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My Business Can't Survive The Pandemic?

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Written by:

John A Waller

Director

Created: April 27th,2021.

My Business Can’t Survive The Pandemic?

Help, my business can’t survive the pandemic. What then?

COVID19 has affected all businesses across the UK. At the time of writing, the UK economy is slowly returning to normality. June 21st 2021 was when restrictions started to be removed, allowing the venue to return offering internal services, like restaurants, public houses, and sports stadium, while observing social distancing.

However, a new COVID19 surge is growing throughout Europe, in countries including France and Italy. India’s pandemic is out of control along with Turkey. So how safe is the UK?

The UK has managed to inoculate over 33,000,000 (as at April 25th) people, and is perhaps the safest country in Europe after a poor start.

How are we to measure the actual impact? How will fraudulent claims therefore impact the National purse? The list of questions goes on and on.

However, bounce loan support stopped 31st March 2021.

Today, many companies are in dire financial difficulties.

Common Questions being asked during the pandemic

So what can company directors do to protect their limited company?

The viability of UK corporate entertainment, international travel for business meetings, and globalisation of supply chains remains in the air.

Creditors of your limited company may not issue a winding up petition over debts owed to them through the Covid19 pandemic until 30 June 2021. As have wrongful trading provisions.

Businesses to pay 10% towards costs in July and 20% in August.

Employment and Insolvency Law Regulations

Companies in the UK remain legally entitled to cancel holidays due to staff shortages. However, they remain required to give legal notice equivalent to the length of the holiday owed. Should one of your employees cancel their holiday, the company has no legal duty to accept them back into work if they made different arrangements. However, you may ‘lay off’ employees without redundancies. Please view ‘Layoffs and short time working‘.

Employer rights and required legal duties in the pandemic

Worthy of note is contacting the Federation of Small Businesses. They provide further support if you are a member. 

If you require employees to be redundant during the furlough, ensure you comply with your actions legally.

The UK government has legislated the Corporate Insolvency and Governance Act, allowing up to a 20-day moratorium, which company creditors may extend.

A moratorium once in place protects the company from creditor actions during the pandemic. Therefore, Landlords remain unable legally to:

  • Forfeit leases;
  • Issue winding-up petitions;

Against companies that remain unable to pay rent due during the pandemic until 31st March.

Companies House announced that companies in England and Wales have three months to file their accounts.

Employment and Insolvency Law Regulations

Companies in the UK remain legally entitled to cancel holidays due to staff shortages. However, they remain required to give legal notice equivalent to the length of the holiday owed. Should one of your employees cancel their holiday, the company has no legal duty to accept them back into work if they made different arrangements. However, you may ‘lay off’ employees without redundancies. Please view Layoffs and short time working.

The UK government has legislated the Corporate Insolvency and Governance Act, allowing up to a 20-day moratorium, which company creditors may extend.

A moratorium once in place protects the company from creditor actions during the pandemic. Therefore, Landlords remain unable legally to:

  • Forfeit leases;
  • Issue winding-up petitions;
  • Against companies that remain unable to pay rent due during the pandemic until 31st March.

Companies House announced that companies in England and Wales have three months to file their accounts.

Forfeiture of commercial leases in the UK 

Section 82 Coronavirus Act 2020 restrained forfeiture by landlords between 26th March 2020 and 30th June 2021 for non-payment of rent due under a commercial lease. However, rent remains unpaid, and only an express waiver waives the right to forfeit once the restricted period expires.

Other support by the UK government.

  • Furlough supports ceases, September 30th, 2021, with businesses paying 10% in July 2021 and 20% in August 2021 towards costs.
  • Business interruption loans extended to ten years;
  • Self-employed grant extended;
  • Local Councils have received additional funds to assist firms impacted heavily by the pandemic lockdown, enabling them to survive. The UK Government has provided another £1.1 billion restrictions grant. Grants of £25,000 remain available.
  • A bonus of £1000 per employee, paid to employers who return a furloughed worker.
  • The UK Government will pay a share of wages to encourage businesses in the UK to employ young start-ups in a Kickstart scheme.
  • HMRC’s Time to Pay service expanded. New Tax Helpline 0800 015 9559, to arrange tax due to be deferred. 

Insolvency Practioners Help in Pandemic

Insolvency practitioners help in pandemic is essential to support and therefore advise companies who are:

  • Currently in financial distress;
  • Pending legal action for debt pre or during the lockdowns;
  • Directors aware of potential claims post lockdown.

With the pre COVID19 pandemic normality doubtful to return, licensed insolvency practitioners need to reposition businesses in the UK for a new hereafter.

An insolvency procedure in the case of the pandemic is not to be considered failing. Directors should act swiftly, grasp the unplanned events and take a positive spin, and generate value through capturing, protecting company assets while repositioning your company into a viable business, not burdening with COVID19 induced debt.

My Business Can’t Survive The Pandemic? So what then with HMRC?

Those businesses who choose to defer VAT between 20th March 2020 and 30th June 2020 have struggled to obtain any insignificant payments on 31st March 2021. HMRC has adopted a different scheme to aid those businesses by extending payment over a period extended to support. HMRC have created an online service that commenced 23rd February 2021 until 21st June 2021. Companies can begin paying interest-free monthly instalments (MAX11). To initiate this VAT payment scheme, please view the deferral of VAT payments due to the coronavirus COVID 19.

HMRC have extended the VAT rate of 5% for the tourism industry and hospitality to September 28th, 2021.

Remember, if you require additional time, HBG Advisory advises you to contact HMRC or HBG Advisory for support.

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