Coronavirus / Covid-19 - Chancellor's Update18/Mar/2020
Further to our note earlier this week regarding our availability and commitment to you as we deal with these unprecedented and challenging times, following the Chancellor’s recent announcements and other developments we wanted to provide some advice and information that we think might be both relevant and useful.
Updates such as this are something we will look to do for as long as the situation requires us to, but our LinkedIn page is our main ‘noticeboard’ – please do follow us for regular updates from the Government, HMRC and our own contributors: https://www.linkedin.com/company/dsa-prospect-ltd
The Chancellor yesterday announced the following business support measures:
- A £10,000 grant available to business who pay little or no business rates. This will be overseen by local authorities, who will contact relevant businesses with further details of this.
- A business rate holiday for 20/21 and a £25,000 grant available to businesses in the retail, hospitality and leisure businesses operating from premises with a rateable value between £15,000 and £51,000. This will be again be overseen by local authorities, who will contact relevant businesses with further details.
- A ‘Coronavirus Business Interruption Loan Scheme’ offering loan funding to SMEs of up to £5m. The detailed conditions and processes are still being determined (by the British Business Bank – a government-backed organisation) and we will update you when we know more, but an interest holiday of 6 months is expected amongst other ‘preferential’ terms to standard lending.
- Increased awareness of HMRC’s ‘Time to Pay’ procedures (see notes below).
Other points to consider include:
- ‘Cash is King’ - prepare a short-term cashflow forecast.
Be clear on what the business needs in cash terms to function even at its most basic level, and revise this as the position develops.
- Consider delaying payments to HMRC.
We are expecting a soft-touch approach from HMRC in the coming weeks and months in terms of payment of taxes, however they will only usually discuss delays under the ‘Time to Pay’ process when they are aware of the extent of the liability and when the discussion is had in advance to it falling due – therefore know the position before you call them.
- Seek continuity of revenue.
Communicate with your customers to determine how they are affected and understand how you can work together. Don’t under-estimate loyalty in challenging times - we’re in this together with shared objectives.
- Speak to suppliers.
Smaller suppliers will likely be in a similar boat but again communication is vital. Discuss your concerns and plans with them to ensure you retain services that are key to your business – they will undoubtedly be keen to continue supply in any form possible.
- Prepare a short-term business plan.
What are short-term priorities and how should they be addressed? Can your offering be adapted to meet the needs of the current climate?
- Contact your bank.
Discuss the potential for repayment holidays or additional credit and seek any advice they may have to offer. Also review and discuss any covenants that might be in place with the bank to understand your commitments in that respect.
- Consider alternative finance options.
Consider HP, leasing or contract hire to explore what support they can provide in terms of things like asset finance.
- Review any capital commitments.
Can they be put on hold or cancelled if necessary?
- Be aware of your responsibilities as a director.
Obviously it’s a last resort and we’re doing all we can to ensure we all get through these uncertain times, however if the future of the business could be in doubt you need to remember your legal duties as a director and act accordingly.
A further useful resource for regular government information on the Coronavirus position is the ‘gov.uk’ email update service which you can subscribe to here: https://www.gov.uk/email-signup?link=/government/topical-events/coronavirus-covid-19-uk-government-response
On behalf of us all at DSA Prospect we hope you, your friends and family keep well during this challenging time and we hope this update helps answer some of the questions you will undoubtedly have following recent developments.
Please do contact us if there is anything you’d like to discuss further – the directors can be contacted any time on the following and please remember that first and foremost we’re here to help:
Gary McHale: 07876 624498
Alec Pridsam: 07876 615305
Nick Longford: 07780 470944