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Re. Coronavirus Business Support Schemes
We are receiving a number from enquiries from clients regarding the various business support schemes and assistance proposed by the Government during the present crisis, and we are writing in order to detail their nature and availability.
It is of course important to note that the situation remains very fluid and further governmental guidance and advice is being updated daily. We can therefore only provide a general guide that should be used with care. We are updating information as it becomes available on our website www.mils.co.uk.
The information in this note is based on information released by the Government as at 23 March 2020.
The Coronavirus Job Retention Scheme
Under the Coronavirus Job Retention Scheme (CJRS), 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.
Eligibility
All UK businesses are eligible.
How 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 month. HMRC are working urgently to set up a system for reimbursement. Existing systems are not set up to facilitate payments to employers.
If your business needs short term cash flow support, you may be eligible for a Coronavirus Business Interruption Loan.
We would advise clients to contact their MILS lawyers at legaldept@mils.co.uk to take further advice in relation to furloughed workers and the procedure that needs to be followed.
Deferring VAT and Income Tax payments
The Government will support businesses by deferring Valued Added Tax (VAT) payments for 3 months. For those clients who are self-employed, Income Tax payments due in July 2020 under the Self-Assessment system will be deferred to January 2021.
VAT
For VAT, the deferral will apply from 20 March 2020 until 30 June 2020.
Eligibility
All UK businesses are eligible.
How to access the scheme
This is an automatic offer with no applications required. Businesses will not need to make a VAT payment during this period. Taxpayers will be given until the end of the 2020 to 2021 tax year to pay any liabilities that have accumulated during the deferral period. VAT refunds and reclaims will be paid by the government as normal.
Income Tax
For Income Tax Self-Assessment, payments due on the 31 July 2020 will be deferred until the 31 January 2021.
Eligibility
As income tax only applies to a natural person you will need to be either self-employed / a sole trader you are eligible.
How to access the scheme
This is an automatic offer with no applications required.
No penalties or interest for late payment will be charged in the deferral period.
HMRC have also scaled up their Time to Pay offer to all firms and individuals who are in temporary financial distress as a result of Covid-19 and have outstanding tax liabilities.
Support for Statutory Sick Pay
The Government will bring forward legislation to allow small-and medium-sized businesses and employers to reclaim Statutory Sick Pay (SSP) paid for sickness absence due to COVID-19. The eligibility criteria for the scheme will be as follows:
- this 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. If evidence is required by an employer, those with symptoms of coronavirus can get an isolation note from NHS 111 online and those who live with someone that has symptoms can get a note from the NHS website
- eligible period for the scheme will commence the day after the regulations on the extension of SSP to those staying at home comes into force
- the government will work with employers over the coming months to set up the repayment mechanism for employers as soon as possible
Eligibility
You are eligible for the scheme if:
- your business is UK based
- your business is a small or medium-sized and employs fewer than 250 employees as of 28 February 2020
How to access the scheme
A rebate scheme is being developed. Further details will be provided in due course once the legalisation has passed.
We will be updating clients through our website at www.mils.co.uk as matters progress.
Support for business rates
It should be noted that Business Rates have been fully devolved to the Scottish Parliament, Welsh assembly and Northern Irish assembly. We can only apply guidance for England at this time.
There is a business rates holiday for the majority of MILS clients.
The Government will introduce a business rates holiday for retail businesses which presently include all MILS clients save for bodyshops and repairers in England for the 2020 to 2021 tax year.
Businesses that received the retail discount in the 2019 to 2020 tax year will be rebilled by their local authority as soon as possible.
Eligibility
You are eligible for the business rates holiday if:
- your business is based in England
- your business is in the retail sector as defined by the scheme
At this stage there are ongoing discussions to include this benefit for all MILS clients and we will provide further updates as soon as possible.
How to access the scheme
There is no action required from you. This will apply to your next council tax bill in April 2020. However, local authorities may have to reissue your bill automatically to exclude the business rate charge. They will do this as soon as possible.
You can estimate the business rate charge you will no longer have to pay this year using the business rates calculator.
Cash grants for some MILS clients
It should be noted that the currently proposed grant system is devolved to the Scottish Parliament, Welsh assembly and Northern Irish assembly. We can only apply guidance for England at this time.
The Retail and Hospitality Grant Scheme provides businesses in the retail sectors with a cash grant of up to £25,000 per property.
For businesses in these sectors with a rateable value of under £15,000, they will receive a grant of £10,000.
For businesses in these sectors with a rateable value of between £15,001 and £51,000, they will receive a grant of £25,000.
Eligibility
You are eligible for the grant if:
- your business is based in England
- your business is in the retail sector
How to access the scheme
There is no action required from you. Your local authority will write to you if you are eligible for this grant.
Guidance for local authorities on the scheme will be provided shortly.
Any enquiries on eligibility for, or provision of, the reliefs and grants should be directed to the relevant local authority.
The Coronavirus Business Interruption Loan Scheme
A new temporary Coronavirus Business Interruption Loan Scheme, delivered by the British Business Bank, will launch early next week to support primarily small and medium-sized businesses to access bank lending and overdrafts.
The government will provide lenders with a guarantee of 80% on each loan (subject to a per-lender cap on claims) to give lenders further confidence in continuing to provide finance to SMEs. The government will not charge businesses or banks for this guarantee, and the Scheme will support loans of up to £5 million in value.
Eligibility
You are eligible for the scheme if:
- your business is UK based, with turnover of no more than £45 million per year
- your business meets the other British Business Bank eligibility criteria
How to access the scheme
The full rules of the Scheme and the list of accredited lenders is available on the British Business Bank website. All the major banks will offer the Scheme once it has launched. There are 40 accredited providers in all.
You should talk to your bank or finance provider (not the British Business Bank) as soon as possible and discuss your business plan with them. This will help your finance provider to act quickly once the Scheme has launched. If you have an existing loan with monthly repayments you may want to ask for a repayment holiday to help with cash flow.
The scheme will be available from early next week commencing 23 March.
Support for larger firms through the COVID-19 Corporate Financing Facility
Under the new Covid-19 Corporate Financing Facility, the Bank of England will buy short term debt from larger companies.
This will support your company if it has been affected by a short-term funding squeeze, and allow you to finance your short-term liabilities.
It will also support corporate finance markets overall and ease the supply of credit to all firms.
Eligibility
All UK businesses are eligible.
How to access the scheme
The scheme will be available early in week beginning 23 March 2020.
We will provide information on how to access the scheme shortly.
Time to Pay service
All businesses and self-employed people / sole traders in financial distress, and with outstanding tax liabilities, may be eligible to receive support with their tax affairs through HMRC's Time To Pay service.
These arrangements are agreed on a case-by-case basis and are tailored to individual circumstances and liabilities.
Eligibility
You are eligible if your business:
- pays tax to the UK government
- has outstanding tax liabilities
How to access the scheme
If you have missed a tax payment or you might miss your next payment due to COVID-19, please call HMRC's dedicated helpline: 0800 0159 559.
Insurance
Businesses that have cover for both pandemics and government-ordered closure should be covered, as the government and insurance industry confirmed on 17 March 2020 that advice to avoid pubs, theatres etc is sufficient to make a claim as long as all other terms and conditions are met.
Insurance policies differ significantly, so businesses are encouraged to check the terms and conditions of their specific policy and contact their providers. Most businesses are unlikely to be covered, as standard business interruption insurance policies are dependent on damage to property and will exclude pandemics.
However we would advise you to contact your MILS lawyers at legaldept@mils.co.uk to discuss your individual policy.
In Conclusion
The above is a brief guide to the schemes currently available. It should be noted that the Government is constantly updating its advice and support. Should you find yourself in the situation above, please contact us at legaldept@mils.co.uk at any stage for advice and assistance as appropriate.
Very best wishes,
Motor Industry Legal Services Ltd.
T/A MILS
27b The Mansions
252 Old Brompton Road
London SW5 9HW
Tel: 020 7244 6790
Fax: 020 7244 6791
Email: legal@mils.co.uk
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