COVID-19 BRIEFING FOR SME’S ISSUED AT 1800 hrs 22nd MARCH 2020

#fffECONOMIC & FINANCIAL MATTERS

On Friday 20th March the Chancellor of the Exchequer set out a package of temporary and targeted measures to support public services, people and businesses through this period of disruption caused by Covid-19. He has since confirmed that timeframes may be extended and support increased as required, with no fiscal limit at present.

The support packages for business include:

• a Coronavirus Job Retention Scheme
• deferring VAT and Income Tax payments
• a Statutory Sick Pay relief package for SMEs
• a 12-month business rates holiday for all retail, hospitality and leisure businesses in England
• small business grant funding of £10,000 for all business in receipt of small business rate relief or rural rate relief
• grant funding of £25,000 for retail, hospitality and leisure businesses with property with a rateable value between £15,000 and £51,000
• the Coronavirus Business Interruption Loan Scheme offering loans of up to £5 million for SMEs through the British Business Bank
• a new lending facility from the Bank of England to help support liquidity among larger firms, helping them bridge coronavirus disruption to their cash flows through loans
• the HMRC Time To Pay Scheme

Support for businesses through the Coronavirus Job Retention Scheme

Under the Coronavirus Job Retention Scheme, all UK employers will 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. All UK businesses are eligible.

In order to access the scheme business owners will need to:

• designate affected employees as ‘furloughed workers’ (this in effect means indefinite unpaid leave but not altering their current employment status) and notifying these employees of this change. It is important to remember that 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, which will be accessible soon via your organisation’s existing HMRC online facility. If in doubt, you can contact the HMRC free telephone hotline on 0300 200 3300 HMRC will ‘shortly’ set out further details on the information required.

HMRC will reimburse 80% of furloughed workers wage costs, up to a cap of £2,500 per month. HMRC are working urgently to set up a system for reimbursement and it anticipated that the system will be running and making payments by the end of April at the latest. Don’t forget that all payments under this scheme can be backdated to 1st March 2020. Existing systems are not set up to facilitate payments to employers.

Support for businesses through deferring VAT and Income Tax payments

The Government will support businesses by deferring Valued Added Tax (VAT) payments for 3 months. If you’re self-employed, Income Tax payments due in July 2020 under the Self-Assessment system will be deferred to January 2021.

VAT

For VAT, the deferral will apply from 20th March 2020 until 30th June 2020 and all UK businesses are eligible. 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. VAT refunds and reclaims will be paid by the Government as normal.

Income Tax

For Income Tax Self-Assessment, payments due on the 31st July 2020 will be deferred until the 31st January 2021. If you are self-employed you are also eligible. This is an automatic offer with no applications required. No penalties or interest for late payment will be charged in the deferral period. HMRC have also scaled up their Time to Pay offer to
all firms and individuals who are in temporary financial distress as a result of Covid-19 and have outstanding tax liabilities.

Support for businesses that are paying sick pay to employees

The Government will shortly introduce legislation to allow small and medium-sized businesses and employers to reclaim Statutory Sick Pay (SSP) paid for sickness absence due to Covid-19. The eligibility criteria for the scheme will be as follows:

• this refund will cover up to 2 weeks’ SSP per eligible employee who has been off work because of Covid-19
• employers with fewer than 250 employees will be eligible – the size of an employer will be determined by the number of people they employed as of 28th February 2020
• 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. If evidence is required by an employer, those with symptoms of coronavirus can get an isolation note from NHS 111 online and those who live with someone that has symptoms can get a note from the NHS website
• 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.

You are eligible for the scheme if:

• your business is UK based
• your business is a small or medium-sized and employs fewer than 250 employees as of 28th February 2020

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

Business rates holiday for retail, hospitality and leisure businesses

The Government will introduce a business rates holiday for retail, hospitality and leisure businesses in England for the 2020 to 2021 tax year. Businesses that received the retail discount in the 2019 to 2020 tax year will be rebilled by their local authority as soon as possible.

You are eligible for the business rates holiday if:

• your business is based in England
• your business is in the retail, hospitality and/or leisure sector

Properties that will benefit from the relief will be occupied hereditaments that are wholly or mainly being used:

• as shops, restaurants, cafes, drinking establishments, cinemas and live music venues
• for assembly and leisure
• as hotels, guest & boarding premises and self-catering accommodation

You do not need to take any action to access this scheme. It will apply to your next council tax bill in April 2020; however, local authorities may have to reissue your bill automatically to exclude the business rate charge. They will do this as soon as possible. You can estimate the business rate charge you will no longer have to pay this year using
the business rates calculator. Further guidance for local authorities is available in the expanded retail discount guidance.

Cash grants for retail, hospitality and leisure businesses

The Retail and Hospitality Grant Scheme provides businesses in the retail, hospitality and leisure sectors with a cash grant of up to £25,000 per property. For businesses in these sectors with a rateable value of under £15,000, they will receive a grant of £10,000. For businesses in these sectors with a rateable value of between £15,001 and £51,000, they will receive a grant of £25,000.

You are eligible for the grant if:

• your business is based in England
• your business is in the retail, hospitality and/or leisure sector

Properties that will benefit from the relief will be occupied hereditaments that are wholly or mainly being used:

• as shops, restaurants, cafes, drinking establishments, cinemas and live music venues
• for assembly and leisure
• as hotels, guest and boarding premises and self-catering accommodation

To access this scheme you do not need to do anything at present. Your local authority will write to you if you are eligible for this grant. Guidance for local authorities on the scheme will be provided shortly. Any enquiries on eligibility for, or provision of, the reliefs and grants should be directed to the relevant local authority. Find your local
authority.

Support for businesses that pay little or no business rates

The Government will provide additional Small Business Grant Scheme funding for local authorities to support small businesses that already pay little or no business rates because of 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 their ongoing business costs. You are eligible if:

• your business is based in England
• you are a small business and already receive SBBR and/or RRR
• you are a business that occupies property

You do not need to do anything at present to access this scheme. Your local authority will write to you if you are eligible for this grant. Guidance for local authorities on the scheme will be provided shortly. Any enquiries on eligibility for, or provision of, the reliefs and grants should be directed to the relevant local authority.

Support for businesses through the Coronavirus Business Interruption Loan Scheme

A new temporary Coronavirus Business Interruption Loan Scheme, delivered by the British Business Bank, will launch early during w/c 23rd March to support primarily small and medium-sized businesses to access bank lending and overdrafts.

The Government will provide lenders with a guarantee of 80% on each loan (subject to a per-lender cap on claims) to give lenders further confidence in continuing to provide finance to SMEs. The government will not charge businesses or banks for this guarantee, and the Scheme will support loans of up to £5 million in value.

Businesses can access the first 12 months of that finance interest free, as the Government will cover the first 12 months of interest payments.

You are eligible for the scheme if:

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

All the major banks will offer the Scheme once it has launched. There are 40 accredited providers in all. 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. This will help your finance provider to act quickly once the Scheme has launched. If you have an existing
loan with monthly repayments you may want to ask for a repayment holiday to help with cash flow.

Support for businesses paying tax: Time to Pay service

All businesses and self-employed people in financial distress, and with outstanding tax liabilities, may be eligible to receive support with their tax affairs through HMRC’s Time To Pay service.

These arrangements are agreed on a case-by-case basis and are tailored to individual circumstances and liabilities. You are eligible if your business:

• pays tax to the UK Government
• has outstanding tax liabilities

If you have missed a tax payment or you might miss your next payment due to Covid-19, please call HMRC’s dedicated helpline: 0800 0159 559. If you’re worried about a future payment don’t contact HMRC until nearer the time that it is due.

Insurance

Businesses that have cover for both pandemics and Government-ordered closure should be covered, as the Government and insurance industry confirmed on 17th March 2020 that advice to avoid pubs, theatres etc. is sufficient to make a claim as long as all other terms and conditions are met. Insurance policies differ significantly, so businesses are encouraged to check the terms and conditions of their specific policy and contact their providers.

Most businesses are unlikely to be covered, as standard business interruption insurance policies are dependent on damage to property and will exclude pandemics.

Financial help for Sole Traders, un-registered organisations and Self-Employed people

The Government has acknowledged that its current financial packages do not yet provide the same level of help and support as is now available for businesses. It has not yet finalised its plans for a comprehensive assistance package for these groups of people, although the Chancellor of the Exchequer is expected to make further announcements
during w/c 23rd March. We will advise you on any details of measures that he announces in relation to these people.

Social Distancing

Social Distancing

Everyone has been urged to undertake ‘social distancing’, which means staying at least 2 metres away from other people in public places. Some pubs, cafes and restaurants – having been forced to close on Friday night 20th March – are now offering take-away services. Other shops and supermarkets are still open and we have all been urged to
employ social distancing when queuing inside and outside such establishments. The same advice applies in all other settings (such as streets and recreational areas) too.

Children, most of who will now be on an extended period of non-attendance at the now-closed schools, should be told not to play/stay close to their friends in public areas and parents/carers should explain the dangers in not doing so. Children are likely to have immune systems that are stronger than older adults so they can unwittingly become
carriers; even if they do not develop any symptoms, they may still infect adults in their households if they have acquired Covid-19 from their friends.

Vulnerable Groups

People over 70 years’ old and those with underlying health conditions have been urged to take extra care when mixing with others in, say, shops. Ideally they should stay at home and not mix with others at all – although for people who live alone and do not have a support network this can be difficult. Encouragingly, many local neighbour networks are emerging spontaneously and we should all see if we can offer help to vulnerable neighbours and family members who live away from us. For maximum bio-security, please avoid direct contact with vulnerable people; for instance, if we are getting shopping for them it is safer to leave the bags on their doorstep and knock/ring the doorbell to advise them of the delivery, rather than wait for them to open the door and have a close-contact chat.

On Sunday 22nd March the Government announced that for the 1.5 million people who are most at risk due to very serious medical conditions a new service will become available during w/c 23rd March. From Tuesday 24th March all such people will receive a letter from their GP or other NHS source telling them how to trigger this service, which will include home delivery of food/household goods boxes (the initial boxes will be generic and free) and prescription medication. As the scheme develops, people will be able to be specific about personal preferences. They will also be advised to completely self-isolate for at least 12 weeks.

From Monday 23rd March larger supermarkets will introduce special opening hours for Vulnerable Groups and, separately, healthcare workers. Please check the supermarkets’ national websites and follow the advice given, possibly clicking through to local stores as opening times are likely to be different across different geographical locations.

Other Health Advice

We have all been advised not to visit friends and relatives for the foreseeable future in order to help stop the unwitting spread of the virus.

We will issue further advice and guidance Bulletins as the Covid-19 situation develops.

Sir Henry Boyle
1800 hrs 22nd March 2020