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Financial Support Update 3 April 2020

As we end the third week of the crisis impacting the UK, some issues are becoming clearer and most of us are getting used to the notion that things are likely to be this way for some while yet.

This briefing note provides updates and commentary on the following issues:

  • Small business grants: update
  • Crisis management: cocooning
  • Self-employment Support Scheme
  • Other action
  • Scams
  • And finally


A colleague was kind enough to circulate information yesterday confirming the status of grants with various councils. There is a wide variation in the way different councils are dealing with the issue.

It seems that Folkestone & Hythe and Ashford already have a link on their website, Swale and Medway say they will be contacting businesses in the next few days and Canterbury, Thanet and Dover say they will be writing or emailing businesses after next Tuesday. We know of at least one company with offices in London who have already received their grant payment!

We suggest you make sure your council have your email address and keep checking for status.

Corona Business Interruption Loan Scheme (CBILS)

The scheme has seen some criticism in the media for being slow and for not delivering funds to businesses that need it most. Whether or not you regard such criticisms as fair, it is clear that the banks have been overwhelmed with applications.

If you have any doubt about your cash flow position, we recommend you consider whether to apply for funding sooner rather than later. Ask if you need help or guidance.

Crisis management: cocooning

The crisis introduced us to the term “furlough”. It seems we will soon be using another new term: “cocooning”.

Cocooning refers to the process of suspending your company where turnover has dropped to zero (or close enough to zero as to make trading pointless in the current climate). Clearly, the decision to close is a difficult one but may be unavoidable or the most pragmatic action to protect the company and to give a reasonable chance of survival. The cocooning process invariably includes a range of actions such as:

• furloughing staff
• notifying customers and suppliers
• cancelling direct debits wherever possible
• speaking to HMRC to defer tax payments (remember that , for now, VAT is automatically deferred but PAYE and corporation tax are not)
• where appropriate, speaking to the landlord and local council

As you will know from previous updates, it now seems that directors of cocooned companies can be furloughed. This status will be valid even where the director carries out administration or management tasks during the cocooning period provided the director does not do any revenue generating work. Clearly this is a grey area, so we urge all directors to be mindful of these rules.

We also remind you that the minimum furlough period is three weeks: if any staff are furloughed for a shorter period, HMRC will not pay the support grant for those staff.

Self-employed Support Scheme

We have been preparing calculations of grant entitlement for clients this week. Although we have covered this in previous updates, it is worth emphasising a few points:

• We understand that the Scheme will be operated by HMRC and that eligible individuals will be contacted by HMRC. Given that the grant will be based on submitted tax return information, it is also our understanding that HMRC will be calculating the grant and issuing payments, but the specific details of how this will work are not yet available.

• You must have been self-employed in 2018/19 and 2019/20 and intending to continue in self-employment in 2020/21. You must also have suffered a loss of business as a result of the corona crisis.

• You must have filed a tax return for 2018/19. If you have not yet done so (and some of you have not), you must do so by 23 April or you will lose any entitlement to support.

Other actions

In these challenging times, we are sure that everyone will be taking action to protect their business.

We remind you of our “tough times checklist” which you can find here

We also encourage everyone to keep monitoring critical information such as:

  • Three month forward cash flow forecast: adopt reasonable assumptions on remittances. Identify any potential problems early
  • Debtors: keep a close eye and keep in contact with customers
  • Suppliers: keep them informed as to payment status, particularly if you need to defer or spread payments because of cash flow
  • Financing & loans: consider whether to discuss the possibility of a payment holiday
  • Grants and other support measures: keep monitoring for updates
  • Premises: keep your landlord informed as to payment status. Consider whether to discuss possibility of payment holiday. Speak to the council about possible business rates exemptions.
  • Remuneration: remember that dividends are tax efficient but can only be paid from cumulative reserves. If reserves are low, you should switch to salary-based remuneration

If you need guidance or need to discuss any of these issues, please let us know.


We are seeing reports of increased email scams, including fake emails from HMRC. These range from familiar ones such as unexpected tax refunds to offers of emergency grants and loans. Always remember that if it seems too good to be true, it usually is. If in doubt, delete.

And finally

We continue to receive feedback and suggestions from clients and contacts. One interesting development we have seen is some engagement with local MP’s who seem keen to get involved, especially in relation to eligibility for grants. If you are experiencing difficulty or wish to express an opinion on the coverage of the current support from government, we suggest you get in touch with your MP. It may not result in immediate change but could influence how we as a country move forward in this crisis.

Check out other information on

As always, we remain here to help and support you as far as we can. If you need assistance or further guidance, please let us know.

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