What accountants should know about emergency funding eligibility
The UK government has allocated £330 billion to businesses for pandemic relief. This is the base amount; the government has made it clear that more will be allocated as needed. Small and struggling businesses are rejoicing over this bailout, but of course it comes with conditions. Accountants are now relied upon to ensure that these conditions are met, ascertaining whether businesses are eligible for this loan and ensuring that they receive their due. But this means more work for accountants in a tumultuous economy. Perhaps a bailout is also in their future.
£20 billion in business rates support and grant funding is going to the retail, hospitality and leisure sectors. This amount will ensure that such businesses get full business rate breaks for one year. £25,000 is being allocated to businesses with a rateable value of less than £51,000; and £10,000 cash grants are being given to Britain’s 700,000 smallest businesses. Additionally, £5 million loans at 0% interest for six months will be given to businesses who turnover no more than £45 million annually. However, eligibility is restricted to those without applicable insurance policies.
For businesses with insurance policies that cover pandemics, emergency loan relief is not needed. However, unless the business is a pub, theatre or another public venue that had no choice but to close and no other way to continue business, insurance will not cover their costs. The responsibility of assessing insurance and loan eligibility for confused businesses falls on the shoulders of accountants. As such, accounting firms are imploring the government for their own breaks amid COVID-19 panic. These include exemption from mandatory audit firm rotation, physical inventory counting, and accounts filing deadlines. Increased accountancy insurance, which protects firms from unforeseen costs and ensures liability coverage, may also be on the request list.
Unforeseen costs are inevitable at a time when accountants’ jobs have been made more hectic than likely ever before. Nila Khan, business advice manager ICAEW (Institute of Chartered Accountants in England and Wales), had this to say about the situation: “Businesses will be looking to the ICAEW members for reliable advice. We should stay close to our clients, telling them not be scared, to reach out for support and reassure them that this is something they can trade their way through.”
Not only are small businesses asking for Coronavirus-related bailouts; accountants are too. The government is complying with the former request, and maybe soon the latter will be fulfilled. No matter what, accountants need to perform their duties for struggling businesses with compassion and tact during this difficult time.