To fight an impending recession, the UK Government has announced an unprecedented package of support for businesses and workers.
Stephen Welch, a Turnaround & Crisis Management specialist, outlines below some of the key initiatives and what businesses need to be doing now.
COVID-19 has brought upon us a series of unprecedented events, many governments are responding and are offering a myriad of financial, tax and legal concessions. The support packages are evolving daily. In the UK, the Government now offers a range of assistance including:
The UK Government's assistance package will continue to evolve. While the support initiatives are very welcome, it can be complex to access. Make sure you get help from your tax and/or legal advisers now.
Where businesses are choosing to defer tax debts or rates, do not forget these liabilities will ultimately have to be met in the future. Make sure that when dealing with HMRC your communications are in writing. Be prudent and seek assistance from your legal or accounting advisers to get your documentation in good order.
The Government has recently announced a temporary suspension of wrongful trading provisions. The wrongful trading law is interested in at what point the director knew, or ought to have concluded, there was no reasonable prospect of the company avoiding liquidation or administration. Even with the best of intentions, a director can be liable for wrongful trading.
The temporary suspension will reduce pressure on Board’s managing a distressed business. However, dealing with such issues and business solvency can be complex and unfamiliar territory for many directors.
Where a business is facing financial distress or uncertainty, keep in mind the following for good board practice:
It is well advised to seek, financial, legal and insolvency advice in respect of Directors’ duties and how these can be satisfied in this challenging time.
The Board and Management must maintain a focus on protecting a business’ liquidity. Where Government support schemes are being accessed, make sure your CFO thoroughly understands the mechanisms to access support and the associated timings.
Your CFO should have the following questions at the front of mind:
The new assistance packages being offered by the UK Government are there to help stabilise UK business. Parallel to accessing these schemes, businesses need to revisit their messaging to internal and external stakeholders. It is a nervous time for customers, suppliers and employees. Now more than ever there is a need to develop and execute a well-controlled communications plan. Inform your network about what your business is doing to continue to trade, even if the messages are short and focus on the short-term.