COVID-19: FAQ for Small and Medium Businesses

General

A. We specialise in bankruptcy and insolvency. We are known as a go-to firm for SME businesses facing financial difficulties, such as insolvency issues; this is all the more relevant at this uncertain time. We can assess your particular situation, and assist you with any COVID-19 related queries surrounding bankruptcy and insolvency, debt restructuring, refinancing, directors avoiding personal liabilities and negotiating tax liabilities with HMRC. To get in touch, please call us on 0207 889 0100 or email info@westlondonlaw.com.

Cash grants for small and medium businesses:

A. There are two different cash grants available at this time.

The first is available through the Coronavirus Job Retention Scheme (CJRS). Employers can place their employees on furloughed leave and then claim 80% of their wages through HMRC, up to a cap of £2,500 per month. There will be an online portal which will be active from 20 April 2020, with the first payments going out to businesses on 30 April, and employers will receive the grant to pay the wages within 4 – 6 days of making a claim.

The second scheme is the Small Business Grant Scheme, where businesses which are eligible for small business relief rate, rural rate relief or tapered relied can receive a one-off grant of £10,000.

If you would like to more information on the above schemes, you can request a copy of our detailed guide, COVID-19: Essential Guide for Employers and Business Owners, through the following link

A. In addition to the Coronavirus Job Retention Scheme and the Small Business Grant Scheme, the Government has introduced the Retail and Hospitality Grant Scheme. Eligible businesses in the retail, hospitality and leisure sectors will be able to access a cash grant. Businesses with a property with a rateable value of up to £15,000 may be eligible for a grant of £10,000, whilst those with a property with a rateable value of between £15,000 and £51,000 may be eligible for a grant of £25,000.

If you would like to more information on this scheme, you can request a copy of our detailed guide, COVID-19: Essential Guide for Employers and Business Owners, through the following link:COVID-19: Essential Guide for Employers and Business Owners, through the following link

A. To access the Coronavirus Job Retention Scheme, you will need to apply via the HMRC portal when it becomes active on 20 April.

For the Small Business Grant Scheme or the Retail and Hospitality Grant Scheme, most local authorities will contact businesses directly, however some have chosen to run an application process. You can check your local authority website for more information via the following link:https://www.gov.uk/find-local-council.

Government loans for small and medium businesses:

A. The Coronavirus Business Interruption Scheme (CBILS) has been set up to temporarily support SME’s with access to loans, overdrafts, invoice finance and asset finance.
A. Loans will be available up to the value of £5 million, and term loans and asset finance are available on repayment terms of up to six years, whilst overdrafts and invoice finance facilities are available up to three years. The Government will make a Business Interruption payment to the lenders to account for the first 12 months of interest payments and any lender fees. Therefore, businesses will not have to pay any upfront costs and the initial repayments will be lower.
A. This scheme is being run through commercial lenders, although it is backed by the Government-owned British Business Bank. However, it appears that there have been some initial problems with the scheme, as at 6 April 2020, fewer than 1,000 of the 130,000 loan applications have been approved. If this continues to be the case, the Government could step in to ensure that the lenders act in the national interest, as was the case when the Chancellor removed the obligation to for businesses to provide a personal guarantee for smaller loans.
A. West London Law can help your business with: restructuring options; full-service advice in relation to employment, tax ; refinancing your company, such as through loans; and advice on taxes. We can assist you with preparation of loan documentation, business plans and cash forecasts with our panel accountants to ensure that we move quickly.

HMRC:

A. The Government has set out some temporary changes to VAT payments due between 20 March 2020 and 30 June 2020, in order to assist businesses with their cash flow.

Businesses can defer VAT payments for this period, however the VAT due must be paid on or before 31 March 2021. VAT payments due following the end of the deferral period must be paid as normal. Businesses will not need to inform HMRC that they are deferring VAT payments for this period, however, VAT returns still need to be submitted to HMRC on time.

 

A. The ‘Time to Pay’ service is a HMRC phone service, which you can use if you are struggling to pay a tax bill. HMRC will decide whether you should be able to pay the tax bill immediately, or if you should be permitted more time to place payments back on track. This is more suitable for businesses which are fundamentally profitable, as you will be asked to pay immediately over the phone if HMRC do not allow you more time. Instalment plans are usually over three to six months; however, this may be extended to 12 months.

There is also a new helpline which you can contact for advice. We can help you with preparing repayment plans and negotiating time to pay arrangements with the HMRC on your behalf, after having discussed the best option with you.

Insolvency and restructuring:

A. There will be a temporary three-month suspension of the wrongful trading rules, which will avoid directors incurring personal liability whilst continuing to trade under the threat of insolvency. This will be applied retrospectively from 1 March 2020 and will initially be in place for a period of three months.

There will also be a short moratorium for companies, which will provide breathing space from creditors seeking to enforce their debts and will allow companies time to restructure and attempt to avoid becoming insolvent.

There is also a government proposal for a new formal process whereby a majority of creditors could approve a proposed restructuring, even where priority creditors vote against it.

Companies that are undergoing restructuring will be allowed to continue buying supplies, as clauses in contracts which allow suppliers to terminate agreements because a customer is insolvent will not be enforceable.

A. We work with specialist lenders in the event a government backed loan is not viable, advise you on refinancing options, on pre packs, CVA’s, mergers and acquisitions, and on the tax implications by working with our chosen team of professionals so that you obtain advice and restructuring and refinancing as quickly and cost effectively as possible.
A. We can advise you on your options, including proceeding with a members voluntary liquidation or striking off, also known as dissolution of your company.

Please call or email us for a free initial confidential discussion

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