Retailers protected from “aggressive” rent collection

Under pressure shops and other companies will be protected from “aggressive” rent collection and asked to pay what they can during the coronavirus crisis, the government has announced.

It says the majority of landlords and tenants are working well together to reach agreements on debt obligations, but some landlords have been putting tenants under undue pressure by using aggressive debt recovery tactics.

To stop these unfair practices, the government will temporarily ban the use of statutory demands (made between March 1, 2020 and June 30, 2020) and winding up petitions presented from Monday April 27 through to June 30, where a company cannot pay its bills due to coronavirus.

It says the move will help ensure these companies do not fall into deeper financial strain. The measures will be included in the Corporate Insolvency and Governance Bill, which business secretary Alok Sharma set out earlier this month.

The government is also bringing in secondary legislation to provide tenants with more breathing space to pay rent by preventing landlords using Commercial Rent Arrears Recovery (CRAR) unless they are owed 90 days of unpaid rent.

However, while landlords are urged to give their tenants the breathing space needed, the government is calling on tenants to pay rent where they can afford it or what they can, in recognition of the strains felt by commercial landlords too.

The latest announcements come on top of a package of business support measures, including a moratorium on evictions for commercial tenants for at least a three-month period.

Business secretary Alok Sharma said: “In this exceptional time for the UK, it is vital that we ensure businesses are kept afloat so that they can continue to provide the jobs our economy needs beyond the coronavirus pandemic.

“Our unprecedented package of support can help commercial landlords, including through the recent expansion of the Coronavirus Business Interruption Loans Scheme.

“I know that like all businesses they are under pressure, but I would urge them to show forbearance to their tenants. I am also taking steps to ensure the minority of landlords using aggressive tactics to collect their rents can no longer do so while the Covid-19 emergency continues.”

Under the new measures, any winding-up petition that claims that the company is unable to pay its debts must first be reviewed by the court to determine why. The law will not permit petitions to be presented, or winding-up orders made, where the company’s inability to pay is the result of Covid-19.

The legislation to protect tenants will be in force until June 30 and the government says it can be extended in line with the moratorium on commercial lease forfeiture.

Legislation will also be brought forward to prevent landlords using commercial rent arrears recovery (CRAR) unless 90 days or more of unpaid rent is owed.

The Financial Conduct Authority, the Financial Reporting Council and the Prudential Regulatory Authority have also issued a joint statement encouraging investors and lenders to take into account the issues arising directly from the COVID-19 pandemic in responding to potential breaches of covenants.

Emergency legislation already introduced by government includes a suspension of forfeiture rights, which prevents all commercial tenants from being removed from their properties.

The government has also announced new insolvency measures which will provide further support to businesses impacted by the Covid-19 pandemic.

Can a sole director be furloughed?

Can you furlough a sole director under the Coronavirus Job Retention Scheme (CJRS)? It’s a question that we’ve been asked a number of times.

A sole director cannot be furloughed completely as they still have to be present to undertake their statutory duties. Such things as on-going administration, book-keeping, tax-filings and banking would likely come under this heading.

However, part-furloughing is possible, with the director’s work and duties as an employee of the business, the subject of the furlough.

That means they cannot do any work they would carry out in normal circumstances to generate commercial revenue or provides services to or on behalf of their company.

Activities such as talking to customers and suppliers, marketing the business, posting on social media and taking work calls would fall into that ‘work’ category.

It is also important to stress that the scheme is only for any wage paid through PAYE to the director. It does not extend to dividends paid to directors.

The government has put nothing in place to provide financial support to shareholders where the amount of their dividend is affected by the coronavirus crisis.

Here’s what HMRC guidance says: “To be eligible for the grant, when on furlough, an employee cannot undertake work for, or on behalf, of the organisation. This includes providing services or generating revenue.”

It adds: “If an employee is working, but on reduced hours, or for reduced pay, they will not be eligible for this scheme.

“Where furloughed directors need to carry out particular duties to fulfil the statutory obligations they owe to their company, they may do so provided they do no more than would reasonably be judged necessary for that purpose.

“For instance, they should not do work of a kind they would carry out in normal circumstances to generate commercial revenue or provides services to or on behalf of their company.”

If the company has two directors then one could be totally furloughed leaving the other in charge of those statutory obligations.

Directors are eligible to make a claim through the system if they are paid through PAYE – and as with other employees any possible claim would be for 80 per cent of the salary paid to them, capped at £2,500.

Here’s an example of how the scheme could work:

A company’s sole director pays himself a basic annual salary of £8,632. The rest of their renumeration is made up by a dividend on the company’s profits. No amount of this dividend can be reclaimed from the government.

As a result of the coronavirus crisis and the government’s restrictions, the company, which is in the entertainment industry, shut down during March.

The director can be furloughed from the day that the company confirms in writing that is happening.

The amount claimed under the scheme for 2019/20 would be £8,632, divided by 12 and adjusted to deduct the number of days worked in March.

Employer pension contributions would then be added: there is no NI to add as annual salary is less than the Employers’ Secondary NICs threshold.

The amount being claimed for 2020/21 would be based on the same figures, with no adjustment for days worked.

At the moment the company can continue to claim for the director under the scheme until the end of June 2020.

Furlough scheme extended to end of June

The government has announced that its Coronavirus Job Retention Scheme (CJRS) will be extended by a month to reflect continuing social distancing measures.

The scheme, which allows firms to furlough employees, with the government paying cash grants of 80 per cent of their wages up to a maximum of £2,500, (https://wnj.co.uk/job-retention/) was originally open for three months and backdated from the March 1 to the end of May.

Now, Chancellor Rishi Sunak has announced that it will be open until the end of June.

He said: “It is the right decision to extend the furlough scheme for a month to the end of June to provide clarity.”

The government says that the scheme will continue to be monitored to ensure people and businesses can get back to work “as soon as it’s safe to do so to drive UK economic recovery”.

Under the scheme, thousands of businesses up and down the country have now furloughed staff.

An online service is being launched today (April 20) to allow businesses to make a claim – the taxman has revealed they will not be able to claim by telephone.

Businesses and agents that are authorised to act on behalf of clients for PAYE matters, will be able to make a claim.

WNJ’s team is available to support its clients through the process, either directly, if authorised, or indirectly.

Please confirm to payroll@wnj.co.uk if you wish to instruct us to access the HMRC portal directly on your behalf and process the grant claim.

In addition, whilst our payroll team has already been processing salaries based on furlough calculations for some clients where applicable, if you haven’t already done so, please can you provide the following information:

• Name and National Insurance number of the employee furloughed
• Details of the furlough claim period
• Confirmation of the business bank account number and sort code

To make a claim themselves, businesses will require the following information:

• PAYE reference number
• Confirmation of the number of employees being furloughed
• The furlough claim period for each employee
• Amount claimed (per the minimum length of furloughing of three weeks). HMRC retain the right to audit all aspects of the claim
• Your business bank account number and sort code
• Your contact name and telephone number

The online service is designed to be ‘self-serve’, with guidance in place.

The Office for Budgetary Responsibility has said the CJRS scheme is limiting the impact on employment.

The government says future decisions on the scheme will take into account further developments on the wider measures to reduce the spread of coronavirus, as well as the responsible management of the public finances.

PAYE payment and furlough eligibility extensions

Companies that have cash flow difficulties and are unable to meet their PAYE liabilities as a result of the coronavirus crisis may be able to defer their payments.

HMRC is urging anyone worried about any payments to contact them to discuss the options available.

That could include a payment extension. It is understood that if required the taxman will defer PAYE bill payments for up to three months, where the business is adversely impacted by coronavirus.

This is not an automatic deferral. However, WNJ has successfully applied for a PAYE payment extension on behalf of one of its clients.

Applying for a payment extension might also be an option for businesses struggling to pay other taxes which aren’t automatically deferred under the government’s coronavirus support measures, including Corporation Tax and CIS.

The government has also announced that during the outbreak the annual interest on deferred tax payments will be waived.

HMRC has also set up a dedicated helpline. For more details visit: https://www.gov.uk/government/organisations/hm-revenue-customs/contact/coronavirus-covid-19-helpline

Meanwhile, the government has extended the start date for eligibility for furlough to March 19 from the original February 28 date, meaning that 200,000 more people can benefit from the scheme.

Under the scheme employers can claim a grant covering 80 per cent of the wages for a furloughed employee, with a cap of £2,500 a month.

To qualify and to protect against fraudulent claims, individuals originally had to be employed on February 28, 2020.

But following a review of the delivery system and to ensure the scheme helps as many people as possible, new guidance has confirmed the eligibility date has been extended to March 19, 2020 – the day before the scheme was first announced.

Employers can now claim for furloughed employees that were employed and on their PAYE payroll on or before March 19, 2020.

The employee must have been notified to HMRC through an RTI submission notifying payment in respect of that employee on or before that date.

A HMRC spokesman said: “This change makes the scheme more generous while keeping the substantial fraud risks under control and is expected to benefit over 200,000 employees.”

It has also been confirmed that the scheme is set to be fully operational next week with the online portal going live on April 20.

More information on the scheme is available here: https://www.gov.uk/guidance/claim-for-wage-costs-through-the-coronavirus-job-retention-scheme

New insolvency measures unveiled

New insolvency measures to prevent companies unable to meet debts due to the impact of coronavirus from going out of business have been announced.

The Business Secretary has said he will make changes to allow companies undergoing a rescue or restructure process to continue trading, giving them “breathing space” that could help them avoid insolvency.

It will include enabling companies to continue buying much-needed supplies, such as energy, raw materials or broadband, while attempting a rescue.

And it also involves temporarily suspending wrongful trading provisions retrospectively from March 1 2020 for three months for company directors, so they can keep their businesses going without the threat of personal liability.

Business Secretary Alok Sharma said the measures would, “reduce the burden on business, giving bosses much-needed breathing space to keep their workers employed and their companies going.”

Mr Sharma also announced that the government would introduce legislation to ensure those companies required by law to hold Annual General Meetings (AGMs) will be able to do so safely, consistent with the restrictions on movement and gatherings introduced to address the spread of coronavirus.

Companies will temporarily be extended greater flexibilities, including holding AGMs online or postponing the meetings.

This measure follows an announcement that companies would automatically and immediately be granted a three-month extension to the filing of their accounts following a fast-track online process.

More than 10,000 businesses have already successfully applied for the extension.

The government previously consulted on changes to the corporate insolvency regime and announced plans to introduce new insolvency restructuring procedures in August 2018. The new legislation will implement these plans.

Current insolvency rules stipulate that directors of limited liability companies can become personally liable for business debts if they continue to trade when uncertain about whether their businesses can continue to meet their debts.

Relaxation of these wrongful trading rules will reassure directors that the difficult decisions they have to make about the future viability of their business will not have to be unduly influenced by the exceptional circumstances which are entirely beyond their control.

Matthew Fell, chief UK policy director at the Confederation of British Industry, said: “The temporary suspension of wrongful trading provisions, along with other measures, will give much needed headroom for company directors to enable otherwise viable businesses to use the government’s support package and weather this crisis.”

Coronavirus Job Retention Scheme – an update

HMRC has revealed more information about how the Coronavirus Job Retention Scheme (CJRS) will work.

An online service is set to be launched next week to allow businesses to make a claim – the taxman has revealed they will not be able to claim by telephone.

HMRC says the new online portal will open on April 20 and it is contacting businesses to advise them what they need to do.

CJRS will allow employers to claim 80 per cent of the wages of staff that they have furloughed – up to a maximum of £2,500 per employee wage costs (https://wnj.co.uk/job-retention/).

Once the portal is up and running, businesses, and agents that are authorised to act on behalf of clients for PAYE matters, will be able to make a claim.

WNJ’s team will be available to support its clients through the process, either directly, if authorised, or indirectly.

Please confirm to payroll@wnj.co.uk if you wish to instruct us to access the HMRC portal directly on your behalf and process the grant claim.

In addition, whilst our payroll team has already been processing salaries based on furlough calculations for some clients where applicable, if you haven’t already done so, please can you provide the following information:

• Name and National Insurance number of the employee furloughed
• Details of the furlough claim period
• Confirmation of the business bank account number and sort code

To make a claim themselves, businesses will require the following information:

• PAYE reference number
• Confirmation of the number of employees being furloughed
• The furlough claim period for each employee
• Amount claimed (per the minimum length of furloughing of three weeks). HMRC retain the right to audit all aspects of the claim
• Your business bank account Number and sort code
• Your contact name and telephone number

HMRC says it is expecting phone demand to be beyond its capacity to offer a normal service. The service is designed to be ‘self-serve’, with guidance in place.

HMRC will also be providing further information on its support for businesses and workers over the coming weeks, including more detail on the Coronavirus Self Employment Income Support Scheme.

Jim Harra, First Permanent Secretary and Chief Executive of HMRC, says it is “working at pace” to deliver the service that will allow businesses to make a CJRS claim.

Last week Mr Harra told a virtual Commons Treasury Committee hearing on the impact of the COVID-19 related measures that it was currently testing the new online portal with selected PAYE employers.

HMRC has had to move quickly. The scheme was first announced on Friday March 20 at only the second coronavirus news briefing delivered by Chancellor Rishi Sunak.

Mr Harra said: “We are confident that it will be able to handle the large volume of employers that will use it. It is important that the maximum number will be able to self-serve. We will be issuing guidance next on how to compile claims.”

He said that the only way to get the scheme to work would be to ensure it was driven by self-service, as there could be millions of claims.

Mr Harra added: “Many employers will be familiar with filing online PAYE returns or they will use an agent. Between now and the release of scheme, we will be releasing more detailed guidance.”

The latest guidance on CJRS can be found on GOV.UK by searching for ‘Coronavirus Job Retention Scheme’.

£750million coronavirus funding for frontline charities

Charities across the UK will receive a £750million package of support to ensure they can continue their vital work during the coronavirus outbreak.

The money will help a range of good causes including hospices and charities supporting domestic abuse victims.

Tens of thousands of charities providing vital services will benefit from direct cash grants to ensure they can meet increased demand as a result of the virus as well as continuing their day-to-day activities supporting those in need.

As part of the package of support, £360m will be directly allocated by government departments to charities providing key services and supporting vulnerable people during the crisis.

The second part of the support package is £370m for small and medium-sized charities, including through a grant to the National Lottery Community Fund for those in England.

This cash will support organisations at the heart of local communities which are making a big difference during the outbreak, including those delivering food, essential medicines and providing financial advice.

The latest announcement from Chancellor Rishi Sunak builds on previous announcements of support for charities and businesses, including deferring their VAT bills, paying no business rates for their shops next year, and furloughing staff where possible, with the government paying 80 per cent of their wages.

The Chancellor said: “Our charities are playing a crucial role in the national fight against coronavirus, supporting those who are most in need.

“It’s right we do everything we can to help the sector during this difficult time, which is why we have announced this unprecedented £750m package of extra funding.

“This will ensure our key charities can continue to deliver the services that millions of people up and down the country rely on.”

Government departments will now “work at pace” to identify priority recipients, with the aim for charities to receive money in the coming weeks. The application system for the National Lottery Community Fund grant pot is expected to be operational within a similar period of time.

Chancellor strengthens support on offer for business

Chancellor Rishi Sunak has announced he is now taking further action to support firms affected by the coronavirus crisis.

He is bolstering business interruption loans for small businesses and has announced a new scheme for larger companies.

The move follows concerns that the original scheme he announced to support businesses was moving too slowly and rested to heavily on the judgement of banks over eligibility.

The Treasury says that more than £90 million of loans to nearly 1,000 small and medium sized firms have been approved under the government’s Coronavirus Business Interruption Loan Scheme (CBILS) since its launch.

In order to maximise the support available, the Chancellor is extending the CBILS so that all viable small businesses affected by COVID-19, and not just those unable to secure regular commercial financing, will now be eligible should they need finance to keep operating during this difficult time.

The government is also stopping lenders from requesting personal guarantees for loans under £250,000 and making operational changes to speed up lending approvals.

The government also says it will continue to cover the first 12 months of interest and fees.

The new Coronavirus Large Business Interruption Loan Scheme (CLBILS) aims to ensure that more firms are able to benefit from government-backed support during this difficult time.

It will provide a government guarantee of 80 per cent to enable banks to make loans of up to £25m to firms with an annual turnover of between £45m and £500m.

Loans backed by a guarantee under CLBILS will be offered at commercial rates of interest and further details of the scheme will be announced later this month.

The Chancellor said: “We are making great progress on getting much-needed support out to businesses to help manage their cashflows during this difficult time – with millions of pounds of loans and finance being provided to hundreds of firms across the country.

“This is a national effort and we’ll continue to work with the financial services sector to ensure that the £330 billion of government support, through loans and guarantees, reaches as many businesses in need as possible.

The Chancellor also revealed he will be speaking to bank chief executives to discuss how the schemes are working and ensure everybody is playing their part.

There have now been over 130,000 enquiries from businesses across the country for business interruption loans, according to latest figures from UK Finance.

Some 983 businesses have had finance approved, while banks are processing thousands of loan applications – and scheme changes made today will help them approve loans for the smallest businesses as quickly as possible.

Last week, Mr Sunak and the Governor of the Bank of England Andrew Bailey wrote to banks asking them to support small and medium-sized enterprises in any way they can.

This included ensuring interest rates offered to struggling businesses are reasonable and to pass on the benefit of the government guarantee to those borrowing under the Coronavirus Business Interruption Loan Scheme.

Adam Marshall, director-general of the British Chambers of Commerce, said: “Improvements to the Coronavirus Business Interruption Loan scheme will help firms get access to cash more quickly, and the announcement of a new loan scheme for mid-sized companies closes a significant gap in existing support.”

Mike Cherry, national chair of the Blackpool-headquartered Federation of Small Businesses said: “The most immediate issue threatening the survival of millions of small businesses and the self- employed is severely depleted cash flow.

“Time is of the essence and therefore we welcome government action in ensuring that any viable small business that has been negatively impacted by the Coronavirus can now directly access CBILS rather first being offered a bank’s own standard commercial lending product.

“Removing personal guarantees for all commercial loans below £250,000 is also very welcome.

“Taking on debt at the current time is a daunting prospect for many small businesses and the self-employed.
“We look forward to continuing our constructive engagement with government to ensure that debt can be repaid in an affordable way that allows small businesses to recover from this crisis and to thrive again.”

Is your furlough scheme compliant with employment law? Expert advice is at hand

There is no doubt the government’s Job Retention Scheme will provide a critical lifeline for many businesses.

However, it is important that employers ensure compliance with employment law legislation while addressing the concerns of employees and protecting their business.

Help is now at hand for WNJ clients who have any queries regarding the scheme that relate to employment law matters – such as choosing who is ‘furloughed’ and how to action the scheme properly.

They can now get FREE access to expert HR support advice from a dedicated coronavirus team set up by Croner Taxwise.

Its aim is to guide employers through:

• the Job Retention Scheme
• how to deal with employee concerns
• how to support employees whilst protecting your business

The HR Support Advice number to phone is: 0844 892 2807

To access the free advice as a WNJ client, give the account number TXWS7496.

Under the scheme, all UK employers will be able to access support to continue paying part of the salary of employees that would otherwise have been laid off.

It will cover 80 per cent of a regular salary up to £2,500 a month, which is just above the median income. All UK businesses are eligible.

Information on the scheme continues to develop. For instance, the Croner Taxwise team point out that when it comes to issuing furlough letters, the employee must agree to being furloughed.

Stating in a letter that if the employee has no objections by a certain time, their acceptance will be presumed, is not acceptable.

Meanwhile, in a move to increase load capacity HMRC has changed its dedicated phone number for the coronavirus helpline targeted at businesses and the self-employed.

The HMRC coronavirus helpline number to call is now 0800 024 1222

All calls to the original 0300 number will be redirected to the new helpline, according to Accountancy Daily. Opening hours for the helpline will be 8am to 4pm Monday to Friday only.

Business rate grant fund – an update

Local authorities are gearing up to deal with applications from businesses looking to access grant schemes set up in response to the coronavirus pandemic.

The government has announced small business grant funding of £10,000 for all business in receipt of small business rate relief or rural rate relief.

This will provide a one-off grant of £10,000 to eligible businesses to help meet their ongoing business costs.

Any enquiries on eligibility for, or provision of, the reliefs and grants should be directed to your relevant local authority.

You are eligible for this if you are a small business based in England, your business occupies property and you already received Small Business Rate Relief (SBRR), Rural Rate Relief (RRR).

The response to the grant scheme is still developing but some local authorities have created online forms for businesses to fill in. Others say they will contact businesses directly.

Here’s what some individual councils in the North West are doing to respond to the scheme:

Blackburn with Darwin Council:
Applications should be made via the council’s website.

https://www.blackburn.gov.uk/business-rates/coronavirus-support-business

Blackpool Council:
You do not need to do anything. The council will write to you if you are eligible.

Burnley Council
Waiting on further details from the government

Chorley Council
The council says it will contact everyone who is eligible directly as soon as possible

• Fylde Council
The council has an online application form:

https://new.fylde.gov.uk/coronavirus-business-support/

Hyndburn Council
The council is writing to all local businesses in its area

Lancaster City Council
For information visit:

https://www.lancaster.gov.uk/sites/business/business-support-grants-fund

To make an online application visit: https://www.lancaster.gov.uk/forms/ShowForm.asp?fm_fid=261

Pendle Council
Awaiting government guidance

Preston City Council
The council has begun the process of writing to everyone who may be eligible. If you haven’t received a letter by April 15 get in touch through the city council’s website. For information visit:

https://www.preston.gov.uk/coronavirus

• Ribble Valley Council
In the process of writing to everyone who may be eligible for the grant

• South Lakeland Council
Fill in the online form to apply:

https://selfservice.southlakeland.gov.uk/renderform.aspx?t=93&k=0C44CDB3AE6713461719E20CC39A2EA7CF2010AA&refresh=1

• South Ribble
The council has an online application form at:-

https://southribble-ss.achieveservice.com/AchieveForms/?mode=fill&consentMessage=yes&form_uri=sandbox-publish://AF-Process-7839127e-000c-4cd8-9f3b-ed46a6745511/AF-Stage-c1a34eea-4990-4a42-be36-6a0b0db856e7/definition.json&process=1&process_uri=sandbox-processes://AF-Process-7839127e-000c-4cd8-9f3b-

• West Lancashire
Businesses that are eligible will receive a letter and an email

• Wyre Council:
For information visit:
https://www.wyre.gov.uk/CoronavirusBusinessSupport
For an online form visit:
https://www.wyre.gov.uk/coronabusinessgrant