We at Foster Mann UK have put together ‘A Guide for Small Businesses’ which I believe may be helpful to you over the coming days, weeks and months. We hope you will find it helpful and interesting.
Coronavirus Business Interruption Loan Scheme
Many details remain to be worked out, but to be eligible businesses must be:
Be UK based, with turnover of no more than £41 million per annum
Operate within an eligible industrial sector (subject to sector exclusions)
Have a sound borrowing proposal, but insufficient security to meet a lender’s normal requirements
Be able to confirm that they have not received de minimis State aid beyond €200,000 equivalent over the current and previous two fiscal years.
The scheme will be operated through High Street banks for £1,000 to £1.2m. Government guarantee to cover 80%, with the banks retaining residual 20% risk. This will necessitate a credit process, which will hopefully be as streamlined as possible.
We are closely following developments and will provide us timely updates as soon as more information becomes available.
Statutory Sick Pay
The eligibility criteria for the scheme will be as follows:
The 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 28 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
Eligible period for the scheme will commence the day after the regulations on the extension of Statutory Sick Pay to those staying at home comes into force
The government has yet to set up the repayment mechanism for employers and again THL will provide updates as soon as more information becomes available.
Business Rates
The Government announced that it will provide additional funding to support small businesses that already pay little or no business rates because of Small Business Rate Relief (SBBR). This will provide a one-off grant of £10,000 to businesses to help meet their ongoing business costs. You should be contacted by your local council for this and should not need to apply. There shall be no business rates payable by any companies in the leisure and hospitality industry for 2020/21 and there will also be £25,000 grants available to the hospitality sector businesses that pay between £15,000 and £51,000 in rates.
Paying VAT, PAYE and Corporation Tax
The latest from HMRC is that they will be much more flexible than usual when agreeing time to pay arrangements with small businesses. They have set up a dedicated helpline, which opens at 8am, on 0800 0159 559, however, and as to be expected, it is extremely busy.
When calling you should have the following information to hand:
Details of how much tax you believe you owe.
A note of how much you believe can realistically afford to pay.
Details of how the coronavirus is affecting your business.
Insurance
Businesses should check with their insurance provider to see if they are covered for business interruption although most policies are dependent on damage to property, which will exclude pandemics. Some businesses may have purchased a specific add on relating to notifiable diseases, but some of these will still specify damage to the building. Some businesses may have purchased supply chain or denial of access cover which may meet their needs in this case.
Rent and other large ongoing liabilities
Rent is normally paid quarterly in advance. Businesses should contact their landlords and other supplies to discuss payment terms or payment holidays.
Employment Issues
Working from Home
With the latest advice from the government to employees being to avoid the office where possible, home working can work very well on both sides. You will need to consider the most effective and efficient ways in which you can keep in contact with the homeworker, for example, the frequency of email reporting, telephone contact or attendance at the office for meetings or training.
Other issues which will need to be considered are who is responsible for providing and maintaining furniture and equipment, insurance and security matters. Employers’ health and safety obligations apply to homeworkers in the same way as they do to employees who work on the company’s premises and so you should carry out a thorough risk assessment before any home working arrangement begins and review it regularly.
Lay-offs and Short-time Working
Lay-offs and short-time working are alternative actions to compulsory redundancies and are often used by employers as an attempt to mitigate financial difficulties. Lay-offs and short terms working are only intended as temporary measures and, if the work situation does not improve, redundancy is likely to be the next step.
A business can only impose a lay-off or short-time working arrangement where there is a contractual right to do so. Where there is no contractual right to impose a lay-off or short-time working, a business will need an employee’s express consent before introducing them.
Redundancy
Redundancy is a fair reason for dismissing an employee but only if a full and fair consultation process is carried out and the reason for the redundancy dismissal is the closure of a business or workplace or a reduced need for employees to carry out work of a particular type.
An employer may decide to offer voluntary redundancy to employees as an alternative to compulsory redundancy, although there is no legal requirement to do so but it is good practice as it may provide a way of avoiding, or at least reducing, the need for compulsory redundancies.
Adequate time must be allowed for consultation on the redundancy plans and this will be at least:
• 30 days before the first redundancy where there are 20 to 99 proposed redundancies; and
• 45 days before the first redundancy where there are 100 or more proposed redundancies.
Where there are fewer than 20 proposed redundancies, the consultation period is not specified but employers should allow at least two weeks. In any redundancy situation, employers must consult with individual employees. In addition, employers must consult with trade union or elected employee representatives if more than 20 employees are affected within a 90-day period. This is known as collective consultation.
These are challenging times but we as your accountants are here to support you and your business every step of the way!