Solicitors High Wycombe, Author at Reynolds Parry Jones LLP

Delayed, but not cancelled – company responsibilities during lockdown

Delayed, but not cancelled – company responsibilities during lockdown

Company directors will be focused on the bottom line and corporate governance as they continue to navigate their way through the pandemic lockdown and the Government’s route map towards business as usual. Many will be worried at the risk of straying into territory where they cannot pay their bills, or in meeting reporting requirements, but Government concessions should relieve some of the stresses in the short term.

Compliance with the Companies Act 2006 requires directors to exercise reasonable care, which includes ensuring that the company does not trade while insolvent. This will arise where a company
is unable to pay its debts as they fall due, or in situations where liabilities are greater than assets, and directors are under a duty to minimise potential losses to creditors. If no action is taken, a director may be wrongfully trading, which carries unlimited personal liability.

The UK Business Secretary announced a temporary three‐month suspension of wrongful trading provisions early in the lockdown, so company directors could continue to trade and pay staff without the threat of personal liability. Other duties remain unchanged, and a director will be liable for any other breach, including the duty towards the company’s creditors if there is a question of insolvency.

Said corporate expert Robert Hill of Reynolds Parry Jones LLP: “The challenge of balancing the books during the current crisis is stretching even the most robust companies. Alongside, directors are justifiably concerned about fulfilling their responsibilities, acting diligently and in the best interests of the company. One issue is where they stand if cash flow has been hit and company solvency is in question. The Government’s intervention may have allayed some immediate concerns about cash flow, but it is no substitute for professional insolvency advice and indeed this special relaxation of the rules on wrongful trading will currently expire at the end of May.

“It’s important to be clear that these concessions are not about reframing corporate responsibility; it’s more about breathing space.”

Other responsibilities which can be deferred during the pandemic include some filings with Companies House, gender pay gap reporting and the publication of modern slavery statements.

Changes to filings with Companies House:

  • A three‐month extension for filing year‐end accounts. This extension must be applied for before the filing deadline, but is automatic and immediate on request. Where late filing has already occurred and is due to the pandemic, there will be a sympathetic response and there may be a break before penalties must be paid, or payment plans agreed.
  • Temporary changes to strike‐off policy. Where an application has been made for voluntary strike‐off this will be published in the Gazette, but further action delayed to protect those who may have objections. Where strike‐off is due to failure to file, Companies House will continue to write to companies but will not publish a Gazette notice. This does not apply to those who are being dissolved through insolvency or where the filing delay is reported as being due to the pandemic.
  • Emergency filing service. This will enable a number of paper‐only registrar’s powers forms to be uploaded for submission. This will cover a small selection of forms which do not currently have an online option to allow requests for rectification and removal of information on the register. This will be extended to include more documents and payments in future.

Again, these policy changes are temporary and will be reviewed as the pandemic develops.

Gender Pay Gap:

The Government Equalities Office (GEO) and the Equality and Human Rights Commission (EHRC) has suspended gender pay gap reporting for 12 months. The rules apply to businesses and organisations with over 250 employees and while no data will be required until 2020/21, businesses can voluntarily complete the reporting once the pressures of the lockdown are over.

Modern Slavery:

Under section 54 of the Modern Slavery Act 2015, larger companies with a turnover in excess of £36m and other criteria are required to publish an annual modern slavery statement. This sets out
what steps are being taken to identify and address potential risks around modern slavery. During the pandemic, the Government has announced that businesses which need to delay the publication of their modern slavery statement by up to 6 months due to coronavirus‐related pressures will not be penalised. When the statement is published, businesses should set out the reason for any such delay.

But even where a business needs to delay publication, the Government has emphasised that organisations must continue to tackle the risk of modern slavery in their operations and supply
chains and recognise the increased potential for labour exploitation during the pandemic.

Added Robert Hill: “This is another example of a loosening on corporate reporting during the pandemic, but there is no scope to let things slide. Businesses will need to use their next modern slavery statement to demonstrate how they monitored risks during any such delay and adapted their activities and priorities in response.

“And even though gender pay gap reporting has been fully suspended for the year, with no catch‐up requirement for 2019/20, most companies will have compiled the data during the year. Recognising that this is seen as an important measure of their approach to gender equality the expectation is that they will wish to catch up with reporting, if they have not already done so.”

Getting ready for when the office lights go back on

Getting ready for when the office lights go back on

Office spaces with communal areas and shared facilities will be in the frontline when the next stage of lockdown is lifted, and staff return to the workplace. Managing the return and preparing the building for what is being called the ‘new normal’ will demand collaboration and co‐operation between landlords and tenants, staff and visitors.

Some of the immediate concerns are around managing the flow of people in common areas, as well as within their defined workplaces, while keeping up with continually changing guidance. Action will also need to focus on how to manage risk through the building environment itself, such as cleaning processes.

The shift in recent years towards communal, shared working spaces, where open plan offices are shared by multiple organisations using group desk arrangements, brings added pressures for co‐existence. Different micro businesses may have wildly differing attitudes towards sharing their immediate space while Covid‐19 remains a threat, and here landlords will need to have a clear strategy.

Considering traffic flows and identifying the spaces likely to provide the highest risk of contamination is the starting point for a ‘new normal’ building management strategy. This should identify ways in which staff and visitors can best be protected, and how to reduce surface transmission through increased cleaning alongside these new behaviour protocols.

Discussions between landlords and tenants can help towards creating a staggered timetable for workers to arrive and leave a building to avoid over‐busy common areas and also to consider how to meet social distancing standards when moving around or working in the building, which could include one‐way systems and categorising how and when lifts or stairs may be used, as well as protective screens where appropriate.

For tenants, preparing for the re‐opening of offices is likely to demand intensive planning around which staff are going to be returning, if the necessary social distancing is to be achieved within existing office space. It is likely to lead to requests for continued homeworking for many staff.

Equally, where landlords employ staff for common areas, they will need to consider how they fulfil their obligations to keep these employees safe as they will be on the front line in the number of physical interactions they have each day and it is likely to include some form of PPE ‐ personal protective equipment ‐ for reception and security staff.

Where buildings have been closed during the lockdown, building managers will need to ensure safety checks are carried out on all equipment, and servicing undertaken where necessary, to prepare the building for use.

Throughout, it’s important to ensure that decisions are made based on the latest guidance, such as the latest information from the Government, Public Health England and the Health and Safety Executive. Also, insurance should be checked as the building’s insurers may have special requirements on keeping the building safe as it is brought back to active use.

Close liaison between the landlord, building management staff and tenants is essential to address building management issues such as these, but equally important is facing up to any lease or service charge‐related problems, ideally to avoid them becoming the subject for major dispute at a later date.

The Government has already provided some protection for commercial tenants, saying that anyone who cannot pay their rent because of coronavirus will be protected from eviction if they miss a rental payment in the three months from March. But this safeguard is not an alternative to discussing the situation with the landlord. While many tenants will have agreed a payment holiday during the lockdown, it’s likely that full rent will be due, including the backlog, once offices re‐open, so if a payment plan needs to be in place, this should be discussed sooner rather than later so both sides know where they stand.

Where landlords incur additional costs, such as specialist cleaning, measures to support social distancing or extra security, this may be recoverable from tenants through service charges, but leases need to be checked carefully to be sure any potential charges are in line with what is set out there, as well as being ‘reasonable’. Again, up‐front discussions with tenants will help avoid arguments later.

IR35: Government announces one year delay due to coronavirus

IR35: Government announces one year delay due to coronavirus

The Government has announced that the IR35 tax reforms which were due to be implemented in April 2020 have been delayed for a year because of the ongoing coronavirus outbreak.

The changes to off-payroll working rules, which would see all medium and large-sized private sector employers become responsible for deciding a contractor’s employment status, will now come into effect on 6 April 2021.

The decision was announced by Chief Treasury Secretary, Steve Barclay and comes alongside a broad package of measures from the Treasury in a bid to protect the economy during the outbreak.

It follows significant opposition from business leaders to the announcement in the Budget that the reforms were still set to go ahead next month.

The Government has reiterated that the decision was a deferral, not a cancellation and they remain committed to reintroducing this policy on the new date.

Further information is expected to be published in the coming days regarding the IR35 reform delay, as well as the other measures which are being introduced to support businesses.

If you require help or advice regarding the IR35 reform delay then contact a member of our expert team today.

COVID-19 – The importance of updating your Will

COVID-19 – The importance of updating your Will

The current coronavirus outbreak is an obvious concern for many, and the unfortunate reality of the situation is that some of those people who will die as a result of the virus will not have made a Will.

A recent report found that the demand for Wills has increased by 30 per cent, a key indication that many are now thinking about estate planning.

For those that do not have a Will, there is the risk that their final wishes may not be communicated. In the UK, individuals can leave their estates to whomever they choose, except for in certain situations where the person making the Will lacked the necessary capacity, or where an eligible party applies for reasonable financial provision to the court.

You must consider whether or not you or a family member need to make a Will or update an existing Will to ensure that your wishes are carried out.

Consideration will have to be given to several aspects, including the following:

  • What assets are owned and debts due?
  • Is the family home owned in one or both of your names?
  • Does the money in joint bank accounts belong to you both equally?
  • Are there children from a first marriage or relationship to consider?
  • Is there an adult child you would like to provide for or exclude entirely?
  • Is there a better way to arrange your affairs for tax purposes?
  • Do you want to make charitable gifts?
  • Do you want a provision that a beneficiary who challenges your Will forfeits their gift?
  • Are you sufficiently capacitated to make a Will?

You may also need to consider whether a Lasting Power of Attorney (LPA) is necessary for you or a loved one to ensure that provisions are in place should you lose the capability to make important decisions.

For help and advice on matters relating to Wills and LPAs, contact our expert team today.

Eligibility restrictions for small businesses – Enterprise Finance Guarantee scheme

Eligibility restrictions for small businesses – Enterprise Finance Guarantee scheme

The Enterprise Finance Guarantee (EFG) supports small businesses by providing finance to smaller businesses that cannot obtain finance from their lender because of insufficient security. The British Business Bank has now announced that a number of eligibility restrictions are in place because of the European Union’s (EU) state aid rules.

Businesses can apply for the EFG through approaching an EFG accredited lender, and to be eligible, businesses must:

  • Be UK based, with a turnover of no more than £41 million per annum
  • Operate within an eligible industrial sector (a small number of industrial sectors are not eligible for support)
  • Have a sound borrowing proposal and robust business plan, but inadequate security to meet a lender’s normal requirements
  • Be able to confirm that they have not received de minimis-State Aid beyond  £185,000 equivalent over the previous three years

However, further eligibility restrictions now apply, because of the EU’s de minimis-State Aid rules. The main restrictions are as follows:

Not eligible

  • Banks & Building Societies
  • Insurance & Reinsurance
  • Primary education
  • General secondary education
  • Activities of business, employers and membership associations
  • Activities of trade unions
  • Activities of religious organisations
  • Activities of political organisations
  • Activities of households as employers of domestic personnel
  • Undifferentiated goods and services-producing activities of private households for own use

Eligible – provided no ONS public sector classification of borrower or group

  • Combined facilities support activities
  • Public administration and defence, compulsory social security
  • Pre-primary education
  • Tertiary education
  • Hospital activities & other human health activities
  • Residential care activities
  • Social work activities without accommodation for the elderly and disabled
  • Other social work activities without accommodation
  • Library and archive activities
  • Operation of historical sites and buildings, and similar visitor attractions

Eligible – reduced threshold

  • Growing of non-perennial crops – £15,000
  • Growing of perennial crops – £15,000
  • Plant propagation – £15,000
  • Animal production – £15,000
  • Fishing – £30,000
  • Aquaculture – £30,000
  • Processing and preserving of fish, crustaceans and molluscs – £30,000
  • Mixed farming – £15,000
  • Support activities to agriculture and post-harvest crop activities – £15,000
  • Freight transport by road – £100,000

Eligible

  • Activities of financial services holding companies

For more information on the EFG and the eligibility restrictions, go to https://bit.ly/2vNqTRS

Children of separated parents “can move between households”, confirms minister

Children of separated parents “can move between households”, confirms minister

Children of separated parents can move between households during the coronavirus lockdown, it has been confirmed.

It comes after minister Michael Gove reportedly “U-turned” on advice given to families following the introduction of strict new laws designed to keep people indoors.

Under the new rules, people should only be leaving the home for four reasons: to exercise once a day, to travel to and from work where “absolutely necessary”, to procure essential supplies, and to address medical or care needs.

Mr Gove initially indicated that children moving between different houses – for example, where parents have shared custody of a child – did not qualify as an “exceptional” circumstance.

In a tweet, however, the MP adjusted the Government’s position in regard to children moving between households, stating that this “may be necessary when children who are under 18 move between separated parents”.

“I wasn’t clear enough earlier, apologies”, he tweeted. “This is permissible and has been made clear in the guidance.”

The Government guidance now says: “Where parents do not live in the same household, children under 18 can be moved between their parents’ homes.”

For help and advice on matters relating to family law, contact our expert team today.

Government to pass legislation to protect commercial tenants from eviction

Government to pass legislation to protect commercial tenants from eviction

Commercial tenants who cannot pay their rent because of the coronavirus will be awarded extra protection from eviction, it has been revealed.

The amendment to the Coronavirus Bill on commercial leases will apply to England, Wales and Northern Ireland and will last until 30 June 2020.

According to Government guidance, landlords and tenants should attempt to reach a voluntary arrangement about rental payments should a tenant feel unable to pay their bills. However, the new rules will give commercial tenants added protection from eviction.

Commenting on the move, Communities Secretary, Robert Jenrick, said: “We know many commercial landlords are already setting a great example by working closely with tenants and offering rent deferrals or holidays.

“However, these new measures will provide reassurance to businesses struggling with cashflow and ensure no commercial tenant is evicted if they cannot pay their rent because of coronavirus over the next three months.”

Mike Cherry, Federation of Small Businesses National Chairman, welcomed the move, saying the measure will give “peace of mind to millions of small businesses who are desperately struggling with their cash flow”.

“We know sensible conversations between landlords and commercial tenants are taking place – but having this legislative backstop to prevent evictions during the worst of the crisis will provide much-needed peace of mind for many small businesses.”

The measure forms part of the Government’s £330 billion emergency response package designed to help businesses affected by the Covid-19 pandemic.

In similar announcements, Companies House, HMRC and the Charity Commission have also urged businesses and not-for-profit organisations to come forward if they are unable to meet their tax, reporting or statutory deadlines.

For help and advice on matters relating to landlords and tenants, contact our expert team today.

Accessing the Coronavirus Job Retention Scheme

Accessing the Coronavirus Job Retention Scheme

With substantial restrictions on personal mobility, and many businesses being forced to close, the Chancellor has announced a scheme to reimburse up to 80 per cent of the cost of the wages of ‘furloughed workers’.

What is a ‘furloughed worker’?

Anyone designated as a ‘furloughed worker’ will remain on your payroll, rather than being laid off. However, they will not carry out any work for your business or organisation. There is no option to keep them working on reduced hours.

They will generally be people who would otherwise be at risk of being laid off or being made redundant.

Furloughed employees will still accrue continuous service and will still be entitled to the usual terms and conditions of their employment, other than pay and benefits. This means that their contractual notice period remains in effect during a period of furlough and they would remain entitled to statutory redundancy payment in the event they are made redundant during their furlough.

How do I designate an employee as a ‘furloughed worker’?

You will need to notify the relevant employee that you are changing their employment status to ‘furloughed worker’.

Designating someone as a ‘furloughed worker’ remains subject to the provisions of existing employment law and their contract of employment and so, because ‘furlough’ is a new concept, in most circumstances, it will be necessary to agree to a furlough with the employee concerned. This agreement should ideally be made in writing.

An employee cannot designate themselves as a ‘furloughed worker’.

Can I force someone to become a ‘furloughed worker’?

This is unlikely, but where the alternative is that they will lose their employment entirely, owing to being at risk of lay-off or redundancy, fewer workers are likely to decline to be designated as a ‘furloughed worker’.

What do I get if I designate an employee as a ‘furloughed worker’?

HM Revenue & Customs will provide you with a sum equivalent up to 80 per cent of each furloughed workers’ total wage costs, up to a limit of £2,500 a month, for three months initially, backdated to 1 March 2020. This includes National Insurance Contributions and Pension Contributions.

Can I pay the ‘furloughed worker’ more than 80 per cent of their usual salary?

Yes – you are free to do so if you wish but you are not required to do so. For higher-earning employees who are paid more than £2,500 a month, this could be very expensive. However, this cost needs to be balanced against the benefit of helping to retain that employee in the business.

Can workers be brought back to the business and placed on furlough where they have been dismissed owing to a lack of work?

It appears that this will be possible if the employer agrees to bring the employee back and keep them on the payroll. The cut-off date for employees dismissed in these circumstances is 29 February 2020.

How do I apply to the scheme?

HMRC is setting up a new online portal through which you will be able to make applications. The Government has said that it will be ready in time for the first payments under the scheme to reach businesses before the end of April.

What information do I need to provide?

Full details of the information that you will need to provide to access funds under the scheme have not yet been announced. However, we anticipate that you will need to provide the below:

  • The employee’s name
  • National Insurance Number
  • The amount they have been paid in at least each of the last three months of normal employment
  • Contract details, such as whether their employment is permanent or temporary and whether they work part-time or full time
  • The date they were designated as a ‘furloughed worker’
  • The date that they will cease to be designated as a ‘furloughed work’ if this is known.

For help and advice on matters relating to employment, contact our expert team today.

Coronavirus (COVID-19) for employers and employees

Coronavirus (COVID-19) for employers and employees

The UK has moved from the ‘contain’ to the ‘delay’ phase of its response to coronavirus and has widened the circumstances in which it recommends self-isolation.

This means that there is an increased chance of the response to coronavirus having an impact on the operations of employers and the lives of individual employees.

To help you navigate the challenges that may come with coronavirus, whether you are an employer or employee, we have put together this short guide.

Follow Government advice

The Government’s official advice has the potential to change quickly, so to ensure that you are acting according to the latest advice from the Government, it is a good idea to visit the official guidance pages on gov.uk regularly.

Advice for individuals

Guidance for employers and businesses 

Sick pay for individuals in self-isolation

With the increased range of circumstances in which the Government advises that people should self-isolate, there is a greater chance that you will have to deal with self-isolation.

Statutory Sick Pay (SSP)

The legal provisions for those who self-isolate in accordance with public health guidance on coronavirus to be considered incapable of work, for the purpose of claiming statutory sick pay came into effect on 13 March 2020.

This definition is a person who is “isolating himself [or herself] from other people in such a manner as to prevent infection or contamination with coronavirus disease, in accordance with guidance published by Public Health England, NHS National Services Scotland or Public Health Wales …. and [who] by reason of that isolation is unable to work”.

An employee will need a notice to self-isolate or a fit note from their GP or NHS 111 if they are following Public Health England advice to self-isolate.

The Government has also confirmed that SSP will payable from the first day that an employee is absent from work to self-isolate.

The Government has also committed to reimbursing businesses with less than 250 employees for the cost of SSP for the first 14 days of self-isolation.

Contractual Sick Pay

It may be necessary to pay additional sick pay in circumstances where this is provided for in a contract of employment, in the employee handbook, or even where it is usual practice to do so.

If you are unsure as to what to do in specific circumstances, please contact a member of our team.

Pay for individuals you have required to self-isolate

There may be circumstances in which you consider that an employee should self-isolate, even where this is not in accordance with Government advice. In these circumstances, you would have to continue to pay them their basic salary as usual.

Lay-offs owing to reduced work

It is possible that businesses, especially those in certain sectors, will see a reduced workload as a consequence of coronavirus.

In these circumstances, and where allowed for in the contract of employment, employees can be laid off temporarily.

Employees who are laid off must be paid a guarantee payment of up to £29 a day and a maximum of £145 in a three-month period.

After four weeks, employees may be able to request that they are made redundant.

Use of holiday

Another option that employers might wish to use is to require employees to take annual leave.

Where an employer wishes to do this, they must provide notice of at least twice the length of leave they require the employee to take. A requirement for an employee to take a week’s leave would require two weeks’ notice.

Additional steps

  • Provide guidance to employees, setting out your approach to coronavirus.
  • Assess whether any of your employees belong to vulnerable groups and who may need special provisions or employees whose presence is crucial to the functioning of your organisation.
  • Check the steps that can be taken feasibly to reduce the risk to employees, including whether it is possible to reduce face-to-face contact with customers, clients or suppliers, allowing working from home, stepping-up the cleaning regime or holding meetings remotely.

For further specific advice on dealing with coronavirus in your workplace, please contact us today.

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