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Dear Chancellor,
Firstly, we must commend the government as a whole and you, as Chancellor of the Exchequer, in particular, for what has been done so far to tackle this unprecedented crisis. So much has been achieved in a very short time.
All the tax deferrals and initiatives are to be applauded but we have profound concerns both that too many businesses and the self-employed fall through the cracks and that the time scale for delivery is too long.
There are a lot of pressure points on delivery with HMRC needing to build new systems to cater for the Coronavirus Job Retention Scheme and the reimbursement of Statutory Sick Pay, local councils needing to process cash grants to all the relevant businesses and the banks having the manpower to administer the financial support under Coronavirus Business Interruption Loan Scheme.
The first wave to suffer the impact of COVID-19 are the Retail, Hospitality and Leisure sectors. From this perspective, it makes absolute sense to use the Business Rates mechanism to deliver financial support. It disperses the delivery of the grants to the local authorities.
The further grant for businesses that are receiving Small Business Rate Relief or Rural Rate Relief is positive extra step.
However, HMRC is indicating that “Your local authority will write to you if you are eligible for this grant.”
As many business premises are closed and, with every likelihood that the lockdown restrictions will be tightened in the coming days, who is going to receive the letter and take the actions required from the letter? Similarly, if the local council makes the grant in the form of a cheque, how is it going to be banked?
Moreover, this takes no account of the reality of working models today. Countless professionals and start-ups either work from home or in a co-shared workspace. Tradesmen and women tend to effectively use their vehicle as their office. For businesses in serviced offices and units, the business rates are often absorbed by the landlord and effectively included in the rent.
As it stands, these businesses will get no support from their local authority.
In a similar vein, the Coronavirus Job Retention Scheme is a response to the first wave of impacted businesses and provides a route to a much-needed cash injection.
However, HMRC has to build the mechanisms to capture the data on the ‘furloughed workers’ under the scheme and to deliver the payments to employers.
The best estimate is it will be four weeks before HMRC is in a position to process the payments meaning, although covered by the scheme, there is no immediate support for the upcoming March payroll.
One of the requirements to be considered a ‘furloughed worker’ is that the employee is not working for the business.
This is effectively excluding the raft of businesses that need both support on paying their payroll and to keep their employees working albeit largely in a reduced capacity.
The support so far for the millions of self-employed is not sufficient and is, in turn, is encouraging people to continue to work in circumstances where they should not.
Further support is needed for freelancers, contractors and sole traders.
There is a strong case to adopt a Universal Basic Income model that would deliver money quickly with no hoops or barriers.
The Coronavirus Business Interruption Loan Scheme is now live and we recognise that it is an extraordinary feat to have delivered this in less than two weeks.
However, we have grave reservations that the scheme will prove to be too onerous and over-bureaucratic to provide the immediate financial support that businesses need now.
The stark reality is that many businesses need support in the next few days to meet their payroll costs, the quarterly rent payments and to pay their suppliers.
More needs to be done now in a streamlined way. For instance, the government could underwrite, say, a £25,000 overdraft facility or increase in overdraft facility for every business in the land and this could be up and running in days not weeks.
At CooperFaure, we understand the profound impact of COVID-19 on businesses from our conversations both with clients and others that have reached out at this time of need.
In these challenging times, we are reminded of the words of Winston Churchill, “Continuous effort — not strength or intelligence — is the key to unlocking our potential.”
We would urge you and the government to consider new and innovative routes of immediate support in terms to cash payments into businesses.
Yours faithfully,
CooperFaure Accountants
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