Covid-19 - Help Available for Scottish Businesses

The sharp decline over the past two weeks in consumer and B2B demand has understandably left many small enterprise owners concerned about the future of their business. As revenue is driven down, many in the private sector will be turning to the Government to relieve pressure on cash flow. Like countless questions at the moment, the answer has not been clear. What has been clear is that swathes of businesses and business owners will require urgent and significant help.

So, what help is currently being made available?

1. Grants
Last Tuesday, the Scottish Government announced that from 1st April:

• Those who currently benefit from Small Business Bonus Scheme (SBBS) or Rural Relief, or eligible for SBBS in receipt of Nursery Relief or Disabled Relief, and with rateable value up to £18,000 will be able to apply for a £10,000 grant.
• Retail, hospitality and leisure businesses with a rateable value of between £18,000 and £51,000 will be able to apply for a grant of £25,000.

Businesses will apply for grants through their local council authority. The deadline for application for both grants is 31st March 2021. You will be able to find an application form on your local council website, with payment being made into your nominated bank account ten days after application. These grants will not be required to be repaid.

2. Loans
The Coronavirus Business Interruption Loan Scheme (CBILS) allows businesses who are experiencing cash flow disruption stemming from lost or delayed revenues to access a facility of up to £5M. Given the that the Government provides the lender with a partial guarantee (80%) against the outstanding loan balance (subject to an overall cap per lender), the likelihood of a business gaining credit is greater than a typical credit application.

Eligibility – Businesses must be:

• UK based;
• with turnover of no more than £45 million per year; and
• in the situation where financial support will enable them to viably trade out of any short-to-medium term difficulty (the lender will ultimately decide this).

3 key features should be kept in mind:
• The loan is interest free for a period of twelve months.
• No fee for SMEs to access scheme
• Finance terms of up to six years

The majority of UK high street banks are accredited CBILS lenders. If you think a loan may be suitable, contact your bank in the first instance. It is also worth bearing in mind that banks are also offering support on their own accord. Assistance may include: loan repayment holidays, overdraft extensions, interest rate reductions, and immediate access to deposit balances without incurring a penalty.

3. VAT and Income Tax Holiday
All VAT payments have now been postponed until the end of June 2020. Businesses will pay their deferred VAT payments at the end of the 2020/2021 Tax year. There is no ‘application process’ as VAT payments are now automatically suspended, and there has been no mention of deferred VAT payments incurring interest charges. Businesses should also bear in mind that a VAT return must still be submitted on time and comply with the new HMRC ‘Making Tax Digital’ regime.

It is also thought that Income Tax payments due in July 2020 under the Self-Assessment system may be deferred until January 2021. This optional deferment will only be available to individuals that are due to pay their second self-assessment payment on account on 31 July this year. You do not need to be self-employed to be eligible.

Like the VAT deferment, it is automatic and there is no application required, and no penalties or interest for late payment will be charged if you do decide to defer payment.

In addition to this assistance, HMRC have also scaled up their Time to Pay offer to all firms and individuals who are in temporary financial distress as a result of COVID-19 and have outstanding tax liabilities.

4. Rate relief
Lastly, it was announced last week that the change in poundage for 2020-2021 has effectively been reversed as all non-domestic properties in Scotland will benefit from a 1.6% rates relief. This relief will be automatically calculated and should show on your next bill from your local council. Please note that the non-domestic rates reliefs and grant funding measures announced by the Chancellor of the Exchequer in March 2020 apply only in England. They do not apply in Scotland.

Retail, hospitality and leisure businesses will be given 12 months of 100% rates relief. In order to get this relief, a property has to be occupied. Properties that have closed temporarily due to the government's COVID-19 advice will be treated as occupied. Again, this will be administered through local councils. We are still waiting for guidance on how and when to apply for the relief. It is understood that you must apply through your local council. However, any reductions may not be reflected on your 2020/21 rates bills issued next month and revised bills will have to be issued to reflect any reductions.

WJM are committed to helping our clients make sense of these uncertain times by providing meaningful solutions. Please get in touch with your usual WJM contact to discuss your options.

This guidance was accurate on 26th March 2020. As government guidance and support is shifting each day, keep your self up-to-date on the Scottish Government’s dedicated COVID-19 support for business web page; https://findbusinesssupport.gov.scot/coronavirus-advice and the UK Government’s support page: https://www.gov.uk/government/publications/guidance-to-employers-and-businesses-about-covid-19