Frequently Asked Questions during the COVID 19 crisis

Posted by David Cudlip 26 March 2020 11:52 AM

As we continue to receive information on a day to basis, updates on how new system implementation will be rolled out and the additional funding that is available - we will share the information straight away.

Some of the frequently asked questions that we have received to date are below, and if your question isn't answered, instructions are at the bottom of the page on how to get in touch with us:

 

I need to consider making some of my workers Furloughed, what are the next steps?

We are not issuing advice here only our guidance and you should seek your own independent employment law advice as necessary before making any decisions.  We recommend contacting Jonathan Moreland, Partner of Swinburne Maddison and can be contacted by email -jmm@swinburnemaddison.co.uk

HMRC are still in the process of developing a system to deal with the Coronavirus Job Retention scheme, so specific details are still quite vague at this point. HMRC have made it clear they expect you to designate staff members as a “Furloughed Worker”. A furloughed worker is technically still employed by the company, but the company is stopping the employee carrying out any work. Rather than laying off a large part of the workforce, HMRC is supporting the company with a grant of up to 80% of the Employees cost (up to a cap of £2,500).

Our guide contains more knowledge on this topic and can be downloaded via https://www.harlandsaccountants.co.uk/covid19-guide

 

I’ve heard about a retail discount from 1st April 2020, what is it?

The Government announced that it would provide a relief of one half of the business rate bill to all occupied retail properties with a rateable value of less than £51,000 in the year 2020-21. The intention is that all retailers (that meet the qualifying criteria) will receive the relief and not just those retailers that are in the high street or town centres.

 

How do I know if I qualify for retail discount?

Properties that will benefit from the relief will be occupied with a rateable value of £51,000 or less, that are wholly or mainly being used as shops, restaurants, cafes and drinking establishments.

Some examples of premises or premises used for the following services include:

Shops such as: florist, bakers, butchers, chemists, newsagents, hardware stores, supermarkets, Opticians, Post offices, Petrol stations, Hair and beauty services, Travel agents, Tool hire, Car hire, Car workshops, Restaurants, Takeaways, Sandwich shops, Coffee shops, Pubs, Bars.

Some example properties that are being used for the provision of the following services to visiting members of the public:

Financial services, Estate and Letting agents, Medical services, Professional services, Kennels, stables, Day Nurseries, Gyms, Activity Centres, Taxi offices, Call Centres etc

 

I heard the announcement about the VAT holiday, Do I need to do anything?

An announced on the 20th March 2020 that any VAT liabilities due until 30 June 2020 would not be payable until the end of the financial year, 5 April 2021.

We understand that all VAT returns must be submitted on time and anyone paying via Direct Debit in April to June 2020 inclusive must cancel their direct debit to HMRC in respect of that quarter or monthly VAT payment only.

 

What is the Coronavirus Business Interruption Loan Scheme (CBILS)?

CBILS is a new scheme that can provide facilities of up to £5m for smaller businesses across the UK who are experiencing lost or deferred revenues, leading to disruptions to their cashflow. CBILS supports a wide range of business finance products, including term loans, overdrafts, invoice finance and asset finance facilities.

The scheme provides the lender with a government-backed guarantee potentially enabling a ‘no’ credit decision from a lender to become a ‘yes’.

 

When can I access the Coronavirus Business Interruption Loan scheme?

The scheme went live on Monday 23 March and will initially run for six months.

 

What are the key features of CBILS?

CBILS guarantees facilities up to a maximum of £5m available on repayment terms up to six years for term loans and asset finance. For overdrafts and invoice finance facilities, terms will be up to three years. The scheme provides the lender with a government-backed partial (80%) guarantee against the outstanding facility balance.

There is no guarantee fee for SMEs to access the scheme. Lenders will pay a fee to access the scheme. The Government will make a Business Interruption Payment to cover the first 12 months of interest payments and any lender-levied fees.

 

How do I know if I’m eligible to apply?

Smaller businesses (SMEs) from all sectors3 can apply for the full amount of the facility, up to a maximum of £5m. To be eligible for a facility under CBILS, your business 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 COVID-19 pandemic, would be considered viable by the lender, and for which the lender believes the provision of finance will enable your business to trade out of any short-to-medium term difficulty
  • If the lender can offer finance on normal commercial terms without the need to make use of the scheme, they will do so.

Is the scheme appropriate for Start-ups?

Potentially, if your business activity is primarily UK-based. For early stage businesses in their first two years of trading, the British Business Bank’s Start Up Loans programme (loans £500 to £25,000 at 6% p.a. interest) may be more suitable. Visit www.startuploans.co.uk for more information.

 

Will the CBILS funds run out so I can’t access the scheme?

No. Government has confirmed that the amount of funding available under the scheme will be demand-led. Therefore there is no immediate need to approach a lender if you do not need finance in the short-term. The scheme will initially run for six months.

 

Are sole traders / freelancers eligible for CBILS?

Yes, as long as the business activity is operated through a business account. The scheme is open to sole traders, freelancers, body corporates, limited partnerships, limited liability partnerships or other legal entity carry out a business activity in the United Kingdom, with annual turnover of up to £45m, operating in all sectors.

The business must generate more than 50% of its turnover from trading activity.

 

I am getting other kinds of aid to help respond to COVID-19 - can I still get a loan?

Yes. The eligibility criteria for CBILS does not require Lenders to take into account the other forms of government support that SMEs may be benefiting from e.g. business rate reliefs or grants unrelated to the CBIL scheme.

 

I have a payment due in July 2020 of self-assessment; do I need to do anything?

The second payment on account for the tax year 5th April 2020 due by 31st July 2020 has been delayed until 31st January 2021, You don’t need to don’t need to contact HMRC at this stage on this as it’s happening automatically. If you are in a position to pay and would like to you still have the ability to do so as normal.

 

What happens if an employee tells me they must self-isolate?

If the employee is told by either a doctor or NHS111 that they must self-isolate because of;

  • Being in a vulnerable group
  • Family member is in a vulnerable group
  • They self-declare they must self-isolate

They are required to fill in an “Employee Statement of Sickness”. The reason must be declared as “Coronavirus” or “Covid-19” to qualify for SSP from Day 1 rather than day 4.

 

An Employee is unwilling to come into work over fears of Coronavirus, do I still need to pay them?

If an employee declares they are self-isolating, after consultant NHS111, they are entitled to SSP providing they fill in an Employee Self Certification. If they have not been advised to self-isolate, the employee has chosen to remove their services. If the request is reasonable, the employee is in breach of their contract. According to most contracts of employment, the employer is under no obligation to pay and would follow their standard breach of contract procedures. With the social distancing measures currently in place, please take advice from a legal or HR expert before making any decision.

 

An employee earns under £118.00 per week, are they entitled to Coronavirus Sick Pay?

If an employee earns under the minimum earnings threshold for SSP, they follow normal procedures and must provide the employee with an SSP1, for more information visit https://assets.publishing.service.gov.uk/government/uploads/system/uploads/attachment_data/file/870877/ssp1-interactive.pdf

 

How do I find out if I have Business Interruption Insurance?

Many insurers have advised they are unable to cover any losses as a result of the Coronavirus due to various reasons. However, on 17 March, the UK government advised that insurers are “stepping up to the plate”, meaning its worth speaking to your insurer regularly as advice from them that you’re not covered one day may well change the next day.

Updates since the 17th March are more positive and we understand the Association of British Insurers (ABI) are working with insurance companies to assess how they can include the disruption caused by Coronavirus on many UK businesses.

 

Can I add any further protection of my business assets during COVID 19?

It is possible, with advice from your Tax Advisor and an Insolvency Specialist to turn your trading business in to a group. This group may allow you to protect various assets should the trade element of the group suffer post Coronavirus. This restructure may - if executed well - allow you maintain control of property, cash and intellectual property should your business fail in the future. We can’t stress how important it is to take the relevant advice prior to moving ahead with a reorganisation.

 

I’ve got another question...

As always the Harlands Accountants team is here to support you, and especially so during such challenging times. If there is anything in the above or otherwise you would like discuss in more detail or explore how it may work for you, please do not hesitate to contact us by:

We are monitoring all changes and updates that may affect your position and will communicate regularly throughout. Please follow us on our social media as we will continue to post updates as the situation develops.

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Topics: Coronavirus