
It was also announced that firms would be able to ‘top up’ existing Bounce Back Loans if they need additional funding. Where businesses have borrowed less than their maximum permitted facility (less than 25% of their turnover), they will be allowed to top-up their existing loan.
Coronavirus Business Interruption Loan Scheme
The Coronavirus Business Interruption Loan Scheme (CBILS) was introduced to help businesses during these difficult times.
It is fair to say there has been some criticism of the CBILS scheme and the requirements attached to making an application. As a partial result of this feedback, the Government introduced the Bounce Back Loan Scheme.
CBILS will also be delivered by the British Business Bank and, as well as business loans, there are many other types of finance supported by the programme, depending on the provider. You can find out what type of finance is provided on the British Business Bank partner page.
For further information regards availability of finance products and eligibility criteria, please click here.
Coronavirus Job Retention Scheme
The Coronavirus Job Retention Scheme was introduced to allow all UK employers to access a financial subsidy originally worth 80% of their workers’ wage costs up to a cap of £2,500 per worker per month.
Employers would need to class their employees as ‘furloughed workers’ to be eligible for the scheme. Initially due to run until the end of July, the scheme was extended until the end of October with reduced levels of subsidy, and changes were introduced to support staff furloughed on a part-time basis.
The scheme has now been further extended until at 31st March 2021. The level of support will also return to the levels seen previously, so the grants for November 2020 to January 2021 will be worth 80% of worker’s wage costs, up to a cap of £2,500 per worker per month. The level of grant for February and March 2021 is yet to be determined.
A Jobs Retention Bonus was originally due to be paid in February 2021. This will longer take place, and the Government has stated that a retention incentive will be deployed ‘at the appropriate time’.
Self-employment Income Support Scheme
The Government's Self-Employment Income Support Scheme (SEISS) is intended to support individuals whose businesses have been adversely affected by coronavirus. This support comes in the form of taxable grants, based on a proportion of average monthly profits.
Statutory Sick Pay (SSP) arrangements
The Government is introducing legislation to allow employees to reclaim Statutory Sick Pay (SSP) relating to absences as a result of COVID-19. This refund will cover up to two weeks’ SSP per eligible employee.
The reclaim can be made the employer’s HMRC PAYE online account, and appropriate records in respect of the claim must be retained for three years after payment is received.
The current rate of SSP is £95.85 per week (£94.25 before 6th April). Note that SSP can now be paid from the first day of absence.
Talk to HMRC
Among the series of support packages, the Government pledged in The Budget, was an enhancement to HMRC’s ‘Time to Pay’ arrangement scheme to help those with upcoming tax bills plan how they can pay with an individual plan. To support this, it has also launched a dedicated helpline - 0800 0159 559 – with increased staff numbers, to help those businesses and self-employed people who are concerned about being able to pay their tax due to coronavirus.
Deferral of VAT payments
If you have a VAT-registered business, the VAT becoming due between 20th March 2020 and 30th June 2020 was automatically deferred until 31st March 2021, though you could have still paid if you wished.
On 24th September 2020, the Chancellor announced that businesses who deferred VAT due from 20 March to 30 June 2020 will now have the option to pay in smaller payments over a longer period. Instead of paying the full amount by the end of March 2021, businesses can make smaller payments up to the end of March 2022, interest free. You will need to opt-in to the scheme, and for those who do, this means that your VAT liabilities due between 20th March and 30th June 2020 do not need to be paid in full until the end of March 2022.
Companies House accounts filing extension
All companies must send their accounts, reports and confirmation statements to Companies House every year. If a company’s accounts are filed late, the law imposes an automatic penalty.
Companies House has announced measures for those companies whose accounts submissions have been affected by COVID-19. Private companies with accounts submission deadlines originally falling due between 27th June 2020 and 5th April 2021, will automatically have their filing deadline extended from nine months to 12 months. Please note that this will not apply to companies who have already requested a filing extension from Companies House.
Speak to your accountant to ensure that your company takes appropriate action to file your accounts on time or that you have contacted Companies House if you are unable to do so.
Think about funding available
Your bank is probably your first point of contact as they will know you and your business - many of the major banks have stated they have options that businesses are able to access should they experience temporary setbacks as a result of COVID-19 affecting their business.
You should also consider alternative lenders who may be able to help you in the short term.
Stay in touch with your customers
In any crisis clients, whether large or small, look for reassurance. We are all facing similar challenges so you can easily relate to their issues. A quick email, or even better, a phone call to see how your customers are managing may make a big difference to them, show that you truly care and generate goodwill that will be valuable in the future. Most will be comforted that there is someone who understands what they are going through.
Staying in touch also helps you understand the challenges your clients may be facing in their own businesses, which in turn helps you consider the likely impact on your own current and future revenue. The more time you have to look at this impact and react, the better.
And a final point on customers – yes, you do want to keep working with them, but if there are outstanding amounts due to you then start chasing for payment now to help support your own cashflow.
Speak to your suppliers and landlord
It is important to open dialogue as soon as possible where it is likely payments to creditors could be missed. To get your suppliers and landlord onside, engage proactively and treat them like the important stakeholders that they have been, are now, and will continue to be.
Review your working arrangements
Increasingly people will need to work from home and businesses need to start adapting to this new reality. Technology such as Skype, Facetime and Zoom allows you to continue having virtual face-to face meeting with your clients but working from home will involve a huge change for many. Is your business ready for this? Are your staff prepared to work from home? Have they got access to IT equipment, data, suitable broadband speed, etc? Some businesses may already have a business continuity plan, but this is going to be a huge challenge for many, and you may need to talk to external IT support.
Many businesses will inevitably look at ways they can reduce staff costs and will be considering redundancies, reduced working hours, unpaid leave, etc. The Government is urging caution and asking businesses not to over-react to the situation. This is difficult to do when income is falling and you need to protect your business, but it’s important to consider what your business needs to function, even at a reduced level of activity. It’s also worth bearing in mind the costs and challenges of recruiting once the crisis is over and you are trying to return to ‘business as normal’.
But for many, cost control will be inevitable and staff costs will be a key part of this. Flexible working arrangements such as unpaid leave and reduced hours are now commonplace. If you do decide to take this action to protect your business make sure you consider employment law and seek advice should you need it.
Know your numbers
Understanding how your business is performing is critical in difficult times. You are likely to have to make important decisions to help support the business and this needs to be based on an accurate view on where the business is and where it’s going. Cashflow is going to be key.
Make sure your accounting records are up to date and work with your accountant. Now may be a good time to update your systems and take advantage of some of the tools and technology available to help you understand the numbers and save time and effort.
Once your figures are up to date you can more accurately predict demands on your future cashflow, make more informed decisions and get a clear picture of what your business and, more importantly, you and your family may need over the next few months.
Forecast your cashflow
Most businesses will have some working capital available, but this can quickly be used in challenging times. Use your knowledge of your numbers and understanding of future income, orders, costs, commitments, etc. to look at how you and your business can cope with a fall in income. Ask your accountant to help if you need support doing this. Consider how you might respond. Do you need to control costs? Is there a need for further funding?
Look at your insurance cover
Check your insurance policy to see if your commercial insurance includes Business Interruption, Supply Chain or Denial of Access cover. This may include cover in the event of your business being affected by a ‘notifiable disease’. The UK and Scottish Governments have declared that COVID-19 is a notifiable disease.
If you do feel you have some form of cover, speak to your insurance provider or broker and ask them how this would work in your particular circumstances.
It is inevitable that the Government will consider relaxing some regulations which apply to business. We will keep you updated regards changes which could impact your business.
The Government has already said that to support the food industry and help provide meals for people who need to self-isolate, the Government will be relaxing planning regulations to allow pubs and restaurants to start providing takeaways without a planning application.
Speak to our team
There are several ways in which we may be able to help. It’s always important to get good advice and that’s particularly true in turbulent times. If you need help please talk to us on 0800 0523 555 or use our online enquiry form. We can offer initial consultations, advice and support over the phone if you have any concerns about face-to-face meetings.
And please feel free to share this information with your customers to help them plan their business affairs during these challenging times.
For our latest COVID-19 news and guidance for your business, visit our dedicated Coronavirus Hub.
We will be updating it regularly as we continue to monitor and digest all the latest information
Last updated: 5th November 2020This article is intended to inform rather than advise and is based on legislation and practice at the time. Taxpayer’s circumstances do vary and if you feel that the information provided is beneficial it is important that you contact us before implementation. If you take, or do not take action as a result of reading this article, before receiving our written endorsement, we will accept no responsibility for any financial loss incurred.