HMRC Payments and British Business Bank Loans - An Update

20/Mar/2020

Given the fast-moving nature of emergency legislation and measures being put in place for emergency support and similar, we thought it might be useful to update you on a couple of matters that we’ve covered earlier this week.

HMRC Payments

We’ve spoken with a client this afternoon who have already contacted the HMRC Coronavirus helpline and their feedback has been extremely positive.

Despite taking an hour to get through (which is not unexpected at this early stage), the agent dealt with was extremely friendly, knowledgeable and helpful, with the call culminating in:

  • the deferral of months 11 and 12 PAYE to mid-May at the earliest
  • review at that point with the option to defer further (and additional months) depending on the circumstances at that time

It is obviously extremely encouraging that they are taking a sympathetic, proactive and pragmatic approach to dealing with calls and issues - we therefore wanted to share this experience in the hope that our clients recognise a call to the HMRC helpline isn’t something that should be stigmatised or feared, but embraced if appropriate.

(A point worth noting is that the line is likely to get extremely busy around the following days each month, so try to avoid these and seek to complete VAT and payrolls in good time before them):

7th of the month (VAT payment deadline)

22nd of the month (PAYE payment deadline)

Last day of the month (corporation tax payment deadline)  

CBILS – British Business Bank Loans

This follows our email on Wednesday outlining the Chancellor’s plans for business support, whereby further details of the Coronavirus Business Interruption Loan Scheme (CBILS) have now been announced.

In response to criticism that the scheme was taking too long to roll out, its release date has been brought forward to become available week commencing 23 March 2020 (this coming Monday).

The crux of the measure is to offer businesses who might struggle to obtain debt finance in the current climate and market the opportunity for support, and offer a more attractive basis to do so for both the lender and borrower.

It will be operated by the British Business Bank through participating providers (see the link below for a list of these) and gives lenders a government-backed guarantee against the outstanding facility balance (noting that the borrower always remains 100% liable for the debt).

The  maximum facility remains at £5m and the products it will seek to support will include:

  • Term facilities 
  • Overdrafts
  • Invoice finance facilities 
  • Asset finance facilities  

The government has committed to cover interest payments for the first 6 months and terms are expected to range from 3 months to 10 years (for term loans and asset finance) and up to 3 years (for revolving facilities and invoice finance).

Eligibility guidelines have also been clarified (despite still being subject to change until rolled out on Monday 23 March). Eligible businesses must:

  • be UK based, with turnover of no more than £45 million per annum
  • operate within an eligible industrial sector (a list is available via the link below)
  • be able to confirm that they have not received de minimis State aid beyond €200,000 equivalent over the current and previous two fiscal years
  • be unable to meet a lender’s normal lending requirements for a fully commercial loan or other facility, but would be considered viable in the longer-term

The advice, as with any arrangement of this sort, is to speak to a number of lenders to ensure the most appropriate and best-fitting product is obtained.

Lenders are also likely to require comprehensive borrowing proposals before offering finance – when the requirements of this become clear we will of course be more than happy to assist with their preparation. The expectation at this point is that the application process could be single-opportunity, so well worth getting right first time.

As with the HMRC helpline, it is likely demand will be hugely high in the early stages – therefore do consider the timing of this or the use of online application procedures which are advised will be available.

For more detailed information, the relevant section of the British Business Bank website can be found at: https://www.british-business-bank.co.uk/ourpartners/coronavirus-business-interruption-loanscheme-cbils/

If you have any questions regarding this or anything else please get in touch, and for regular updates, announcements and news make sure you’re following our LinkedIn page: https://www.linkedin.com/company/dsa-prospect-ltd