Business Support

The HM Government guidance titled Working safely during COVID-19 in shops and branches has been updated. The updates relate to managing product handling and returns, the test and trace service, safer travel and managing security risks.

The guidance is relevant to all retail stores, bank branches, post offices and other open money businesses. This document sets out guidance on how to work safely and has been prepared by the Department for Business, Energy and Industrial Strategy (BEIS). It gives practical considerations of how this can be applied in the workplace.

The guidance includes advice on the following main areas:

• Thinking about risk
• Who should go to work
• Social distancing at work
• Managing your customers
• Cleaning the workplace
• Personal protective equipment (PPE) and face coverings
• Workforce management
• Inbound and outbound goods

The guidance applies to those outlets that are currently open and will help those that are currently closed consider how to adapt their operations when they are allowed to open.

Employers remain legally responsible to protect workers and others from risk to their health and safety and must keep risk assessments for COVID-19 updated as the outbreak risks and government guidance continue to evolve.

Public health is devolved in Northern Ireland, Scotland and Wales so this guidance should be considered in those parts of the UK alongside local public health and safety requirements and legislation.

Last week, we considered one of the issues that employers will likely need to consider in the coming weeks and months: productivity.

This week we have listed other factors that you may need to consider if you presently have staff furloughed under the Coronavirus Job Retention Scheme (CJRS).

From 1 July, it is possible for furloughed staff to return to part-time work. From 1 August, employers will need to finance an increasing proportion of the CJRS costs for time not worked.

Aside from these considerations, employers will need to dust of their business forecasts and figure out what staffing levels they will need as the furlough scheme unwinds and is withdrawn 31 October 2020.

There will be hard choices for employers who may have invested heavily in building their team. Who to retain, who to let go?

Some of the points you may need to consider are:

• What level of sales activity is expected?
• Based on this estimate, what level of staffing is required?
• Which members of your team have the necessary skills?
• Are staff able to accept a gradual return to work; a period of part-time working to allow business activity to re-establish?
• What are the financial consequences of laying-off staff, redundancy pay for example?
• What effect will your decisions have on profitability, cash-flow and funding?

In should be pointed out that every business will need to make decisions based on its own unique circumstances and planning is no longer a luxury that we cannot afford. Please call if you need help preparing and interpreting the necessary forecasts.

While our businesses have been able to maintain or increase profits there has been an unwritten acceptance that we will pay for current taxes out of future cash resources.

For example, if you are self-employed, payments on account for self-assessment taxes on current income are made two months before the end of each tax year and four months after the end of each tax year. And if payments on account are not enough to cover what is due, any balance owing to HMRC is payable some months after the end of the tax year.

Companies are required to pay tax nine months and one day after accounts and tax returns are drawn up.

There is a flaw in the unspoken assumption that funds will always be available to meet future tax payments. It arises if profits and cash resources are falling.

Unfortunately, COVID-19 disruption is creating these conditions for many UK businesses.

The present pressures on cash-flow preclude saving for future tax, but there will come a time when HMRC will come looking for their money.

HMRC have agreed to allow more time to pay and we may be able to help reduce tax due if there are losses available or if payments on account can be reduced.

If this is likely to be a problem for you in the coming months please contact us so we can help you consider your options. 

We reported late last month on the extension of the Coronavirus Job Retention Scheme to 31 October 2020 following the announcement by the Chancellor, Rishi Sunak. At the time, the Chancellor confirmed that further guidance on the workings of the amended scheme, which allows for flexible furloughing from 1 July, would be published on 12 June. This revised guidance has now been published.

The following updated guidance should be noted:

• If you still need to make a claim under the existing Coronavirus Job Retention Scheme (which comes to an end on 30 June) this will need to be done by the 31 July at the latest.
• Claims for the revised Coronavirus Job Retention Scheme will start with the introduction of flexible furloughing from 1 July. The first time you will be able to make claims for days in July will be 1 July, you cannot claim for periods in July before this point.
• From 1 July, employers can bring back employees to work part-time, for any amount of time and any shift pattern. Employers will have to pay employees for the hours they work but can still use the scheme to cover any normal hours your employees are furloughed.
• The revised scheme requires employers with employees who are flexibly furloughed to have agreed the furlough arrangement with the employee (or reached a collective agreement with a trade union) and to keep a written agreement of this fact.
• Employees can stay on full furlough under the revised scheme. The government will continue to pay 80% of costs for normal hours not worked up to the £2,500 cap during the month of July.
• Government support for the scheme will begin to taper from 1 August when employers will be expected to start contributing towards furloughed employees wage costs by paying employers’ NIC and pension costs for any normal hours an employee does not work. There will be further reductions in government support to 70% of capped wages in September and to 60% in October before the scheme is closed on 31 October.
• The government had previously announced that employees who haven’t had a qualifying 3-week period of furlough by 30 June would not be able to benefit from the revised scheme. However, there will an exemption for employees currently on statutory parental leave. The 3-week period for furlough is no longer a requirement of the revised scheme.  
• Employers will need to report both the hours worked and the usual hours that an employee would be expected to work in a claim period.

In the not to distant past business managers were prone to “empire building”. Increasing head count was more important than increasing productivity.

This bygone-age tendency has long slipped away but productivity is likely to remain as a leading consideration when businesses organise their use of human assets to run their businesses in the post-COVID economy.

Productivity should be one of the key considerations as we emerge from lock-down. Employers may need to make difficult choices if their ability to trade has been affected by COVID restrictions.

Who to retain, who to let go…?

Efficiency is a difficult quality to measure. Much depends on the entrepreneur’s ability to manage and release productive endeavour as well as the personal bent of individual employees to work effectively or otherwise.

When business owners start the process, who to retain after furlough ends on 31 October or who to lay-off, they will need to take a range of factors into account:

• At what level will demand for products or services settle?
• Based on this, what infrastructure is required to sustain this level of activity?
• Can the new reality be financed? Is further investment required?

A number of businesses may close their doors. Those linked to the aviation or hospitality sectors will be severely challenged.

Those businesses that can see a light at the end of the tunnel will need to stay sharp. Planning to achieve this cannot be underestimated. During the coming summer business owners need to engage with their advisers and figure out what to do next.

One ingredient that should be considered as part of this process is what choices can be made to create and capitalise on productivity gains.

Dictionary definitions of the word profit tend to include such synonyms as “advantage”, “financial gain” and “financial advantage”.

Longer explanations might say: the difference between the amount earned and the amount spent in buying, operating, or producing something. 

All true to some degree.

A wider definition might include that profits facilitate economic growth if they are used to invest in the businesses that create them.

An issue we may face as we emerge from lock-down is the urge to hoard cash resources. There is nothing quite like the challenge that COVID-19 has created to reawaken the primal instinct to keep wool on your back.

Saving funds in response to these challenges would seem to work against the likelihood that we will recover, instead, they assume the opposite that we will not recover.

Conversely, profits reinvested will strengthen our ability to trade. And in this sense, making profits takes on a completely different role than simply swelling bank deposit accounts.

Initially, as we emerge from lock-down, planning for profits will need to include – for many businesses – the funding of losses where these are necessary to rebuild and re-establish market share. 

Regaining profitability is a worthwhile planning objective, Obviously, unless this can be achieved a sustainable future is unlikely. What you do with those profits should also be a key ingredient in your planning process.

HMRC’s guidance makes it clear that any business that makes an error in making a Coronavirus Job Retention Scheme (CJRS) claim must pay back any amount over-claimed. Any claims based on inaccurate information can be recovered by HMRC.

The CJRS application claim form has been updated and now allows businesses to advise HMRC if they have identified previous errors and over-claimed. If you confirm that your business has been overpaid, the new claim amount will be reduced to reflect this overpayment.

HMRC has also clarified what will happen if you have made an error in a CJRS claim and do not plan to submit further claims. HMRC is working on a process that will allow employers to let HMRC know about these errors and pay back any amounts that have been over-claimed. HMRC will update their guidance when this option is available.

Employers must pay the full amount they are claiming to their employees, even if the company enters administration. If the employer is unable to pay employees what they are due, the monies will need to be repaid to HMRC. The same applies in relation to employer NICs and pension contributions.

It is important to ensure that all claims made for furloughed employees are accurate. Employers are required to keep full records relating to any CJRS claims (including adjustments) for a period of six years.

As our readers will be aware, the Coronavirus Job Retention Scheme (CJRS), has been extended until 31 October 2020. There are a number of important changes to the way the scheme works that will start to come into effect from 1 July 2020, when employers can bring back furloughed employees to work part-time, for any amount of time and any shift pattern.

For any periods starting on or after the 1 July, the maximum number of employees that employers can claim for cannot be higher than the maximum number they claimed for in a previous period. For example, if the highest single claim for periods up to 30 June was for 100 people, then employers cannot claim for more than this number in later periods.

The government will continue to pay 80% of costs for normal hours not worked up to the £2,500 cap during the month of July. From August 2020, employers will be expected to start contributing towards furloughed employees wage costs by paying employers’ NIC and pension costs for any normal hours an employee does not work. There will be further reductions in government support to 70% of capped wages in September and to 60% in October before the scheme is closed.

HM Treasury has published its weekly update (to close of business on 7 June 2020) on COVID-19 lending schemes designed to support businesses impacted by the pandemic.

Under the Coronavirus Business Interruption Loan Scheme (CBILS), 47,650 businesses have received funding so far, with lenders approving £9.56 billion. This was an increase of £640 million of funding to 1,807 businesses over the previous week.

The Coronavirus Large Business Interruption Loan Scheme (CLBILS) has approved £1.57 billion in loans to 244 larger businesses. In the past week, 53 firms were approved for £460 million in loans.

Under the Bounce Bank Loan Scheme (BBLS), for small and micro businesses, in the five weeks since the launch over 780,000 businesses have successfully applied for funding totalling £23.78 billion.

The Future Fund is a special investment fund for high-growth companies impacted by the crisis, made up of funding from government and the private sector. Funding applications for the Future Fund opened on 20 May 2020 and the first government loans totalling £55.9 million have now been approved for 53 companies.

The recent news that the lockdown is being eased for certain businesses is good news. Unfortunately, there are many other businesses that are still closed and unable to trade.

And there is always a background risk that any relaxation of the lockdown will increase the number of COVID-19 infections.

The Government seem intent on easing the economic down-side of the pandemic and its likely that any reestablishment of tighter restrictions will be focussed on controlling local outbreaks.

In which case, it probably makes sense to minimise the risks by observing government guidelines regarding social distancing and other health and safety issues. The old adage, act in haste repent at leisure comes to mind.

Unfortunately, the distancing rules are going to reduce potential footfall for many shops that can now reopen. It's unlikely that window shoppers will have the patience to stand in a queue to take a closer look.

Dentists will have to reorganise waiting rooms and may have problems sourcing PPE.

Financially, many risks can be minimised by careful planning. Readers who can now reopen their doors to business should do so after considering the financial implications. We can help. Please call if you would like to consider your options. 

There is the potential that present changes may result in future, backward changes. Fingers crossed that this is not the case.