(Updated 2.11.2020 re the 2nd lockdown rules)

Are you making full use of the Governments COVID-19 financial support package?

As we enter yet another national lockdown, businesses may be concerned about their ability to survive and succeed in the weeks and months ahead.

The level of support on offer from the Government and local authorities is unprecedented via the various grants, loans and payment holidays now available.

To help you make sense of these schemes, our experienced team have put together a helpful table covering the eligibility for each scheme and how you can apply, which we encourage you to download and read.

Businesses should assess their current financial position now and seek the support they require as soon as they can.

Chancellor announces grants worth up to £9,000 for businesses in the retail, hospitality and leisure sectors

The Chancellor, Rishi Sunak, has announced a package of one-off grants worth between £4,000 and £9,000 for businesses in the retail, hospitality and leisure sectors, following the announcement of a nationwide lockdown in England lasting until at least mid-February.

The new scheme will be accessed through local authorities and offers funding based on the rateable value of a closed business’s premises:

• £4,000 for businesses with a rateable value of £15,000 or less;
• £6,000 for businesses with a rateable value of between £15,000 and £51,000; and
• £9,000 for businesses with a rateable value of over £51,000.

This funding comes in addition to the existing Government business support schemes, including grants of up to £3,000 a month for closed businesses.

The Chancellor has also announced a further £594 million for local authorities and the devolved administrations to support businesses that are not eligible for the new grants. The devolved administrations will additionally receive equivalent funding to the main grants to distribute as they see fit.

The Chancellor said: “The new strain of the virus presents us all with a huge challenge – and whilst the vaccine is being rolled out, we have needed to tighten restrictions further.

“Throughout the pandemic we’ve taken swift action to protect lives and livelihoods and today we’re announcing a further cash injection to support businesses and jobs until the spring.

“This will help businesses to get through the months ahead – and crucially it will help sustain jobs, so workers can be ready to return when they are able to reopen.”

National Lockdown 2.0 Extension to the CJRS (Coronavirus Job Retention Scheme), SEISS (Self Employed Income Support Scheme), Grants and loan schemes

The Government has extended the Coronavirus Job Retention Scheme (CJRS) following the announcement of new Coronavirus restrictions in England from Thursday 5 November 2020 to Wednesday 2 December 2020, which will require many businesses to close.

It has also confirmed that those businesses that are required to close will be eligible for business grants of up to £3,000 a month, introduced originally for closed businesses in areas of ‘Very High’ Coronavirus restrictions under the three-tier system.

Meanwhile, the mortgage payment holiday scheme that had been due to end on Saturday 31 October 2020 has been extended so that borrowers impacted by Coronavirus will be able to access a six-month repayment holiday.

Businesses forced to close

The categories of businesses forced to close under the new restrictions are near-identical to those required to close following the initial announcement of ‘Stay at Home’ measures on 23 March 2020, with some limited differences.

The Government has confirmed that the following businesses will be required to close from Thursday 5 November to Wednesday 2 December 2020:

• all non-essential retail, including, but not limited to clothing and electronics stores, vehicle showrooms, travel agents, betting shops, auction houses, tailors, car washes, tobacco and vape shops.
• indoor and outdoor leisure facilities such as bowling alleys, leisure centres and gyms, sports facilities including swimming pools, golf courses and driving ranges, dance studios, stables and riding centres, soft play facilities, climbing walls and climbing centres, archery and shooting ranges, water and theme parks,
• entertainment venues such as theatres, concert halls, cinemas, museums and galleries, casinos, adult gaming centres and arcades, bingo halls, bowling alleys, concert halls, zoos and other animal attractions, botanical gardens;
• personal care facilities such as hair, beauty and nail salons, tattoo parlours, spas, massage parlours, body and skin piercing services, non-medical acupuncture, and tanning salons.

Supermarkets, food shops, garden centres and a limited group of other retailers that sell ‘essential’ goods and services will be able to remain open if they follow COVID-secure guidelines.

Meanwhile, ‘non-essential’ retailers will be able to open for click-and-collect and delivery only.

As was the case during the original ‘Stay at Home’ measures, hospitality businesses, including pubs, bars and restaurants that are required to close may provide takeaway and delivery services. However, in contrast to the previous measures, under the new restrictions, hospitality venues will not be able to provide takeaway’s or alcohol.

Accommodation venues will only be able to remain open for people who have to travel for work and for a limited number of other exemptions.

Coronavirus Job Retention Scheme (CJRS) Extension

The Coronavirus Job Retention Scheme (CJRS) has been extended, just hours before it had been due to close to be replaced by the new Job Support Scheme.

The extended CJRS will operate on similar terms to those in place in August 2020. CJRS grants will cover 80 per cent of a furloughed employee’s usual wages, capped at £2,500 a month, while employers will be required to cover employer National Insurance and pension contributions. They will not be required to contribute to employees’ wages, as had been required in September and October.

Flexible furlough arrangements will also be permitted under the extended scheme. This means furloughed employees will be able to work reduced hours, paid by their employer in full, while the employer can claim a CJRS grant in respect of 80 per cent of the pay for usual hours not worked

Crucially, neither the employer nor the employee needs to have used the CJRS previously to use the extended scheme.

The scheme is open to all employees for whom a Real Time Information (RTI) submission had been made on or before 30 October 2020. Previously, the scheme had only been open for employees reported on an RTI submission on or before 19 March 2020 and who had been furloughed for at least three weeks before 1 July 2020.

The scheme will otherwise operate as it has done previously and will be open to employees on any type of contract. Employers will also be able to top-up employee wages above the value of CJRS grant if they wish to do so.

Employers will need to agree full furlough or flexible furlough arrangements with employees in accordance with employment law and their contracts of employment.

Full guidance on the extended scheme is expected to be published imminently.

The extension of the CJRS means that the introduction of the JSS Open and JSS Closed on 1 November has been postponed until the CJRS closes.

Business Grants

Businesses that are required to close under the new England-wide restrictions and which are in the business rates system will be able to claim grants of between £667 and £1,500 for each two-week period they are required to remain closed.

The arrangements are the same as those in place for businesses in areas of ‘Very High’ (Tier Three) Coronavirus restrictions through the Local Restrictions Support Grant.

The new grants will pay £667, £1,000 or £1,500 for each two-week period a business is required to shut.

Businesses with rateable values of £15,000 or less will receive £667, those with rateable values of £15,000 to £51,000 will receive £1,000 and those with rateable values of more than £51,000 will receive £1,500.

The scheme will be administered by Local Authorities, with £1.1 billion of funding being distributed on the basis of £20 per head to help them support businesses more broadly.

This scheme applies to England only. However, the Devolved Administrations will receive equivalent funding to distribute as they see fit.

Mortgage Payment Holidays

Following the introduction of the new Coronavirus restrictions in England, the Government has confirmed that mortgage payment holidays will still be available to borrowers impacted by Coronavirus. The scheme had been due to end on 31 October 2020.

Borrowers affected by Coronavirus will be entitled to a six-month mortgage payment holiday. Those that have already benefitted from a mortgage payment holiday will be able to top this up to six months without a record being made on their credit file.

Further details of the scheme are expected imminently.

Government extends Self-Employment Income Support Scheme (SEISS)

The Government had already announced an extension to the SEISS under its plan for local lockdowns, which would ensure that self-employed workers would receive two more grants between November 2020 and April 2021.

The first of these grants covering the three months from 1 November 2020 until 31 January 2021 was to provide a taxable grant covering 40 per cent of average monthly trading profits, paid out in a single instalment covering three months’ worth of profits, and capped at £3,750 in total.

However, now the Government has decided to increase the total grant from 40 per cent to 55 per cent of trading profits for November to January, while the grant will be capped at £5,160.

To confuse matters slightly, in Parliament, the Prime Minister announced that support to the self-employed would increase from 40 per cent of trading profits to 80 per cent for November. As this would only be for just one month and claims are made over three, the amount available in total for the period has been adjusted to account for this.

To ensure that those who need support get it as soon as possible, payments will be made more quickly, with the claims window being brought forward from 14 December to 30 November.

The level of the second SEISS grant, running from 1 February 2021 until 30 April 2021, will be reviewed by the Government and set in due course.

Government-backed loan schemes

Businesses had already been given an additional month to make an application for the Bounce Back Loan, Coronavirus Business Interruption Loan, Coronavirus Large Business Interruption Loan and Future Fund schemes, allowing them to submit by 30 November 2020.

However, in recognition of the additional financial support that some businesses may require, the Government will now extend the loan application window until 31 January 2021.

Businesses that wish to make an application are encouraged to begin applications soon to ensure they have sufficient time to prepare and submit the required information.

Businesses who applied and drew loans under the bounce back loan scheme but didn’t take the full loan available can apply for a top up. This will be available from 9 November. The maximum loan was the higher of £50,000 or 25% of turnover.

So for example if your business had turnover of £100,000 you would have been eligible for a loan to a maximum of £25,000. If you took a loan of £15,000 you could apply for a top up of £10,000.

Updated 1.6.2020 re the new CJRS rules (see below)

The last few weeks have seen an unprecedented set of events and circumstances around the world. Maybe not since the Cuban Missile Crisis in in 1962 or the Spanish Flu outbreak of 1918 have the lives of everybody been turned upside down so quickly and worryingly.

The level of concern in the UK has been increasing since the start of February leading to a budget focused on providing support to our economy. Only a matter of days later, Chancellor Rishi Sunak, was standing next to the Prime Minister and Chief Medical Officer outlining another series of initiatives designed to help business with the promise that “we will do whatever it takes” and he’s made even further announcements since, all aimed at supporting business and the economy.

“There is genuine concern and worry amongst the business community. We’ve spent the last few weeks helping clients, some of whom are in a real crisis, find solutions to help them.”

Whilst the primary concern of any organisation is the well being and safety of their employees  every business needs to put a plan in place now to ensure there is a sustainable base to operate from as the crisis is navigated and then left behind.

What FIVE actions should you be taking right now?

One : Improve cash flow

Putting together a 13-week cash flow to help estimate what the future cash position might be is a vital first step. Cash is the life blood of any business and it needs to be protected. You should start by mapping out what you would have expected your cash flow to be and then make adjustments for either; (a) mitigating actions, like not paying your next VAT bill, reducing payments to suppliers and reducing overhead costs or (b) receipts of cash grants and loans. You should also consider what might happen to cash receipts which will more than likely reduce significantly or in some cases stop altogether if the business has had to close temporarily.

In these difficult times, the following points are intended to help maintain a fluid movement of cash into your business:

1. Invoicing

• Issue invoices more regularly and consider invoicing upfront or sending interim bills.
• Look at offering discounts, for example 5% if payment is made within 7 days to bring forward receipt of the money.
• If taking on any new customers ensure you use a credit check report, for example, Experian.

2. Debt Collection

• If you use a cloud-based accounting package, look at the possibility of automating your debt collection system, for example, Chaser.
• If you have debts beyond your payment terms, look at placing the invoice with a debt collection company.
• Look at financing your debtors using invoice discounting.
• If you have individual large sum invoices, look at single invoice finance.
• If customers are struggling to pay, be flexible and allow a payment plan by way of monthly direct debit.

3. Stock

• Look at your various stock lines and operate a just in/just out system.

4. Payment to Creditors

• Contact your suppliers to discuss extending terms or agreeing a payment plan.
• If offered an early payment discount by individual suppliers, look at settling their invoices first.

5. Capital Expenditure

• If considering purchasing capital equipment, investigate leasing the equipment rather than purchasing.
• Purchase any new equipment via a hire purchase agreement.
• Extend the term of the hire purchase agreement to reduce the monthly.

6. Cash

• Transfer any excess cash into a deposit account.
• Look at other investment opportunities whereby you still have quick access to the funds if required.

Two : Understand how to defer tax liabilities

VAT : One of the key government measures announced relates to VAT. Any VAT liabilities due to be paid from 20 March to 30 June are deferred. Any liabilities that fall due in this time (February, March and April VAT returns) not paid will need to be settled with HMRC by 5 April 2021.

It is important that you cancel your direct debit if you settle your liabilities in that way.

Income Tax : HMRC have also agreed to defer self-assessment payments due at the end of July until 31 January 2021. This is an automatic relief and no application is required.

Other tax liabilities (PAYE and Corporation Tax) HMRC are also allowing taxpayers to defer other tax liabilities such as PAYE and Corporation Tax. As there is a lot of uncertainty they will allow you to defer payment until the end of May or June providing you call them and let them know when you will go back to them with a proposal of how you intend to pay them back. The number is 0800 024 1222 although please be aware waiting times are long.

Three Consider : “furloughing” your workforce

“Many businesses who had to close were worried about the significant wage costs that they would still incur. Understanding the resources you need to carry on trading is vital.”

The Job Retention Scheme was announced to deal with this specifically. The broad points of the scheme are that the Government, through HMRC, will provide a grant of the lower of 80% of the employee’s wage costs or £2,500. This will cover an employee’s costs of employment provided they are placed on furlough leave.

The scheme is being amended from 1 July 2020 to make it more flexible and also to start employers contributing to the cost the scheme. See the image below which details the changes or our updated news item on the changes.

Rishi Sunak, Twitter feed 29 May 2020

Furloughed leave is new but essentially means that employees retain their employment but do not work. An employee must be furloughed for a minimum period of three weeks for the grant to apply. Employment Law still applies to them and the process of furloughing and therefore it is essential that advice is taken before you proceed with this measure to ensure that you follow the correct procedure.

Our HR Advisory team are standing by to help you with these difficult decisions whilst our payroll team are on hand to help complete calculations and submit them to HMRC (when the portal is active).

UPDATED NEWS 29 May news The CJRS is being extended read a summary here

Read our guide to the Job Retention Scheme

UPDATED 4 April 2020 news (including information on Director/ Shareholders of small limited companies.

UPDATED 9 April 2020 The HMRC portal will open on 20 April.

Four : Apply for a cash grant

One of the first schemes announced related to Rates relief. There are two schemes that businesses can qualify for.

For small businesses that don’t pay rates because they qualify for small business rates relief or rural relief a grant of up to £10,000 is available.

For businesses in the Retail, Leisure and Hospitality sectors with a rateable value of between £15,000 and £51,000 they will receive a grant of £25,000 and will not have to pay rates for 2020-21.

For businesses with a rateable value in excess of £51,000 in the Retail, Leisure and Hospitality sectors they will receive a rates holiday for 2020/21.

Five: Discuss a rent break with your landlord.

New rules have also been introduced to help commercial tenants by providing a three-month window from April to June where Landlords can not take action to evict for non-payment. It’s important to remember that the rent will become due on 1 July and therefore it is recommended that tenants come to a commercial agreement with their landlord for the repayment. A common approach seems to be spreading the accrued liability across the period from July 2020 to March 2021 in equal instalments.

Read our guide on deferring commercial rent payments.

The important action is to take action

Business owners need to take action and take it quickly to ensure they protect their businesses. Developing a longer-term plan is important but to help deliver it cash will be needed and therefore protecting it now is vital.

The team at Nicholsons are happy to talk to any business owner worried about the impact the current situation is having on their business. Whilst our offices are closed we can be contacted on 01522 815 100.

Support for the Self Employed

The Chancellor Rishi Sunak has announced the measures the UK Government is to take to help self-employed business people cope with the financial impact of the Coronavirus.

This announcement came a week after the financial assistance package for employed workers was announced, but clearly any scheme to help the self-employed was bound to be more complicated due to the variations in business profits from year to year.

Providing you qualify the scheme will fund up to 80% of the average monthly earnings calculated with reference to the previous three years from 2018/2019 backwards.

To read more about this important measure to support the self employed please read our guidance.

Coronavirus Business Interruption Loan Scheme (CBILS)

UPDATED (3/4/2020) Please also read our updated advice on CBILS

When Rishi Sunak stood up and announced the new Coronavirus Business Interruption Loan Scheme (CBILS) and the £330 billion he was putting behind initiatives it sounded as though this was going to be the magic bullet that businesses needed to be confident there was a longer term solution to help them through the economic crisis caused by the Coronavirus.

Not the magic bullet we expected

It was very clear that banks were not prepared for this and have been working extremely hard behind the scenes to catch up. Over the past week we have started to hear more from the clearing banks about their policies and at Nicholsons we have spent time talking to our banking contacts to understand local policies.

The CFN, of which we are a member firm, has assisted to lobby banks to remove the requirement for a Personal Guarantee for loans under £250k and this was confirmed by the main lenders on 26^th March. However, for loans higher than this, PGs from any director owning more than 10% of the business, and a debenture from the Company, will be required in most cases. We have also been informed that CBILS is now open to sole traders and partnerships, not just limited companies

We have always worried that the scheme will not be suitable for all SME’s and when it is will take a long time to access. Notwithstanding the pressure local Relationship Managers are under it’s unlikely that valuers are going to visit sites during lockdown and the number of applications will undoubtedly be overwhelming.

Add to this that it is likely that the mainstream banks will only welcome applications from existing customers and the fact that many of the other funders in the list of 40 lenders are not close to having products ready we are encouraging clients to focus on other funding and measures first.

Things to consider

There will come a time when thinking about a bank loan application is right and we thought we’d share a few tips on what to consider before talking to your bank about funding.

Don’t lose focus

In our cash flow post we outlined other practical steps that you could take aimed at helping you manage cash. This should be a priority as self-help will have immediate results.

1. 1. 1. 1. 1. 1. 1. 1. 1. 1. Agree rent free periods with your landlords. The Government has included a three month commercial rent moratorium in their measures, which prevents eviction.
                           2. Agreeing payment holidays on business loans and other credit payments, such as hire purchase and asset finance.
                           3. Explore whether “spot invoice” financing could help top up cash whilst debtors are being a little slower at paying.
                           4. Looking at assets that the bank won’t be too interested in losing from their debenture and see if you could raise finance on them, for example stock.

Be prepared

It might be obvious, but we think that well thought through and structured applications will be seen in a more positive light by the bank than general conversations around support.

Banks will assess applications in the same way they always have (because they will use the same process, systems and people) and therefore management accounts, a business plan and forecasts will be essential parts of the application. You might also keep an analysis of creditors, debtors and time to pay arrangements with HM Revenue & Customs (HMRC).

Structure your argument

In your business plan, you should focus on the strength of the business before the crisis, its trading performance and ability to generate cash.

You should also outline the path back to this position making clear the steps you are taking and the time frames you are working to.

In their appraisal of the business plan, banks will want to understand management capability and whether there are any long-term implications of the economic fallout on the business or industry it operates in.

Look towards other funders

There is no doubt that other funders, alternative and second tier, will be looking to fill the gaps left by the banks. We understand that peer-to-peer lenders are trying to be included in the plans announced by the government. Alternative lenders may offer to fund but their fees, terms and interest rates need to be checked carefully.

And finally

Don’t be afraid to ask for advice and support. There is a lot of information out there, some of it confusing and some contradictory, so if you are unsure about anything or just want to sense check your plans please don’t hesitate to call either Richard Hallsworth, Emma Murray, or Jo Brown on 01522 815 100.

Directors duties and compliance!

Whilst for lots of business owners survival has been the number one priority it’s important to not forget the additional duties that Directors of companies must comply with. These duties are never so important as when your company may be in distress, so we are going to provide some guidance so that you don’t inadvertently breach them.

Companies House have also been quick to help business owners meet their Companies statutory deadlines. They have

released new guidance on what to do should you feel that you might not be able to file your company’s accounts on time. Whilst their line is very much that accounts and other documents such as the annually filed Confirmation Statement must still be filed they do advise that if immediately before the filing deadline it becomes apparent that accounts will not be filed on time they will accept an application to extend the period allowed for filing.

The key message is to act now and not leave it until the filing deadline has passed. Make an application early as they a likely to be inundated with extension requests and their team is likely to be disrupted too.

Companies House have provided a simple process to do this which can be accessed here.

It’s important to keep talking to customers and employees

Marketing to the outside world

Your customers will want to know that there is someone there who cares about their business, they will also want to know whether you are still ‘open for business’. However, email traffic is currently full of companies communicating their COVID-19 policies, this will soon lose impact and will be ignored/deleted.

Over the next few days, ensure you have emailed or spoken to all of your customers, if this is not possible – contact your key customers first and gradually work through the list. Where possible, provide reassurances about your resilience and ways in which you can help them or avenues in which you can collaborate to overcome economic difficulties.

Most importantly, do not use this as an opportunity to sell. If you can, send the emails yourself (bearing in mind GDPR regulations) and do not use generic marketing or ‘contact us’ emails if you are asking your marketing team/others to help with this.

Internal Communication

It is vital to know the facts and communicate proactively with all employees-using clear, compassionate, and understandable messages. This not only demonstrates leadership, but also provides reassurance and instils a sense of trust among employees.

An internal communication plan should be established (if you haven’t one in place already), or updated, as a means of reaching employees through combinations of emails, intranet postings, flyers/ posters, manager talking points, FAQs or a website hub. The plan should identify simple, key messages, along with a reliable process for providing continual updates and collecting feedback from employees.

Read our guide on internal communications