COVID-19: Support for Business

In response to the COVID-19 crisis, both the UK and Scottish Governments have announced a series of measures to help business with the financial effects.

The situation is fast moving and constantly changing. This paper is a summary of the information currently available on the key measures. A number of links to HM Government and Scottish Government sites are given at the end of the paper and these sites should be checked for up to date information.

Staff

The support for individuals is:

• Statutory Sick Pay (SSP) will now be available for eligible individuals diagnosed with COVID-19 or those unable to work because they are self-isolating in line with Government advice.
• SSP will be payable from day 1 instead of day 4 for affected individuals.
• People who are advised to self-isolate for COVID-19 will be able to obtain an alternative to the fit note to cover their period of self-isolation by contacting NHS 111, rather than visiting a doctor.
• Those who are not eligible for SSP, e.g. self-employed or earning below the £118/week, can now make a claim for Universal Credit or Contributory Employment and Support Allowance.

Support for businesses:

• As a result of the changes to SSP, the Government have announced that they will rebate employers.
• The eligibility criteria for the scheme will be as follows:
  • This refund will cover up to two weeks’ SSP per eligible employee.
  • Employers with fewer than 250 employees will be eligible.
  • Employers will be able to reclaim expenditure for any employee who has claimed SSP as a result of COVID-19.
  • Employers should maintain records of staff absences, but employees will not need to provide a GP fit note.
  • The eligible period for the scheme will commence the day after the regulations on the extension of SSP to self-isolators comes into force.

Loans

From 23 March, business will be able to apply for emergency loan funding from the new Coronavirus Business Interruption Loan Scheme.

The Government will underwrite up to 80 per cent of the risk of the lender but the borrower remains liable for the full amount borrowed. The Government will cover the first 6 months of interest payments. Directors or business owners may be asked to provide a personal guarantee, which will mean the individual will be personally liable if the business cannot repay the debt. An application for a loan will still require to go through a credit process and the initial announcement said that a “sound borrowing proposal” would be required.

Funding will be provided by the British Business Bank through participating providers offering more attractive terms for both businesses applying for new facilities and lenders. All the major UK banks, as well as more than 30 smaller lenders, will participate in the Scheme.

The maximum value of a facility provided under the Scheme will be £5 million. The loan term will be from three months up to ten years for term loans and asset finance and up to three years for revolving facilities and invoice finance.

Full eligibility criteria are to be published but to be eligible for support via CBILS, the  business must:

• be UK based, with turnover of no more than £41 million per annum.
• operate within an eligible industrial sector (some industrial sectors will not be eligible due to EU de minimis-State aid rules).
• not have received de minimis State aid of more than €200,000 in the current and previous two fiscal years.
• have a sound borrowing proposal, but insufficient security to meet the lender’s normal requirements.

Business Rates and Grants

The reliefs which have been announced are different for Scotland and the rest of the UK.

Scotland – with effect from 1 April 2020

• Full non-domestic rates relief for retail, hospitality and leisure sectors for one year. 
• Small businesses in receipt of the Small Business Bonus Scheme or Rural Relief will be eligible for a £10,000 grant.
• Businesses in the hospitality, leisure and retail properties with rateable values of £18,000 - £51,000, will be eligible for a £25,000 grant.
• 1.6% rate relief for all properties.

Rest of UK – with effect from 1 April 2020

• Business Rates holiday for 1 year for retail, hospitality and leisure sectors.
• Properties which benefit from the Business Rates holiday will be used wholly or mainly for:
  • Shops, restaurants, cafes, drinking venues, live music venues and cinemas.
  • Places of leisure and assembly.
  • Self-catering accommodation, hotels and guest and boarding premises.

VAT, Corporation Tax, PAYE and CIS

Time-to-pay arrangements can be agreed with HMRC on a case-by-case basis and will be tailored to individual circumstances and liabilities.

It has been announced that HMRC will consider deferring payments for VAT and PAYE.  They will also discuss Time-to-pay arrangements for VAT, Corporation Tax, PAYE and/or CIS where the business is affected by the virus.

HMRC have stated they are willing to grant a deferral of VAT payments for up to two months.  PAYE deferral can currently be granted for up to 30 days.

After an initial deferment period is agreed, the business can also apply for further assistance via a Time-to-pay arrangement. Typically, instalments of no longer than 12 months can be granted, however in the circumstances it is expected that special concessions will be made.

HMRC are prepared to discuss this situation where a business has a current Time to Pay arrangement in place that they now cannot or will struggle to meet due to the disruption caused by the virus.

HMRC have set up a helpline for businesses looking for assistance on payment of taxes or looking to discuss a Time-to-pay arrangement – 0800 0159 559.

Further information

HM Government Guidance for employers and employees on coronavirus
https://www.gov.uk/government/publications/guidance-to-employers-and-businesses-about-covid-19/guidance-for-employers-and-businesses-on-coronavirus-covid-19

HM Government COVID-19: support for businesses
https://www.gov.uk/government/publications/guidance-to-employers-and-businesses-about-covid-19/covid-19-support-for-businesses

HM Government COVID-19: guidance for employees
https://www.gov.uk/government/publications/guidance-to-employers-and-businesses-about-covid-19/covid-19-guidance-for-employees

ACAS Coronavirus (COVID-19): advice for employers and employees
https://www.acas.org.uk/coronavirus

Scottish Government Help with non-domestic rates in Scotland during coronavirus (COVID-19)
https://www.mygov.scot/non-domestic-rates-coronavirus/

Scottish Government £2.2 billion for business
https://www.gov.scot/news/gbp-2-2-billion-for-business/

Disclaimer 
The matter in this publication is based on our current understanding of the law.  The information provides only an overview of the law in force at the date hereof and has been produced for general information purposes only. Professional advice should always be sought before taking any action in reliance of the information. Accordingly, Davidson Chalmers Stewart LLP does not take any responsibility for losses incurred by any person through acting or failing to act on the basis of anything contained in this publication.