Covid-19 update

What funding support is available for businesses

We want to make sure every single business knows where to go right now to help them through the challenges caused by coronavirus. We might not be able to advise but we can point you in the right direction.

• The Coronavirus job retention scheme that will cover 80% of furloughed worker’s income up to £2,500 a month.
• The £330bn of support announced by the chancellor will be made available through banks. Speak to your bank or lending provider about access to the scheme.
• The Coronavirus Business Interruption Loan Scheme (CBILS) is a loan up to £5m interest-free for 12 months to help businesses with the impact of Covid-19. This is accessed through the British Business Bank.
• The Coronavirus Large Business Interruption Loan Scheme (CLBILS) has been extended so that the loan size scheme will be increased from £50m to £200m. Companies receiving help through CLBILS and the Bank of England’s Coronavirus Corporate Financing Fund will be asked to agree to not pay dividends and to exercise restraint on senior pay.
• New “bounce back loans” will give the UK’s smallest businesses will have guaranteed access to loans of up to £50,000 within 24 hours of applying. 100% guaranteed by the Treasury and available from 4 May.

• The new coronavirus Future Fund scheme will issue convertible loans between £125,000 to £5 million to UK innovative companies, subject to at least equal match funding from private investors. To qualify the business would need to have raised at least £250k in funding rounds over the last 5 years.

• The grants for smaller businesses of up to £10k will be channelled through local authorities. If you think you may need this support, speak to your local authority.
• UK registered businesses can apply for a share of up to £20 million grant for innovation in response to new and urgent needs as a result of the Covid-19 pandemic.
• Business rates are cut and will automatically be applied.
• Most banks have launched a working capital support facility so speak to them if you need this.
• VAT payments are delayed for 3 months.
• Cash grants of up to £25,000 for the retail, hospitality and leisure businesses. Your local authority will write to you if you are eligible.
• Don’t forget the long-standing R&D tax credit scheme which could provide a cash injection

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How will the Coronavirus Business Interruption Loan Scheme (CBILS) effect my R&D tax credit claim?

We have received several queries from concerned clients and accountants highlighting that the CBILS is state aid and wondering how that impacts R&D claims. HMRC have said:

The Government has notified CBILS as a State aid under the European Commission’s new Temporary Framework for COVID-19. The measure is a fully notified aid, so the restriction on receipt of other State aid (s1138(1)(a) CTA 2009) potentially applies, i.e. if the CBILS relates specifically to the company’s R&D expenditure [on a project] rather than being intended more generally to support the company.

Therefore providing the loans are provided to generally support the company and are not provided to fund a specific R&D project then there will be no impact on the R&D claim. We very much doubt that there will be any clients or claimant companies receiving funding for a specific R&D project under the CBILS scheme and therefore not something we envisage becoming an issue for any companies R&D claim. We will continue to monitor the situation and as we are members of the Research and Development Consultative Committee (RDCC) we will be able to feedback to HMRC through that channel.

Also for further clarity this also only applies to anyone claiming under the SME scheme, RDEC claimants will remain unaffected by this.

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The financial benefit of claiming R&D tax credits, more important now than ever

If you are a company who can take the R&D tax benefit as cash, it will be a vital cash injection so making a claim is more important than ever.

Businesses and Accountants will be spinning many plates in the coming months so making sure you have other advisors around to lighten the load is crucial.

HMRC will continue to pay out tax credits even if you have delayed payments to HMRC due to Covid-19. Now is the time to be proactive and get ahead by starting the claim processes as soon as you can. We will make this processes as smooth as possible and will minimise the time you need to spend on this – leave it to us and you can focus on steering the ship.

R&D activity helps to protect jobs across the company. 80% of R&D tax claims are made up of people’s time so if you have resources that cannot be utilised in the normal way, think about if they can be deployed into development roles to help when the tide eventually turns. A percentage of these costs will be able to be reclaimed through R&D tax relief.

Should any companies need the cash sooner, there are R&D tax short term loan options available. We work with Rocking Horse Group and can facilitate the introduction should this be an option you wish to explore.