WHATS BETTER ABOUT THE CORONAVIRUS BUSINESS INTERRUPTION LOAN SCHEME (CBILS)
WHAT WE ARE SEEING
We have seen numerous comments on social media and from directors with regards to the Coronavirus Business Interruption Scheme Loan Scheme (CBILS) not providing guarantee to "good directors", when they have to personally guarantee the lending,. As well as many surprised that security or personal guarantees are even requested.
Chancellor has announced support for Self employed.
Direct cash grants of 80% of their profits up to £2,500 per month announced.
THE HEADLINESTHE ANNOUNCEMENT
At the Budget 2020, the Chancellor announced a number measures to support businesses and people through the Covid-19 outbreak.
Two flagship schemes were announced as part of these measures, the Covid-19 Business Interruption Loan Scheme (CBILS) and the Covid-19 Corporate Financing Facility (CCFF).
Of the two schemes CBILs is aimed a SMEs with a maximum turnover of £45 million (and we recommend SMEs look at this scheme), whereas the CCFF scheme is aimed at larger companies, with a minimum loan of £1 million and requires an investment grade rating or equivalent.
Under the CCFF scheme, the Bank of England will buy short term debt in the form of commercial paper, from larger companies. This will support companies that have been affected by a short-term funding squeeze, and allow them to finance its short-term liabilities. It will also support corporate finance markets overall and ease the supply of credit to all firms.
Larger companies require an investment grade rating or equivalent, and the Bank of England has confirmed that it will accept;
WHAT IS COMMERCIAL PAPER?For many the first question may be what is commercial paper?
It is commercial paper is an unsecured, short-term debt instrument issued by a company.
Commercial paper the Facility will purchase
The Facility will purchase sterling-denominated commercial paper, with the following characteristics:
FURTHER INFORMATIONDetailed guidance on the Facility can be found on the Bank of England website which can be viewed at https://www.bankof england.co.uk/news/2020/march/the-covid-corporate-financing-facility >
DISCLAIMER - DUE TO THE RAPIDLY CHANGING CIRCUMSTANCES WITH COVID-19, WE ARE UTILISING INFORMATION FROM GOVERNMENT SOURCES, THESE ARE TRUSTED SITES, BUT WE CANNOT BE HELD RESPONSIBLE FOR ANY INCORRECT INFORMATION OBTAINED FROM THEM OR INFORMATION ON LINKS TO THOSE SITES. THE INFORMATION PROVIDED HERE IS GENERIC IN NATURE, AND NOT SPECIFIC TO YOUR CIRCUMSTANCES, YOU SHOULD SEEK PROFESSIONAL ADVICE BEFORE ACTING ON ANY OF THE INFORMATION CONTAINED ON THIS WEBSITE
PLEASE CONTACT US... WE ARE HERE TO HELP
Many are impacted by the coronavirus outbreak, but for those in an Individual Voluntary Arrangement (“IVA”), this could lead to greater uncertainty and concern.
We have contacted all our debtors in Individual Voluntary Arrangements (IVAs) and agreed terms for the short term in this uncertain time.
The changes however could have significant impacts for those in IVAs, especially where the proposals are written in such a way that they do not allow for flexibility, reduction in income, payment holidays or the discretion of the Supervisor etc.
Any change from the proposals of an IVA require a variation approved by creditors, and this is still the requirement under the Insolvency Act 1986 (as amended, and enacted). It would hard to known how creditors would vote at this time, when many may be impacted themselves by the outbreak.
Anyone in an IVA concerned, should
EXTRA PROTECTION FOR BUSINESSES WITH BAN ON EVICTIONS FOR COMMERCIAL TENANTS WHO MISS RENT PAYMENTS
The Government have announced that Commercial tenants who cannot pay their rent because of coronavirus will be protected from eviction.
Commercial tenants who cannot pay their rent because of coronavirus will be protected from eviction.
As commercial tenants will still be liable for the rent after this period, the government is also actively monitoring the impact on commercial landlords’ cash flow and continues to be in dialogue with them.
Tenants should be mindful, whilst protection is offered in the short term, the rental payments will still be due after the period of protection, and should make what payments they can afford in the meantime.
The change will come into force when the Coronavirus Bill receives Royal Assent. It will last until 30 June, with an option for the government to extend if needed.
If you have commercial premises and looking to manage your cashflow, please do not hesitate to contact us on Tel: 07972928153 or email: email@example.com should you need assistance with forecasting, and knowing more about the options available to you.
Eligible if your business:
HOW TO APPLY
If you have missed a tax payment or you might miss your next payment due to the coronavirus outbreak, call HMRC on 0800 024 1222 . Opening hours Monday to Friday 8am to 8pm, and Saturday 8am to 4pm.
or contact HMRC through www.gov.uk/government/news/tax-helpline-to-support-businesses-affected-by-coronavirus-covid-19
UPDATE 27/03/2020: the helpline number has been changed from 0800 0159 559 to 0800 024 1222
WHAT WE ARE FINDING
The support available will depend on your individual circumstances, the level of liabilities and whether they are current liabilities, or ones that date back prior to the outbreak. Generally we are finding that HMRC are being supportive and understanding, offering the following;
REPAYMENT AND FEES
This is a deferral, or in effect a payment plan. You will still be responsible for paying 100% of your taxes.
HMRC will however, waive late payment penalties and interest where businesses experience administrative difficulties contacting HMRC or paying taxes due to Covid-19. There is also currently a commitment to suspend debt collection proceedings.
IMPORTANT - CAUTIONARY NOTE: You will still be responsible for paying your taxes
If you defer payments, you should consider the impact on future cash flows, and your ability to cover the payments later
Also see separate guidance on Deferral of VAT
DISCLAIMERS - DUE TO THE RAPIDLY CHANGING CIRCUMSTANCES WITH COVID-19, WE ARE UTILISING INFORMATION FROM GOVERNMENT SOURCES, THESE ARE TRUSTED SITES, BUT WE CANNOT BE HELD RESPONSIBLE FOR ANY INCORRECT INFORMATION OBTAINED FROM THEM OR INFORMATION ON LINKS TO THOSE SITES. THE INFORMATION PROVIDED HERE IS GENERIC IN NATURE, AND NOT SPECIFIC TO YOUR CIRCUMSTANCES, YOU SHOULD SEEK PROFESSIONAL ADVICE BEFORE ACTING ON ANY OF THE INFORMATION CONTAINED ON THIS WEBSITE
PLEASE CONTACT US... WE ARE HERE TO HELP
KEY FUNDING FOR BUSINESSES
The Prime Minister and Chancellor announced a staggering £330 billion support package for businesses. Made up of several key schemes
KEY FUNDING AND SUPPORT FOR BUSINESSES
There is a lot of information already with regards to support from Government and it can be confusing of what is available and where to go for that support. In our video below we talk through the key financial support and funding available for businesses to help you get to grips with it all.
[VIDEO NO LONGER AVAILABLE ON BLOG]
A members Voluntary Liquidation enables shareholders to receive distributions as capital rather than dividend income without limit, thus enabling them to take advantage of Entrepreneurs’ relief.
Which brings onto the question of what is Entrepreneurs Relief?
Entrepreneurs Relief (“ER”) is a valuable tax relief that reduces capital gains tax payable to 10% (instead of 20%) on the disposal of qualifying assets i.e. shares providing certain qualifying conditions are met
For more information on the terms of qualifying for Entrepreneurs Relief, please see HM Revenue and Customs Entrepreneurs’ Relief (Self Assessment helpsheet)
Entrepreneurs Relief and the Budget?
Entrepreneurs Relief reduces the tax on disposal of qualifying assets to 10%, it has been criticised as being excessively generous to people who are already rich, and as ineffective in incentivising entrepreneurs to start businesses.
It was much anticipated that the relief would be abolished completely as there has been speculation for a number of years, but the Chancellor decided against the abolishing it altogether and reduced the lifetime amount of eligible chargeable gains from £10 million to £1 million with effect from 11 March 2020. The £1m limit announced brings the relief back down to its original level when it was first introduced in 2008
This may impact on the net cash available to business owners who sell shares in their trading company or sell part of their business.
This should not be confused with ‘Investors Relief’ which is for external investors in qualifying trading businesses, where there is no charge to the £10 million limit for this relief.