Joanna Connolly Solicitors know how worried everyone is at this time. The following is a summary of the Government assistance available to small businesses.
Key financial assistance is being provided by the Support for businesses through the Coronavirus Job Retention Scheme. We would strongly advise you to read the HMRC guide which can be accessed here:
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, you will need to:
• designate affected employees as ‘furloughed workers,’ and notify your employees of this change – 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 the information required)
HMRC will reimburse 80% of furloughed workers wage costs, up to a cap of £2,500 per worker per month initially for a 3-month period backdating it to 1 March 2020. HMRC are working urgently to set up a system for reimbursement, as existing systems are not set up to facilitate payments to employers. They expect to set up the portal at the beginning of April 2020 and for payments to be made by the end of April 2020
At the same time all VAT liabilities due between the period 20 March 2020 – 30 June 2020 is being deferred by the Government until the end of the 2020 to 2021 tax year. However, any VAT refunds and reclaims will still be paid as normal. This is an automatic offer with no applications required. HMRC suggest that you cancel the direct debit as they cannot unilaterally cancel it. No interest or penalties will be charged if you take advantage of this .
To further assist with cash flow the second instalment payment for income tax due in July 2020 for the coming tax year 2020 -2021 is deferred until January 2021. Again, no interest or penalties will be charged.
You can also recover up to 2 week’s Statutory Sick Pay for any employees who have been off work because of Covid-19 though a repayment mechanism has not as yet been set up.
You have access to the HMRC’s Time to pay service which is agreed on a case by case basis both for existing tax liability and future such as PAYE.
You also have access to the temporary Coronavirus Business Interruption Loan Scheme which provides access to loans, overdrafts, invoice finance and asset finance of up to £5 million and for up to 6 years. The government will cover the first 12 months of interest payments and any fees charged by the lender. The government will provide the lenders with a 80% guarantee on each loan. It is important that if you are asked to provide a personal guarantee in this uncertain time that you consider the risks carefully. Even if the lender says that your home would be safe due to the terms of the loan please remember that if the lender chooses the insolvency route then a Trustee in Bankruptcy would still be able to sell the property for the benefit of all creditors.