The Chancellor announced on 17th March & updated on 20th March with Round-2 a massive business support package (equal to 15% of GDP) aimed at propping up UK businesses, including:
- A Coronavirus Job Retention Scheme in which the Government will pay 80% of salaries of 'furloughed' employees
- Deferring VAT and Income Tax payments
- A Statutory Sick Pay relief package for SMEs
- A 12-month business rates holiday for all retail, hospitality and leisure businesses in England
- Small business grant funding of £10,000 for all business in receipt of small business rate relief or rural rate relief
- Grant funding of £25,000 for retail, hospitality and leisure businesses with property with a rateable value between £15,000 and £51,000
- The Coronavirus Business Interruption Loan Scheme offering loans of up to £5 million for SMEs through the British Business Bank
- A new lending facility from the Bank of England to help support liquidity among larger firms, helping them bridge Coronavirus disruption to their cash flows through loans
- The HMRC Time To Pay Scheme
- A potential support package specifically for airlines and airports (to be announced)
- A three-month mortgage payment holiday for homeowners
The Chancellor's unprecedented support for business and workers – to protect against the economic emergency caused by the Coronavirus. Gov.uk
But there are already many questions (see below) on how the Business Interruption Loan Scheme will work. We have also discussed some of the key issues in our article on Coronavirus Business Support Package- Key lessons to be learned from the 2008 EFG:
- How is the funding to be accessed by cash-strapped businesses?
- What are the conditions going to be to get a business support loan?
- Which banks do businesses approach to get their loans?
- How long will the application process take?
- Will businesses have to deliver audited and/or recent management accounts in their applications?
- When will the loans become repayable?
- Will the loans be treated as preferential to other debts, including secured loans?
- Are there going to be any special terms on the loans?
- Is it correct to assume the loans will be unsecured?
- What happens if businesses can't pay loan interest in six months time?
- What happens if a borrower can't repay the loan on time or at all?
- Finally, how can the package be administered better than the Enterprise Finance Guarantee introduced in 2008 after the financial crash, which has been widely criticised?
And the big question- IS IT GOING TO BE ENOUGH?
The Chancellor said that the Government will do whatever it takes to support business, hinting that more measures are in the pipeline- potentially.
But those who appear to have been left out of the Government's life-support are those self-employed and in the gig economy.
They represent a major part of the workforce and are, arguably, also amongst the most vulnerable to the nationwide enforced business shut--down that is happening due to the social distancing measures that were introduced by the Prime Minister yesterday.
How will they be supported?
The Government will need to address this vital part of the economy sooner rather than later, along with delivering at pace the initial £330 of support just announced.
HMRC's Response to Coronavirus:
The HMRC has stepped into the fray by setting up a Help Line to "support businesses and self-employed people concerned about not being able to pay their tax due to Coronavirus (COVID-19)."
An instalment arrangement might be organised if cash is short: "HMRC may offer you extra time to pay if they think you genuinely cannot pay in full now but will be able to pay in the future. You can set up a plan to pay in instalments by Direct Debit on dates they agree with you."
But HMRC also says that "you’ll have to pay immediately if HMRC think you can when you call."
Download HMRC Helpline Guide.
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