The purpose of this message is to provide guidance on the help that is being made available to businesses, and to explain how we at Dufton Kellner will remain accessible and able to help you during this period.
We are certainly going through a challenging time, the likes of which most of us will not have experienced before. However, it is also important to retain a sense of perspective. We have heard it said that we are now on a ‘war footing’, but those who did live through the Second World War tell me that, at the start, it did feel a bit like now – great uncertainty, our previous ways of life turned upside down, nobody knowing how long it would last or what the outcome would be. History tells us that the struggle was hard, but it was overcome, as has been every other challenge that we have faced over millennia. In more recent times, I remember a sense of shock watching the aircraft hit the Twin Towers; that unnerving sense of knowing that everything has just changed. And then we faced, and overcame, the financial crash of 2008; we have seen these walls of red on stock market screens before. And we have overcome.
However bleak matters appear right now, we will overcome this. Some businesses will fail; the vast majority will survive. Our lives will change, perhaps quite significantly over the coming months; possibly, although it might be hard to see quite how at this moment in time, for the better. Events like the coronavirus pandemic make us take stock of our lives, give us pause for thought, and perhaps even time for contemplation. Normal service, or some semblance thereof, will resume; perhaps we may even use these coming months to design a better ‘normal’ for each one of us.
How we at Dufton Kellner Will Support You
We will remain open and available to help you in whatever ways we can throughout this period, however long it may last, and beyond. Whilst we intend to keep the office physically open for as long as government allows, we will ensure that we remain contactable throughout this entire period.
For many years we at DK have operated in a hosted desktop environment. This means that our computer systems are hosted in a secure UK-based data centre, and our entire team is able to access our entire network via a desktop or laptop and a secure connection, from anywhere in the world. There is no practical difference between sitting at a desk in the office or a desk at home – the same data encryption applies and the same data is accessible. This means that we are able to seamlessly switch between home and office working, and allows us to reduce the numbers physically present in the office whilst retaining full work capacity as others work from home. All of our team must abide by strict confidentiality and data protection policies, so even whilst working from home your data and your records remain as secure as if they were being worked on in the office.
The easiest way to contact a specific member of our team is by email. If you’re not sure who to contact, please email firstname.lastname@example.org with an outline of your requirement and we will ensure that the appropriate person contacts you by return. Alternatively, there is a live chat function available at www.duftonkellner.co.uk during office hours or you can call the main office switchboard on 0151 342 6405 during normal office hours and we will ensure you are put through to someone who can help you.
How DK Will Share Government Advice and Help
This is a fast-moving situation with government advice and support changing on a daily basis. As and when new advice or help is available, we will distribute this as quickly as possible by a combination of direct email, a note on our Facebook page or a notification on our web site.
Our Current Advice to Business Owners
1. Cash is king – businesses do not fail due to lack of profits; they fail due to lack of cash. It is worth sacrificing some profit in order to maintain cash flow – so if you can finance a purchase at a reasonable interest rate, for example perhaps your insurance premium or a car of van purchase, it makes sense to do so.
2. Talk to your creditors – it is worth speaking with your major suppliers, with your landlord, with your bank, to see if they are willing to extend longer credit terms or new lines of finance. It is in their interests for you to continue trading and paying them – so as in point 1, but now the other way around, your creditors may be willing to advance further credit to you in order to help you to continue to pay them.
3. Talk to your bank – banks are being encouraged to support businesses during this period. If you have existing loan or overdraft facilities then you may wish to renew or extend these, even if you do not currently plan to use them. If you do not have such facilities, you may wish to discuss with your bank to make such available should you need to use it later on.
4. Talk to HMRC – at the moment there is no specific help available from government to defer VAT or PAYE payments. In the meantime, it may be worth calling HMRC to ask for help and to negotiate a ‘time to pay’ arrangement. There is a specific HMRC helpline set up to deal with COVID-19 requests on 0800 0159 559.
5. Monitor your debtors – whilst you may need to show a little additional flexibility, now is the time to ensure that you and your team remain on top of who owes you money and that you ensure that it is regularly chased and collected.
6. Remain in control of your finances – attempting to run a business without access to up to date financial information is like trying to drive a car at night without lights; not recommended. Now more than ever you need access to timely financial information so you know where you are making money and where you might be losing it so that you can take corrective action.
7. Update your cashflow forecasts – you need to know when pinch points might arrive – quarterly VAT or rent payments, large supplier payments etc. – so you can plan in good time how to remain within your bank facilities or know in advance that you will need to seek additional funding.
8. Talk to your team – employees up and down the land are nervous, understandably. They want reassurance, yes; but honesty even more so. People are reasonable and know that we are in trying times. You may want to meet with your team, explain your plans, ask for their help and understanding. You may wish to defer any salary increases or bonus payments until this period passes.
9. Employment contracts – unless your employment contracts specifically include the right to reduce employee hours, you will be unable to do so without risking an employment claim. If you do need to reduce employee costs and do not have such a clause in your employment contracts, the only option available to you is redundancies. If you are a subscriber to our tax investigation service then you have access to the employment law helpline; details will have been provided to you on renewal back in November/December 2019.
10. Defer discretionary purchases – many businesses have March year-ends, so this is the time of year when you might usually be trying to accelerate expenditure in order to obtain a Corporation Tax deduction as early as possible. If the expenditure is on something you know you will need within the next couple of months then this still makes sense; otherwise, it may be better to conserve the cash and accept a slightly higher tax bill, because it is more likely that support will be made available to help you meet or defer that tax bill.
11. Finance capital acquisitions – even if you have the funds to acquire a fixed asset outright, it makes sense to finance such acquisitions and to conserve the cash saved within your business.
12. Remote working – clearly this is easier to implement in some sectors than others, but if you think this may help you and you do not currently have a solution in place then now might be a good time to investigate and implement a remote working solution.
13. Insurance – if you have keyman insurance, this should pay out if you become ill because of COVID-19. It is worth checking to see whether any business interruption cover you may have will cover any loss of business income, but in our experience, pandemics are usually excluded.
We can help you with all of the above. If you need our assistance please just ask.
Government Help and Support
1. Off-payroll rules for the private sector (IR35) – it has just been announced that the implementation of these rules will be put back to 1 April 2021 at the earliest.
2. Coronavirus Business Interruption Loan Scheme– A new temporary Coronavirus Business Interruption Loan Scheme, delivered by the British Business Bank, will launch next week to support businesses to access bank lending and overdrafts. The government will provide lenders with a guarantee of 80% on each loan (subject to a per-lender cap on claims) to give lenders further confidence in continuing to provide finance to SMEs. The government will not charge businesses or banks for this guarantee, and the Scheme will support loans of up to £5 million in value. Businesses can access the first 6 months of that finance interest free, as government will cover the first 6 months of interest payments.
3. Retail, hospitality and leisure sector businesses – all businesses in these sectors will not have to pay business rates for the next 12 months. This goes beyond the announcement made in last week’s budget which limited the relief to businesses with a rateable value below £51,000. Sunak also offered £25,000 grants to retail, hospitality and leisure businesses in smaller premises with a rateable value between £15,000 and £51,000. Any enquiries on eligibility for, or provision of, the reliefs should be directed to the relevant local authority. Guidance for local authorities on the business rates holiday will be published by 20 March.
4. Statutory sick pay – small and medium sized (per the usual Companies Act size criteria) will be able to reclaim SSP paid to staff who are absent due to COVID-19 for up to two weeks per employee. SSP will be claimable by individuals from day 1 of COVID-19 related absence from work.
5. Small Business Rate Relief grant – local authorities will pay a cash grant of £10,000 to 700,000 businesses that are currently eligible for SBRR or Rural Rate Relief. If your business is eligible for SBRR or rural rate relief, you will be contacted by your local authority – you do not need to apply. Funding for the scheme will be provided to local authorities by government in early April. Guidance for local authorities on the scheme will be provided shortly.
6. HMRC time to pay – available across all business taxes, call 0800 0159 559.
7. Mortgage payment holiday – we understand that mortgage lenders are required to offer a 3-month payment holiday for mortgage holders who are affected by COVID-19. It does not appear that similar relief is available to those who are renting, and no further details are available at this time.
8. Coronavirus Job Retention Scheme – announced by Chancellor Rishi Sunak on 20 March 2020, the government will pay 80% of the salary cost of retained workers up to a total of £2,500 per month if the business cannot afford to maintain an employee in their usual role and instead chooses to furlough them instead of making them redundant. Employers can top up salaries further if they wish, but this means that furloughed employees will be paid at least 80% of their usual earnings up to £2,500 per month. The scheme is expected to be operational some time during April and will be operated by HMRC. We will publish further details once they are announced.
9. VAT Deferral – VAT payments due to be made between 1 April 2020 and 30 June 2020 will be deferred until the end of March 2021, so that companies may retain the funds to assist with cashflow.
10. Self-employed July payments on account deferral – the July 2020 payments on account due to be made by the self-employed will be deferred until January 2021. The Chancellor only referred to the self-employed in his announcement on 20 March; until full details are provided we must assume that others due to make July payments on account should expect those payments to be due as usual.
11. Universal and Working Tax Credit changes – the Universal Credit standard allowance and Working Tax Credit basic element both increases by £1,000 for the next 12 months, and Universal Credit at a rate equivalent to Statutory Sick Pay is being made available to the self-employed.
I hope you have found this update useful. We will provide further guidance as we progress through this time and I encourage you to please contact us at any time if there is anything we can do to help you.
I wish you, your family and your team all the very best.