Coronavirus (COVID-19): Advice for Owner-Managed Businesses

This is a good idea anyway, but particularly at a time like this, all businesses need to have an understanding of their variables, whether it is the price of their product falling, the price of inputs rising, or even the lack of availability of some inputs. 

SMEs are no exception, for example, in the construction sector, a business owner would need to understand what is the impact if the price of ready-mixed concrete increases by, say, 15% due to supply chain issues.  A forecast cashflow can be constructed to help manage potential cashflow issues, we have a template for this that enables you to test out different future scenarios.  Click here to learn more about why it’s important to evaluate your financials.

If you’re self-employed and unable to work due to social distancing, then it may be that you need to look at applying for Universal Credit to help with your living costs.

Individuals can apply for Universal Credit via this link, contacting the Universal Credit helpline on 0800 328 5644 or the new Coronavirus and claiming benefits page.

For those who have a disability or health condition that affects how much you can work, then you may be able to claim Employment and Support Allowance, potentially in addition to Universal Credit. Full guidance can be obtained here.

You may be eligible for the Self-Employment Income Support Scheme, click here for the Government’s guidance on how to claim 80% of your monthly trading profits for three months, up to a maximum of £7,500.

The furloughing of staff should be justified in its relation to the impact of COVID-19. In circumstances where it’s necessary to reduce your number of staff, then it’s reasonable to consider this option. Click here for more information from us on furloughing and the Coronavirus Job Retention Scheme  and here for details and how to claim on the gov.uk website.

Importantly, furloughing does not override employment law and the employees need to agree to the variation in their terms of employment.

The government has set out a package of targeted, temporary measures to support public services, people and businesses through this period of disruption. From a business rates perspective, these measures include:

• A 12 month business rates holiday for all retail, hospitality and leisure businesses in England
• Small business grant funding of £10,000 for all businesses in receipt of small business rate relief or rural rate relief

There is also grant funding available of £25,000 for retail, hospitality and leisure businesses with property with a rateable value between £15,000 and £51,000. For a more detailed examination click here.

These grants are being administered by Local Authorities and they should have written to you by now where they expect your business to qualify.

Yes. One way to bolster your earning potential is to explore whether you can take advantage of Research and Development (R&D) tax credits, particularly as it’s a tax relief you can opt to turn into cash, and there is scope to go back and claim for the two preceding years. 

Many business owners don’t believe they can benefit from R&D tax relief because ‘there can’t be much R&D happening in my specific sector’. But this simply isn’t true. R&D tax relief applies to many sectors, including food & drink, property & construction and manufacturing.

In the event that a business or individual is unable to pay their tax liabilities (Corporation Tax, PAYE and NI, VAT, Income Tax etc) by the due date, it may be possible to enter into what’s called a Time to Pay or TTP arrangement with HMRC. You will need to make your case to HMRC as to why you should be allowed TTP, and that these tax liabilities could be met in the future.

If successful, this would result in the deferment of liabilities, providing some cashflow relief in these periods of disruption. NB It’s important to understand that under a TTP agreement the business will have to pay both the deferred and current tax liabilities when the TTP comes to an end. Click here for further HMRC guidance.

There are two automatic deferrals that you don’t need to apply for:

1. This quarter’s VAT payment can be deferred until 31 March 2021
2. The July income tax self-assessment payment on account can be deferred until 31 January 2021

In both cases, you will need to cancel your direct debit arrangement otherwise the money will be collected as normal.

The government has given a three-month extension to the filing of company accounts, but it’s still quite possible for us to prepare your accounts and do any audit remotely in order to keep your business up to date.  We would advise that the option to delay your accounting process is only used as a last resort.  In many cases the support options including the Coronavirus Business Interruption Loan Scheme will require the most up-to-date set of accounts and management information for the period since the year-end.  To discuss your options further and to see if this is something that you should consider please speak to your adviser. For further details click here.