Practical suggestions and other support measures

Published: Tuesday 23 June 2020

Last updated on Thursday 23 June 2020

Refunds available for VAT payments

As a further update to the temporary arrangements for the deferral of VAT payments, HMRC has confirmed that where taxpayers wanted to defer VAT payments due between 20 March 2020 and 30 June 2020, but did not manage to cancel their direct debit in time they can claim a refund. Find out more here.

Businesses that cancelled direct debit arrangements in order to take advantage of the VAT payment deferral arrangements will need to reinstate those direct debits so that payments due after 30 June relating to liabilities declared on submitted VAT returns can be made to HMRC. Find out more here.

Accounting for support schemes

With so many support schemes and funds available to businesses during the pandemic, we have provided an overview of accounting for these any steps you need to take next. Find out more here.

Grants

Remember to check if you are eligible for the discretionary grants available to small and micro businesses from local authorities and apply as soon as possible, as some councils have announced that they will close to applications this weekend. Find out more here.

There is also a Retail and Hospitality Grant Scheme which provides grants to businesses in the retail, hospitality and leisure sectors (but please note veterinary would not normally fall into being categorised as one of these sectors).  Businesses in these sectors with a property that has a rateable value of up to £15,000 may be eligible for a grant of £10,000.  Businesses in these sectors with a property that has a rateable value of over £15,000 and less than £51,000 may be eligible for a grant of £25,000.  What is interesting is that we are aware of a few practices with branch surgeries which have had one of their surgeries classified as being within the retail sector and this has entitled them to a grant of up to £25,000.  This certainly seems to be very much the exception as opposed to the rule, but it would be worth checking whether your practice might be eligible for any form of grant or enhanced grant.  

Your local council is the best contact for any questions regarding your eligibility for grants.

Bounce back loans

After rising pressure, the Government announced on 27 April the new small business ‘bounce back loans’ also know as the ‘microloan’ scheme. This will have 100% Government backing for lenders. The aim is that this fast track scheme, without the need for viability tests, will give businesses the ability to borrow between £2,000 and £50,000 with the funds being sent to businesses within days. The loans will have no interest or capital repayments for the first 12 months and can accessed across the existing network of accredited lenders. The interest rate has been set at 2.5% and no personal guarantees. Find out more here. 

Coronavirus business interruption loan scheme (CBILS)

Whether or not you feel you may need to take out a loan to support your practice during these times, it would be worth being armed with information about what is available. Here is the low-down:

  • Lending is being made by a variety of lenders including all the major banks.
  • The lending is not from the Government, rather each lender has an 80% government guarantee, providing lenders with confidence and subject to a per lender cap on claims.
  • The Government guarantee means that if a borrower defaulted on the loan, the Government would guarantee 80% of the outstanding loan value to protect the lender.
  • For the avoidance of any doubt, keeping up repayments on any borrowing taken out under the scheme remains the complete responsibility of the borrower.
  • It is aimed at SMEs (small and medium sized enterprises). The business must be:
    • UK based in its activity,
    • have a turnover of no more than £45 million per annum; and
    • have a borrowing proposal which the lender:
      • would consider viable were it not for coronavirus (in their eyes: clearly this is open to interpretation, although the feedback we have had so far is that lenders are generally taking a pragmatic and supportive stance which is good news); and
      • believes will enable your practice to trade out of any short to medium term difficulty (there is no defined timeframe for short to medium term).
  • Up to £5 million potentially available per business (we recognise that most practices would not need to borrow anywhere near £5 million).
  • Lending options include:
    • Loans of up to six years
    • Asset finance (e.g. hire purchase) up to six years
    • Overdrafts of up to three years
    • Invoice finance of up to three years. Invoice finance is in effect selling your client debtor book to a lender in return for a fee.  We suggest that practices explore other options first before looking at invoice financing because it would mean a degree of loss of control over debtors’ management.
  • The first 12 months of interest are covered by the Government.
  • Any lender levied fees in the first 12 months are also covered by the Government. Fees could potentially apply beyond the first 12 months, e.g. early repayment fees; it would depend on the lender’s stance.
  • Other specific terms should be discussed with lenders directly as they can vary from lender to lender.
  • Initially there was much in the media about lenders requesting personal guarantees (a form of security) from those linked to the business.
    • Personal guarantees will not be required for loans under this scheme of less than £250,000.
    • Personal guarantees might (but not necessarily will) apply from other lenders and/or where borrowing is £250,000 or more: this would be at the discretion of the lender. This is not to say that borrowing of £250,000 or more would automatically require a personal guarantee but it could be requested. 
  • What is referred to as primary residential property (i.e. main home) cannot be taken as security under the scheme.
  • It may be that a lender decides to offer lending without using the scheme. If you are speaking with lenders, you should clarify what difference, if any, this would make to the terms of lending for your practice. Why might a lender choose not to lend through the scheme? Potentially because the lender has to pay a fee to the government to access the scheme. Where a business currently has a healthy cash balance, we have heard of them being turned down for a loan under the CBILS but some have been offered other facilities to be taken out now or in the future, e.g. a loan outside of the CBILS or an overdraft facility in case it is needed in the future.
  • From practices that have spoken to lenders, we have heard that it can take up to six weeks from application to funds being drawn down on a loan under the scheme, although it might be quicker than this.

The scheme is managed by British Business Banks. Their website provides further detail including links to lenders’ websites with details of the finance on offer and how to apply, here

Deferring financial commitments

Examples of financial commitments/borrowing, both business and personal include:

  • Mortgages
  • Bank loans
  • Other loans
  • Hire purchase/finance leases/lease purchase
  • Credit cards
  • Car leases
  • Equipment leases
  • etc.

As we have mentioned previously, individuals can currently apply for a three month mortgage repayment holiday.  Many mortgage providers are now allowing people to apply for this online. 

You may wish to speak with providers of other finance to see if you can defer payments.  We have seen capital repayment holidays with only interest being charged of between three and six months.

You should ask lenders whether if you take a capital repayment holiday, the term (i.e. length) of the borrowing will remain the same or whether it could be extended.  If it stays the same, it would likely mean higher repayments once the repayment holiday is over.  If it is extended, then you may be able to keep repayments at their historic level after the capital repayment holiday or potentially even make them lower. 

If you have been overpaying on borrowings, you might be able to claw back the overpayments before going on to a capital repayment holiday.  We are aware that some mortgage lenders are advising that if you take the Government announced three month capital repayment holiday, that this will automatically claw back any overpayments you may previously have made.  However, by clawing back overpayments first and then applying for the three month capital repayment holiday, you could end up having a longer period without having to make capital repayments. There is potentially some risk with this strategy though, if, in the near future, lenders become less generous on taking a capital repayment holiday.  It would be best to have an honest and upfront discussion with any lenders about what they suggest would be best for your particular circumstances.

Some lenders are offering online applications for capital repayment holidays and this is a way to beat the phone queues if you are clear on what you wish to apply for and do not feel the need to speak with a lending advisor.

Much of this will at the lenders discretion, but general feedback we have had from practices and speaking with our colleagues and contacts is that most lenders are being very helpful and supportive at this time, which is encouraging.

If you are renting, e.g. equipment or a car etc (i.e. operating lease), it might be that the hirer could help you too.

Renting property

If you are concerned about your cashflow and you rent a property, you may wish to consider speaking with your landlord to discuss bespoke arrangements given these unprecedented times. Deferral of rent is perhaps the most obvious option, but you could discuss alternatives with them as well. 

This could apply to both business and personal properties that are rented.

Landlords with buy to let mortgages are able to access three month capital repayment holidays and if they have other types of borrowing, they may be able to defer these. This might make it easier for landlords to be able to help you with any rental commitments.

The Government has announced that both private and commercial tenants who cannot pay their rent because of coronavirus will be protected from eviction. Further details can be found here and here.

Any questions regarding changes to rental arrangements would be best directed at your solicitor.

Suppliers

The vast majority of businesses are under pressure at the moment and we recommend you prioritise spending on the services and goods that you need.

For those businesses that normally offer discounts for prompt payment, if you are able to take advantage of that then not only would it mean a lower cost to you, it would help them as well.

The main suppliers to perhaps have a think about initially would be your key trade suppliers.

If you are concerned about being able to pay suppliers, we recommend that you contact them to discuss how they may be able to help you.

Saving on business rates

If your practice property has a rateable value of less than £15,000 and your practice only uses one property, then it is eligible for small business rate relief (SBRR) which means no or reduced business rates. SBBR also existed prior to the coronavirus.

If your  practice property has a rateable value of less than £12,000, there are no business rates payable.

If the rateable value is between £12,000 and £15,000, the rate of relief is phased out from 100% to 0%.

The rateable value represents the rental value per annum of a commercial property on the open market.  All commercial property has a rateable value, details of which should be available from your local council.  Please note that the rateable value could well be different from the actual rent payable.

For further details regarding support with business rates, including what to consider if you have more than one property, read more here.

Your local council is the best contact for any questions regarding your practice’s position with rates.

Tax deferring

Read our summary of the different tax deferrals that are available and what the implications are here.

HMRC has put in place webchat facilities in addition to their normal phone hotline for their time to pay service.  HMRC will not speak with us directly about time to pay arrangements and they must speak with the individual or business owner/Director themselves.  Details of how to apply for time to pay can be found on their website, here

Have you considered R&D tax incentives to help with cash?

One option to explore is Research and Development (R&D) tax credits, which are available for companies working on specific projects to develop new products or services, change processes or to do things differently. 

It is only available for companies, i.e. not sole traders, partnerships nor LLPs.

Companies that are eligible for the tax incentives are extremely diverse and those businesses that recognise that the tax support is focused at ‘on the ground’ activities can reap considerable benefits.

Further details including how we could help if this area is relevant to you can be found in the R&D section of our website here.

Insurance

Most practices have already furloughed employees. It may be worth checking with your insurer whether this brings about any benefit in terms of your insurance premium. 

The terms of insurance policies can vary significantly and therefore you should review the wording of any insurance policy to see whether it might entitle you or your practice a pay-out due to disruption from the coronavirus. It is worth mentioning that often insurance policies exclude pandemics and therefore may well not pay out due to the coronavirus, but it is still worth checking just in case.

You may wish to also discuss credit insurance with your insurance provider. Credit insurance helps to protect businesses against bad debts relating to clients being unable to pay (which is of course a greater risk given the coronavirus). Clearly given the unprecedented times we are in, it may be that the cost of such insurance could be prohibitive, but it would be amiss of us not to at least mention.

Supporting your team: health and wellbeing

Arguably now more than ever, the health and wellbeing of you and your team should be a strong focus. We do not need to take on the role of counsellor but recognising that different people will be reacting to the current challenges in different ways is important.

It is worth reminding ourselves that whilst people that are furloughed by their employer are not allowed to undertake any work for that employer, there is no reason why they cannot still be kept in touch with.

Some ideas that you may wish to consider for everyone in the team, both those working and those that are furloughed:

  • Ways to keep in touch with people that are furloughed, e.g. phone calls, video catch ups, WhatsApp group.
  • Organise some fun games or challenges, e.g. quiz, home hair cut photos(!), quote of the week competition, home fitness challenge,   art bomb Friday (post best paintings from home schooling) etc.  No doubt you have ideas of your own that you and your team will enjoy. 

Whether or not you have any members of your administration team working from home, you may find the link below helpful, which provides helpful tips on leading at a distance.  Some of the sentiments are equally relevant to staying in touch with furloughed members of the team who are not working:   Leading at a Distance 

If you have any working relationships with locums, you may wish to stay in touch with them too.

Supporting your clients

Stay in touch with your clients. They may well be following you on social media or looking at your website. Indeed, a lot of people are online more at the moment than normal. Updating online content with new material and explaining ways in which you are still able to support them despite the restrictions is worthwhile.

Explain to clients on your website, on social media and when they contact you as to what has changed in terms of the services you are able to offer at the moment and the safeguards you have in place to protect them, their animals and your team.

Whilst we appreciate there are limits as to what could be included, could you record some podcasts or webinars to help owners look after their animals?

Statutory sick pay for those affected by COVID-19

In a recent update to statutory sick pay, HMRC has now announced that the online service, which will allow employers to make a claim, will be available from 26 May.  A claim can be made for repayments of SSP paid to employees for eligible periods of sickness (as described above) commencing on or after 13 March 2020.  The current rate of SSP is £95.85 per week and was £94.25 for the period 13 March 2020 to 5 April 2020.

For full details of what you will need to make a claim, read more here.