COVID-19 Business Support
As the UK starts lifting some of its restrictions for non-essential businesses, the BID's Business Recovery Guide will provide businesses with useful information to consider (if not already) how to re-open safely for your staff and your customers. Click here or on the image to take a look at the guidance.
Please note that this guide does not constitute legal advice. Legislation is constantly changing so we can only present legal information at its highest level. We therefore strongly recommend that you seek the help of qualified legal advice, as this cannot be provided.
Advice, Support & Guidance
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Updated 9th April 2020
Coronavirus: Job Retention Scheme
Coronavirus Job Retention Scheme: launch date announced
Yesterday, the Chief Executive of HMRC, Jim Harra, appeared before the Treasury Select Committee and announced that their online system for making claims under the Coronavirus Job Retention Scheme has been developed and will be launched on 20 April.
The system has been tested to handle up to 450,000 claims per hour and yesterday they began live testing with a small number of invited businesses. Employers can expect to receive their furlough grant within 4 to 6 days of submitting their claim and the first payments are due to come through by the end of April.
Mr Harra said he was confident that the portal would not crash but accepts that their call centre may struggle to cope with call volumes if many employers call for assistance on using the system. HMRC have put plans in place to ensure the process works as smoothly and quickly as possible, with 2,000 staff already dedicated to their helplines and another 3,500 redeployed to help process the huge number of anticipated claims.
He also outlined the measures which have been taken to counter potential fraud and abuse of the scheme. In particular:
The employee must have been on payroll by 28 February
The employer needs to have already been authenticated by HMRC
There will be a 4 to 6-day processing period to make background checks
There will also be checks after grants have been made to verify claims
There will be a whistleblower’s hotline where fraud or abuse of the scheme can be reported (for example, if an employee has been asked to work when on furlough).
25th March 2020 Edition
On Friday 20 March 2020, the Chancellor announced an intervention to protect the jobs of those facing likely redundancy as a result of the impact Coronavirus is having on the UK. The unprecedented intervention from the Government was initially thought to cover only those business forced to shut by the various restrictions that have been implemented to restrict movement in an attempt to slow the transfer rate of the virus. However, the Government website confirms that this is applicable to all businesses even those able to continue trading even at a much-reduced capacity.
The current guidance can be found at the following:
The main aspect of this new schemes is it only covers employees who have been ‘furloughed’. There has been some confusion about what this means as it is a more common term in the USA than it is in the UK. It effectively means placing the employees on unpaid suspension from duties. This is more often referred to as a ‘lay off’.
The employees have not been ‘sacked’ or made redundant and they are still employed and remain on the payroll but there is no work to do.
What is the scheme?
The Job Retention Scheme is aimed at stopping employers from making redundancies following a downturn in their businesses during the current pandemic. Instead, it allows them to send employees home (furlough) with up to 80% of their salary up to a maximum of £2,500 per person per month.
The scheme is intended to cover salaries from 1 March to 1 June 2020.
The employer applies each month to HMRC to cover the 80% of the salary.
During the period of furlough, the employee is not allowed to do any work for the employer during that period – this includes email, telephone calls or working from home. If they do, furlough is broken and it is likely the employer will have to cover the full daily cost of that employee’s workday, regardless of how long they actually worked for.
This is both to stop abuse of the system and also to stop well intentioned employees from trying to ‘help out’ during the furlough period.
A list of the furloughed employees will be sent to HMRC via the new online system (when it is ready).
Who is covered by the scheme?
All that has been announced so far is that it covers furloughed employees. Therefore, it does not cover:
Self-employed individuals whether working as a sole trader or through a partnership or LLP.
Workers who are working on personal contracts but do not satisfy the conditions to be an employee (those with no holiday or sick pay entitlement)
These people will have to rely on the benefits system to assist them during this period.
There is uncertainty on whether these rules apply to sole director sole shareholder owner managed businesses and similar companies. This is because of the need to be able to be furloughed. It will be a question of law under the Companies Act 2006 as to whether a controlling shareholder and director of the business can suspend himself/herself indefinitely without pay. The single step needed to qualify for the scheme.
It will be necessary to wait for further detailed guidance from HMRC on this point.
Which employees can be furloughed?
Again, this is a question of law and it will be necessary to review the employment contracts of all staff members to see whether they contain the necessary clauses in their employment contracts to allow them to be furloughed. This is not a standard clause in most employment contracts unless the business is involved in a cyclical industry such as manufacturing, agriculture and the airline industry, so you may need to take further employment or legal advice.
To send an employee home without pay in the absence of this clause could be a breach of contract and could lead to a claim of constructive dismissal or unlawful deduction of wages under existing employment law. It will therefore be necessary to do this only with the agreement of the employee.
Measures to support the business community:
In the 2020 Budget, measures included:
SMEs can ask for time to pay tax bills.
retail, leisure and hospitality businesses with a rateable value (RV) of less than £51,000 will pay no business rates in 2020/21 if they apply.
pubs with a RV of less than £100,000 receive a £5,000 reduction on business rates if they apply.
new small business grants are available.
a new Coronavirus Business Interruption Scheme may guarantee some business loans up to 80%
Sick pay can be claimed from Day 1.
Further measures to support businesses and employees announced by the Chancellor (20th March 2020). These will be explained in more detail in the factsheet below. The announcements are as follows:
Bars, pubs, clubs, restaurants, nightclubs, gyms, theatres and cinemas to close as of 20th March, although takeout services can continue.
New Corona Virus Job Retention Scheme
The Corona Virus Business Interruption Loan Scheme. Further announcements will be made for medium and large enterprises as soon as they are known.
Deferment of next quarter’s VAT payments, with businesses having until the end of the financial year to pay this back.
For employees, the standard allowance for Universal Credit and Working Tax Credits will be increased by £1,000 for the next 12 months.
Self Assessment payments have been deferred until January 2021.
In addition to the 3 month mortgage holiday previously announced, there will be an increase to Local Housing Allowance as a support for renters.
Birmingham City Council Business Rates
Birmingham City Council has confirmed that revised Business Rates bills for 2020/2021 will be issued as soon as possible. Birmingham City Council will also be attempting to stop Direct Debit payments for Business Rates due on 1 April where a discount will now be applied. If, however, your account is debited, please contact your bank to arrange for a repayment to be made to you by Birmingham City Council.
Birmingham City Council is putting together a business case to unlock additional local funding to support businesses. They have asked businesses to complete a short survey by Tuesday 24 March to help them build a body of evidence that supports them to do this. You can access the survey here.
17th March 2020
- Chancellor announced further measures including:
a business support package of £330bn.
small businesses in the retail, hospitality and leisure sectors (less than RV of £51,000) can apply for interruption insurance cover of up to £25,000.
a potential support package for airlines, airports, and others.
a 3-month ‘mortgage holiday’ for borrowers, as required.
the pre-announced business rates exemption is matched by government backed loans with interest free periods.
all retail, hospitality and leisure operators will not pay business rates for the year 2020/21.
small hospitality, retail and leisure operators may be eligible for cash grants of up to £25,000.
Birmingham City Council is currently actively seeking clarification and the BID Team will advise Northfield Businesses as soon as possible.
Latest information from Birmingham City Council Business Rates regarding business support during the present pandemic can be found here