Coronavirus – protect your business and your wealth

Unprecedented Times

ad+ is here to help protect your business and your wealth

 

This is the first in our series of bulletins through which we aim to help all our clients by sharing up-to-date official Guidance and practical tips to combat the financial impacts caused by the Cornonavirus (Covid-19).

“Britain is facing something akin to wartime”, according to the head of the Office for Budget Responsibility, Robert Chote. I sense that description conveys the right impression of the challenge we are all currently facing. However, I want to assure you that ad+ is determined to do everything possible to help you protect your business and your wealth.

I believe that In the future, when the UK reflects on the coronavirus, it will be the financial impact and effects that will stand out in memory more than the illness itself.

Our team has now experienced several recessions, from Black Monday in 1986, and every 8 years or so thereafter, and this, by far, looks to be the most challenging economic environment to be encountered in living memory.

We want to share the learnings we have accumulated with you. ad+ will be e-mailing regular updates during this challenging period, to keep you informed and up to date. We will ensure we communicate and elaborate on the Government’s financial support measures.  We will also continue to offer our own proactive advice and assistance to help you manage your businesses and cash-flow during this “economic emergency”.

 

Government’s financial support measures

As may have heard or read, several emergency financial aid measures have been announced. This web link will give you the up-to-date official Government announcements: COVID-19: support for businesses.

On Tuesday, Rishi Sunak, the Chancellor, offered more help to individuals and businesses, on top of the relatively modest £30bn package included in last week’s Budget. The following is a summary of the relevant measures announced to date:

• Access to Government-backed business loans on attractive terms

The Government is offering to underwrite risky loans up to £5m each to businesses adversely affected by the coronavirus outbreak. It has pledged up to £330bn but has already promised more, should this be needed.

The Coronavirus Business Interruption Scheme will replace the Enterprise Finance Guarantee (EFG), under which the Government guarantees debt to encourage lenders to give loans to companies that would otherwise be deemed too risky. Interest rates will be similar to existing bank lending, but with no interest payable for the first 6 months.

The scheme will be delivered by the British Business Bank (BBB), a state-owned wholesale bank that currently operates the EFG. More than 40 lenders, including the big four banks, Barclays, RBS, HSBC and Lloyds, provide funds under the scheme as term loans, overdrafts, or asset-based lending, secured on equipment or invoices. Under the new coronavirus scheme, the BBB will provide lenders with a guarantee of 80 per cent of each loan.

More details will be made available next week.

• Time to Pay arrangements for HMRC debts

SME’s that cannot afford to pay their tax bills can ask HMRC for a Time to Pay arrangement which would suspend debt collection. This system has been previously used to help businesses affected by flooding and the 2008 financial crisis. Each agreement is negotiated on an individual basis through a dedicated hotline. During the outbreak, the usual 3.5% annual interest on deferred tax payments will be waived.

• 12-month business rates holiday for ALL in the retail, leisure and hospitality sectors

This was previously only offered for businesses occupying premises with a rateable value up to £51,000. However, this measure has been extended to ALL businesses in the retail, leisure and hospitality sectors, including hotels, restaurants and coffee shops. These worst affected sectors will not pay any rates in 2020-21. Local authorities, which collect rates, will be provided with funds by the Government to make up for the shortfall.

• Cash grants for small businesses

The 700,000 smallest businesses had already been promised a £3,000 cash grant to help meet their business costs. This has been increased to £10,000.

Retail, leisure and hospitality businesses with a rateable value less than £51,000, will be eligible for larger cash grants of up to £25,000.

It is not yet clear how businesses will access these grants.

• Reimbursement of Sick Pay (SSP) costs

SMEs will be able to reclaim the cost of 14 days of sick pay — just under £200 — per employee. However, the Government has cautioned that they may have to wait months for reimbursement because it has yet to set up a repayment mechanism.

• 3-month mortgage holiday

This will apply to individuals financially affected by coronavirus.

How ad+ can help you through the coronavirus crisis

We are here to help reduce the risk to you and your business in this highly challenging period.

The reality is that most businesses will need to take action and make changes, no matter how uncomfortable. The first step is survival. Next, stabilize. Opportunities will appear, and then it’s time to focus on how to thrive post-coronavirus.

For now, let’s concentrate on survival and how ad+ could help you with one or all of these essential financial steps:-

• Cashflow support help & guidance

More so than ever before, you will need to monitor your cash flow, and take action to ensure you can at least break even. Businesses are encountering extremely uncertain times. The extent of the effect and the timeframes that businesses will be subject to these conditions are currently unknown.  ad+ can complete the cash-flow forecasts for your business based on ‘What If’ scenarios.

• Bookkeeping

To effectively monitor your business, you will need reliable and up to date bookkeeping. We have resources in this area and can offer you immediate bookkeeping assistance.

We can help you set up setup and maintain a 2020 bookkeeping solution. This will ensure you are properly armed with accurate and timely information….to allow you to make the right decisions at the right time, based on facts.

• Management Accounts

We can strengthen your business control with monthly (or quarterly) reviews and management accounts.  This will enable you to understand your current position (cash and liabilities) and to review performance in comparison with previous periods, to keep you fully informed and able to take any action required.

• Video/Telephone Support Calls

We will be continuing to operate throughout this crisis and are available to you to discuss the management accounts & cash-flow forecasts, helping you make the right decisions.

• Protect the cash in your business

If you have surplus cash, we can help you remove it from your trading company, into another “money box” company, and avoid the risk to this hard-earned cash in the future from potential insolvency or litigation.

Suppose you have £200,000 retained profits or surplus today. If you take this out personally, it could cost you £65,000 in personal tax, maybe more. If you lend the money out to invest elsewhere, and then your trading company fails, the liquidator could demand the loaned money back, in effect costing you £200,000. Using our “money box” company, there would be no tax on moving the £200,000 into this and you have created a “war chest” for your future security, which won’t be at risk should the trading company fail.

And while we are talking…

If you are confined to your home, self-isolating, it may be a good time for to catch up on your bookkeeping…

Don’t forget to send us your accounts and tax return information as soon as possible after your company year-end (or 5th April, for personal tax). This will enable us to advise you as early as possible of your tax liability, in order that you can effectively provide for that liability or get a Time To Pay arrangement in place, if necessary.