With information being considered and decisions being made at an accelerated pace to match the continually evolving COVID-19 situation, it is important that advice is sought when considering the hard decision of whether to close your business altogether.
The Government has now introduced a raft of measures to help businesses navigate the crisis. These measures are being created and deployed at high speed in difficult social and economic times.
Therefore, any short term decision making has to be made with the benefit of full consideration of the help and assistance that is available. It needs to be understood that the Government will expect these measures to be fully utilised to ensure businesses that would otherwise thrive under normal economic conditions, do survive this emergency.
For all businesses, and especially those considering closing the doors altogether, the following measures must be considered carefully.
Coronavirus Job Retention Scheme
This measure by the Government provides an alternative to redundancies. Furloughed employees should be retained under this scheme utilising the £2,500 or 80% of pay (whichever is lower) such that the workforce is available once the business can return to normal conditions
Deferred tax payments, grants, funding and business rates relief
The Government has introduced a collection of measures designed to ease cash flow in times of reduced income and reduced trade debtor receipts. An assessment of these measures in relation to your business should be carried out and available options considered in detail.
Life after COVID-19
It is important to consider how you want to be positioned when normal life resumes. Closing your business may leave you in the fortunate scenario of needing to extract accumulated wealth, but it will leave many others in a position where there is insufficient value to pay all creditors.
Wealth can be extracted by tax efficient means, but there are restrictions under the Targeted Anti-Avoidance Rule (TAAR) legislation restricting the ability to trade again within a period of two years following closure.
Value in insolvent businesses may also be extracted for the benefit of existing creditors and the benefit of business generally in a post COVID-19 economy.
It is important that any closure is structured correctly to the specific circumstances of the business and its owners.
Wherever your business is currently positioned and whatever the realistic options available, if you want to talk through the next steps, ensure all options have been fully explored and know that the decision about whether to close is the right one, please contact one of our restructuring specialists.