JAMES BEATTON, HEAD OF CORPORATE AT LAW FIRM CRIPPS PEMBERTON GREENISH ANSWERS SOME OF THE VIRUS-RELATED QUESTIONS BUSINESSES ARE ASKING AND HOW TO TAKE ADVANTAGE OF STATE SUPPORT.
We need financial support to get us through the crisis, what is currently available?
Support available includes business property rates relief, VAT and Income Tax deferral and grants of up to £25,000 for those in the retail, leisure and hospitality sector.
To address liquidity issues, the coronavirus Business Interruption Loan Scheme offers loans of up to £5 million to businesses with a turnover up to £45 million. However, some have found the loans difficult to access or subject to potentially onerous conditions. Explore all available options and take advice if you are unsure.
We do not have enough work for our employees. How can I avoid redundancies?
Furlough leave aims to assist businesses to retain employees who would have otherwise been made redundant due to the effects of coronavirus on the business. The Government will cover 80% of their salary costs, up to £2,500 per month, plus employer NICs and some pension costs. The business can top up pay to 100% but this is not obligatory. Employees cannot undertake any work for the business while on furlough leave, other than training.
My business employs freelancers/contractors. Am I responsible for assisting them, and if not, what help is available?
Businesses are not legally obliged to provide work for freelancers (gig-workers), contractors or other self-employed workers (although in limited cases they may have obligations towards them under service contracts).
To protect these workers, the Government set up the Self-Employment Income Support Scheme (SEISS) which is similar to the employee furlough scheme. It offers a taxable grant worth 80% of profits to a maximum of £2,500 per month. Not all self-employed people will benefit – if they are newly established for example or have profits exceeding £50,000 a year.
Those who are employed through their own companies won’t be able to claim SEISS, but instead need to look to the furlough scheme. This means however that they would have to stop work altogether for the period during which they want to claim. Also difficult for some is that the furlough scheme covers only salary, not dividend income.
We’re struggling to meet contractual obligations to suppliers and customers, what are our options?
Firstly, review your contracts to establish your legal obligations. Next consider what could work for you, your customers and suppliers going forward (suspension or termination, extended credit terms, reduced repayments etc). Then take your proposal to your customers and suppliers. If that’s unsuccessful, or your situation deteriorates, be cautious about continuing to trade.
The Government has committed to doing “whatever it takes” to support businesses through this crisis and the measures have been broadly welcomed by business in the South East. Whether they are enough to keep businesses afloat as the difficult economic trading conditions continue will only become clear with time.
The information provided here was correct at the time of writing (31 March 2020). For updates and practical guidance on all of the topics above, please visit our coronavirus (Covid-19) resource hub at www.crippspg.co.uk/coronavirus-covid-19/
We will be keeping this up to date and will add further resources as the situation unfolds and in response to our clients’ concerns.
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