Coronavirus: accountants play ‘key role’ accessing emergency funding
19 March 2020: ICAEW has welcomed the Chancellor’s pledge to provide a £350bn funding boost to help the UK economy weather the debilitating effects of coronavirus and urged accountants to communicate and signpost the measures to business.
At least £330bn of loans has now been made available to businesses by the government, in addition to the £30bn announced in last week’s budget.
Chancellor Rishi Sunak has said the government would provide “whatever is needed” should more funding be needed. “If demand is greater than the initial £330bn pounds I’m making available today, I will go further and provide as much capacity as required,” he said on Tuesday.
Among Sunak’s financial package is an extra £20bn of business rates support and grant funding to alleviate pressure on struggling firms, granting all retail, hospitality and leisure businesses in England a 100% business rates break for the next 12 months.
Larger firms will be helped through the government’s new lending facility with the Bank of England, while the lending limits for its Coronavirus Business Interruption Loan Scheme have been raised from £1.2m to £5m, with the first six months interest free.
Iain Wright, ICAEW’s Director for Business and Industrial Strategy, commented that the accountancy profession has a key role to play in helping businesses navigate their way through the perils of the crisis.
“I think ICAEW members, through running businesses and dealing with clients through their practices, have a strong idea as to what is happening in the real world. The immediate priorities are reassuring staff and ensuring that sufficient liquidity is kept in the system to help cash flow in the face of an abrupt fall in demand.
“What I would ask chartered accountants in both business and in practice is to communicate and signpost these measures from government and feed back to us what is working as we have an open line to government. That will be crucial.”
As the loan guarantees will be channelled through the British Business Bank into commercial banking and the reliefs on business rates will be administered via local authorities, “that is where we should be advising businesses to talk to”, he added.
Wright, like the Chancellor, is acutely aware of the unprecedented nature of the pandemic. “A week ago, we thought that £12bn was going to be sufficient to deal with the coronavirus outbreak, but now just six days later that has moved to £330bn. This just shows the scale and speed with which it is moving,” he said.
Nila Khan, ICAEW business advice manager for practice, said: “Businesses will be looking to the ICAEW members for reliable advice. We should stay close to our clients, telling them not be scared, to reach out for support and reassure them that this is something they can trade their way through.”
In other measures announced on Tuesday, mortgage lenders have agreed to support people impacted by Covid-19 through a payment holiday of up to three months.
The Chancellor confirmed that its advice to avoid pubs, clubs and theatres is enough for businesses to trigger an insurance claim if they have the right business interruption cover for pandemics in place, but it is believed most ‘typical’ policies do not cover this.
But he added that as many smaller firms don’t have such insurance, the government is making cash grants of £25,000 per business available.
Help for the food industry will be delivered through the relaxation of planning regulations to allow pubs and restaurants to provide takeaways without a planning application.
And in a boost for IR35 contractors, changes due on 6 April 2020 will now be pushed back to 6 April 2021, meaning that the existing off-payroll working rules will continue for a further year.