The MoJ has published some interim measures to assist firms with cash flow. These include:
- initiatives to support civil, family, and criminal legal aid practitioners to keep the justice system running
- changes to make hardship payments easier to access – including reducing the threshold for work done to £1,000, rather than the current £5,000
- pausing some debt repayments to the LAA for legal firms
- aligning legal aid fees for First Tier Tribunal immigration and asylum appeals with HMCTS’s move to an online system for these cases
The government has increased the support available for both small and large businesses.
VAT and income tax deferral
The government has announced that it will defer VAT payments for all businesses for three months from 20 March until 30 June 2020. No application is needed. Businesses will not need to make a VAT payment during this period. Taxpayers will be given until the end of the 2020/21 tax year to pay any accumulated liabilities.
In addition, self-employed people will be able to defer income tax payments (without interest or penalty) otherwise due in July 2020 under the self-assessment system. These will be deferred to January 2021. Again, no application is needed.
Loans for small and medium sized firms or businesses
A new temporary Coronavirus Business Interruption Loan Scheme will be delivered by the British Business Bank.
It will facilitate business finance for smaller UK-based businesses (with a turnover of no more than £45 million) that are viable but cannot obtain finance because they have insufficient security to meet the lender’s normal requirements. It will provide accredited lenders with a government-backed 80% guarantee against the outstanding loan balance.
The government will not charge businesses or banks for this guarantee, and the scheme will support loans of up to £5 million, with no interest due for the first 12 months. More information is available at the British Business Bank website.
Loans for larger firms and businesses
To support liquidity there will be a new lending facility with the Governor of the Bank of England to provide low cost, easily accessible loans. It is only available to companies, so it would appear not to assist professional partnerships and LLPs. This facility will be available from the week commencing 23 March 2020.
The government will provide further funding for local authorities to support businesses eligible for Small Business Rate Relief or Rural Rate Relief. This will take the form of £10,000 cash grants to 700,000 of the country’s smallest businesses, delivered by local authorities.
Firms should check with their insurance providers if they are covered for any losses incurred due to the virus.
A number of private lenders are also making funds available to small businesses impacted by COVID-19, including £2 billion from Lloyds Banking Group and £5 billion from NatWest.
In a move that could help firms and contract workers operating through ‘lawyers on demand’ type arrangements, the government has announced that the planned extension of the off-payroll working rules to the private sector will be delayed until April 2021.
There are likely to be further measures to follow.
The new COVID Bill is likely to enable the government to offer whatever further financial support it thinks necessary to businesses.