Following Prime Minister Boris Johnson’s address to the nation on Sunday 10 May, we have now been given more details on plans to gradually ease the coronavirus lockdown with a change of messaging from ‘Stay Home’ to ‘Stay Alert’.
Greater clarity on workers returning to jobs is due to be provided; (the PM stated that those who cannot work from home should be ‘actively encouraged’ to return to their jobs – with no further instruction). However, what is clear is that businesses should be gearing up and preparing for changes in working practices, whilst take stock of the current (and changing) position.
The Government has put in place a number of measures to assist businesses during lockdown, including small business grants, temporary holidays (for some) from business rates and emergency state-backed loans. But vast demand has created backlogs in some areas. What further measures can businesses plan and anticipate for, in order to meet the ongoing challenges presented by the lockdown?
Working from home
As your employees started working from home did you have to hastily install IT to allow your business to continue? Nearly six weeks in, now is the time to review the protocols implemented at the start of the lockdown.
Evaluate the terms of service for your IT function and assess whether all of the business’ needs are being met. For example, are you being given enough support? Assess how your staff are working from home. Are you checking in with your employees to review any ongoing IT needs and to check on their wellbeing? Are robust security measures in place? Are sensitive documents and papers being securely destroyed? Are employees unwittingly sharing confidential information or breaching Data and GDPR guidelines?
If the government will continue to encourage that employees work from home, it is critical that IT security be analysed to avoid issues. It may also be the time to consider whether it is cost effective for your business to continue to have employees who work from home if this is a policy that works successfully (and cost effectively) for you. Review the terms of your commercial lease if scaling back your business premises is something that you would like to implement.
On March 5, the Government declared Covid-19 a ‘notifiable disease’, one of the key criteria that insurance companies expect to be met before their policies pay out. However, the Association of British Insurers has warned that most business insurance policies are still ‘unlikely’ to cover losses.
French insurer Axa, for example, told customers earlier this month that its general business interruption insurance does not cover losses caused by Covid-19, as it only protects against diseases specifically named in its policies. Covid-19 was not specified, as it is a brand new illness.
However, if your business disruption policy does not specifically cover pandemics/infectious diseases, check the more general provisions of your policy, for example relating to the loss of suppliers or key personnel. Most policies require you to notify the insurers of a claim within a set period of time, so ensure that any claim is brought within this period. Also check what insurances you may need going forward.
Does your business have supplier contracts that are no longer needed because there is no demand or, perhaps, customer contracts that you can no longer fulfil? Now may be the time to reach out to the other party to the contract to see if the terms of the contract may be re-negotiated or if both parties agree – terminated early. Alternatively, consider if the ‘force majeure’ (frustration) clause of the contract will operate.
Health & safety measures
We await details of what health and safety measures businesses will have to put in place after lockdown. It’s likely to include: additional hygiene procedures, (including sanitising equipment and maybe providing face masks), social distancing of two metres to continue between workers and customers, physical screens and the use of protective equipment, minimising the number of workers using equipment, including reduced hot-desking, staggering shift times and maximising home-working where possible.
Businesses need to prepare for this change in working practice and consider the impact this will have both in terms of time to get your business up and running to trade and the associated costs to implement these measures.
UK businesses can defer VAT payments in respect of VAT due between 20 March 2020 and 30 June 2020 until up to 31 March 2021. This is an automatic offer with no applications required. VAT refunds and reclaims will be paid by the Government as normal.
Furthermore, Chancellor Rishi Sunak has also extended a mechanism that has been in place to help businesses affected by emergencies, such as flooding or the 2008 financial crisis. ‘Time to pay’ agreements, which are negotiated on an individual basis between SMEs and the Treasury, allow firms to have debt collection suspended when they cannot afford their tax bill. If this is something that would benefit your business put in place steps now.
There are around 4.3 million businesses on the Companies House register and all companies must submit their accounts and reports each year. Under normal circumstances, companies that file accounts late are issued with an automatic penalty. However, since 25 March 2020, businesses have been able to apply for a three-month extension for filing their accounts, allowing businesses to ‘prioritise managing the impact of coronavirus’.
Please keep in mind that companies will still have to apply for the three-month extension to be granted, although those citing issues around Covid-19 will be automatically and immediately granted an extension.
We are now well aware of the Coronavirus Job Retention Scheme introduced in April (whereby the Government pays 80% of wages for staff who are put on unpaid leave, up to a maximum of £2,500 a month). The scheme has been provided to cover the cost of wages backdated to 1 March 2020.
However, please note it is essential that information is submitted to HMRC about all furloughed employees and their earnings through an online portal. It is also critical to anticipate what the position of your business will be once the payments reduce or fall away. If it becomes apparent that you may have to make staff redundant, please be aware that this must be implemented correctly.
The self-employed income support scheme (which gives the self-employed a taxable grant worth 80% of their average monthly profits for the last three years up to a value of £2,500 per month) was introduced for anyone with up to £50,000 of trading profits who make the majority of their income form self-employed work.
People can access the grants, while continuing to do business but these grants would not be available until June. Those struggling financially now are therefore advised to access Universal Credit, as the Government has suspended the minimum income floor for the self-employed.
Income tax payments due in July 2020 under the Self-Assessment system will be deferred to January 2021, so it is essential that measures are put in place by businesses to ensure that funds will be in place to make these payments.
Business Continuity Plans
Now is the time to re-set your business continuity procedures having had approximately six weeks to learn if your Business Continuity Plan (BCP) is working. Once the Covid-19 outbreak is controlled, businesses will want to review and renew BCPs and assess how existing ones are working. If there are deficiencies, companies will want to identify root causes, whether it’s timeliness of action, lack of infrastructure, staff shortages, or external environment issues. This is something that can be looked at now.
CooperBurnett LLP provides a full suite of corporate and commercial law services. If you would like to discuss any of the above issues please contact:
Corporate and Commercial:
Victoria Sampson, Andrew Hawkins and Nusrat Qureishi.
Joseph Oates and Lee Quickenden
Joseph Oates and Andrew Hawkins
This blog is not intended as legal advice and cannot be relied upon as such. CooperBurnett does not accept any responsibility for the accuracy of its contents. Government guidelines are constantly changing without notice so please refer to www.gov.uk/coronavirus