Few businesses could ever have imagined, let alone made plans for, the potential impact of a massive epidemic such as the current coronavirus crisis.
As accountants, we want to provide you with some practical steps that you can take.
Keep in touch
Keep in touch with your accountant. The sooner that they are made aware of any problem, the easier it might be to solve especially with reference to HMRC payments.
Speak to your bookkeeper, or whoever is doing your books. The earlier you get your accounts information to them, the easier it will be to plan tax payments.
If you feel you need to consider the options for the future of your business contact us for advice on the best way forward. There may be options that you haven’t considered.
Review your cashflow and contact us for advice on what to do to at this time.
In times of crisis, it would be easy to defer such things as doing accounts, but this is the time to take action. Start issuing reminders earlier and more frequently to get accounts out of the way and plan for tax bills coming.
Have you paid your last tax bill? If not, you should look into HMRC’s Time to Pay Service. All businesses in financial distress and with outstanding tax liabilities may be eligible to receive support. The number to call is 0800 015 9559.
Prioritise, where possible, the payment of VAT and PAYE liabilities as HMRC are more likely to agree arrangements for income tax and corporation tax. It is not yet known whether HMRC will waive interest on late payments but this is being explored. Penalties will be waived provided a time to pay arrangement is followed.
Check insurance policies
We would advise you to check out any insurance policies that you may have – would you or your staff, be covered in any sickness claim?
Help with Employment Costs
Refunds will be available for businesses and employers required to access Statutory Sick Pay (SSP) and will cover them for up to 2 weeks per eligible employee (this is based on current rules which are changing daily– support may become more generous as things progress).
Wages costs are posing the biggest concern for businesses at present. Our payroll department at JRW can advise you in relation to making claims for refunds of Statutory Sick Pay. We would however recommend that you seek employment law advice if you are thinking of making any other changes to your workforce that you might feel necessary.
Scottish Government help for Businesses
You can find details of the financial measures that are being made available in Scotland at the following link Scottish Government Help for Business including:
• A 100% Business Rates retail discount for one year for properties in the retail, hospitality and leisure industry.
• A £25,000 grant for retail, hospitality and leisure businesses with a rateable value between £18,000 and £51,000.
• A one-off £10,000 grant for small businesses who are already eligible for either:
o Rural relief
o Small Business Bonus Scheme Relief
• The Scottish Government also advises that if you have trouble paying your business rates that a deferment may be possible if you contact your local council.
• The Scottish Government intends to freeze all other business rates
UK Government Help for Businesses and Individuals
The UK governments response document can be found HERE
The key measures are outlined below:
• The Coronavirus Business Interruption Loan Scheme will become available in the week commencing 23 March. Details of how to apply can be found HERE
• Government advice for businesses generally can be found HERE:
Help for Individuals
• The Scottish Welfare Fund has been injected with £45m from the Scottish Government and offers ‘crisis grants’ for those eligible. To find details visit the website
• If you are self-employed and not eligible for Statutory Sick Pay you can now more easily make a claim for Universal Credit or new style Employment and Support Allowance. For more information on how to claim, please follow this link . If you are already claiming UC and have COVID-19 or are advised to self-isolate, the requirements of the Minimum Income Floor will be relaxed. If you need to claim UC for the first time but have COVID-19 or are self-isolating, you will now be able to claim and to access advance payments upfront without needing to attend a Jobcentre Plus.
• If you are an employee and have COVID-19 or are advised to self-isolate you will receive Statutory Sick Pay (SSP) from the first day of absence. It should amount to £94.25 per week for up to 28 weeks (depending on your contract).
• If you are struggling to pay your mortgage get in touch with your lender in the first instance to see if you can access the government introduced three month mortgage repayment holiday – this will be eligible to most people who are up to date with their mortgages but lenders approaches vary.
• In England and Wales landlords are being prevented from evicting tenants for at least a 3 month period, and similar legislation is being considered in Scotland. Get in touch with your landlord if you foresee problems.
We would advise all businesses to investigate what help is available from their bank, what terms and conditions there are, if help is currently needed. RBS, Lloyds Bank and Barclays have pledged to offer support by mortgage repayment holidays, temporary increases in credit card limits, waiver of fees on early access to fixed savings accounts and late credit card, mortgage, and loan payments.
If you outsource supplies you should contact your suppliers. Suppliers will then be more likely to contact you if they have to resort to restrictions. You should also investigate alternative suppliers. Supply chain issues are already threatening to derail some small businesses. It is worth investigating the whole supply chain – they may say ‘it’s OK I get my supplies from XYZ Ltd based in the UK’, but does the client know where XYZ Ltd gets its supplies from?
When cash is restricted, the temptation is to make late payments. This must be resisted, if only for reputational reasons. Late payments are already causing problems for businesses as 74% of business owners reported invoices due to be paid at the end of February had not been settled and were unlikely to be cleared before the end of March.
You should check your debtors. Review which clients are more likely to get into difficulty and suggest they pay your bill by instalments (if such arrangements are not already in place). Tighten up your invoicing processes.
Review business costs
You should look at all costs and reduce discretionary and non-essential expenses as far as possible. Fixed costs such as wages, rent, utilities, financing costs and tax liabilities not affected by a decline in sales need to be properly managed. You should investigate whether costs can be spread rather than paying in one lump sum (e.g. car insurance).
Review marketing strategy
No one is going to do or buy much other than the essentials during this crisis and, although this situation might lead you to reduce costs by rethinking your marketing strategy, this might not be the right time – consistency is key to recovery.
Review mortgage payments
Banks will be lending cheaply due to the decrease in the bank of England base rate. We would advise all clients to consider remortgaging. Mortgages are based on past data, which will invariably be better for these past three years – defer applying and that may mean lending based on reduced profit figures making it more difficult to get a mortgage.
It is vital that the business must at least give the impression that it is carrying on. This may be impossible if the business is a restaurant but is feasible for the many others who might have to self isolate.
If you haven’t already done so, you should consider your accounting software, now might be a very good time to do so. This means that your books can be plugged into bank data feeds, if not already used.
Support Each Other
It goes without saying that at times like this we not only need support with the financial impact of daily events, but also the social impact. Keep in touch with your family, your friends – even if this is remotely.
You may be able to look for financial or general assistance from this network and you may also be able to provide them with the help that they need.
And finally, look ahead
The coronavirus crisis will change the way that businesses and society works. When the urgent part of the crisis is over, businesses should consider what this crisis changes for them, what they have learned and plan for the future.
It’s important to look ahead. As the head of APCO Worldwide’s Global Crisis Practice has said about the virus:
“There will be an end to this, as there is with every crisis.”
Obviously, this is going to be a hugely challenging time for all of us but we hope that this practical financial advice is helpful to you and your business. Please be assured that JRW are here to help, support and guide you during this crisis. If there is anything that we can do to help put your mind at rest or if we can assist you in any way, please do not hesitate to contact us.
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