We are able to provide expert legal advice on lending, variation of contract terms and conditions and new business structures during the coronavirus crisis.
To help you ensure that your business is resilient to the crisis and ready to bounce back stronger in the future, we have put together the following guidance.
Communication with your staff should be your first priority, ensuring they understand how you expect the coronavirus crisis to affect the business and what measures you anticipate may be required.
Ensuring that your staff are able to work is likely to require considerably more flexibility than is usually the case, especially due to the strict restrictions on travel and social distancing.
The Government has said that all employees that can work from home should do, so you should ensure that logistics are in place to allow them to do so if they are not already working from home.
Where an employee is unable to work from home, you should ensure firstly that you mitigate the risk of coming into contact with coronavirus. Steps you can take here include:
- Making sure that any employees who are unwell or who have family members who are unwell self-isolate for up to 14 days. Ensuring that staff members who are present wash their hands regularly and thoroughly and only cough or sneeze into tissues or the crooks of their elbow.
- Ensure that were possible, employees stay at least two metres apart.
- Step-up the cleaning regime, paying particular attention to surfaces and door-handles.
You should have plans in place for a range of scenarios, given the current crisis. Steps you can take to ensure the continuation of your business might include:
- Making use of the Government’s latest financial measures to support your business;
- Reviewing your contracts with suppliers and customers to see what flexibility is available;
- Renegotiating existing contracts where needed – it may be better to change the terms of a contract than to lose it altogether;
- Communicate early with stakeholders, including clients, suppliers and banks where you consider that you may not be able to meet your obligations;
- Seek opportunities – think about what you can offer that others cannot.
New business structures
You may wish to consider implementing changes to your business structure in order to streamline operations during the coronavirus crisis. We can advise on the considerations around implementing new business structures.
The UK is seeing an unprecedented amount of disruption due to the current coronavirus outbreak and in response the Chancellor has announced a number of measures to help businesses deal with this crisis.
Understandably, business owners will be concerned during these difficult times, but they must take practical steps now to help protect themselves, their business and their staff.
To help, we have put together a checklist to give help and advice on how to try and mitigate
some of the impact of COVID-19:
- Consult with employees, on matters including:
- Statutory sick pay
- Coronavirus Job Retention Scheme
- Redundancies and layoffs
- Defer tax payments by establishing Time to Pay agreements with HM Revenue & Customs (HMRC), for:
- CIS (Construction Industry Scheme)
- MGD (Machine Games Duty)
- Claim business rates reliefs and grants announced by the Government, via your local authority
- Consider using the Government’s Coronavirus Business Interruption Loan Scheme
- Consider using the three-month rental moratorium on commercial leases
- Prepare new or updated bank facilities, including overdrafts and capital holidays
- Liaise and notify customers, suppliers, contractors and trading partners of your contingency plans
- Defer capital expenditure
- Defer finance payments, hire purchase and leasing
- Accelerate income, where possible
- Update credit control procedures
- Reduce stock levels
- Review insurance policies
- Review your business’s terms & conditions
Variation of contracts
The restrictions in place to limit the spread of coronavirus may make it unfeasible to meet your contractual obligations, or they make it unfeasible for a supplier to meet its obligations.
In these circumstances, you may wish to enter into negotiations around a variation of contracts to determine whether new terms can be agreed that enable the business relationship to continue.
HMRC is offering Time to Pay applications and may even waive interest and penalties on late payments for those struggling to make tax payments.
To help with the surge in applications it anticipates, HMRC has established a dedicated helpline manned by more than 2,000 personnel to help businesses and self-employed individuals in financial distress, who may have outstanding tax liabilities.
Those who call the line will be offered advice, as well as other options including:
- instalment arrangements
- suspension of debt collection proceedings
- cancellation of penalties and interest where a business has administrative difficulties contacting or paying HMRC immediately.
The line will be open Monday to Friday from 8am to 8pm, and Saturday from 8am to 4pm.
If you run a business or you are self-employed and concerned about paying tax due to the impact of coronavirus, you can call HMRC’s helpline for advice on 0800 0159 559.
On top of this, the Government has also deferred the payment of VAT and self-assessed Income Tax for three months to help businesses and individuals with their cash flow. These taxes can then be paid at a later date.
Coronavirus Business Interruption Loan Scheme
The business interruption loans announced at during the recent Budget have been significantly extended allowing small businesses to borrow up to £5 million to pay rent, salaries, suppliers or purchase stock.
The loans will be interest-free for the first 12 months, thanks to a pledge from the Government to cover interest payments during this period.
The scheme is now being delivered by the British Business Bank, a state-owned body tasked with supplying credit and finance to small and medium-sized businesses.
These loans are now accessible from via individual accredited lenders via the British Business Bank website here.
Following the launch of the Coronavirus Business Interruption Loan Scheme (CBILS), a number of banks are asking owners and directors of applicant businesses to provide personal guarantees on the sums they borrow.
This guarantee is expected to be of equivalent value to between 25 per cent and 100 per cent of the amount borrowed, although should not be a main home.
We are here to help with legal advice in relation to any personal guarantees required by banks for CBILS loans.
Large firm liquidity
Many businesses work in a supply chain that supports much larger businesses.
To ensure these larger firms can continue to make payments to smaller firms and survive this ongoing economic situation, the Government will launch a major new scheme backed by the Bank of England to help them bridge coronavirus disruption to their cashflow through loans.
Businesses must continue to monitor the financial health of customers and suppliers to ensure that they do not experience disruption from the closure of another firm.
The Government has confirmed that the introduction of the off-payroll rules, or IR35, to the private sector will now be delayed from 6 April 2020 to 6 April 2021.
Chief Secretary to the Treasury, Steve Barclay, told Parliament that the suspension was a response to the COVID-19 pandemic, but confirmed it would still go-ahead next year.
Business rates and grants
The Government has pledged £20 billion of business rates support and grant funding to help the businesses worst-affected by the outbreak of COVID-19.
- Abolishing business rates for all businesses in the retail, hospitality and leisure industries in England for the next 12 months, as well as estate agents, letting agencies and bingo halls.
- Increasing the grants to small businesses eligible for Small Business Rate Relief to £10,000.
- Offering additional grants of £25,000 to retail, hospitality and leisure businesses operating from smaller premises, with a rateable value over £15,000 and below £51,000.
This rate relief will be made available to local authorities to distribute in their local area and will be rebilled to those affected.
However, the process for applying for grants may differ from authority to authority and most have not yet made it clear how they intend to deliver this support.
Business rates support is expected to be available soon and we will keep you updated once the situation becomes clearer.
Insurance firms have been told that Government advice regarding the latest restrictions is sufficient for businesses to make a claim on their insurance where they have appropriate business interruption cover for pandemics.
The food industry, including pubs and restaurants, will see a temporary relaxation in planning regulations that will allow them to start providing takeaways to customers without a planning application to help support those needing to self-isolate.
The Chancellor said the Government is committed to protecting individuals and businesses from the effects of the global economic emergency created by the Coronavirus pandemic and has made it clear that these initial measures are just the start of the Government’s plans.
The Chancellor will employ new legal powers in the Covid Bill to offer whatever further financial support the Government decides is needed.
Contact us now for specialist legal advice on keeping your business running during the Coronavirus crisis.