March 18, 2020

COVID-19 Update 18/03/2020

We are, not surprisingly, being asked by many of our clients for help in understanding what they should do or can do, in response to the Coronavirus. Whilst we appreciate it is a very worrying time for many businesses (notwithstanding the obvious health concerns), particularly those in the travel, hospitality and service sectors who have seen sales decline dramatically, please be aware that we are largely in the dark as much as you are. Please bear in mind also that we are accountants; we do not pretend to be HR experts nor medical experts.

Here is the current gov.uk communication: https://www.gov.uk/government/news/coronavirus-covid-19-guidance-for-employees-employers-and-businesses

We suggest you use this link on a regular basis for any updates on the financial help you can get, how and when.

Nevertheless we can offer some suggestions and do so here. Where we learn more we will communicate to all our clients as soon as possible.

  • Grants
  • Loans
  • Sick pay
  • HMRC debts
  • Cash Flow management

Grants

There has been talk from the Government about small businesses being able to apply for a grant of £3,000 (increased as of yesterday to £10,000). We understand the following from a non government source:

Around 700,000 businesses in England currently eligible for Small Business Rate Relief (SBBR) or Rural Rate Relief can apply for the emergency funding. The Department for Business, Energy & Industrial Strategy will be writing to local authorities this week to outline the scheme, and encourage local authorities to prepare. However, once up-and-running, your local authority will contact you rather than having to apply yourself. And funding will not be available until April, according to sources.

This suggests that if your business is NOT in receipt of the SBBR you will not be eligible.

Loans

Yesterday’s government announcement about access to unlimited loans is clearly helpful. We have no further details at this time and bear in mind that the loans will probably have to be repaid. They are not a grant.

Sick pay

Historically the first three days of illness are free to the employer, with staff being paid roughly £19 a day thereafter. Businesses have had to bear the cost of this. Recently the government announced that staff will not have to wait the three days and have also said the government will bear the cost of up to 2 weeks of SSP @ £19 a day. It is not clear how this will be refunded.

Please see https://www.gov.uk/government/publications/support-for-those-affected-by-covid-19/support-for-those-affected-by-covid-19  which can be accessed via https://www.gov.uk/government/news/coronavirus-covid-19-guidance-for-employees-employers-and-businesses which is all the information we have.

HMRC debts

Paying VAT, PAYE and Corporation Tax is often difficult as they are big numbers. As always you can ring the usual “Time to Pay” number, where I hope HMRC will be more amiable than normal in agreeing to monthly payments.

ALWAYS ring this number BEFORE the tax is due as this usually gets a more friendly response. The number is 0300 200 3835.

See https://www.gov.uk/difficulties-paying-hmrc for a fuller list.

Cash flow management

You know your business better than anyone.

Where businesses are facing a critical cash flow problem the following steps should be taken:

  • Understand fully what the business outgoings are even in the absence of any sales.
  • Don’t forget that is lack of cash that kills businesses; NOT a lack of profit, so now might not the time to take advantage of discount offers to buy more stock than usual as the cash outgoing will be higher.
  • Do not pay any creditors that you think will be merely be disappointed or cross. Creditors will get nothing if you go out of business which is worse for them than having to wait longer for their money.
  • COMMUNICATE with key creditors – ask for a rent holiday (ie no rent to pay for a period) or for a delayed payment (ie no rent for a period but then a catch up afterwards) – rather than simply not paying them.
  • Run stocks down to a lower level,
  • Understand fully your debtor position. Consider offering discounts to get them to pay now. Consider those debtors that might themselves be in cash flow problems and try to get them to pay something to you now before they run out of money.
  • Understand what you can do regarding staff. We are not HR experts so suggest you seek advice.

Contact us today for more information on our COVID-19 updates.