If one thing is certain as the coronavirus pandemic unfolds like an apocalyptic Hollywood film, it is that it is going to cost business. It has been estimated by the UN’s trade and development agency (UNCTAD) that the slowdown in the global economy caused by the outbreak is likely to cost at least $1 trillion. So the UK government’s £330bn rescue package seems like a decent benchmark for our economy, given our 2-3 per cent contribution to global output.
Best protection policy
But with school closures, empty pubs and hotels and with an estimated 15-20 per cent of small businesses likely to be heavily impacted by a shutdown, the cost could be greater than we think. For any business of whatever size, the best protection policy will be to prepare cash flow models on a ‘critical basis’.
Plan for 12 weeks
The height of the crisis is likely to last for 12 weeks and cash flow modelling can really help. But you need to do it now. The Prime Minister announced in his most recent update that his experts are now predicting the slowdown of the virus within a 12 weeks’ window. Whilst it is important to note that this is only an estimate at this time, it does at least give some guidance as to timescales for businesses to work towards. We are urgently advising our client’s to consider the preparation of cash flow models on a “critical basis” over this period. This preparation will be of significant help in ensuring the survival of your business. Our team of expert advisers are offering their services to help you with this task.
Coronavirus Interruption Loan Scheme
The Government is introducing the “Coronavirus Interruption Loan Scheme”, which should be available from Monday 23 March.
The exact details are prohibited until the formal launch in order to ensure maximum publicity and so that no lender can gain a competitive advantage over another. However, we have heard on good authority that terms will be five years for larger loans, 10 years for smaller amounts, interest free for six months and a fast track application processes. Unfortunately, this is all the information we are likely to have until it is formally released
Guidance regarding Companies House late filing penalties
Companies House have announced measures to support companies who are likely to file their year-end accounts or confirmation statements late. Please click here to read about this.
Interest rate reduced
The Bank of England has slashed the base rate for the second time in just over a week in a further emergency response to the coronavirus pandemic, reducing it from 0.25% to 0.1%. This latest cut takes the base rate to its lowest ever level.
We are here to help
Our leadership team have put many proactive measures in place to ensure that we retain a business-as-usual approach. Our priority is to maintain our service levels by considering the wellbeing of our staff so that we can support you through this. Please talk to your accountant at Howards about any aspect of managing your business through this crisis. Call us on 01785 243276 or email your contact directly.
Other sources of help
The government has provided guidance on the support available for businesses affected by Covid-19. This includes advice on:
- making an insurance claim on business interruption insurance
- claiming Statutory Sick Pay (SSP),
- business rates holiday – some businesses will be eligible for a year
- your eligibility to a one-off cash grant of £10,000
- advice on cash flow issues
- accessing the Time to Pay service for help if you are having difficulty paying your tax bills
- avoiding the usual planning processes for operating hot food takeaway service if you are a pub or restaurant and want to serve people staying at home
- the delay to off-payroll working rules (IR35) for businesses in the private sector. This would have applied for people contracting their services to large or medium-sized organisations but will now be delayed for one year until 6 April 2021
Read the full package here: https://www.gov.uk/government/publications/support-for-those-affected-by-covid-19