Policy calls to government
ACCA runs a weekly tracker to monitor the changing business outlook and urgent need for support. We are taking views from members here to inform our ongoing policy response.
ACCA UK’s policy team is working to develop recommendations and lobby for government policy to support members and the businesses they advise. The team maintains close relationships with a number of government departments and ministers to ensure that members have clear and relevant guidance. We are taking a broad range of views and insight by email from members to shape lobbying.
General comments and calls for action
1. Support for small incorporated entities
ACCA welcomes any opportunity for a full and frank discussion on the interactions between tax, employment status and company law. However, we believe that at this time protection of the public interest favours an extension of support to viable incorporated businesses over letting many thousands slip through the net of support resulting in cross-industry company failures.
From an economic and societal perspective it makes sense to target support for businesses on the basis of their function as economic actors, rather than their legal form. In other words, incorporated businesses that have returned annual income to the directors in a different format to sole traders or partnerships should not be disadvantaged. Government should consider how support packages could be replicated for directors of SME incorporated entities, naturally taking into account the cap on support that exists for employees and the unincorporated self-employed.
Therefore, ACCA proposes the extension of the Coronavirus Job Retention Scheme (CJRS) to cover company owner-managers, with capped support covering earnings up to £2,500 per month in line with packages for employees and the self-employed.
HMRC information exchange should allow for the department to identify dividend flows, with company directors providing self-assessment and financial records alongside applications to certify eligible dividend income. ACCA understands there is some complexity surrounding such a scheme; however, at this time the operational resilience and economic contribution of those genuinely in need is a priority.
2. Efficient delivery of Coronavirus Business Interruption Loan Scheme (CBILS)
Government must continue to work closely with lenders, to ensure they are able to strike the right balance between credit risk analysis and timely delivery of funds. The government has the opportunity to act as a consistent and responsive intermediary to ease terms for funds that could be life or death for SMEs concerned about cashflow.
A recent survey of ACCA practitioners suggested that over a third of clients were regularly struggling to access cash to meet immediate liabilities during the lockdown period. Reports from members have highlighted extensive application processes for Coronavirus Business Interruption Loans often being put on hold by lenders for weeks at a time, being offered exceptionally high interest rates and requiring a level of detail businesses are unable to provide, such as future revenue forecasts that would be subject to the development of the national response. Lenders must be encouraged to take a collaborative approach to the application process, reducing the burden on businesses and their own processing times to ensure cash is released promptly to the thousands of businesses that require urgent support.
To aid cashflow for those concerned about short-term liabilities, fixed costs and staff costs, government and lenders may consider an amendment to the CBILs process to provide immediate liquidity support in the first stage of application, which allows firms to draw down a percentage of their annual revenue immediately on an interest free basis until the entire facility is secured.
Refinancing of existing debt is key to managing cashflow for a majority of businesses threatened in the immediate term by the disruption. CBILS should also be extended to any Financial Conduct Authority-regulated provider to bolster the number of deals being agreed and economic stimulus is used to maximum effect.
3. Streamlining applications via the Coronavirus Job Retention Scheme
ACCA supports HMRC’s move to support employers to keep employees on the payroll throughout the Covid-19 outbreak. Feedback from members notes that the current system creates complexity for those dealing with multiple pay dates – for example, where a portion of employees are paid weekly rather than monthly. Allowances for those with varying pay dates to create two submissions grouping claims into the relevant payroll periods would provide much-needed clarity for employers trying to claim through the system.
The employer response to the Job Retention Scheme has been positive and many ACCA members are working extended hours to complete applications on behalf of thousands of employees. Currently the threshold for eligibility to submit claims via spreadsheet is set at 100 employees, with those below manually filing employee details and names. Members are struggling with the manual input of each employee's details required for each claim under this threshold; extending spreadsheet submission to include those from 30 employees would greatly improve the application process for many SMEs.
4. Protecting Innovative Investment – Future Fund
ACCA supports moves to find new finance facilities for innovative enterprises and projects via the Future Fund. However, successful adoption of this scheme will be reliant on the eligibility of investments made via the Enterprise Investment Scheme (EIS) and Seed Enterprise Investment Scheme (SEIS) as ‘matched funds’, not least because many of the innovative businesses the fund aims to support will already be in receipt of qualifying funding under these schemes (many via matched funds from regional initiatives) and have built relationships with investors on this basis. Currently, under the Future Fund innovative businesses would be unable to seek matched government funding for money raised through an existing major government mechanism aimed at encouraging innovative investment.
5. Extending time to pay
HMRC should move to relax time to pay measures and suspend all missed deadline penalties until business-as-usual activity resumes, giving businesses certainty that if their accountant or finance team need to self-isolate or take time off, they will not be penalised.
Further, relaxation of rules must be extended to Companies House to grant extensions to filing deadlines for as long as necessary for businesses hit by Covid-19 disruption, bypassing the three-month limit on extensions and automatic penalties that would be applied across the board.
Adopted measures and policy developments
ACCA’s recommendation to postpone the introduction of the off-payroll working rules for a year was adoptedl We look forward to resuming practical conversations with government in due course on the application of off-payroll rules.
ACCA was able to raise the issues surrounding CBILS with government departments, referencing delays to delivery of funds, personal guarantees and challenges of raising smaller loan amounts. Some of these concerns have been reflected in the Bounce Back Loan Scheme, with interest and payment free loans with 100% guarantees by the government. ACCA plans to continue to work with lenders and government on CBILS and the Bounce Back Loan Scheme to feed back comments on delivery.
Since the introduction of the Coronavirus Job Retention Scheme there has been a high volume of member queries relating to the furlough and continued statutory duties of directors. ACCA was able to request additional clarity from government departments to resolve member queries. Official guidance now states that ‘where furloughed directors need to carry out particular duties to fulfil the statutory obligations they owe to their company, they may do so provided they do no more than would reasonably be judged necessary for that purpose’. Detailed guidance and factsheets are available on ACCA UK coronavirus hub.
ACCA technical and policy support
ACCA is operating within official guidelines to support our members and other stakeholders, and as far as possible continue business as usual. Recognising that members and businesses are all in this together and sharing best practice will be essential.
ACCA has taken steps to support its 219,000 members and 527,000 students all over the world via an online hub, with resources and updates for students, employers and staff as well as guides to aid business planning as well as insights from members in international markets.
In addition, ACCA’s Technical Advisory services will continue to be available to members in the UK via the email helpline.