Coronavirus: recommended actions for security businesses
In such a rapidly changing and demanding economic situation, many businesses are asking themselves what their immediate next steps should be. Based on our experience and the guidance issued by the UK Government, here are our key recommendations.
Ensure you have a cashflow forecast. While uncertainty of income makes this more challenging, it is important to assess the potential damage to your business.
Consider employee costs. Coronavirus has forced unprecedented economic conditions upon most businesses, putting many in the unwelcome position of having to rationalise costs – and employees are usually the biggest cost for businesses. You should explore all available options, including:
Coronavirus Job Retention Scheme: government grants for up to 80% of salary of employees who would otherwise be laid off and are furloughed up to £2,500 per employee per month, backdated to 1 March. HMRC will also pay employer’s NIC and auto enrolment pension contributions. Being furloughed means that employees would be kept on the employer’s payroll rather than being laid off, but with no work to do. The scheme is due to be launched before the end of April; initial details are available from the government here.
Temporarily reducing your company’s operational hours and your people’s working hours, with commensurate reduction in salary– if you don’t have lay-off clauses or a short-time working contractual right in your contracts, consultation is required.
Directors might consider living off capital if possible, borrowing money from the company instead of on payroll; and if taking dividends, consider leaving until after 5 April 2020 to defer personal tax.
Redundancy: if all else fails and if you have employees who you wouldn’t re-employ, consider making them redundant at this time.
We have more information about redundancy considerations, including possible alternatives, in this article on our website.
For VAT, the next quarterly payment due between 20 March 2020 and 30 June 2020 will be deferred until the end of the 2020/21 tax year. If you are paying VAT by Direct Debit, it’s recommended to cancel it. VAT returns should still be filed on time.
For personal tax, the payment due on 31 July 2020 will automatically be deferred until 31 January 2021.
Under Time To Pay, HMRC will discuss deferment of other taxes (corporation tax, PAYE etc) on a case-by-case basis for businesses and self-employed people in financial distress, and with outstanding tax liabilities, who are unable to pay due to coronavirus. More details are available on the government page If you cannot pay your tax bill on time.
Review all other costs, such as:
Rent: negotiate with your landlord for a deferment at worse, a payment holiday at best. There is a 3 month protection from eviction for tenants not paying rents.
Rates: no rates this year for retail, hospitality & leisure sectors. £25,000 grants to those sectors operating from premises with a rateable value of between £15,000 and £51,000, and grants of £10,000 to those sectors operating from premises with a rateable value of below £15,000.
Expenses: stop all that are unnecessary.
Suppliers: make pay arrangements.
Personal costs: look into deferring payments, especially for mortgages (mortgage borrowers can apply to their lender for a three-month payment holiday), and council tax (by speaking to your council)
For the self-employed
On 26 March the government announced a Self-employed Income Support Scheme. Grants are available to self-employed individuals and partners in partnership of 80% of their historic profits capped at £2,500 per month. Income must be negatively impacted by coronavirus. It’s only applicable if trading profits are less than £50,000 per annum and more than half of total income comes from self-employment. Grants are to be paid by HMRC at the beginning of June 2020, with payments backdated to March.
Above all, we should all continue to act responsibly. The unprecedentedly far-reaching impact of this crisis means that every business, and every person, has a duty to be considerate and supportive. It’s never been truer that we’re all in this together.
As new measures are announced by the UK Government, we are continually updating our website’s dedicated coronavirus section with a range of guidance and insights on responding to the current situation.
31 March 2020
Daniel Shear, Partner at BKL Chartered Accountants and Tax Advisors
Risk, Strategy and Contingency Planning
Preventing second-hand news in a crisis