Robin Dandie: Rural businesses feel pain of the crisis
Robin Dandie, partner and head of rural at Johnston Carmichael, discusses the impact of the coronavirus pandemic on farming and rural businesses.
At the beginning of the lockdown it seemed like much of the agricultural sector would be relatively unaffected, but within a couple of weeks it has now become clear that farming and rural businesses are feeling the pain of the coronavirus crisis and this could last long after the lockdown measures have been lifted.
Businesses with diversified activities such as farm shops, restaurants, holiday homes and so on have been shut down, but most of these enterprises should be able to claim the £10,000 or £25,000 grants through their local council.
Having said that, there have been cases of businesses, badly affected by the coronavirus crisis, that have not been able to claim a grant as they do not meet the qualifying criteria. In light of this, membership organisations are continuing to lobby government to give examples of businesses that are being omitted from this support and hopefully this will bring changes to the rules soon.
The Coronavirus Job Retention Scheme (CJRS), under which the government will cover employee costs up to 80% or a maximum of £2,500 per month, has been adopted by a wide range of employers. HMRC will launch the CJRS portal today to allow employers to register their furloughed employees, with the payment to follow.
Originally it was stated that employees who were furloughed could not take up other employment, but it has now been clarified that those on furlough can work for another employer, and this gives some hope to those businesses requiring seasonal labour such as fruit farms.
Where a business has taken up this scheme it is important that they adequately document their calculations and details of their claim as HMRC may ask to review this in the future.
The government also set up the Coronavirus Business Interruption Loans Scheme. The first 12 months of interest and any lender-levied fees will be paid by the government and ultimately the loans will have to be paid back.
A scheme to give support to the self-employed has been introduced also and further guidance on this has just been released. HMRC will review the past three years of tax returns to calculate support worth up to 80% of average monthly trading profits, up to a maximum of £2,500 per month.
This will be available to those who earn the majority of their income from self-employment and whose annual profits are less than £50,000. For farmers, HMRC will look at the amount of profit before any averaging claims. HMRC is aiming to contact eligible taxpayers by mid-may and will ask for an online form to be completed as part of the process.
Finally, HMRC has announced that businesses paying VAT can defer their current liabilities till the end of the year. Personal tax payments due by July 31 are deferred until January 2021 and a time to pay arrangement is available, on a case-by-case basis, for those businesses struggling to pay PAYE or corporation tax.
At the time of writing there has not been any support measures put in place specifically for the agriculture sector. For businesses that are feeling the financial effects of the lockdown, keeping a positive cash flow is key to survival. Make sure all the possible support measures have been claimed and watch out for further announcements as they arise.
Read all of our articles relating to COVID-19 here.