On 23 November 2020 Boris Johnston set out his COVID 19 Winter plan. The hospitality sector has been calling for more clarity on a number of items so they can plan as best they can for reopening. The Prime Minister’s statement did do go some way to answering those questions but the detail on the post lockdown regional tiers in England was missing. Today these have been announced. Matt Hancock thanked people for their "shared sacrifice" and "resolve" so far, saying that the tiers have to be tougher than before to avert another national lockdown.
Given only three areas of England made the lowest level of restrictions, there will be a far-reaching impact on the Hospitality sector. The post code look up tool provided by the government, controversially published just before the announcements, crashed. A full list was then provided and can be seen here. The measures will be reviewed every fortnight with the first full review to be completed by 16 December.
The Prime Minister said he was "sorry to say" more areas will fall into higher levels of restrictions than they were in previously, at least temporarily. Unfortunately Tier 3 will essentially be like a lockdown for those in the sector and Tier 2 will force many to remain closed. In Tier 2 venues, only people of the same household can visit and it will be table service only. The 'rule of six' (which allows six members of different households to come together) will apply outdoors. Those staying open for an hour more than before won’t generate extra revenue if last orders remain at 10pm, but it should help with the dispersal of people.
Some of the highlights in the announcements pertinent to the hospitality sector included:
For those businesses already under level 3 and 4 restrictions in Scotland until 11th December, many will be struggling and trading at a loss, and some will inevitably be forced to shut their doors for good.
The frustration remains that such a low proportion of cases are linked to hospitality venues, particularly due to the significant work and expense that has gone into making venues safe.
Extended support is being called for in the shape of further extensions of the forfeiture moratorium and rent recovery restrictions beyond 31st December 2020, VAT rate reductions past March 2021 and further grant support. In the meantime businesses will need to continue capitalising on the existing extensions of support available, including the Local Restrictions Support Grant for businesses that were required to close between 5th November and 2nd December 2020 in England and the Strategic Framework Business Fund in Scotland.
The extended Coronavirus Job Retention Scheme has a more generous offering than that in place during October and the now postponed Job Support Scheme which was planned to replace it. Support levels have returned to August levels and will run until the end of March 2021 but terms and employer contributions will be reviewed again in January. Further details of the scheme can be found here.
The Self-Employment Income Support Scheme (SEISS) extension will last for six months, from November 2020 to April 2021, with grants paid in two lump sum instalments, each covering a three-month period. Further details can be found here in my recent article. Frustratingly for many, there is still a large gap in support for those not able to access SEISS or the furlough scheme.
One additional support measure which will be of use to many is the ability to spread the cost of your Self-Assessment tax bill into monthly payments online, for amounts due up to £30,000. Once your tax return for the 2019-20 tax year is submitted, you have the option of using the online self-serve ‘Time to Pay’ facility through GOV.UK to set up a direct debit and pay any tax that is owed in monthly instalments, up to a 12-month period.
Visit the gov.uk website for further information or call the Self-Assessment Payment Helpline on 0300 200 3822.
If you deferred VAT between 20th March and 30th June 2020 and still have payments to make you can also spread those repayments. Instead of paying the full amount by the end of March 2021, you can make up to 11 smaller monthly instalments, interest free. All instalments must be paid by the end of March 2022.
Careful consideration of cash flow will be required in all circumstances of course and in particular the timing of those payments where Income tax and VAT payments have been spread into next years’ forecast. Further consideration will be needed around pricing and in relation to VAT too, particularly for accommodation providers. Amounts that are received prior to the uplift in the VAT rate will only be liable to 5% VAT, therefore, businesses may seek to incentivise early payment by sharing some of the VAT saving.
To help manage your cash flow, download our free 13-week cashflow tool, or for help and advice, please contact Richard Askew.