22b4b78c 55f2 4e6a 8512 1e5abe7f8b1e 800x380 - Winding-down the furlough scheme

Winding-down the furlough scheme

Without a doubt, the furlough scheme has provided small businesses with the means to retain staff that would otherwise have been laid-off.
The government is paying 80% of furloughed employees’ wages (subject to a £2,500 maximum). From 1 August 2020, this level of support is expected to drop to say 60%.

From the same date, 1 August, the rules that effectively ban employees from working while they are furloughed is also expected to be eased and affected employees encouraged to return to part-time working.

However, employers will need to draw breath and figure out their choices regarding staffing levels as we start to emerge from lock-down.

The choices will be:

  1. Retain staff and gradually wean the business from the Coronavirus Job Retention Scheme as sales activity resumes pre-March 2020 levels.
  2. Lay-off part of the workforce, retaining those needed to support lower levels of activity.
  3. Lay-off all the workforce as longer-term restrictions in trade make continued trading impossible.

Whichever of these three choices is considered planning needs to be a key part of the decision making process.

Many employers will need to consider these options as more of the economy is opened up and financial support for furloughed workers is decreased. Please contact us if you need help preparing the necessary forecasts so you can make an informed decision.  

Source: Other Tue, 26 May 2020 05:00:00 +0100
6407ab35 cb28 4a52 840d 0d2a35b9ff7b 800x380 - Tackling redundant stock

Tackling redundant stock

Many retailers and manufacturing businesses have stock on their shelves gathering dust.

There are compelling reasons for tackling this issue as we cautiously emerge from lock-down.

For example, freeing up storage space will enable you increase the volume of goods that are selling.

Stock that is not selling is rather like withdrawing money from your bank dropping it into a box and parking it in your stores or stock-room. It has no real value to your business apart from the vague possibility that it will sell at some future date.

What to do?

As we emerge from lock-down everyone is going to be on the lookout for bargains. Accordingly, create a sale of your slower-moving stocks. You can lower the price to recover the cost to you or set sales prices at a level that is marginally higher than its scrap value.

Why should stock turnover be your key indicator in the coming months? 

Every time you sell stock for more than you paid for it you release the profit into your cash-flow.

In which case it makes sense to monitor sales and stock movements to see which items of stock are selling faster than others: faster stock turnover means valuable cash resources being returned to your bank account.

What works against this process is to have stocks on your shelves that are slow to sell and actually tie-up your working capital to no great effect.

The opportunity to buy at reduced prices will encourage customers to return to your business and help to boost your cash-flow. Both factors that will help you re-establish in the post-COVID economy.

Source: Other Tue, 26 May 2020 05:00:00 +0100
9dfea53a d31e 4299 a565 e9b7422e3882 800x380 - Maximum loan under CLBILS increased to £200m

Maximum loan under CLBILS increased to £200m

The scope of the Coronavirus Large Business Interruption Loan Scheme (CLBILS) is to be extended from 26 May 2020. The maximum loan size will be increased from £50 million to £200 million. Larger businesses will be able to benefit from loans up to the lower of 25% of turnover or £200m. The changes are expected to go live on 26 May and full details are expected to be made available on that date. 

This increase will help ensure those large firms which do not qualify for the Bank of England’s Covid Corporate Financing Facility (CCFF) have enough finance to meet cashflow needs during the outbreak.

Companies borrowing more than £50 million through the CLBILS will be subject to restrictions on dividend payments, senior pay and share buy-backs during the period of the loan, including a ban on dividend payments and cash bonuses, except where they were previously agreed. These restrictions also apply to CCFF participants who wish to borrow money beyond 12 months, effective 19 May 2020.

Under the CBILS, the government provides commercial lenders with an 80% partial guarantee on individual loans for businesses that would be otherwise unable to access the finance they need at this critical time.

Personal guarantees of any form will not be taken for facilities below £250,000. For facilities of £250,000 and over, claims on personal guarantees cannot exceed 20% of losses after all other recoveries have been applied. The CLBILS currently supports a range of finance products including short term loans, overdrafts, invoice finance and asset finance.

To date, the government has provided loans of £359 million through the CLBILS and £18.7 billion through the CCFF.

Source: HM Treasury Thu, 21 May 2020 05:00:00 +0100
57f1d979 5a18 4cb0 a3db 6fd6f3dbfe53 1 800x380 - Coronavirus Future Fund launched

Coronavirus Future Fund launched

Last month, the Chancellor, Rishi Sunak, announced a number of measures to help innovative firms survive the Coronavirus pandemic. One of these measures was the launch of a special investment fund for high-growth companies impacted by the crisis, made up of funding from government and the private sector, called the Future Fund. The government has committed to an initial £250 million in funding towards the scheme. This amount will be kept under review.

Funding applications for the Future Fund opened on 20 May 2020 and the scheme will remain open until the end of September 2020. The Future Fund will provide government loans to UK-based companies ranging from £125,000 to £5 million, subject to private investors at least matching the government commitment.

These convertible loans may be an option for businesses that rely on equity investment and are unable to access other government business support programmes because they are either pre-revenue or pre-profit.

There are a number of conditions that must be met in order to apply for a loan. For example, qualifying businesses must be an unlisted UK registered company that has raised at least £250k in equity investment in the past five years. The company must also have been incorporated on or before 31 December 2019.

Source: Department for Business, Energy & Industrial Strategy Thu, 21 May 2020 05:00:00 +0100
c884c3cb 6cea 4b4e bac6 b80993c07034 800x380 - Guidance for employers on workplace testing

Guidance for employers on workplace testing

The Information Commissioner’s Office (ICO) has published guidance for employers on workplace testing during the coronavirus pandemic. It covers the extent to which employers can carry out tests on staff on their return to work to see if they have either coronavirus or symptoms of it.

The guidance makes clear that any testing needs to comply with the GDPR and the Data Protection Act 2018, and that any personal data relating to health is special category data. The topics covered in the guidance include:

  • the lawful basis that can be used for testing employees
  • demonstrating compliance with data protection laws, including the data protection principles
  • data retention
  • data sharing
  • the exercise of data subject rights by staff
  • the data protection considerations where staff have arranged their own tests and disclose the results to their employer
  • the use of on-site temperature checks or thermal cameras for testing or monitoring staff. 
Source: Information Commissioner’s Office Wed, 20 May 2020 05:00:00 +0100
89b10051 4dd7 4faa 9f5b a1b2a0d98774 800x380 - Working safely during coronavirus

Working safely during coronavirus

The government has produced guidance to help employers, employees and the self-employed in England understand how to work safely on their return to work during the coronavirus pandemic. The so-called “COVID-19 Secure” guidance currently comprises eight separate guides covering the following workplace settings: 

  • construction and other outdoor work
  • factories, plants and warehouses
  • labs and research facilities
  • offices and contact centres
  • other people’s homes
  • restaurants offering takeaway or delivery
  • shops and branches
  • vehicles. 

Businesses that operate more than one type of workplace may need to use more than one guide. Each guide includes a downloadable notice that employers can display in their workplace to show that they have followed the guidance. Guides for workplaces that are not currently permitted to be open will be published in due course, ahead of their opening. 

There is also general guidance which applies across all workplaces that are currently allowed to open and this sets out five key points for employers to implement as soon as practicable:

  1. Employees must still work from home if they can, and employers should take all reasonable steps to help them work from home
  2. Employers should carry out a COVID-19 risk assessment, in consultation with workers or trade unions, to establish what guidelines need to be put in place and then they should share the results with their workforce (and if they have more than 50 staff, they should publish the results on their website)
  3. Workspaces should be re-designed to maintain two metres social distancing, wherever possible
  4. Where employees cannot be two metres apart, the transmission risk should be managed
  5. Cleaning processes should be reinforced.

Finally, to help employers with carrying out risk assessments, the Health and Safety Executive (HSE) has published a toolkit. The toolkit begins by setting out the steps that need to be taken by employers to manage risk and then it goes on to provide a risk assessment template document together with a number of example risk assessments covering various industries, including an office-based business, warehouse, local shop and food preparation and service. Finally, there are links to more detailed guidance for employers on managing risk.

fc2e5938 2438 4833 8c2e a6aa990bde4a 800x380 - Removing a home address from the public register

Removing a home address from the public register

Company directors and other eligible people such as company secretaries, people with significant control (PSC) and LLP members can apply to remove their personal addresses from the UK’s official company register on Companies House.

Company directors and others are still required to provide an alternative correspondence address if they are appointed to a live company. If they are no longer appointed to a company, then an alternative address is not required and only the first half of their postcode will be made available to the public. The option to remove your home address from the public register is not available if the home address is the same as the company’s registered office address.

There is a charge of £55 per document where a director wants to suppress their home address. During the COVID-19 outbreak, the fee should be paid online before the application is submitted. The quickest way to proceed is to email a copy of the SR01 application to Companies House. This will allow Companies House to process the application without delay. Applicants can still send a completed SR01 application by post, but it is taking Companies House much longer than usual to process paper applications due to Coronavirus.

53abd6fe fe24 4fb5 a886 115858a25926 800x380 - Changing a company’s year end date

Changing a company’s year end date

There are special rules in place which limit the ability to change a company’s year-end date. A company’s year-end date is also known as its ‘accounting reference date’ and is historically set by reference to the date the company was incorporated. Under certain circumstances it is possible to make a change to the year-end.

As a general rule, you can only change the year-end for the current financial year or the one immediately before it. Making a change to a year-end date will also change the deadline for filing accounts (except for during a new company’s first financial year).

There is no limit to the amount of times you can shorten a year-end date, but you can only extend the period to a maximum of 18 months once in every five years. The financial year can be extended more often under limited circumstances such as when the company has been put into administration.

A request for a change to an accounting reference date can be made online using the Companies House online service or by using a postal version of the Change your company accounting reference date (AA01) form. No change can be made to a period for which accounts are overdue.

There is no overriding reason for using one date over another but there are a number of factors to consider. The most common year end dates are usually 31 December (to coincide with the end of the calendar year) or 31 March (to coincide with the end of the tax year).

e02ca455 c305 46d7 984f 3107355c15b2 800x380 - Definition of trading profits for SEISS

Definition of trading profits for SEISS

The Self-employment Income Support Scheme (SEISS) opened for applications on 13 May 2020. HMRC has confirmed that by midnight on 17 May there had been a total of 2 million claims with over £6.1 billion claimed. The scheme will provide grants of up to £2,500 per month based on 80% of average profits to qualifying applicants.

The initial grant is for the three months, from 1 March through to the end of May 2020. The government has not yet confirmed whether this scheme will be extended, past the current expiration date of 31 May.

The self-employed can only make a claim if their business has been adversely affected by Coronavirus. For most claims, the grant will be based on average trading profits over the tax years 2016-17, 2017-18, 2018-19. To be eligible, trading profits must be no more than £50,000 and at least equal to non-trading income.

HMRC will assess eligibility for the grant based on trading profits and non-trading income from Self-Assessment tax returns. Trading profits are calculated as the profits from self-employment or partnership tax calculation after deducting any allowable expenses. HMRC will not deduct any losses brought forward from previous years or the personal allowance.

c563222d efcd 4f9c a58f f7916c28c078 800x380 - Claiming tax relief on work-related expenses

Claiming tax relief on work-related expenses

Employees who need to buy substantial equipment to use as part of their employment may be able to claim tax relief based on the initial cost. In most cases you can claim tax relief on the full cost of this type of equipment as it usually qualifies for a type of capital allowance called annual investment allowance. Any tax relief would be reduced if the employer provides a contribution towards buying the item.

The way to claim tax relief depends on the amount that is being claimed. HMRC provides the following information on making a claim:

Claims up to £2,500

You should make your claim:

  • using a Self-Assessment tax return if you already fill one in
  • online or by printing and posting form P87 if you don’t already fill in a tax return
  • by phone if you’ve had a successful claim in a previous year and your expenses are less than £1,000 (or £2,500 for professional fees and subscriptions)

Claims over £2,500

  • You can only claim using a Self-Assessment tax return. You need to register if you don’t already fill one in.

There are different rules for employees who use their own uniforms, work clothing and tools for work. It is possible to claim for the cost of repairing or replacing small tools you need to do your job as an employee (for example, scissors or an electric drill), or cleaning, repairing or replacing specialist clothing (for example, a uniform or safety boots). A claim for valid purchases can be made against receipts or as a 'flat rate deduction'. However, an employee cannot make claim relief on the initial cost of buying small tools or clothing for work.