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Furlough definition
Companies will now have to start paying the pension contributions and national insurance contributions (NICs) for all their furloughed staff and from September 1st will have to contribute 10% of their wages and 20% from October 1st. 
The scheme is scheduled to terminate in full on Halloween - October 31st 2020 - when businesses will either have to bring their employees back to work on normal hours, reduce their hours or terminate their employment. 
The cost is estimated to be about 5% of pre-furloughed pay for businesses. 
The Resolution Foundation have estimated that while at its peak, the CJRS paid for nine million UK workers, more than half of these have now returned to work in some capacity. It’s estimated that approx. 3 to 4.5 million workers remain furloughed. 
They say that changes to the scheme now in motion will cost employers an average of £70 per month per employee - equivalent to 5% of the average employee’s wage before the coronavirus pandemic and lockdown was implemented. 
Some sectors remain worse affected than others. The research indicates that some 43% of workers in the leisure industry; 37% in hospitality and 24% in transport and storage were still furloughed until last week.
The Resolution Foundation are among others arguing for a targeted extension of the furlough scheme to these sectors as they are disproportionately struggling.  
Other changes coming into effect from August 1st now mean that it’s down to the discretion of the employer whether or not it’s safe for an employee to return to work. 
Government guidance has changed to reflect the new advice based on whether employers, in consultation with workers, consider home working to continue to be viable. 
It should also take account of their personal circumstances including use of public transport, childcare responsibilities, protected characteristics and other factors including whether the individual is in a high risk group.
The reopening of bowling alleys, nightclubs, soft play areas and weddings was also put back by two weeks and the effects of local lockdowns in Greater Manchester and West Yorkshire will also be detrimental to businesses in those places. 
UKHospitality - the trade body for the industry - estimates that as many as half a million jobs could be at risk in the sector without a firm reopening date or schedule and this could rise in the wider leisure sector. 
Katie Nicholls, chief executive of UKHospitality said: “With prolonged uncertainty and no change on the furlough scheme as a result of a pause in reopening and any knock-on effect on consumer confidence.”
Businesses will be eligible for £1,000 pay off per furloughed employee brought back into the company and still employed at the end of January 2021 but some think even this won’t be enough to offset further job losses in some sectors. 
Andrew Marshall, director-general of the British Chambers of Commerce said: “Furlough has cushioned the blow, but when it ends we will see significant job losses and many insolvencies.”
Anybody hoping for an official change of heart would have been disappointed as Andrew Bailey, Governor of the Bank of England agreed with the Chancellor.
He said: “It’s (CJRS) been a very successful scheme, but he’s right to say we have to look forward now. I don’t think we should be locking the economy down in a state that it pre-existed in”. 
Like dropping a stone into a muddy pond, things are gradually becoming clearer but not by much. 
The Coronavirus Job Retention Scheme only has 88 days left to run and many companies and sectors won’t be at anything like capacity by then before the build-up to the Christmas season begins. 
This could be the best time to get some expert advice about where your business goes next. 
You can get in touch with us today to arrange a convenient, free, virtual initial consultation at a time and date of your choosing. We can go through the situation your business is facing and set out your short, medium and long-term priorities. 
Our expert advisors will work with you to see if they’re achievable and what the best and most efficient ways of reaching them will be.
A plan to survive right now can easily become a plan to expand and thrive in 2021 but only if you start working on it right now. 

coronavirus loan
The loans were issued under the Coronavirus Business Interruption loan scheme (CBILS) and the later Bounce-back loan scheme (BBLS) for small and medium-sized businesses and have an initial 12-month repayment-free period with the first ones falling due for repayment from Spring 2021. 
Early indications are that banks are looking to agree to a lighter-touch approach than they would usually employ for their own standard commercial or business loans. 
The BBLS is 100% guaranteed by the government which means the state will reimburse the bank’s total losses if a customer defaults on their loan. CBILS has an 80% guarantee which would leave a bank looking at a 20% bad debt loss.  
More than £40 billion was leant to over one million businesses under both schemes with most BBLS borrowers being small business owners or sole traders. 
A spokesperson for the British Business Bank (BBB), which manages all the state-guaranteed loan schemes created as part of the coronavirus response, said: “The BBB has regular meetings with lenders, UK Finance, HM Treasury and others to discuss the operation of the government’s Covid-19 response to loan guarantee schemes. 
“Among other topics discussed is the need to treat customers fairly should the collection of debts be required in the future.” 
So far so standard, but there’s a critical point that’s been overlooked so far - and that’s what happens if the debt is defaulted on deliberately. 
Some directors with a basic knowledge of insolvency might think that dissolving the company will free them from the burden of repayment, especially if the debt is already government backed. The implication from the code of conduct discussions however suggests that this will simply not be permitted.
Whilst taking a lighter touch in the debt collection processes, if the banks do not attempt any debt collection or simply allow directors to dissolve the companies, this may invalidate their guarantee, meaning the bank would suffer the loss. It's not anticipated that the banks would risk this level of exposure.
Consequently if you have taken out a BBL or a CBIL you should expect to be required to either repay this in full, make an arrangement to repay a reduced amount as part of a Company Voluntary Arrangement (CVA) or enter liquidation if the company cannot be rescued.
Any company that thinks it might have difficulty making loan repayments or struggling with existing debt should take a moment and get in touch with us. 
The coronavirus pandemic and response has been damaging for companies all over the country but the recovery period also provides an opportunity for businesses to take professional advice and help, and regroup. 
We have years of individual and collective experience in helping businesses to restructure themselves in tough times and come out stronger, stabler and ready to re-engage with customers and creditors with added confidence. 
If there’s ever a time to find out what we can do for you then it’s now. 

Close your eyes and listen. 
Remember the sounds of a happy, busy place. The sounds of a place full to the rafters with customers all eager to be served; of busy but efficient staff doing their best to serve or help them if there’s an issue. 
The sound of tills being opened and closed or cards being tapped and PINs inputted.  
The sounds of normal, everyday life in a successful business .
Hold onto them because the chances are that we won’t be hearing them for a long time or they’ll be mixed with muffled requests through masks or over the rustle of essential PPE.
We won’t really know how the Covid-19 pandemic and lockdown have changed society and business for several weeks and months later but if you own or run a company then you’ll already have a pretty good indication. 
It will be a lucky business that doesn’t have to change in order to accommodate social distancing and other appropriate measures.  
At a time when all revenues are being squeezed, if they’re still coming in at all, the financial demands will continue if not increase. 
Hand sanitizers, PPE, new or upgraded IT equipment to allow for virtual meetings and increased home working. The surety and comfort of the various coronavirus business support schemes now also have a firm timetable for tapering off and ending meaning some hard choices will be visited on directors and owners sooner rather than later. 
What options does a business owner have?
Stressful situations require creative thinking and looking again at previously discarded or otherwise unworkable options. It’s surprising how often the unfavoured solution becomes the correct one. 
So what about placing your business into administration via a Company Voluntary Arrangement (CVA)?
Three months ago this would have sounded unthinkable but then so would closing much of the country’s businesses and making their workers stay at home. 
A CVA carries many advantages: 

Additionally there are several imminent changes to UK insolvency laws that companies could benefit from including:

While the changes are not law yet, they will be tabled in Parliament in the near future and are expected to pass without change or opposition.
A lot of conventional wisdom starts as a cutting-edge, out-of-the-box theory that nobody else saw coming or would consider - until someone successfully implements it and then everybody does it.
So a CVA has gone from a niche business restructuring tool to a possible magic bullet to help large or small businesses take a breath, get their houses in order then come back properly adapted to take advantage of the new economy they’ll be facing. 
Get in touch with us today and we’ll set up a free, initial virtual consultation whenever you want to discuss it.
An experienced, expert advisor will get a better understanding of the unique circumstances surrounding your business and get a feeling for what short and medium term improvements and changes you could make now and in the near future.
Innovators have always used existing tools and techniques in new ways to achieve breakthroughs. This year, the strategic use of a CVA could be the next big one for UK businesses.    
We’re pretty good at this, so put together CVA proposals that will help your business re-emerge from lockdown and go beyond expectations.

April’s was interesting for what it didn’t show - no increase on March’s total but a decrease.
In February 2020 there were a total of 1,348 company insolvencies; up until March 23rd 2020, there had been 1,027 but this dropped to 207 for the rest of the month giving a total of 1,234. 
April saw 1,196 which was not only a reduction on the previous month but was also down 17% compared to the 1,435 total of April 2019. 
The single biggest driver in this reduction was a huge fall in the number of compulsory liquidations in April 2020 which had reduced by 60% annually, down from 242 to 97.
An informed opinion for this is that it’s due to practical circumstances rather than a material change in behaviour on the part of creditors. 
A Compulsory Liquidation requires a winding-up petition which has to be heard and agreed by a court. The same courts that have been running a reduced and virtual service since the lockdown came into effect on March 23rd.  
Another contributing factor is the government’s decision to prohibit the use of Statutory Demands and certain winding-up petitions from April 27th to June 30th 2020 inclusively. 
The biggest factor by far however, is the wide-ranging support measures being offered by the government under their COVID-19 support effort. 
Depending on the sector and size of the company, they will have been able to access grants, loans, offset business rates and VAT and been able to furlough staff that would otherwise have been made redundant.
Each and all of these will have played a major part in keeping otherwise viable businesses alive and being able to fight on when the lockdown is eased and lifted beginning for non-essential retail businesses and others from June 1st. 
Sadly, some businesses will inevitably succumb to negative factors and will have to close and others may take the decision themselves but these measures are the main reason why we aren’t writing about a historic jump in the numbers.
The Insolvency Service state that they do not explicitly record whether an insolvency is directly related to the coronavirus pandemic so they are not able to conclusively state that it has a direct effect on insolvency volumes but it indirectly has by influencing some other key factors. 
These include HMRC temporarily reducing their enforcement activity to concentrate their resources in processing some of the other elements of the government’s coronavirus economic response;  Insolvency practitioners adjusting to new working practices and arrangements in their own business and knock-on effects which have led to delays in documents being provided to Companies House. 
It’s reasonable to conclude that all of these have helped reduce expected company insolvencies last month. 
There were also annual comparative reductions in the total of Creditors Voluntary Liquidations (down 9%) and every other type of company insolvency (down 3%). 
It’s important to know what’s happening in your business and your sector now but it’s equally vital to understand what’s going to happen next - especially now. 
We don’t have a crystal ball but we do have a crystal clear understanding of how a business can make sure it’s fighting fit and ready to go when the lockdown eases further or is lifted entirely. 
Get in touch with us today to arrange your free virtual initial consultation on how we can help you sharpen every area of your company’s finances so you can approach trading with confidence. 

Centuries old practices will fall by the wayside, to be replaced by new structures and codes that have only come of age in the past few weeks - Zoom meetings anybody?
Received wisdom will be reexamined and while some customs and rules will remain, others will be looked back on with a mixture of amusement and bewilderment that they were followed for so long. 
We doubted that paying rent would be one of these however, but these are strange days. 
Firstly, we covered how some retailers such as Boots and Matalan have taken issues into their own hands and refused to pay rent for this Q2 2020 which came due earlier this month.
The landlords of Boots in particular are particularly aggrieved as the store is classified as an essential business so remains open and generating some income and sales during this period. 
One of the landlords said: “We’re trying to support the little guy, the small independent traders whose sole income is through the cash register. I said to Boots - my ability to help those people is directly related to the people who could and should pay rent, paying that rent.”
Then there were reports that other retailers beginning with the Edinburgh Woollen Mill chain of retailers are including pandemic clauses into any new leases it’s due to sign with landlords of Bonmarche stores that their owner, Philip Day, brought out of administration last year.
The clauses would mean that EWM could agree on new Bonmarche store leases without having to pay any rents upfront until the lockdown is lifted and non-essential stores can reopen for business. 
This also means that the company will be refunded any rent payments by their landlords should another pandemic hit in the future. 
It seems that the authorities have been paying attention because the government has now banned landlords from using the threat of statutory demands and winding-up orders to claim any unpaid rent due to the crisis. 
Commercial tenants also have the option to delay full rent payments unless they are already three months in arrears. 
Section 82 of the Coronavirus Act 2020 already prohibits the forfeiture of commercial leases until 30 June 2020 (or longer if the government deems necessary) specifically for non-payment of rent. 
As written, the law didn’t prevent other actions including recognised debt recovery devices until the new measures were introduced. 
While some businesses have no revenue coming in, the government hoped that landlords would have some forbearance and look to cooperate with their otherwise profitable tenants.  
The reality is that some landlords decided to take strong measures first because they were also struggling for income from tenants, some of whom aren’t reciprocating openly themselves. 
A new business world is coming. 
It might be weeks or months away but it will arrive and bring a host of changes with it. 
Rent boycotts, debt recovery bans and niche rental clauses may be the first outliers of an evolving environment but they certainly won’t be the last. 
You need to start thinking about how your business is going to adapt to a new environment when it becomes time to open up permanently again. 
Where will you have a strong advantage? Where will you be in danger of being outflanked and left vulnerable? What part of your company will need evolution and which revolution? 
Get in touch with us today to schedule a conversation around these topics and more. 
We’re used to asking questions that need more than a yes or no answer and make you really think about what you and your business will need going ahead so you can re-emerge with all systems go. 

the boss
It’s frequently misunderstood by those who’ve never worked for themselves and can be seen through the prism of popular culture as either being incredibly risky and precarious or for the flighty and those who want to avoid the commitment of a regular position. 
Nothing could be further from the truth. 
Of the 4.8 million self employed workers in the sector that collectively make up 15% of the working population, the self employed, on average, work longer hours and perform a greater variety of tasks and essential duties within a business than a salaried employee in a traditional business. 
It’s a standing joke among self-employed circles that if they ever committed their job description to paper it would encircle the globe. 
The Coronavirus pandemic is far from a laughing matter for the self employed now but there is some help now available to them. 
The government announced a Coronavirus Self-employment Income Support Scheme (CSISS) for both the self employed and members of partnerships that have lost income due to the impact of COVID-19. 
This is a taxable grant worth up to approx. 80% of their trading profits up to a maximum of £2,500 per month for the next three months - although this may be extended if needed. 
The criteria for eligibility includes having previously submitted an Income Tax Self Assessment tax return for the tax year 2018/19, are currently trading and plan to continue trading in 2020/21. 
Anyone who traded during this period and is yet to submit a tax return for 2018/19 has until 23rd April to do it. 
Self-employed trading profits must be £50,000 or less and more than half your income must have come from this activity. 
The grant received will be 80% of the average profits taken from the 2016/17; 2017/18 and 2018/19 tax years. 
HMRC will add together the total profit for these three periods and divide it by three. They’ll then pay this figure or an amount up to a maximum of £2,500 per month directly into their bank account in one instalment. 
Individuals who claim tax credits will have to include any grant received as part of their income. 
HMRC are contacting eligible claimants and inviting them to apply online. UPDATE - the scheme launches on May 13th 2020.  If accepted, applicants will receive the money within six working days.
Sadly, as always seems to happen when these schemes are announced, fraudsters are looking to take advantage of people’s confusion and are texting, calling and emailing self employed workers claiming to be from HMRC and offering financial help or an advance tax refund.  
They’ll usually ask them to click a link or give personal information such as their name, credit card or bank details. These are scams and should not be responded to. 
Self-employed workers and business owners might also be eligible for some of the other initiatives available including deferral of Self Assessment Income Tax Payments; cash grants for businesses with low or no business rateable value; the Business Interruption Loan Scheme or increased amounts of Universal Credit. 
Self-employed directors who are paid through PAYE will be able to get additional support through the Job Retention Scheme too. The scheme entitles employees, which they technically are if they receive PAYE, up to 80% of earnings that are received via PAYE up to a cap of £2,500.
Dividends are not taken into account.
Depending who you ask, the self-employed sector has either been left to fend for itself or has been backed-up quickly and strongly. 
The answer might rely entirely on whether you have received any support or advice yet otherwise you might feel like you’re twisting in the wind, waiting for help that may or may not arrive in time to save your livelihood. 
Fortunately you can get in touch with us straight away or whenever you want to
Our team of experienced, expert advisors have dealt with self-employed company owners and directors for several years and can appreciate the nuances and ebbs and flows that separates the all-encompassing nature of self-employment from a “day job”. 
A free initial consultation will help you focus on what you need for your business right now and what you can plan to do in the days, weeks and months ahead to bring some needed certainty and structure to a world that, at times, seems to have given up on and decided to make it up as it goes along instead. 

Business Rescue Expert is part of Robson Scott Associates Limited, a limited company registered in England and Wales No. 05331812, a leading independent insolvency practice, specialising in business rescue advice. The company holds professional indemnity insurance and complies with the EU Services Directive. Christopher Horner (IP no 16150) is licenced by the Insolvency Practitioners Association


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