Business Support

The fifth publication has been released ranking the service quality league table of personal and business current account providers. 

For personal and small business customers, the survey is designed to show clearly how the quality of services compares across different dimensions, such as service quality, online and mobile offerings, overdrafts, in-branch experience and, for small business customers, the quality of their relationship or account management services. The CMA requires banks and buildings societies to display the survey results prominently online and in-branch so that customers can see whether they can get a better deal elsewhere.

The top three places for overall service quality providing personal accounts are:

1. Monzo
2. Starling Bank, and
3. First Direct

Customers with personal current accounts were asked how likely they would be to recommend their provider, their provider’s online and mobile banking services, services in branches and overdraft services to friends and family. The results show the proportion of customers, among those who took part in the survey, of each provider who said they were extremely likely or very likely to recommend each service.

It is interesting that these smaller banks are ahead of the big four banks and other larger institutions in the UK.

The second round of the Self-employment Income Support Scheme (SEISS) opened for applications on Monday 17^th August. The second and final grant covers the quarter to 31 August 2020. The second grant will provide up to £6,570 for the quarter (£2,190 per month) paid in a single instalment. These figures are based on 70% of eligible earnings (previous quarter 80%). Claims for the first grant have now been closed.

The following are some of the most important eligibility criteria for the scheme:

• The applicant must have been adversely affected by coronavirus on or after 14 July 2020.
• Applicants must be self-employed or a member of a trading partnership, voluntary work, or duties as an armed forces reservist.
• Have filed a tax return for 2018-19.
• Have traded in 2019-20; be currently trading at the point of application (or would be except for COVID-19) and intend to continue to trade in the tax year 2020-21,
• Have trading profits of less than £50,000 and more than half of total income from self-employment.
• Individuals can continue to work, start a new trade or take on other employment including voluntary work, or duties as an armed forces reservist.

It is possible for a qualifying self-employed person to qualify and claim for the second grant even if they had not claimed / qualified for the first grant.

If you are eligible, you should have been contacted by HMRC via letter, text or email and given a date on which to make your claim. Those who are eligible to use the scheme will have been given a randomly allocated date when they can apply for their grant. Whilst you cannot apply before the allocated day, there is no issue submitting a claim after that day. The application process will close on 19 October 2020. Claims are expected to be paid within six working days of submission of a claim.

Over 2.7 million benefited from the first stage of the SEISS – with the government handing out £7.8 billion of grants to help them through the crisis.

More than 3 million people are thought to be eligible for the second grant although some self-employed workers have fallen through the cracks such as the newly self-employed and some freelance workers who have been unable to claim. There are concerns for many self-employed workers when the scheme comes to an end, especially if we see a second wave of the pandemic.

Needless to say, the greening does not refer to the colour of whisky.

The Green agenda has received endorsement from Scotland’s world famous distilleries who are aiming to cut their emissions by almost half a million tons of CO2 every year.

The achievement has been facilitated by the new Green Distilling Fund announced in the March 2020 budget.

Greening distillery operations in Scotland and across the rest of the UK will help contribute towards its legally-binding target of reaching net-zero emissions by 2050. The funding comes as the UK government continues to ramp up its green economic recovery from Coronavirus ahead of hosting the UN Climate Change talks (COP26) in November next year.

All businesses and home owners should be alert to funding that is likely to become available as the imperative to tackle climate change kicks-in over the coming years.

For example, from September, a New Green Homes Grant will provide vouchers worth up to £5,000 towards the cost of energy efficient improvements for homeowners in England. 

One of the more insidious effects of the coronavirus outbreak is its unpredictability.

Businesses need to plan. To achieve this there needs to be an underlying, stable economic platform. Lockdown – whether locally or nationally applied – removes the certainty required to achieve planned results.

For example, the recent attempts to relax distancing rules and allow hospitality businesses (pubs, restaurants, hotel etc) to reopen on a restricted basis has back-fired in certain areas and the government has created a further layer of uncertainty – regional or local lockdown.

It is self-evident why lockdown is required – to control infection – but the effects on small businesses can be catastrophic.

From green to red the issues that need to be considered might include:

• If you are fortunate and can trade online, lockdown may actually increase your turnover. However, can you meet changes in demand?
• By taking advantage of available grants and government backed soft loans you may have managed to keep your business hopes alive, but the evidence is that the job related, furlough grants are now being phased out and there is just so long that you can trade at a loss without becoming insolvent.
• Lockdown has meant that you are or were effectively closed to business. If the present easing creates more infection further restrictions may be required; either locally or nationally. This may require that business owners face up to unpalatable choices.

Accordingly, we all need to plan for the unexpected, and in particular, that our business plans are flexible enough to cope with new restrictions especially if applied to our local area. 

If you need help with this planning and review process please get in touch with us.

One of the consequences of recession, such as the present downturn in activity caused by the Coronavirus outbreak, is the likelihood that many will face redundancy as employers try to manage the process.

In the past, this shake out process seems to reawaken dreams of not placing all your income eggs in one basket and instead, dusting-off those long-desired plans to run your own business.

There are sound reasons for doing this. For example, a business with 100 customers has 100 separate sources of income. Employment usually requires that you secure all your income from one source.

However, starting a new business – even in times of buoyant economic activity – is fraught with risk. To mitigate these start-up risks we suggest that you:

• Try and use your past experience and skills.
• Talk to other business owners, especially those that have made a success of their business and that are willing to share about their experience of starting a new venture.
• Take professional advice. There are probably a whole bunch of considerations that you need to work through before you open your business. It is what you do not know that will catch you unawares. Professional advice before you start will mitigate these uncertainties.

Add to these normal considerations the added uncertainties occasioned by the Coronavirus outbreak – and Brexit – and the need for cautious and thorough planning are self-evident.

If you are considering a new business start-up, please get in touch as we can help.

The Self-Employment Income Support Scheme (SEISS) was extended for a second and final three-month period from 1 June to 31 August 2020. The maximum grant available for the three-months is £6,570 (Previous quarter £7,500) paid in a single instalment. The application process for the SEISS extension will open from 17 August. Claims for the first quarter (1 March – 31 May 2020) closed on 13 July 2020.

The second grant will be open to self-employed individuals or members of a partnership whose business has been adversely affected by Coronavirus on or after 14 July 2020. It is possible for a qualifying self-employed person to claim for the second grant even if they had not claimed for the first grant.

The following points list some of the most important eligibility criteria for the scheme:

• Applicants must be self-employed or a member of a trading partnership, voluntary work, or duties as an armed forces reservist.
• Carry on a trade which has been adversely affected by COVID-19.
• Have filed a tax return for 2018-19.
• Have traded in 2019-20; be currently trading at the point of application (or would be except for COVID-19) and intend to continue to trade in the tax year 2020-21.
• Have trading profits of no more than £50,000 and more than half of total income from self-employment.
• Individuals can continue to work, start a new trade or take on other employment including voluntary work, or duties as an armed forces reservist.

After the schemes launch, the government widened the remit of the SEISS. This allowed parents, including mothers, fathers and those who have adopted, who took time out of trading to care for their children within the first 12 months of birth of the child or within 12 months of an adoption placement, to use either their 2017-18 or both their 2016-17 and 2017-18 Self-Assessment returns as the basis for their eligibility for the SEISS.

There are businesses that have benefitted from the current COVID disruption. Particularly, those that can deliver goods and services online.

There are far more that have not benefitted.

Before COVID-19 reared its disruptive head businesses were exhorted to make profits. This was the way most firms created surplus cash-flow and value in their businesses.

Since the initial, national lock-down – March 2020 – profitability has been the experience of the few rather than the many.

Government grants, and in particular the furlough scheme, have enabled businesses to mothball activity and keep some semblance of financial credibility. But for a significant number of firms, making profits has been replaced by strategies to minimise losses.

Government backed loan schemes with favourable interest and repayment terms have provided liquidity, but at some future date, borrowers will need to repay loans and absorb interest charges.

Presently, businesses will need to manage a sustained period of loss making to ensure they do not drift into insolvency. Realistically, they will need to plan to at least breakeven – cover their costs – in order to halt any decline in net assets.

Breakeven turnover – the level at which costs are covered – is a fairly easy figure to calculate, but unfortunately, this indicator will need to be exceeded if and when you have to make repayment of loans or create additional working capital.

Again, these options need to be considered in some detail. Planning is key. If you have concerns about your longer term ability to breakeven please call, we can help you crunch the numbers and consider your options.

£20 million worth of new government grants have been released to help small and medium sized businesses across England recover from the effects of the Coronavirus pandemic. These grants will provide businesses between £1,000 and £5,000 to help them access new technology and other equipment as well as professional, legal, financial or other advice.

Commenting on the announcement, the minister for regional growth and local government, Simon Clarke MP, said:

'We have always said that we would stand behind our businesses and communities as we rebuild following the Coronavirus pandemic. This new funding does exactly that.'

The support will be fully government funded with no obligation for businesses to contribute financially. The support will be delivered from the England European Regional Development Fund and distributed through Growth Hubs, embedded in local areas across England.

To establish a viable grant programme, the government has set a minimum of £250,000 for all Local Enterprise Partnership areas. The allocation of resources will be reviewed as the grant fund is delivered. The funding is being provided to address immediate needs and all grants must be awarded by 28 February 2021 and all activity fully completed by 31 March 2021.

The Competition and Markets Authority (CMA) launched a COVID-19 taskforce back in March 2020 to identify any commercial practices that adversely affect consumers and to consider appropriate responses to help businesses comply with the law and protect consumers' rights.

One of the areas where the CMA received reports of unfair practices concerned the early years sector (nurseries and childcare providers). The main areas of concern related to payments and cancellations in the context of COVID-19 lockdown restrictions. This prompted the publication of a statement by the CMA on 30 April 2020, on how the law applies to consumer contracts, refunds and cancellations. On 28 July 2020, the CMA published an open letter.

The letter does not introduce any new laws but does set out in detail how the current law applies in the present circumstances. The CMA was clear that the vast majority of providers were striving to reach fair arrangements.

However, the CMA identified the following three main problem areas:

1. Providers requiring full or excessively large fees for services which are not being carried out due to the pandemic public health restrictions and government guidance.
2. Providers relying on unfair cancellation terms, such as requiring unreasonable notice to be given, or high cancellation fees in cases where the business is unable to provide the service.
3. Providers putting unfair pressure on consumers to agree to make payments by threatening that the child’s place will be lost or the provider will go out of business.

The CMA’s view is that consumers should not have to pay for services that cannot be provided and should also be offered a refund where services are paid for in advance but do not take place as agreed in the contract. In addition, contract terms requiring consumers to pay providers who are not providing the services agreed in the contract are likely to be unfair and unenforceable.

The letter confirms that the CMA will not be taking any action against the early years sector at this stage but will continue to monitor the sector. For the time being, the CMA is asking providers to consider their contracts and arrangements with consumers and take any necessary steps to ensure they comply with the law. Individual consumers will, of course, still have the option of pursuing a claim against businesses for alleged breaches of consumer law.

The government has announced that more small businesses will benefit from the Coronavirus Business Interruption Loan Scheme (CBILS). Under the scheme, borrowers can apply for up to £5 million in finance in the form of loans, overdrafts, invoice finance, and/or asset finance. The government will guarantee lenders 80% of the loan value, as well as covering the first 12 months of interest payments and fees.

Under EU State Aid rules, small firms that were classed as 'undertakings in difficulty' were unable to make use of the CBILS. Following a considerable amount of UK Government and industry lobbying, the European Commission has now relaxed its State Aid rules. This means that effective 30 July 2020, 'micro' businesses with a turnover of less than £9 million and fewer than 50 employees will be exempt from elements of the 'undertakings in difficulty' test and can apply for a loan under the CBILS.

Chris Wilford, Head of Financial Services Policy, CBI said:

'This is an important step that will help more businesses get the critical support they need. These eligibility hurdles have been a real stumbling block for many firms across the UK throughout the crisis. These were put in place to avoid governments bailing out failing companies, but those rules were established in normal times.'

HM Treasury has also made clear its expectation that all accredited CBILS lenders will implement the changes, noting the consequence that businesses whose CBILS applications they have previously declined may now be eligible.