UK GOVERNMENT AID MEASURES TO SUPPORT THE ECONOMY

Coronavirus Business Interruption Loan Scheme (CBILS)

Lenders accredited with the British Business Bank may provide:

• an overdraft (up to 3 years),
• a term facility (up to 6 years),
• an invoice finance facility (up to 3 years), and
• an asset finance facility (up to 6 years),

… for up to £5 million.

HM Government will pay the interest and any lender fees for the first 12 months (fishery, aquaculture and agriculture businesses may not qualify for the full relief for interest and fee payment).

Detailed eligibility criteria have not been published, but in broad terms, a "small" business must:

• be UK based in its business activity, with turnover of no more than £45 million a year;
• operate within an eligible industrial sector (this excludes Banks, Building Societies, Insurers and Reinsurers (but not insurance brokers), the public sector including state-funded primary and secondary schools; Employer, professional, religious or political membership organisation or trade unions);
• generate more than 50% of its turnover from trading activity;
• have a borrowing proposal which, were it not for the COVID-19 pandemic, would be considered viable by the lender, and for which the lender believes the provision of finance will enable the business to trade out of any short-to-medium term difficulty.

At the discretion of the lender unsecured lending is possible for facilities of £250,000 and under. Above £250,000 the lender will establish a lack or absence of security prior to businesses using CBILS. Primary Residential Property cannot be taken as security.

HM Government will underwrite this scheme, initially for a 6-month period.

Covid-19 Corporate Finance Facility (CCFF)

The Bank of England (BoE) will acquire commercial paper (CP), with a term of up to 1 year, "on terms comparable to those prevailing in markets in the period before the Covid-19 economic shock”, from any company that can demonstrate it was in sound financial health prior to the shock.

Eligibility decisions will be made by the BoE’s risk management staff, taking into account a number of different factors.

An UK incorporated company, including with a foreign-incorporated parent and with a genuine business in the UK, will normally be regarded as potentially being eligible.

Detailed criteria have not been published, but a company with significant employment in the UK or with its headquarters in the UK may be eligible.

The BoE will also consider whether a company generates significant revenues in the UK, serves a large number of customers in the UK or has a number of operating sites in the UK.

In evaluating an offer to purchase CP, the BoE will look:

• where available, at issuers with a a minimum short-term credit rating of A-3 / P-3 / F-3 from at least one of Standard & Poor’s, Moody’s and Fitch as at 1 March 2020; and
• where a short-term rating is not available, either a long term credit rating or an assessment by the BoE of the issuer's financial strength.

For an Issuer Eligibility Form, Issuer Undertaking and Confidentiality Letter, Guarantee (for where the Issuer is not the primary entity in the group) and Legal Opinion, Application Forms (and further guidance), please click here.

If a company does not already have an established CP programme it will need to establish a CP programme to participate in the CCFF.

Coronavirus Job Retention Scheme

"Any employer" will be able to apply to HM Revenue and Customs (HMRC) for a grant to cover up to 80% of each employee's wages of up to £2,500, per employee, per month.

Grants will be backdated to 1 March 2020 and will initially be for a 3-month period.

HMRC is seeking to make initial payments by the end of April 2020.

Reimbursement of Statutory Sick Pay

An employer with under 250 employees on 28 February 2020 may reclaim statutory sick pay of £94 per week per self-isolating employee, for a period of two weeks.

Protection from Eviction for Commercial Tenants

A commercial tenant unable to pay rent during the three months prior to 30 June 2020, due to coronavirus, is to be protected from eviction for non-payment of rent during that period.

HM Government will have the power to extend this measure, if necessary, beyond 30 June 2020.

Business Rates Holiday

Retail, hospitality, leisure businesses and nurseries in England will be granted a holiday from business rates for the 2020 to 2021 tax year.

Insurance Claim

Medical advice issued by HM Government on 17 March 2020 is, according to HM Government, sufficient to enable a claim to be made if a company has an insurance policy that covers both pandemics and government ordered closure.

Small Business Grant Funding

£10,000 for each business in receipt of small business rate relief or rural rate relief.

Hospitality, Leisure and Retail Grant Funding

£25,000 where the rateable value of business premises is between £15,000 and £51,000.

SUMMARY OF TAX-SPECIFIC MEASURES

VAT Payment Deferral

VAT payments due between 20 March 2020 and 30 June 2020 will be deferred until the end of the 2020/2021 tax year. Deferral is automatic.

If a business is in a position to reclaim VAT, HMRC will repay that VAT when it is due (i.e. without deferral).

Income Tax Deferral for the Self-Employed

The instalment of income tax due on 31 July 2020 will be deferred until 31 January 2021.

Time to Pay Arrangement (TTPA)

A TTPA provides for the deferral of tax payment(s) through the exercise of HMRC's discretionary powers.

Interest on unpaid tax continues to run at 3.25%, although the rate on interest on corporation tax instalments has been reduced to 1.25%.

A taxpayer is required to:

• satisfy HMRC that the taxpayer 'cannot pay' the tax liability on the actual due date(s); and
• offer the best payment proposals that the taxpayer can realistically afford.

However:

• if a taxpayer's ability to pay improves, the taxpayer must contact HMRC and increase payments/clear the debt; and
• interest continues to run on tax paid after the date on which the tax was originally due

HMRC has established a dedicated helpline for 'time to pay' arrangements: +44 (0)800 0159559.

UK residence and Covid-related stays in the UK

HMRC has published guidance indicating that remaining in the UK may be regarded as occurring in "exceptional circumstances" if an individual:

• is quarantined or advised by a health professional or public health guidance to selfisolate in the UK as a result of the virus;
• finds that that individual is advised by official Government advice not to travel from the UK as a result of the virus;
• is unable to leave the UK as a result of the closure of international borders, or
• is asked by his or her employer to return to the UK temporarily as a result of the virus.

OTHER MEASURES

We will endeavour to keep you informed of any new measures that are adopted in the coming days and weeks.

This legal update is not intended to be and should not be construed as providing legal advice. The addressee is solely liable for any use of the information contained herein and the Law Firm shall not be held responsible for any damages, direct, indirect or otherwise, arising from the use of the information by the addressee.

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