Updated 4 April 2020

On 20 March, the Chancellor started the announcements of the layers of help that would be available to business to help to fight the effects of the governments action to stop the spread of Covid-19 or the Coronavirus pandemic.

This document is a summary of the support available for businesses during this period of disruption. It’s likely that more measures will be announced including specifically, further support for the self-employed. When this happens we will update this page. Details of all government Coronavirus announcements are published here.

Should you as Directors of owner-managed companies be suffering financial difficulties, we would suggest wherever possible that your starting point should be to:

1. Manage your short term cash flow as effectively as possible

2. Take advantage of HMRC’s time to pay arrangements mentioned below

3. Speak with your creditors to discuss payment holidays or payment deferrals

4. Check with your insurer whether you are covered for business interruption – for many this seems to be unlikely but please check anyway

5. Keep your financial information as up to date as possible – decisions made on the basis of good information are so much more effective than guesses. If you’re stuck and need help to get bookkeeping up to date, we can help and ensure that you are making decisions based on reliable, relevant information rather than just poor data.

The measures mentioned below are designed to ensure that businesses can be restarted as effectively as possible after the current measures are lifted:

Coronavirus Job Retention Scheme

All UK employers will be able to access support to continue paying part of their employees’ salary for those employees who may otherwise be laid off during the crisis. All UK businesses are eligible for this scheme, HMRC will reimburse 80% of ‘furloughed workers’ wage cost up to a cap of £2,500 per month. HMRC are working to set up a system for reimbursement. More details of the scheme can be found here.  There is very little detail yet available on the way the scheme will work and particularly how it will deal with owner-managers of limited companies, but we will update the links as we find out more about the practical details.

Update 27 March 2020: Details of how to claim under the furlough scheme can be found here

Update 30 March 2020: 

We now have further guidance on the issue of whether shareholder directors/ owner managers can claim under the furlough scheme.

Ben Kerry, Head of Labour Markets, HM treasury said:

“With respect to Directors and owner managers, that does not disqualify them from being furloughed so long as they are on PAYE payroll. I understand that they will have some statutory duties and obligations such as filling up their accounts and they will still be allowed to undertake those statutory duties whilst they are being furloughed so that would not count as doing work. So one of the key conditions of the furlough scheme is that the employee is not allowed to work for the employer but if you are the owner-manager and you do have statutory duties then you can continued to undertake those duties while being on furlough.”

[Quoted from, “Daily Coronavirus webinar”, 27th March 2020]

Please remember that you will only be able to claim for up to 80% of your monthly salary which will typically be around £720 (80% being £576).  Dividends are not covered by the scheme.

Although HM Treasury has not defined “statutory duties”, section 172 of the Companies Act 2006 states that directors have the following duty “promoting the success of the company” and specifically states that this includes:

  • the interests of the company’s employees,
  • the need to foster the company’s business relationships with suppliers, customers and others,

We advise that directors should now consider furloughing under the Coronavirus Job Retention Scheme (CRJS).

As you will appreciate the situation is constantly evolving but to speak to your normal Riley contacts.

Update II 30 March 2020: In a further update to the Coronavirus Job Retention Scheme guidance, the government has announced that it will now cover the employer national insurance (NI) and employer auto enrolment costs for furloughed staff.

Update 4 April 2020: There have been further updates to the JRS guidance which you can find here

Update 27 March 2020: The Self-employment Income Support Scheme (SEISS)

While the Job Retention Scheme is aimed at the employees of businesses (including directors), the Self-employment Income Support Scheme is aimed at sole traders and members of partnerships and will therefore support individuals and partners who have lost income due to coronavirus (COVID-19).

This scheme will allow you to claim a taxable grant worth 80% of your trading profits up to a maximum of £2,500 per month for the next 3 months. This may be extended if needed. Details can be found here. Note that you cannot apply for this scheme yet. HMRC will contact you if you are eligible for the scheme and invite you to apply online. Individuals do not need to contact HMRC now and doing so will only delay the urgent work being undertaken to introduce the scheme.

Help for self-employed who are currently not working

Many self-employed people are currently finding that they are unable to obtain work or can provide only limited services due to Covid-19. In these instances, Universal Credit may be available. The rules and eligibility criteria on who is entitled to Universal Credit are very specific and you can find the information here. In addition you may also qualify for Employment and Support Allowance as well as Universal Credit. Details of how to claim can be found here.

Deferral of VAT payments

HMRC are supporting businesses by deferring VAT payments for 3 months. No VAT payments will be expected from 20 March 2020 until 30 June 2020, instead these payments will be deferred until 31 March 2021. HMRC have confirmed that there will be no interest charged on any deferred VAT payment and you do not need to advise them that you are deferring a payment during this time. Many businesses have direct debits set up so that HMRC automatically takes payment for your VAT liability as filed and we recommend that this direct debit is cancelled to ensure payment is not taken. If you are in a VAT repayment position these will be paid by HMRC as normal. Note that you will still be required to file your VAT returns on time so please ensure that your financial information is kept up-to-date.

Small Business Grant Scheme

The government has committed to providing support to small businesses that pay little or no business rates due to small business rate relief (SBBR), rural rate relief (RRR) and tapered relief. This will provide a one-off grant of £10,000 to eligible businesses to help meet ongoing business costs. More details can be found here. This will be an automatic relief; the local authority will write to you if you are eligible for this grant. The first emails/letters relating to this have been sent out already by certain local authorities so expect relatively timely action on this. Many of these grants have already been paid out or at least notification has been made of the fact that payment will be made to the businesses that qualify.

Coronavirus Business Interruption Loan Scheme

There is a temporary Coronavirus Business Interruption Loan Scheme (CBILS) which will support smaller businesses with a turnover of less than £45 million with access to loans, overdrafts, invoice finance and asset finance of up to £5 million for a period of up to 6 years. The government have pledged to make a Business Interruption Payment to cover the first 12 months of interest payments and any lender levied fees. As the borrower you will remain liable for 100% of the debt. Details of the scheme are now available from the British Business Bank. Different lenders will require slightly different information depending on your business but please keep in contact with the Riley team to discuss how we can help with the provision of accounts and financial forecasts as required. We’re here to help.

Update 4 April 2020 : the Cornavirus Business Interuption Loan Scheme has been updated to reflect the new iinstruction from government to lenders which brings them all into line with the removal of personal guarantees on all loans of up to £250,000, the exclusion of Principal Private Residences from all guarantees for loans of more than £250,000 and various other details. The updated main page of the British Business Bank can be found here although applications will be made through your normal bank or lender.

Statutory Sick Pay Support

The government is preparing legislation to allow small and medium businesses to reclaim Statutory Sick Pay paid for sickness absence due to Covid-19. The refund will cover up to 2 weeks statutory sick pay per eligible employee who has been off work because of it. If you require evidence, those employees suffering with symptoms can obtain an isolation note from NHS 111 online. More advice on specific employees and entitlement to SSP can be found here. A rebate scheme is not yet active as it is still in development, we will give you links to further details once they are available.

Support for Retail, Hospitality and Leisure Businesses

The government has implemented a range of measures to help support these businesses as these sectors have been some of the hardest and fastest hit by Covid-19.

Business rates holiday – All businesses across the retail, hospitality and leisure sector in England that pay business rates will benefit from a business rates holiday. See here for details.

The relief will be applied on your next council tax bill due to arrive in April 2020, there should be no action from you to receive this relief. It is possible some of these will have already been received, local authorities may have to reissue your bill and should do so automatically. The Valuation Office Agency (‘VOA’) have provided a business rate charge calculator for you to understand your estimated business rate charge, this can be accessed here.

Cash grants for retail, hospitality and leisure businesses – Those with a property that has a rateable value of up to £15,000 will receive a grant of £10,000 per property. Those with a property that has a rateable value of between £15,000 and £51,000 will receive a grant of £25,000 per property. Find the details here. Many of these grants have already been paid through the local authorities. If you have yet to recive any notification please contact your local authority.

Nursery businesses in England will benefit from a business rates holiday for the 2020/21 tax year. Find out more here

Support for businesses paying tax

‘Time to Pay’ – All businesses, whether companies, partnerships or self-employed individuals that are currently experiencing financial distress, and have outstanding tax liabilities, should be eligible to receive support with their tax affairs through HMRC’s Time to Pay service. Please call 0800 0159 559. These arrangements are dealt with on a case by case basis and are clearly therefore tailored to individual circumstances. At present we have seen that HMRC will consider deferring payments for Corporation Tax, PAYE and CIS if the business has been adversely affected by Covid-19. It might not be easy to get through and you may have to wait but they appear to be very supportive.

Income Tax payment on account deferral

For 31 July 2020 income tax self-assessment payments which are due by taxpayers with an annual liability that exceeds £1,000 will be deferred until 31 January 2021. To be eligible for the deferral you must be registered for self-assessment. This is an automatic offer and you will not have to contact HMRC to advise that you are deferring your payments. No penalties or interest for late payment will be charged in the deferral period. Should you not be eligible for the payment on account deferral the HMRC ‘Time to Pay’ facility should be contacted on 0800 024 1222 where you are in temporary financial distress as a result of Covid-19 and have outstanding tax liabilities or payments due.

Information for Directors of small owner managed companies

Clearly, many of our clients are directors and shareholders of small owner-managed businesses and their remuneration is made up of a nominal salary topped up with share dividends. It seems that the current interpretation is that should the company’s business activities be effectively paused and the directors declared as ‘furloughed employees’ the directors should be eligible for receipt of the Coronavirus Job Retention Scheme whereby the company would be able to reclaim 80% of the director’s nominal salary (but not dividend) from the government. Only ‘furloughed employees’ are eligible for the Coronavirus Job Retention Scheme and it is being made clear that a furloughed employee is not allowed to perform any duties for its employer. Therefore, if the business is at all operational, any directors still actively managing the business are unlikely to be eligible for the scheme (full details of the scheme are still awaited).

We have provided as much information as is known at the moment and will continue to update this.

Remember that while we may not be in the office and capable of offering you a real coffee, we are on our normal phone numbers and our regular email addresses as well as mobiles where necessary. We will continue to provide you with advice, assistance and as much support as we can as we all fight to get through this together.

Riley Chartered Accountants
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