Since our last briefing, there have been a number of announcements, so we thought we would share these with you now.

Additional Restrictions Grant (ARG)

Your local authority may be offering an Additional Restriction Grant for businesses that were required to close under the imposed Coronavirus restrictions and do not qualify for the Local Restrictions Support Grant.

The restrictions were in place between 5 November and 2 December 2020.

Eligibility

To qualify, your business:

·         must have been open before the November national restrictions, and 

·         must have been required to close due to national restrictions that came into force on 5 November 2020, and

·         must not have a liability to pay business rates, or

·         may be eligible if it has remained open during the national restrictions but has been significantly impacted and suffered a severe loss of income directly as a result of the national restrictions (severe loss is defined as 50% or more, compared to your usual or forecasted income for this time of year)

We are attaching a link here to the Dorset Council page which gives you more detail and from which you can make an online claim if appropriate.

https://www.dorsetcouncil.gov.uk/emergencies-severe-weather/emergencies/coronavirus/business-and-employers/additional-restrictions-grant.aspx

And this is the page for Bournemouth, Christchurch and Poole.

https://www.bcpcouncil.gov.uk/News/News-Features/COVID-19/Employers-and-businesses/Financial-support-for-businesses/Additional-Restrictions-Grant.aspx

Local Restrictions Support Grants (LRSG)

Please refer to our last briefing (24 November) for details on the Local Restrictions Support Grants available.

Jobs Restart Programme

Widely reported in the media has been the introduction of the Government’s increased support for jobs due to the ongoing restrictions caused by Covid-19. Rishi Sunak announced increased support via the £2.9bn Restart Scheme to help people get back into work. We will pass on more information on this and how it affects businesses in upcoming briefings.

Companies House

If you are a Director of a limited company business, you will be used to getting paper reminders from Companies House for your Accounts and Annual Confirmation Statement filing. Companies House are now ceasing their paper reminder service. However, you can elect to continue to have an email reminder service by going to ewf.companieshouse.gov.uk if you are signed up for the Companies House Webfiling service.

Where you have instructed us to carry out your Company Secretarial services we will arrange for ourselves to receive these reminders. If you would also like a Director to have this reminder, please can you email matthewd@englandandcompany.co.uk who will arrange this for you.

If we do not carry out your Company Secretarial work, a Director of your company will have to apply for the reminders as detailed above.

HMRC Preferential status as a creditor

The Government announced in the Budget of 2018 that it would be seeking to protect HMRC’s position in respect of taxes owed by individuals and businesses. In essence, this was to enable them to recover as much as possible of the taxes held by a business temporarily (so for example PAYE and National Insurance deducted by an employer from its staff member’s salary, but not yet paid over to HMRC) in the event of an insolvency.

Legislation was enacted in the Finance Bill 2020 to do this.

Only certain specified HMRC debts are included and these are:

·         Value Added Tax (VAT)

·         debts that relate to the following taxes:

  • Pay As You Earn (PAYE) Income Tax
  • Employee National Insurance contributions (NICs)
  • Student loan repayments
  • Construction Industry Scheme deductions

From a creditor perspective, this means that HMRC have effectively ‘jumped the queue’ and now sit above unsecured creditors in the pecking order for dividend purposes for some of their outstanding debt. This means that unsecured creditors can expect to receive much smaller dividends in any future insolvency proceedings. That is, of course, where there are sufficient funds to pay a dividend to creditors.

For banks and other lenders who choose to fund a business they will now see HMRC rank above their floating charge recoveries.

So perhaps this will lead to a change in their risk appetite and a potential increase in the cost of funding.

Liquidation and Bounce Back Loan implications

If you are in the unfortunate position of having to consider placing your company into liquidation, you may want to bear the following in mind:

·         It is the duty of a Director to trade the company in the best interests of its shareholders. When it becomes apparent that the company is insolvent (either on a cash flow or a balance sheet basis) the Director’s duty changes to ensuring they also act in the best interests of all creditors, i.e. any continuation of trade should not be at the expense of creditors as any increase in the monies owed to creditors during such a period of insolvent trading may become the personal liability of the Director.

  • Where it is clear that, notwithstanding the receipt of the BBL, the company cannot trade its way out of its current financial position, then the Directors should obviously seek professional advice as soon as possible and consider the restructuring options available. These options may include liquidation.   
  • Where a company goes into liquidation within 12 months of receiving a BBL then it is expected that the Insolvency Service will take a close look at the Director’s conduct and the company’s trading activities. This does not mean the directors will be automatically disqualified but merely that the Insolvency Service will probably take a closer look at their file.
  • Onus will be on the directors to show that any BBL monies received have been used to maintain trading and to pay company liabilities.
  • Where company liabilities also include monies owed to Directors, there will be a need to show all payments made were proportionate and in the normal course of business.
  • If a Director has basically taken BBL monies to repay an existing DLA, with little or no monies paid to other trade creditors, then the Director will likely be asked to repay the monies to the liquidator (payments will be deemed to be unfair preference) and any adverse Directors conduct will end up at the Insolvency Service.
  • There is no issue with a Director having personally received some of the BBL monies. However, it will be essential to show that such payments were made in the normal course of business (i.e. check previous payment history) and there will be a need to clearly show other creditors have not been left behind.

Brexit

As we have in earlier Briefings, we are attaching a link to the Government’s checker tool here https://www.gov.uk/transition and continue to advise you to monitor your respective trade groups for specific advice relating to your business type.

The Government have also produced a number of industry specific webinars and you can sign up for these using the following link https://www.gov.uk/guidance/help-and-support-if-your-business-trades-with-the-eu

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THIS ARTICLE WAS WRITTEN BY

The England and Company Team

The England and Company Team

Our experts include: Chartered Certified Accountants, Chartered Tax Advisors and Registered Auditors.

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