Established accountancy practice Bevan Buckland LLP has been reaching out to clients to help and advise those most severely impacted by the spread of Covid-19 and the dramatic restrictions on activity currently in place.
While all businesses are being impacted by the current crisis, after the initial shock of the last few weeks businesses are now rapidly coming to terms with the “new normal” and taking steps to ensure their survival in the longer term.
The Coronavirus Job Retention Scheme is the scheme providing most immediate help to businesses in their decision making, enabling those businesses who have been completely shut down to “mothball” their business for the time being while still being able to pay staff a wage. Under the Coronavirus Job Retention Scheme HMRC will refund 80% of the salary, up to £2,500 per month, of those workers who have had to be “furloughed” due to the crisis. However, there are still many details of the scheme which are not yet clear. The scheme will be administered by HMRC through an online application process which has not yet been set up.
“We are fielding a large number of queries from clients regarding the process of putting staff on furlough and what the qualifying criteria are” says Harri Lloyd-Davies, Partner.
“As a starting point there are 2 important considerations, Firstly, Employment Law still applies, so businesses should make sure they have an appropriate process in place to agree which staff should go on furlough and that this is documented and agreed with the individual employees concerned, secondly, businesses should consider the spirit of the scheme and not do anything that might cause HMRC to query or reject their claim in the future.”
Some of the key advice for clients is that:
- Eligible employees are those that are paid through PAYE and have an employment contract in place as at 28th February 2020
- Employees should be put on furlough if there is no work for them as a direct result of the Coronavirus crisis
- Employees should not undertake any work for the firm while on furlough or seek alternative employment while being paid their furloughed salary
- Employers can make up the additional 20% of salary if they wish however, they are not required to
- Payments should be processed through payroll and we believe are still subject to income tax and NI
- Employees remain employees of the business and employment rights continue to accrue, such as holiday and length of service
On top of the above scheme, the government is backing a number of other initiatives to support businesses:
- VAT and Self Assessment Income Tax deferrals, these will be automatically applied. Businesses or individuals expecting to make these payments should review whether they want to defer these
- Rates relief for small businesses and those in the hospitality and leisure sectors
- In Wales there is also a small business grant scheme being set up through Local Councils
- The Coronavirus Business Interruption Loan Scheme which is being administered by banks to support businesses which were viable prior to the crisis but now need additional financing
- An increase in the amount of Statutory Sick Pay that some businesses can reclaim
- The HMRC Time To Pay service to allow businesses to defer other tax liabilities that are due
Some details of the above schemes are still emerging, and we are advising businesses to keep up to date through information being released by the Welsh Government, their Local Council, their banks and HMRC. We are also waiting to see what help the government will offer our self-employed clients.
Bevan Buckland are working hard to keep an up to date list of FAQs and information regarding the schemes updated on their website and inform clients as more details are released.
What we are also seeing is the innovative and entrepreneurial spirit of our clients coming through as they reposition their businesses to continue to provide a service to their customers where possible. Some clients are developing their online business or repurposing their activities. Bevan Buckland ourselves have started offering webinars to clients so that we can communicate with clients more directly. Our latest Webinar can be viewed here https://www.bevanbuckland.co.uk/about-us/coronavirus-update/covid-19-business-support
We believe the current crisis will not just impact what we do in the short term but will also change the way businesses and customers operate and interact long after the current crisis has passed.
“Whist we continue to be concerned about the risk of businesses going under during the current crisis, we have been heartened by the proactive and positive approach most of our clients have taken to protecting and preserving their businesses for the longer term” says Alison Vickers, Managing Partner. “Our clients accept that people’s health and the wellbeing of the community is paramount for the moment and are focussing on taking the steps needed to support their employees and preserve their cashflow so that when restrictions are lifted they can pick up from where they left off. There is still a huge amount of uncertainty, but the key is to make decisions on those things you can control and stay on top of the help and support available as we know more. Most importantly businesses should understand their figures and have a clear plan for their cashflow over the next 6 months, planning for the worst and hoping for the best.”
For further contingency planning advice for your business in the wake of the Covid-19 outbreak, please contact the Bevan Buckland LLP team direct.