CORONAVIRUS Covid -19 General Update
Wednesday, 25th March 2020
THE HOT STORY
Businesses to be given an additional 3 months to file accounts
A joint initiative between the government and Companies House means that businesses will from today be able to apply for an additional 3 months to file accounts. The move is designed to help companies avoid penalties as they deal with the impact of COVID-19. As part of the agreed measures, those citing issues around COVID-19 will be automatically and immediately granted an extension. Applications can be made through a fast-tracked online system which will take just 15 minutes to complete. Roger Barker, Head of Corporate Governance at the Institute of Directors, said: “These measures will be welcomed by directors impacted by COVID-19. Our members will be pleased to see government taking proactive steps to support them through this difficult time. By easing the administrative burden that comes with running a business, the government is supporting businesses to focus on the fundamentals during this exceptional period.”
HMRC to manage job retention scheme
Chancellor Rishi Sunak has announced that the Government will pay the wages of employees unable to work due to the coronavirus pandemic, paying 80% of the salary of staff retained by their employer up to £2,500 a month. The move, which covers gross pay, will be backdated to the start of March and last for three months. Mr Sunak said the coronavirus job retention scheme, which will be run by HMRC, would be extend the “if necessary”. Mr Sunak also announced that VAT payments will be deferred until the end of June, while self-assessment income tax payments for July 2020 are to be deferred for six months. The Universal Credit standard allowance for the next 12 months has been increased by £1,000 a year, as has the Working Tax Credit basic element. The Chancellor said HMRC is working to ensure the first grants are available within weeks, with businesses able to apply for relief from Monday .
Source: BBC News (20/03/2020) The Times (20/03/2020) The Daily Telegraph (20/03/2020) Financial Times (20/03/2020) The Guardian (20/03/2020) Daily Mail (20/03/2020) Daily Star (20/03/2020) City AM (20/03/2020)
FCA asks firms to delay preliminary results
The Financial Conduct Authority (FCA) has asked companies due to produce preliminary financial statements to delay publication due to disruptions caused by the coronavirus. The watchdog said in a statement: “The unprecedented events of the last couple of weeks mean that the basis on which companies are reporting and planning is changing rapidly.” Calling on firms set to post statements in the coming days to observe a moratorium for at least two weeks, the FCA said observing timetables set out before the Covid-19 outbreak may not give firms time to give due consideration to the events in preparing their disclosures. The City watchdog’s statement added that listed companies and the audit profession “are facing unprecedented practical challenges during the coronavirus crisis.” The FCA added that it is in talks with the Financial Reporting Council and the Prudential Regulation Authority over possibl e measures aimed at ensuring companies take the necessary time “to prepare appropriate disclosures and address current practical challenges” in what it described as “uncertain times”.
Audit reforms postponed due to corona crisis
The government is expected to delay a second consultation on reforms to the audit sector until at least the third quarter of the year due to the disruption caused by the coronavirus pandemic. The Department for Business, Energy and Industrial Strategy had been preparing to publish a second consultation on reforms recommended by Sir John Kingman, which included measures to give the Financial Reporting Council new powers to hold company directors to account for serious corporate failings. The department also is due to respond to recommendations by the Competition and Markets Authority about separating the audit and consultancy divisions of the Big Four. Michael Izza, chief executive of the ICAEW, said: “While audit reform is still important, the national priority at the moment is around confidence in the market and the economic system. Audit reform is going to have to wait until that is resolved.”
Source: The Times (24/03/2020)
ICAEW postpones exams
The Institute of Chartered Accountants in England and Wales has delayed upcoming exams due to the coronavirus outbreak. It tweeted: “We have taken the difficult decision to cancel and postpone our June and July examinations, because of the global challenges posed by Covid-19.” It said the June ACA professional level exam has been cancelled, adding that it is “exploring options to accommodate students who have been affected, including larger exam sittings”, while advanced level ACA exams due to take place in July have been postponed until the end of August.
Source: Daily Express (21/03/2020)
Small firms set to see £250k loans
Banks are set to pledge interest-free loans of up to £250,000 for small businesses, with it reported that Chancellor Rishi Sunak’s emergency coronavirus loans will initially take the form of overdrafts that could be available within 48 hours. The Mail on Sunday says SMEs will be able to borrow a quarter of a million pounds from one of 40 lenders without having to secure the loan against assets. Small firms will be able to apply for loans of up to £5m under the Government’s business interruption loans programme, but these are expected to take longer to arrange and may need to be secured against assets. Commenting on the rollout of the scheme, Mike Cherry, chairman of the Federation of Small Businesses, said: “Those responsible for deciding whether or not loans go ahead in the coming days need to recognise that, in a lot of cases, they’ll be deciding whether a small business survives or goes bust.”
Source: The Mail on Sunday (22/03/2020)
The government has confirmed that the self-employed will receive financial support if their business has been affected by coronavirus. Are your clients eligible and how can you help them?
Read More about Self-Employed 80% Grant Scheme
Coronavirus: relaxation of the statutory annual leave rules
Regulations have taken effect which amend the Working Time Regulations 1998 to relax the current restriction on carrying forward untaken annual leave. What’s been amended and why?
FSB welcomes small business support
With Rishi Sunak pledging to do “everything necessary” to help businesses amidst the ongoing coronavirus crisis as he revealed a string of measures including £330bn worth of commercial loan guarantees, a moratorium on business rates for those in the retail, leisure or hospitality sectors and grants of up to £10,000 for firms that qualify for small business rates relief, the Federation of Small Businesses (FSB) has welcomed the Chancellor’s stance. Claire Reading, the FSB’s development manager for South Yorkshire, East Yorkshire & The Humber, said the Government has “made clear that it will step in and provide small firms with the cash flow they need – whatever it takes,” saying this marks a “hugely important intervention”. Noting that there will be “difficult days ahead for the small firms that make-up 99% of our business community”, she adds that de livering the pledged measures with no hold ups at banks, local authorities or central government will be key.
Source: Federation of Small Businesses, Press Release (19/03/2020)
SMEs struggle to access financial support
Small companies whose trade has been damaged by the coronavirus pandemic have been struggling to get in touch with banks as they seek access to more than £1.2bn of government-backed credit, the Times reports. UK Finance urged customers to try to make contact through lenders’ websites instead of calling as many staff are absent because of the crisis. Meanwhile, Keith Morgan, chief executive officer of the British Business Bank, has said help for small firms to cope with the coronavirus will soon be available, stating: “The money will start to flow this week… We have had close interactions with major lenders and they are entirely committed to making this happen.” Finally, the Mail reports that councils, which are charged with handing out grants of £10,000 to £25,000 to the businesses who do not benefit from the government’s one-year business rates holiday, have not yet been provided with details of the scheme.
Source: The Times (24/03/2020) The Daily Telegraph (24/03/2020)
Bailey vows to help SMEs
Bank of England (BoE) governor Andrew Bailey has told small firms to approach him or the Bank if they struggle to raise debt from their lender, saying he is “more than happy to intervene” if jobs are at risk. He said that while the BoE has limited resources, he is looking to increase them, adding: “I want small businesses to feel there are people here to help.” With banks pledging to offer SMEs billions of pounds of emergency loans to help them through the coronavirus crisis, the BoE incentivising lenders by offering them cheap funds and the Treasury providing loan guarantees, Mr Bailey said: “If you put together everything we’ve done and the Government has done it is substantial.”
Source: The Times (20/03/2020)
Firms unsure over loan scheme
The Times looks at the Coronavirus Business Interruption Loan Scheme, the Government’s emergency credit initiative for small companies that will provide firms with credit of up to £5m. Oliver Prill, chief executive of Tide, a digital bank for SMEs, warns that the scheme “will fail a significant proportion of small businesses.” Frances Coulson, former president of insolvency trade body R3, comments: “It remains to be seen whether real access is given to all businesses efficiently and without lenders imposing or changing terms of existing banking.” It is noted that some commentators feel the scheme is too similar to the Enterprise Finance Guarantee (EFG) – the loan scheme set up in the wake of the financial crisis, with Mark Stephens, CEO of Allica Bank, saying the EFG was cumbersome and “horrendous” in regard to its bureaucracy.
Source: The Times (20/03/2020)
Chancellor under pressure to save the self-employed
The Chancellor Rishi Sunak is under further pressure to help self-employed people since Boris Johnson’s crackdown as many fear the new restrictions will prevent them from earning an income. Mr Sunak has already been accused of leaving the self-employed behind with the support measures he introduced last week. Labour MP Rachel Reeves, chairman of the Business, Energy and Industrial Strategy Committee, said the 5m workers are essential to the British economy and will still have bills to pay during the crisis. She said: “The government has rightly prioritised income replacement for employees. This now needs to be extended to the self-employed and freelancers.” The Times reports that Mr Sunak is expected to announce measures at the end of the week as officials work to overcome significant “technical barriers”.
Source: The Daily Telegraph (24/03/2020) The Times (23/03/2020)
COVID-19 crash to be worse than 2008
The coronavirus crisis will damage the global economy more than the 2008 financial crisis, the OECD and the IMF said yesterday. IMF boss Kristalina Georgieva called for countries to “undertake more bold fiscal actions” adding that she hoped the world would see a recovery in 2021. Separately, analysts at Goldman Sachs predict that the slowdown caused by the COVID-19 pandemic will cause the global economy to shrink by 1% this year. Meanwhile, UBS economist expect Europe’s economy to shrink by 4.5% this year, similar to 2008.
Source: City AM (23/03/2020) Daily Mail (24/03/2020)
Coronavirus hits UK job security and spending plans
Data firm IHS Markit’s household finance index has revealed that Britons plan to reduce spending on major purchases at the fastest rate in eight years, as concerns about employment prospects grow in response to the pandemic. With the IHS Markit household finance index falling to 42.5 in March from 47.6 in February a month earlier, economist Joe Hayes commented: “UK consumers are already feeling the financial pinch of coronavirus,” noting that “major purchases are being shunned in response to the worsening outlook for financial wellbeing.”
Source: City AM (24/03/2020)
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