Legal News | 2.04.20
Covid-19 Update for Companies
Companies House extends annual accounts filing deadline
Where a company has been affected by Covid-19, the company can apply before the company’s deadline to extend the period for filing. An automatic three month extension will be applied, providing their application is made before the company’s filing deadline. It is unclear if a company has already extended their filing deadline, or shortened their accounting reference, whether that company will be eligible.
Companies House are also urging all companies to make their necessary filings online.
HMRC- Stock Transfer Forms and e-signatures
HMRC have announced that stock transfer forms and other transfer instruments should not be posted to HMRC at this time and should be sent by email to email@example.com. At this time HMRC will accept e-signatures on forms. It is also important to highlight that any forms recently posted should also be resubmitted vie email. Any payments should be made electronically and details of the payment included in the email with the stock transfer form. Any cheques will not be banked.
Deferment of VAT
Companies can defer VAT payments between now and the end of June 2020. This is an automatic offer with no application process. Companies will have until 2020-2021 financial year to pay the accumulated liabilities.
Companies holding Annual General Meetings (AGMs)
On 28 March 2020 the Government announced they would introduce legislation to enable companies to hold AGMs safely and in accordance with the restriction on movement and gathering measures which were introduced to address the spread of Covid-19. Companies will be extended greater flexibility to hold such meetings online or postpone their AGM.
The Government is offering a Business Interruption Loan scheme. The scheme offers up to £5 million for small and medium-sized enterprises through the British Business Bank. The Government will guarantee up to 80% of the loan and the first six months of interest will be paid by the Government.
Business Rates Holiday
The Government are introducing a business rates holiday for retail, hospitality, leisure businesses and nurseries in England for the 2020 to 2021 tax year. Properties which will benefit from the scheme include nurseries, shops, restaurants, cafes, drinking establishments, cinemas, live music venues, properties for assembly and leisure and properties for hospitality, such as hotels, guest & boarding premises or self-catering accommodation.
The Government is also introducing the Small Business Grant Scheme, providing a one-off grant of £10,000 to support small eligible businesses that already pay little or no business rates because of small business rate relief, rural rate relief and tapered relief.
Wrongful Trading Provisions
On 28 March 2020 the Government announced that they would temporarily suspend the wrongful trading provisions under insolvency law from 1 March 2020 until 31 May 2020.
What is wrongful trading?
Under insolvency law, directors can be personally liable to make a contribution to the insolvent company’s assets in an amount the court thinks is proper in light of the loss suffered by the company’s creditors due to wrongful trading. Directors have a duty to take every step to minimise the potential loss to a company’s creditors where there is no reasonable prospect of it avoiding insolvent liquidation or administration.
Why has this change been introduced?
The suspension is intended to ensure that, during the uncertainty surrounding Covid-19, directors can make a decision to continue to trade and incur additional debt, including the new Government financial initiatives, without the threat of personal liability in respect of wrongful trading. The laws in respect of fraudulent trading, transactions defrauding creditors, misfeasance and director disqualification remain in force to deter misconduct.
Company restructuring tools
On 28 March 2020 the Government stated its intention to introduce legislation as soon as possible to enact new insolvency restructuring tools, which will include a moratorium (a temporary prohibition of an activity) for companies to allow them breathing space from creditors enforcing their debts for a period of time while the company seeks a rescue or restructure. The measures will also protect essential supplies, such as energy and raw materials, while the company puts a new restructuring plan in place. Such a plan will bind creditors and suppliers to enable the company to continue trading during the moratorium. The plan should include safeguards for creditors and suppliers to ensure they are paid while a solution is being sought.
If you have any questions on the content of this article or for assistance with any commercial or corporate matters please contact a member of the Commercial Team on 01380 733300 or at firstname.lastname@example.org.
Last updated 02/04/2020