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What measures are available to help businesses through the Coronavirus outbreak?
We understand that many of our clients will be very concerned about what they should do at this time to try to keep their business and staff safe as well as keeping the business going in the longer term. We have therefore put together a guide of some of the measures the Government has made available to businesses of all kinds.
Usually when legislation like this is passed through parliament it takes a number of months to go through and is heavily debated. The purpose of this is to try and cover all eventualities before the law is passed. In these unprecedented times laws are being passed (or announced before being enforced) in hours rather than months and there are therefore gaps that have not been covered and we therefore don’t know the answers until they are expanded on. For this reason, all we can do is apply our best interpretation until additional guidance or amendments to the law are introduced. It is for that reason that all the information in this briefing is qualified as being subject to change at any time and you should check back here regularly and also check out the Gov.uk website for the latest information. If you are in any doubt as to the current schemes available please contact the Commercial Team at Fieldings Porter who would be happy to help.
Closure of Shops and Businesses
Do we need to close our shops and businesses?
Please read our information sheet Which businesses have to close to the public during the lockdown? or Hospitality and leisure sector considerations during the Coronavirus outbreak which provide more information about this.
Can we still take online orders for products for delivery to the customer/recipient or collection by them?
At this time the guidance from the Government is that online retail is still permitted and is to be encouraged. Delivery and postal services are still to run as close to normal as possible so it will still be possible for you to carry on trading as an online retailer only using online platforms, telephone, e-mail or postal ordering services.
The partial relaxation of the lockdown rules on 13th May 2020 also now permit people to leave their homes to collect items that they have ordered remotely from businesses so you would be able to operate a click and collect type business for non-essential items. However, you must keep the shop closed and operate a socially distanced business.
If I am operating my business as an online retail business only can staff still come in to work to help prepare the orders?
At this moment in time if your staff are unable to prepare the products from their own home and would need to come into your premises to do so then that is permitted. The facilitation of collection services would also be permitted. However, if this is the case you must adhere to the Public Health guidelines on social distancing and ensure that you put all measures possible in place for the safety of your staff. This will include workers being at least 2 metres apart, hand washing practises and reducing contact to a minimum. You must also make sure that the public have no access to the building and the shop itself remains closed (unless it is in the category of shops permitted to remain open).
You should consider whether you could implement ways of staff working from home if at all possible. There is no right or wrong answer here and you will need to review your own business and what is and isn’t feasible.
However, whilst it is important that you try to keep your business going and keep the economy going your primary concern at this time must be the health of your staff and customers. You must complete a health and safety risk assessment (publish it on your website if you have more than 50 employees) and display a new COVID-19 HSE poster. Failure to demonstrate this consideration and an appearance for only economic rewards could be damaging later should something go wrong.
If you are in any doubt as to whether you are able to continue to operate your business or the impact it may have on the employment rights of your employees please contact the Fieldings Porter Employment and Commercial Team.
We have produced separate information sheets dealing with Statutory Sick Pay, Furlough Leave, NHS Volunteering and Redundancy entitled Covid-19 and its effects on employment and you should read that and the associated Furlough leave and what this means for employers briefings.
Essentially though the government has introduced an unprecedented scheme to help employers secure cashflow to keep jobs open throughout the coronavirus outbreak paying 80% up to £2,500 per month towards employee costs. The scheme is quite detailed and, in many ways, quite complicated and you will need to ready through our other guidance notes. If you have any questions about how the scheme may or may not work for your business or need us to check the compliance of your documentation please contact the Fieldings Porter Employment Team.
Business rates holiday for retail, hospitality and leisure businesses
The Government has announced that in England they are operating a 100% rates relief for the 2020-21 financial year for business premises in the retail, hospitality and leisure sectors.
Properties which will benefit from the relief will be occupied wholly or mainly for use as:
There is now detailed guidance in place for local authorities on the implementation of the scheme as they are administering it. There should be no action required by businesses as the relief will be applied to your non-domestic rates bills from April 2020. If invoices have already been received the local authority should reissue the bill as soon as possible.
Should you experience any difficulty in obtaining this rates relief please contact David Darlington in Fieldings Porter’s Commercial Team to discuss further.
Protection from eviction for commercial tenants
The Coronavirus Act 2020 contains a provision that commercial tenants who cannot pay their rent because of COVID-19 will be protected from eviction. These measures mean no business will automatically forfeit their lease and be forced out of their premises if they miss a payment up until 30 June.
Moreover, the Courts have confirmed they will not continue with or accept any new possession claims for a period of 90 days from 27th March 2020.
Following a recent announcement by government it is anticipated that measures will be drafted into law in the coming days to prevent statutory demands and winding up petitions to be used to enforce unpaid rents on commercial premises until 30th June 2020. Restrictions on the use of the Commercial Rent Arrears Recovery scheme for unpaid rent of less than 90 days have also been announced.
However, you should still pay your rent if possible as it is not a rental holiday and you will still be liable for the rent.
Should you be facing any action from your landlord or be a landlord who wants to know their options at this difficult time please contact the Fieldings Porter Commercial or Litigation Teams.
Financial Support for Businesses
Small Business Grant Fund
Businesses eligible for small business rates relief on their business rates will get a £10,000 cash grant which will be paid by local authorities. The payment is only available for businesses who operate from business premises.
Eligibility for this scheme is not connected to whether the business was able to continue trading during the coronavirus outbreak. The only condition of eligibility for this relief is that on the 11th March 2020 the business was eligible for relief under the business rates Small Business Rate Relief Scheme (including those who pay a small amount of business rates which receive tapered relief having a rateable value between £12,000 and £15,000). Eligible businesses will receive a payment of £10,000 per premises.
There are a small number of exclusions to the scheme which are where the property is used for personal use, for car parks and parking spaces and businesses in liquidation or dissolved on 11th March 2020.
The Retail, Hospitality and Leisure Grant Fund
For businesses whose premises’ rateable value is higher than £15,000 there may be another source of grant funding available dependant on the use of the premises.
Businesses in England that would have been in receipt of the recently announced Expanded Retail Discount (the 100% rates relief detailed above) with a rateable value of less than £51,000 will be eligible for cash grants as follows:
There is no pre-condition that the business must not have been operating during the coronavirus outbreak. Businesses just need to operate an eligible premises to get the grant.
If a business has received a payment under the Small Business Grant Fund above it will not receive another payment under this fund.
Again, there are a small number of exclusions to the scheme which are buildings used for personal use, car parks and parking spaces and businesses in liquidation or dissolved on 11th March 2020.
For both schemes the local authority should contact the person responsible for paying the business rates for the premises to ask them to confirm they are still the relevant person responsible for the rates payments and complete a declaration of that. However, a number of local authorities have now set up pages on their websites allowing businesses to apply directly for the grant. This is especially helpful for those who have closed their premises and are not getting the post at the moment. We would therefore recommend all our members check their local authority’s website for this.
If you don’t know your property’s rateable value this can be checked this by visiting https://www.tax.service.gov.uk/business-rates-find/list-valuations-by-postcode and inputting the property details.
Should you experience any difficulties in obtaining your grant please contact David Darlington.
The government are supporting businesses by deferring VAT payments for any payments due between 20th March 2020 to 30th June 2020. Any applicable payments must be made by 31st March 2021.
All UK businesses are eligible, but the deferral is not compulsory. HMRC will not charge interest or penalties on any amount deferred under the scheme provided it is paid by 31st March 2021.
You do not need to tell HMRC that you are deferring your payment, but you do need still to file your returns on time.
Government advice is that businesses who normally pay by direct debit should cancel their direct debit with their bank if they are unable to pay in sufficient time so that HMRC do not attempt to automatically collect on receipt of your VAT return. VAT refunds and reclaims will be paid by the government as usual. The scheme does not cover payments for VAT MOSS or import VAT which should be paid in the usual way.
Please note that the VAT will still be payable but it will be paid at a later date. This allows you to use the money collected for VAT now for short term costs whilst the other schemes are being set up and start to pay out.
Bounce Back Loan Scheme
On 27th April 2020 Rishi Sunak announced the Bounce Back Loan Scheme to support small and medium sized businesses in England. The scheme went live on 4th May 2020.
Under the Bounce Back Loan Scheme the government will guarantee 100% of a loan for between £2,000 and £50,000. There won’t be any fees or interest to pay for the first 12 months.
The amount you can borrow is capped at 25% of your turnover up to a maximum loan size of £50,000.
Loan terms are for 6 years with no repayments due during the first 12 months. The interest payable after that is fixed at 2.5% per annum and early repayments can be made at any time.
The scheme is delivered through a network of accredited lenders and is open to businesses based in the UK which have been negatively affected by coronavirus and not have been an ‘undertaking in difficulty’ on 31 December 2019.
You can’t apply if you are a bank, insurer (not a broker), public sector body or state funded primary and secondary school, nor if you have claimed a Coronavirus Business Interruption Loan Scheme (although you can switch between the two up to 4th November 2020).
The scheme operates on a self-certification basis.
Full details of the scheme are available from the British Business Bank website www.british-business-bank.co.uk .
Coronavirus Business Interruption Loan Scheme (CBILS)
The temporary Coronavirus Business Interruption Loan Scheme supports small and medium businesses with access to loans, overdrafts, invoice finance and asset finance of up to £5 million and for up to 6 years with a Government backing.
Key Features of CBILS are:
• Up to £5m facility & maximum term of 6 years
• 80% guarantee: The scheme provides the lender with a government-backed, partial guarantee (80%) against the outstanding facility balance, subject to an overall cap per lender
• No guarantee fee for SMEs to access the scheme: No fee for smaller businesses. Lenders will pay a fee to access the scheme.
• Interest and fees paid by Government for 12 months: The Government will make a Business Interruption Payment to cover the first 12 months of interest payments and any lender-levied fees (if charged by the individual lender), so smaller businesses will benefit from no upfront costs and lower initial repayments.
• Finance Terms: Up to 6 years for term loans and asset finance facilities. For overdrafts and invoice finance facilities, terms will be up to 3 years.
• Security: The scheme may be used for unsecured lending for facilities of £250,000 and under and no personal guarantee will be taken for this. For facilities above £250,000, the lender may ask for a personal guarantee, but it cannot include a principle private residence and can only be for a maximum of 20% of the outstanding balance of the CBILS facility after the proceeds of business assets have been applied.
If the lender can offer finance on normal commercial terms without the need to make use of the scheme, they may do so, but other options need not be exhausted before the use of the CBILS.
You must appreciate that the borrower always remains 100% liable for the debt and your business will still be responsible for the repayment of the loan. Ultimately the idea is to ease cashflow at this difficult time by allowing more businesses to be eligible for emergency lending.
SMEs from all sectors can apply for the full amount of the facility. To be eligible for a facility under CBILS, an SME must:
• Be UK-based in its business activity, with annual turnover of no more than £45m
• Have a borrowing proposal which, were it not for the current pandemic, would be considered viable by a lender, and for which the lender believes the provision of finance will enable the business to trade out of any short-to-medium term difficulty
You can access the loans either by going direct to the 40 accredited finance providers or by contacting a broker. Brokers may charge fees, but these can often be added to the loan.
You will need to provide certain evidence to show that you can afford to repay the loan which is likely to include management accounts, cash flow forecasts, business plans, historic accounts, and/or details of assets, but will vary from lender to lender.
You should take financial advice before entering into a loan.
Should you need to take legal advice on the personal guarantee required or any security required to be given for larger loans please contact Fieldings Porter Commercial Team who will be happy to help with the advice required.
There are also schemes for business with a turnover from £45m - £500m where loans of up to £25m can be obtained and should you need any further information and assistance with that please contact the Fieldings Porter Commercial Team.
Time to Pay Service
Businesses 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 to be agreed on a case-by-case basis and are tailored to the individual circumstances and liabilities.
If you have missed a tax payment or you might miss your next payment due to COVID-19, you should call HMRC’s dedicated helpline: 0800 0159 559
Should you need any guidance or legal assistance in navigating your business through the coronavirus outbreak please do not hesitate to contact Fieldings Porter’s Commercial Team who will be happy to help.
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