With the sudden onslaught of the Covid-19 virus in March 2020, the Government sought to implement much publicised support measures as quickly as the virus swept the nation.
Precautionary measures soon became vital to many businesses in order to survive the pandemic and will have a lasting impact on the future of the UK economy.
As vaccine rates increase and infection rates continue to decrease, this article provides the latest updates on when the main Covid support has been/will be withdrawn and what measures, if any, will stay in place as the Government is under increasing pressure to return businesses to normality.
- Investment from the Future Fund
- CBIL loans
- Protection from eviction enforcement
- Business rates relief
- Coronavirus Job Retention (Furlough) Scheme
- Holding General Meetings and AGMs
- Coronavirus Remote Right to Work concession
- Moratorium on winding up petitions, statutory demands and wrongful trading
1. Investment from the Future Fund
What is it? Announced by the Chancellor in April 2020, the Future Fund issued convertible loans to innovative UK companies with good potential that typically rely on equity investment and were affected by Covid-19. The scheme was designed by the UK Government and delivered by the British Business Bank.
Initially, the Government made £250 million available for investment through the scheme, to be matched by private investors.
When was it withdrawn? 31 January 2021.
2. CBIL loans
What is it? The Coronavirus Business Interruption Loan Schemes were designed to support UK businesses that are losing revenue and seeing their cashflow disrupted as a result of the Covid-19 outbreak. Depending on the size, there were three types of loan: Bounce Back, CBILS and CLBILS.
When was it withdrawn? 31st March 2021
Likelihood of extension? Rather than extend, CBILS have been replaced by the new Recovery Loan Scheme (RLS) which runs until 31 December 2021. This can be used on top of existing emergency schemes such as the CBILS or Bounce Back Loans or as a new support. Available loans under this scheme range from £25,000 to £10 million and invoice and asset finance is available from £1,000. Under the RLS, loans will include both an 80% government guarantee and an interest rate cap and are available to business from all sectors other than:
- Banks
- Building societies
- Insurers and reinsurers (but not insurance brokers)
- Public sector bodies
- State funded schools.
An important difference between the CBILS and the RLS is that the RLS no longer offers the 12-month interest free period. Any business that applies for finance under the RLS will have a duty to meet all repayments from the outset of the loan.
3. Protection from eviction enforcement
What is it? The protection being provided to commercial tenants is a ban on the enforcement of all commercial evictions. Further extensions to these protections were announced on 10 March 2021.
Residential tenants are also supported by measures that ban bailiff-enforced evictions in all circumstances other than for extremely serious cases of fraud or domestic abuse. The ban on bailiff enforcement also includes mortgage repossessions. These protections assist social and private sector tenants to remain in their homes as the Covid-19 recovery roadmap continues.
When is it being withdrawn? For commercial tenants: 30 June 2021. For residential tenants: 31 May 2021 in England, 30 June 2021 in Wales and 30 September 2021 in Scotland for areas under Level 3 and 4 restrictions.
The government have stated that, as 14 days’ notice is required before an eviction can take place, no evictions are expected before mid-June other than in particularly serious cases.
Likelihood of extension? There is a potential for extension in England beyond 31 May following widespread calls for assistance from both landlords and tenants affected by the economic pressures of the pandemic. The Housing, Communities and Local Government Select Committee have called on the government to review the decision to withdraw protection and to deliver a financial package to support tenants as a priority. There has been no update from the government at the time of writing. For those based in Scotland, the Scottish government has stated that the withdrawal date is to be reviewed every 21 days following the 30 September cut off.
4. Business rates relief
What is it? As part of the range of business support measures introduced during the pandemic, targeted business rate reliefs were made available to businesses in the hospitality, retail and leisure sectors. Properties must be wholly or partly occupied to qualify for the relief. Eligible businesses receive discounts on their business rates bills for each tax year within the period and can be claimed on top of any other rate reliefs that a business is eligible for. It is worth noting that if a business decides to opt-out of business rate relief, they cannot change their mind within the same tax year. For guidance on which types of business are eligible to benefit, please see the Government guidance.
When is it being withdrawn? Rishi Sunak revisited this contentious issue in the updated Budget, where the 100% business rates relief was extended to retail, leisure and hospitality business until the 30 June 2021.
After this date, the rates will remain discounted by two-thirds until 31 March 2022.
Likelihood of extension? Many of these sectors have been the hardest hit by the pandemic and the continued support has been welcomed by many in these industries, though these latest announcements have faced criticism from larger businesses and landlords due to the introduction of a cash cap from 1 July 2021 onwards.
This cap of £2m for businesses that were required to close as at the third national lockdown on 5 January 2021 and £105,000 for business that were allowed to open. This cap applies to the whole business rather than individual stores or properties, which could result in larger chains hit harder as the country begins to recover. It is key to note that the Government has released a statement intending to legislate to rule out businesses appealing for reduced business rates bills under the existing “material change of circumstance” rules.
5. Coronavirus Job Retention (Furlough) Scheme
What is it? The scheme allows businesses to place any employees working full-time or on a PAYE basis on ‘Furlough’. This includes employees on zero-hours contracts or flexible contracts. Under the Furlough Scheme, employees receive 80% of their usual salary up to £2,500 a month paid by the government.
If an employee receives regular pay this will be 80% of salary before tax and if their pay varies, 80% will be taken from a monthly average or using data from a previous year, whichever is highest.
For an employee, being placed on furlough means that they are unable to continue to work for their employer for the duration of the furlough period and there is no guarantee of an employee being retained once the scheme ends.
When is it being withdrawn? 30 September 2021
Likelihood of Extension? Arguably the most relied upon of the Covid relief schemes, the furlough scheme has been extended until 30 September 2021. Currently it is unlikely to be extended again as the hardest hit industries begin to open up once more. From July 2021 the scheme as we know it will begin to change, with the government reducing the level of grant and asking employers to contribute towards furlough wages. Employer contributions will be 10% of an employee’s wages for any hours not worked during the months of July and August, rising to a 20% contribution for September. Fox Williams’ employment team will continue to monitor any changes to the scheme. If you are concerned about how these changes may affect your business, please get in touch.
6. Holding General Meetings and AGMs
What is it? Under company law statutory requirements, public or traded companies are usually required to hold an AGM within six months of the end of the company’s financial year. Private companies are only required to hold an AGM if the articles of association require one. The Corporate Governance and Insolvency Act 2020 (CIGA) previously provided temporary flexibility to ensure that AGMs and other General Meetings were able to be held safely during the pandemic, this included by virtual means.
When is it being withdrawn? Expired on 30 March 2021
Likelihood of reintroduction/extension? Unlikely. Though the protection has now expired, measures remain in place to ensure General Meetings and AGMs are held in a Covid-secure manner. Businesses must now consider the Health Protection (Coronavirus Restrictions) (Steps) (England) Regulations 2021 (Step Regulations), introduced on 29 March 2021 when considering holding a GM, which implement the Government Covid-19 response roadmap, as restrictions continue to ease over the current key dates of 17 May and 21 June for Steps 3 and 4.
Considering the current Covid-19 roadmap, it is unlikely that Step 4 restrictions, which will allow indoor gatherings and reduced social distancing, will be in place before 21 June 2021. Based on this information it is likely that General Meetings will still need to be held on a more restricted basis until this date at the very earliest.
Businesses should keep a close eye on the Step Regulations and the success of the roadmap to ensure all in-person meetings always comply with the Regulations.
Where CIGA provisions previously provided protection for companies restricting shareholder attendance at meetings, companies will remain protected in some ways by the common law. This means that the chair of the meeting has wide ranging powers to ensure the safety of attendees. Whilst restrictions on large gatherings remain in place, businesses will be able to exclude anyone from the meeting whose presence is not seen as reasonably necessary for work purposes. In practical terms this could mean limiting members to the chair and a quorum. Hybrid meetings may also be considered as long as this is not prohibited under the articles of association.
Where AGMs are required to meet company law requirements, the Corporate Governance Institute (CGI) has issued some guidance for public companies. The Guidance and key suggestions which may also be relevant to private companies can be found here. The CGI Guidance clarifies that companies should hold physical AGMs and General Meetings save for where their articles expressly allow entirely virtual meetings. Legal uncertainty surrounds whether a wholly virtual meeting is a valid meeting and companies concerned by this should seek advice.
7. Coronavirus Remote Right to Work concession
What is it? Employers are required by law to conduct extensive right to work checks for all new employees. Temporary adjustments were made during the pandemic on the usual requirement for original documents to be checked, allowing for checks to be carried out virtually in line with government lockdown provisions.
When is it being withdrawn? 20 June 2021, previously due to expire on 17 May 2021.
Likelihood of extension? Sacha Schoenfeld and Adèle Standard from the Fox Williams immigration team had the following to say on the topic.
“As part of the Prevention of Illegal Working obligations, all employers are required to check the right to work of all employees’ original documents in person on or before their first day of work. Due to the pandemic, however, employers have temporarily not been required to see an employee’s original document in person in order to carry out a compliant right to work check, and can carry out a remote right to work check instead. A remote check is currently done by reviewing an electronic copy of the document and holding a video call with the employee.
From 20 June remote right to work checks can still be completed via video link, but employers must view the employee’s original documents. If not back in the workplace, this will need to be done by the employee sending (e.g. by post or courier) their original documents to the employer to check ahead of the video call.Employers can still check the right to work online for those issued with a Biometric Resident Permit or granted status under the EU Settlement Scheme. The original document does not need to be checked in these circumstances.”
8. Moratorium on winding up petitions, statutory demands and wrongful trading
What is it? The moratorium was introduced to prevent creditors filing statutory demands and winding up petitions during the throes of the pandemic as well as the suspension of wrongful trading. The statutory demand and winding-up measures mean that creditors are unable to rely on statutory demands to bring winding-up petitions and are prohibited from filing winding up petitions where the company’s inability to pay is due to Covid-19.
The suspension of wrongful trading has allowed directors to continue to operate without the threat of incurring personal liability, all during a time when it would have been difficult due to the impact of Covid-19 on the company. Extensions have taken into account increased economic uncertainty.
When is it being withdrawn? 30 June 2021
Likelihood of extension? Potential but not likely. Fox Williams partner Paul Taylor has written an article discussing the options available to companies following the withdrawal of these restrictions. Click here to view.
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