26 March, 2020 in Industry News

Summary of COVID 19 support for businesses

The past week has been a time of uncertainty for businesses and the UK Government and Stormont Executive are continually releasing details of support packages in response to the COVID 19 crisis.

With many businesses closing temporarily, business owners will have many questions as to the support packages that are available but also how to protect their business during this period to ensure that it remains viable in the future.

We have set out the steps that businesses should consider, and the support available, to assist businesses through this period.

 

Assess your cashflow requirements

Before you apply for the available loan schemes, it is important to understand what your cashflow requirement is on a monthly basis.

Income

Project business income over the next 3 to 6 months:

  • What work is in the system and is it guaranteed to proceed
  • What work was in the pipeline and assess likelihood of it proceeding
  • Speak to customers and clients to understand their position
  • Liaise with supply chain to determine whether you can deliver sales
  • Consider approach to customer debt collection

Expenditure

Project monthly expenditure over the next 3 to 6 months:

  • Consider staffing level requirement based on projected sales/income (support available via Employee Retention Scheme).
  • Will availability of supplies result in a price increase?
  • What overheads can be reduced (see below for support available).
  • Determine affordability of repayment of current finance (see finance support available).
  • Assess VAT liability (see VAT support below).

How can we assist?

By projecting forward your income and expenditure over the period you will be able to understand what the cashflow requirement is on a monthly basis and thus assess what the most appropriate method of financial support is.

If required, we can provide assistance in helping you to understand your monthly/weekly cashflow requirement.  Contact your client manager or a member of our Advisory Team.

Financial Support Available

Employee and Self Employed salary support

Coronavirus Job Retention Scheme

Under the Coronavirus Job Retention Scheme, UK employers may 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.

Eligibility

All UK businesses are eligible

How to access the scheme

 

You will need to:

  • Designate affected employees as ‘furloughed workers'.
  • Notify your employees of this change – please note changing the status of employees remains subject to existing employment law and, depending on the employment contract, may be subject to negotiation.
  • 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 portal when available)

HMRC will reimburse 80% of furloughed workers wage costs, up to a cap of £2,500 per month plus the associated employers’ national insurance contributions on this amount and the minimum automatic enrolment employer pension contributions on that wage.

HMRC are working urgently to set up a system for reimbursement. Existing systems are not set up to facilitate payments to employers.

Companies can choose to top up the payment but are not required to do so.

Considerations / Comments

There has been no detailed guidance on how this scheme will operate and businesses may need short term cashflow support to pay wages until the scheme is implemented.

In addition, we expect strict implementation of this measure by HMRC who will be able to cross-check the applications against PAYE records for each business.

For this reason and for HR employment reasons, it is advisable that businesses should be clear in documenting their decisions so they can evidence that the actions taken are proportionate and appropriate at this stage.

As at 25th March, it is also unclear what happens to employers’ national insurance contributions, which amount to about 13.8 per cent of the majority of a worker’s salary. This has not been decided yet.

 

Support for paying sick pay to employees

The government is bringing forward legislation to allow small and medium-sized businesses and employers to reclaim Statutory Sick Pay (SSP) paid for sickness absence due to COVID-19 (up to a maximum of 2 weeks SSP per eligible employee).

Employers will be able to reclaim expenditure for any employee who has claimed SSP (according to the new eligibility criteria) as a result of COVID-19.

Employers should maintain records of staff absences and payments of SSP, but employees will not need to provide a GP fit note.

Eligible period for the scheme will commence the day after the regulations on the extension of SSP to those staying at home comes into force.

The government will work with employers over the coming months to set up the repayment mechanism for employers as soon as possible..

 

Eligibility

Your business is UK-based.

Your business is small or medium-sized and employs fewer than 250 employees as of 28 February 2020

How to access the scheme

 

A rebate scheme is being developed. Further details will be provided once the legalisation has passed

https://www.nibusinessinfo.co.uk/content/coronavirus-support-paying-sick-pay-employees

Self – employed pay

The UK Government announced assistance for the self-employed on 26th March.

Self-employed people who have been adversely affected by COVID-19 will be entitled to a taxable grant of 80% of average profit over previous 3 years up to £2,500 per month.

Rishi Sunak has stated that for those without three years’ worth of accounts, the Treasury will look at what they do have and go with the information they have.

Those who have not yet submitted tax returns for 31 January 2020 to submit returns within 4 weeks.

It is anticipated that payments will not be paid until early June 2020 however, self-employed people can apply for Universal Credit.

The Government have indicated that there will be a reform of the tax system in the future so that the self employed lose some of their tax advantages.

Eligibility

The scheme is open to any self-employed person with average trading profit up to £50K p.a.

In order to avoid fraud, it will only be open to people who are already self-employed and have a tax return from 2019

It is open to those who make the majority of their income from self-employment.

How to access the scheme

Tax authorities will contact self-employed people directly in relation to the application process.

How can we assist?

You can speak to our payroll department to discuss any queries you may have about the payment of SSP.

Grant Aid

Small Business Grant

A grant of £10,000 will be provided to all small businesses who are eligible.

Eligibility

Businesses who are eligible for the Small Business Rate Relief Scheme.

The ratings system will be used as the mechanism to identify eligible businesses in Northern Ireland.

Last year’s rating list will be the basis for payment.

How to access the scheme

 

Payments will be made directly into the bank accounts of eligible businesses.

Apply via the following link https://www.covid-19smallbusinessgrants.economy-ni.gov.uk/

You will need:

  • Your Ratepayer ID (shown on your rate bill)
  • Your Occupancy ID (shown on your rate bill)
  • Your sort code
  • Your bank or building society account number
  • Your e-mail address

Retail, hospitality and tourism grant

A grant of £25,000 will be provided to companies in the retail, tourism and hospitality sectors with a rateable value between £15,000 and £51,000. This should assist 4,000 businesses.

Eligibility

Details yet to be confirmed.

How to access the scheme

Details yet to be confirmed but it is expected that this will be similar to the Small Business Grant.

https://www.economy-ni.gov.uk/news/covid-19-business-support-grant-schemes

Finance available

Current Funders

Many banks are offering deferred loan repayments, interest only periods, overdraft extensions or increases on current loan facilities for current customers.

Banks are dealing with business requests on a case by case basis. 

Note that cancelling direct debits without agreement can impact your credit score so ensure that you have agreed any changes to payments with banks, HMRC and suppliers.

Coronavirus Business Interruption Loan Scheme

A new temporary Coronavirus Business Interruption Loan Scheme, delivered by the British Business Bank (via accredited providers), aims to support primarily small and medium-sized businesses (SMEs) to access bank lending and overdrafts.

Eligibility

You are eligible for the scheme if:

  • Your business is UK based, with a turnover of no more than £45 million per year.
  • Your business meets the other British Business Bank eligibility criteria.

How to access the scheme

 

The full rules of the Scheme and the list of accredited lenders is available on the British Business Bank website. All the major banks will offer the Scheme once it has launched (not that AIB are not participating in the scheme. There are 40 accredited providers in all and 22 participating lenders in Northern Ireland

You should talk to your bank or finance provider (not the British Business Bank) as soon as possible and discuss your business plan with them.

www.british-business-bank.co.uk/ourpartners/coronavirus-business-interruption-loan-scheme-cbils/

COVID-19 Corporate Financing Facility (Larger Companies only)

Under the new Covid-19 Corporate Financing Facility, the Bank of England will buy short term debt from larger companies.

This will support your company if it has been affected by a short-term funding squeeze, and allow you to finance your short-term liabilities.

 

Eligibility

UK incorporated companies that make a material contribution to the economic activity in the UK, including those with foreign-incorporated parents and with a genuine business in the UK; companies with significant employment in the UK; firms with their headquarters in the UK.

The facility is open to firms that can demonstrate they were in sound financial health prior to the shock.

 

How to access the scheme

Information is available on Bank of England website:

https://www.bankofengland.co.uk/markets/market-notices/2020/ccff-market-notice-march-2020

How can we assist?

Depending on your financial situation, banks may require additional information in order to make changes to current facilities or for new applications.  We can assess finance requirements and provide cashflow projections to banks.

We can assist in the preparation of business continuity plans where required.

Rates

Rates bill

Rate bills for 2020-21 were due to be issued in April 2020. To avoid placing financial pressure on ratepayers affected by COVID-19, rate bills will not be issued until June 2020.

Eligibility

All rate payers.

How to access the scheme

This will happen automatically.

Business rates

There will be a three-month rates holiday for all business ratepayers, excluding public sector and utilities.

This means that no rates will be charged for April, May and June 2020. This automatically reduces the 2020-21 annual rate bill for business ratepayers by 25 per cent. This amount does not need to be paid back.

Eligibility

All businesses excluding public sector and utilities.

How to access the scheme

This will happen automatically.

HMRC

VAT

The government will be automatically deferring business payments for Valued Added Tax (VAT).

The deferral will apply from 20 March 2020 until 30 June 2020.

Eligibility

All UK businesses are eligible.

How to access the scheme

 

This is an automatic offer with no applications required. Businesses will not need to make a VAT payment during this period.

Taxpayers will be given until the end of the 2020 to 2021 tax year to pay any liabilities that have accumulated during the deferral period.

Please note that if you pay your VAT by direct debit then you will have to cancel this or it will automatically be paid.

VAT refunds and reclaims will be paid by the government as normal.

https://www.nibusinessinfo.co.uk/content/coronavirus-deferred-vat-payments

Income Tax for Self-employed

If you’re self-employed, Income Tax payments due in July 2020 under the Self-Assessment system will be deferred to January 2021.

Eligibility

If you are self-employed you are eligible.

How to access the scheme

 

This is an automatic offer with no applications required.

No penalties or interest for late payment will be charged in the deferral period.

HMRC has also scaled up its Time To Pay arrangement, which is a method of spreading your business tax payments over a longer period of time in a more affordable way. It is available to all businesses and individuals who are in temporary financial distress as a result of COVID-19 and have outstanding tax liabilities.

If you are having trouble paying your tax bill or may struggle to meet your tax obligations in the future, call the HMRC Coronavirus Helpline.

 

HMRC Coronavirus Helpline

Telephone: 0800 015 9559
Monday to Friday, from 8 am to 8 pm
Saturday, 8 am to 4 pm

https://www.nibusinessinfo.co.uk/content/coronavirus-deferred-income-tax-payments

How can we assist?

We can liaise with HMRC in relation to any VAT or PAYE issues

Should HMRC require cashflow projections to consider repayment options for legacy liabilities, we can assist you in the preparation of this information.

Other actions

Rent

If you pay commercial rent, contact your landlord to negotiate a reduction in rent over this period.

Utility costs

If you will struggle to pay your utility bill, contract your provider to discuss a payment plan over the short term.

Insurance

Review your insurance policy to determine if you have business interruption cover and whether it covers Covid19.  Many insurance companies have advised that Covid19 will not be covered under this clause.

Consider opportunities

In this difficult time, businesses may be forced to develop new ways of doing business.  Consider how you can do business differently – online opportunities, new lines of business.

Take the time now to consider future strategy, look at the things that you didn’t have the time to do before, everyone has a list!

InvestNI

Invest NI are offering consultancy support throughout COVID 19 and are working with DfE to develop business continuity programmes for all businesses across NI. 

 

If you or your business are in the unfortunate position that you are concerned about the financial viability of your business or personal position, we have an experienced team who can assist you in considering your options and identify possible solutions.

Interested in finding out more? Contact:

Whilst every effort has been made by CavanaghKelly to ensure the accuracy of the information here, it cannot be guaranteed and neither CavanaghKelly nor any related entity shall have liability to any person who relies on the information herein. Information given here is for guidance only. Detailed professional advice should be taken before acting on any information contained herein. If having read the guidance here, you would like to discuss further; a member of our team would be pleased to help you.