Corona Virus - Business Closure

Just pondering planning for complete closure

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Just pondering planning for possible complete business closure for two months.

As a manufacturer, we can't 'work from home' - although some functions can to a limited extent.

I am checking our insurance, (not expecting much..)

Wondering where we might end up with "time to pay" on VAT, PAYE, Business rates etc.

Currently well funded, but that will drain away quite quickly.

What are anyone else's thoughts?

Replies (16)

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By SteveHa
12th Mar 2020 11:51

See towards the top of https://www.gov.uk/difficulties-paying-hmrc.

HMRC have you covered, apparently.

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Replying to SteveHa:
Lone Wolf
By Lone_Wolf
12th Mar 2020 13:32

Stupid question, but have they given any guidance as to when to use that line?

I'd have thought a normal call to the debt management team about time to pay would have sufficed, but having a separate line suggests there will be different criteria for calling this.

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By Duggimon
12th Mar 2020 12:23

I strongly expect that mandated closure, if done per government guidelines, will certainly constitute a reasonable excuse for any late filing/payment penalties that might otherwise occur.

As for time to pay, they announced a big extension to the system in the budget, so should be amenable to any reasonable requests, but we'll have to wait to see if they implement it as fully as suggested.

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By sosleepy
12th Mar 2020 13:18

Sorry for hijacking the thread but it's a related question...

What happens with regards to employees if a business chooses to close? Do they get full pay or do they get sick pay despite being fit, healthy and ready to work but being unable due to a decision by the owners?

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Replying to sosleepy:
By ireallyshouldknowthisbut
12th Mar 2020 13:40

It will depend on the employment contract.

Unless you are on zero hours you are probably entitled to full payment.
Whether business can afford to pay it would be another matter.

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Replying to ireallyshouldknowthisbut:
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By sosleepy
12th Mar 2020 14:01

Thank you, confirms what I was thinking.

Wages I think will be the main reason for requiring short term overdrafts/loans for most clients if/when things get to that stage.

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Replying to ireallyshouldknowthisbut:
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By tom123
12th Mar 2020 14:33

I am not sure our contract of employment covers such matters. It talks about 'short time working', so I guess those provisions would come into play.

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Replying to tom123:
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By kestrepo
12th Mar 2020 16:01

I think that you will find that there is a difference between short time working and closure due to sickness. I am expecting the Corona virus to be classified as sickness in employment law and think that we will have to pay in accordance with individual employees terms of employment. If it happens it will be expensive as most employees here are entitled to enhanced sick pay and not just SSP - we will be able to claim back £188.50 (£94.25 x 2) SSP from HMRC but it is not clear how this will be administered / claimed for yet and the claim is a drop in the ocean compared to our enhanced sick pay costs! I would take further advice from your employment advisers before replying on short time working to see you through and start accruing - with a bit of luck you'll be able to carry an accrual through a year end!!

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By bendybod
13th Mar 2020 12:21

But not if a business chooses to close or an employee chooses to self isolate.

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Replying to sosleepy:
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By Simpleton2
19th Mar 2020 20:56

It might win you any "Boss of the year" awards, but you can mandate some use of annual leave or have a contract in place to allow short term lay offs https://www.acas.org.uk/coronavirus/if-the-employer-needs-to-close-the-w....

Possibly a variation to the contract could be agreed now if it is not already in place, people tend to want to do what they can to avoid redundancies or the company they work for going bankrupt when they are staring down the barrel of global recession.

Sick pay would only I believe be relevant if the employees are sick or required to self isolate (as opposed to social distancing), though of course the advice about this is very much in flux at the moment.

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paddle steamer
By DJKL
12th Mar 2020 19:00

The main area I have been looking at is remote working- we are fortunate that on the accounts side it is really only me so if I sort bank access from laptop rather than office desktop (a little security software) and I take some files home I can do a fair bit from home.

We can also divert tenant calls to other numbers so for us most things are possible.

The main difficulties will be building issues (leaks/ water/waste/power supply problems), not sure how these get covered, if only a couple of weeks then Christmas operating practices will likely suffice, if longer not so sure.

Regarding cash availability we already hold quite a lot so this will likely not be much of an issue if only 3-4 months disruption, however if tenant damage leads to large number of voids and time after to find new tenants then it is possible in 12-18 months time we could see some issues, however we are far better balanced than we were in 2008 so I suspect we will come out the other end- I am certainly not as confident with our smaller business tenants (we have about 100 of them), some will certainly collapse, the difficulty is really not knowing which ones until it happens.

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paddle steamer
By DJKL
12th Mar 2020 22:00

Duplicate

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By daymar
13th Mar 2020 10:10

A good idea for a separate phone line with plenty of staff - it will probably pay for itself as they are back to using an 0800 number again instead of the 0300 numbers now used elsewhere.

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By C.Y.Nical
13th Mar 2020 16:45

I am in a slightly similar position. In my case I am semi-retired, still a director of one company, and a 50% shareholder in another, both of which deal with the public and may have to close. One has substantial liquid assets, the other has had a bad winter and doesn't. In addition I have residential tenants whose jobs and income may be in jeopardy.I don't want any of this to fail so my aim is to keep everything going, somehow.

My approach to the situation currently falls under the following headings:
1. Forget profits and even the balance sheet. Prepare a cash flow forecast very carefully and watch it like a hawk. Cash is the only thing that matters at a time like this.
2. Do not run out of cash before you take drastic action like making people redundant. If you run out of cash you loose control of the situation. The message I am getting is that if things are truly going pear-shaped redundancy may be the best for both parties because it draws a line under the employer's liabilities and entitles the employee to benefits - and (probably, soon) a mortgage or rent holiday.
3. Be very open and honest with employees, suppliers, your landlord if there is one, and customers. Keep them informed. If they are good people they will appreciate your honesty and do their best to help, most of them, and they will come back when this is over. I would have included the bank in that list in days gone by, but not now. If you have a bank "manager" who is (a) human, and (b) not completely without discretion in their decision-making perhaps include them in the loop. But in the light of what has happened in recent years I wouldn't trust the average bank one bit. And it might even transpire that your bank goes bust before you do.
3. Following on from that, do not keep all your cash in one bank.
4. Duck and dive and do everything you can to keep open even if only nominally. Is there one product line you could keep open, even with just one operative, even if it's just yourself? The Bank of England will create money (the USA Fed sort of printed 3 trillion dollars yesterday) and lend it to the government so that they can help businesses weather the storm but my best guess is that there won't be any help for businesses that have actually closed. Much more likely that help will be available for those that are still afloat, even if only nominally.

I'd appreciate being told whether this makes sense or not.

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Replying to C.Y.Nical:
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By Simpleton2
19th Mar 2020 21:02

Realise this is an old comment, but if you haven't already do have a look at the measures being put in place to assist SMEs, and check what may apply to you.

https://www.gov.uk/government/publications/guidance-to-employers-and-bus...

There is a business interruption loan being made available with six months without interest.

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John Hextall
By John Hextall
17th Mar 2020 17:04

I would echo C.Y. Nical - create a detailed cashflow and try to keep a skeleton crew going. Your short time policy should allow you to reduce hours/pay substantially (although you will have to decide whether it is worth doing this - you will likely lose all the best staff and may not be able to recruit any back in a couple of months) but can you consider getting everyone who can to work from home? I realise in manufacturing, most staff have to be in the factory though. It's hard to say without knowing the numbers but a mixture of voluntary redundancy, short time working, working from home, being at home on full pay (but liable to come in at short notice), redecorating etc. should be possible without holing the ship, depending on your plans for what happens in two months time.

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