As COVID-19 ravages Europe, the UK Chancellor of Exchequer Rishi Sunak announced over a span of two weeks a series of temporary emergency measures designed to support people, businesses and public services during the crisis. The measures, comprising a mix of economic and fiscal initiatives, are designed to preserve liquidity in the economy while providing crucial financial support to workers and industries impacted by a pandemic-driven demand shock. This update covers the measures announced by the UK Government as at 24 March 2020, and will be revised should there be any further stimulus measures announced in the coming weeks.

Economic Policies

  • Coronavirus Business Interruption Loan Scheme – A new Government-backed scheme to guarantee up to 80% of short-to-medium term funding provided to a UK SME (<£45m turnover) by any major UK bank. The scheme will be administered by the British Business Bank, and will be available from the week starting on 23 March 2020.
  • COVID-19 Corporate Financing Facility Fund – A new scheme launched by the Bank of England to provide liquidity for larger, non-financial UK companies by purchasing their short term debt. Under this scheme, BoE will provide a minimum £1m funding on pre-CoVID-19 market terms for any period of up to 12 months to infuse cash in the organisation struggling due to COVID-19.
  • Statutory Sick Pay – All UK based SME’s will be refunded up to 2 weeks of Statutory Sick Pay paid for any employee that falls ill due to COVID-19. Any employing SME with fewer than 250 employees (as at 28 February 2020) will be eligible for this initiative.
  • Coronavirus Job Retention Scheme – The Government (through HMRC) will reimburse 80% (up to a cap of £2,500 per month) of the wage bill for each employee of any UK business where such employee is designated as “furloughed worker”. This radical move is designed to prevent mass layoffs that could accompany a pandemic-driven demand shock, and the scheme will be backdated to cover anyone who has not bee able to work since 1 March 2020 and is expected to be in place for at least 3 months (although very likely to be extended beyond this period).

Tax Policies

  • Time-To-Pay Scheme - All UK businesses and self-employed persons struggling financially who have outstanding tax liabilities (including PAYE and VAT) may be eligible to receive HMRC’s support through this scheme. A dedicated scheme helpline has been set up for contacting HMRC who may be able to offer an arrangement to resolve the outstanding tax liabilities (based on personal circumstances of each case). The helpline is 0800 0159 559.
  • VAT Deferral – The upcoming VAT quarter (from 20 March until 30 June) will be deferred and any VAT liability during this period will be paid during the last quarter of the 2020-2021 financial year.
  • Self-Employed Income Tax Deferral – Income tax due by all self-employed persons by 31 July 2020 under the Self-Assessment system will now be deferred to 31 January 2021.
  • Business Rates Relief (England only):
  • All companies in the retail, hospitality, and leisure sector, and all nursing businesses will receive an automatic tax holiday on their business rates for the 2020-2021 financial year (irrespective of the rateable value);
  • Provide cash grants through the Retail and Hospitality Grant Scheme to all businesses in retail, hospitality, and leisure sectors of £10,000 (if RV is <£15,000) or £25,000 (if RV is £15,001 - £51,000);
  • One-off cash grants of £10,000 through Small Business Grant Scheme to all businesses currently paying business rates under small business rate, rural rate or tapered reliefs.
  • Non-Domestic Rates Relief (Scotland) – The Scottish Government announced that it would also give a 100% tax holiday to Scottish retail, hospitality and leisure businesses for the 2020-2021 financial year, but it is unclear how this measure will be introduced.
  • Cash Grants (Scotland) - Scottish retail, hospitality and leisure businesses with an RV of its premises between £18,000 and £51,000 are also entitled to apply for one-off cash grant of £25,000 to support them during the crisis.
  • Statutory Residence Status - The statutory criteria for determining tax residence in the UK have now been updated to reflect that having to stay in the UK due to COVID-19 (eg as a result of quarantine measures, sickness or border closures, or having to return to the UK temporarily due to the virus) could be disregarded as being due to exceptional circumstances for the purpose of calculating how many days the individual has spent in the UK in the current tax year.

What Can We Do For You

As the health crisis progresses to an economic crisis, it is absolutely vital that you and your business are aware of the Governmental measures being put into place to protect and support you and your business. We are here to help you navigate these measures and support your personal and business tax affairs through this difficult period.

  • We can assist with and liaise on your behalf with HMRC about your Time-To-Pay application to reach a desired arrangement for your tax liabilities.
  • Our VAT specialists can advise and provide on-going VAT support to your business to ensure accurate and effective VAT recovery to protect your cash flow position.
  • Alongside our employment colleagues, we can support your business as you tap the Coronavirus Job Retention Scheme.
  • If your business is owed money by its customers or suppliers who are going through financial difficulties so their debt may have to be written off, we can assist you to ensure that your business receives appropriate tax relief as a result of this debt write-off.
  • We can advise your business (or its owners) on the tax implications of entering into a voluntary liquidation (whether initiated by creditors’ or members’), arrangement (CVA) or administration.

You are not alone in this, so let us help you receive all the support that you need.

If you would like to get in touch to discuss this further, please contact Ronnie Brown.