Coronavirus Impact: Small to Medium Sized Businesses

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Coronavirus Impact: Small to Medium Sized Businesses

Our Y30 partners, Black's Solicitors, have pulled together this useful breakdown for us which looks at statutory sick pay, funding, tax and cash flow.

This article was published on Tuesday 17 March 2020

The ramifications of Coronavirus on UK businesses will be wide ranging and the next few months will be turbulent.

Almost all businesses, big or small, will feel the impact however those that rely heavily on footfall traffic, cross-border supply chains and face-to-face customer interaction could face serious financial disruption.

Whilst there is a lot of guidance being published, things are changing daily and the key points to be aware of in the next few months are as follows:

Statutory Sick Pay

The Government have announced that they will expedite legislation to allow small to medium sized businesses and employers to reclaim Statutory Sick Pay which will be paid for sickness absence related to COVID-19.

This refund will cover up to two week’s Statutory Sick Pay and all employers with fewer than 250 employees will be eligible.

If you need to speak to someone in relation to Statutory Sick Pay or require further information, please contact a member of our Employment team.

Funding

The Government will provide additional funding to local authorities to help and support small businesses. This should provide a one-off grant of £10,000 to around 700,000 businesses currently eligible for Small Business Rate Relief or Rural Rate Relief to help those businesses meet their ongoing business costs.

A new temporary Coronavirus Business Interruption Loan Scheme is being delivered by the British Business Bank and will hopefully launch imminently. This Scheme will help businesses access bank lending and overdrafts and the Government will provide those lenders with a guarantee of 80% on each loan to help provide that finance to SMEs. The Scheme will support loans of up to £5 million in value.

The Government have made it clear that Banks are to take a sympathetic approach to small businesses so it is important that if your business is in financial difficulty due to the impact of Coronavirus, you speak with your Bank as soon as possible to discuss the possibility of obtaining new credit facilities or payment holidays on existing commitments.

If you need to speak to someone for advice on obtaining funding or require further information, please contact a member of our Corporate team.

Time to Pay

Businesses (and self-employed individuals) in financial difficulty and with outstanding tax liabilities may be eligible to receive support with their tax affairs through HMRC’s Time to Pay service. A time to pay arrangement will be agreed on a case-by-case basis and will be tailored to individual circumstances and liabilities.

HMRC have a new dedicated COVID-19 helpline for advice and support. If you are concerned about being able to pay your tax due to COVID-19, you should call the dedicated helpline on 0800 0159 559.

If you need to speak to someone in relation to outstanding tax liabilities or require further information, please contact a member of our Dispute Resolution team.

Risks to Cash Flow

All businesses must consider their finances and address any concerns about their solvency position, and that of any contractual counterparties. The ability to meet payment obligations as they fall due and the management of cash flow is paramount.

If your financial situation significantly worsens, you may need to consider whether you are obliged to make the relevant insolvency filings.

When a company is financially distressed and insolvency proceeding become likely, a directors duty to promote company’s success is replaced with a duty to act in the interest of the company’s creditors as a whole. Failing to comply with that duty can create potential personal liabilities.

There are several insolvency proceedings business owners may need to consider if they are in financial distress such as administration, Company Voluntary Arrangements (CVAs) and voluntary liquidation.

If you are concerned that your business will not be able to continue to trade on a solvent basis due to Coronavirus and need advice on next steps, please speak to a member of our Insolvency & Recovery team.

As a Welcome to Yorkshire member Black’s Solicitor’s are offering telephone consultations should you have any queries, please call them on: 0113 207 0000

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