Covid-19 Series: Expert Advice to Help Your Business Through These Times
In these times of uncertainty, it is more important than ever to ensure that you really understand the finances of your business and that you have all the information you need to hand to make key decisions quickly and to provide information to external stakeholders who may be in a position help.
Alex Ffrench, one of the Directors at Williams Giles , outlines some expert advice for UK businesses in these times.
There are a number of government schemes available that, depending, on the nature of your business will be relevant to you. For employers there is the Coronavirus Job Retention Scheme – an employer will be able to reclaim 80% of wages (up to a maximum of £2,500 per month) plus Ers NI & pension contributions from HMRC for workers who are furloughed (ie not working) during the Coronavirus situation – the scheme is initially open for three months from 1 March 2020. The scheme is expected to be operational by the end of April. It will be important to seek legal advice if employment conditions are altered as a result of utilising this scheme.
For the self-employed the government has launched the Self-employment Income Support Scheme – this is open to self-employed individuals or members of a partnership who are currently trading with trading profits of less than £50,000 and have lost profits due to Coranavirus. To be eligible they must have submitted their 18-19 tax return – if this is outstanding it must be submitted by 23 April 2020 to qualify. As with the employment allowance the amount available is 80% of average profits up to £2,500. HMRC will contact eligible individuals directly and the scheme should be open by the end of April – again it is vital to file any late returns for 18-19 to qualify.
It is possible to defer the payment of VAT for any returns due by the end of June – you still need to submit the return and if you have a direct debit in place you will need to cancel this otherwise your payment will be taken as normal. HMRC are willing to defer payments of PAYE and Corporation tax but you will need to talk to them.
Grants are available for small businesses in the form of the Small Business Grants Fund – this is administered through the local authority and available to any business claiming Small Business Rates Relief or Rural Rates Relief.
In these times of uncertainty, it is more important than ever to ensure that you really understand the finances of your business and that you have all the information you need to hand to make key decisions quickly and to provide information to external stakeholders who may be in a position help. You should ensure that your accounting records are up to date and that you are able to produce timely and accurate management accounts. You should prepare cash flow forecasts for at least the next six months and these should include any measures taken such as furloughing staff. These cash flows serve a dual purpose; firstly to ensure that you can keep your head above water during these challenging times but also to ensure that you know the way back to full activity and that you have the cash available to trade out the other side. A number of these measures, such as deferring VAT, can be really helpful to get us through the next six months but these are debts and will need to be repaid and it is important to build these into your future projections.
The government has also launched the Coronavirus Business Interruption Loan Scheme. This is available to businesses with an annual turnover of less than £45m – the government will secure 80% of any funding and financing of up to £5m is available with no interest payable for 12 months. Lenders will still need to see budgets and forecasts and will expect businesses to demonstrate that they can repay the loan. The Covid Corporate Financing Facility through the Bank of England has also been launched for larger businesses.
Alex is a Director at Williams Giles. If you would like to discuss any of your accounting needs or specifically your response to the Coronavirus situation please contact him on email@example.com