The Government has introduced a number of measures and packages to support and assist businesses through this difficult period as a result of the COVID-19.
We have set out below details of the packages that may be relevant to SEIS/EIS investee companies.
One concern that was raised was whether the Coronavirus Business Interruption Loan Scheme ("CBILS") would be available to SEIS/EIS investee companies given an initial requirement that the business must not have received de minimis State aid beyond €200,000 equivalent over the current and previous two fiscal years. The British Business Bank has confirmed to the Enterprise Investment Scheme Association ("EISA") that this is not the case and EIS and/or SEIS investee companies can qualify for CBILS if they meet the other requirements.
In addition to ensuring that CBIL is available to SEIS/EIS investee companies the EISA has also written to the Government to request that the legislative restrictions on EIS and SEIS investments be lifted and additional income tax relief be made available for a limited period of time to encourage private investments in to essential SME's required to assist the fight against COVID-19 and relieve the pressure on the NHS. We await the Government's response.
The details of the packages available are:
Coronavirus Business Interruption Loan Scheme ("CBILS").
The CBILS provides loans up to £5million for small and medium sized businesses ("SME's") through the British Business Bank. The Government will cover the interest for the first 12 months and will guarantee 80% of the loan.
To be eligible for a facility under CBILS, the business must:
1. be UK based in its business activity with an annual turnover of no more than £45million; and
2. Have a borrowing proposal which, were it not for the COVID-19 pandemic, would be considered viable by the lender.
1. If the business does not currently pay business rates it can apply to its Local Authority for a grant of £10,000.
2. If the business operates in retail, hospitality or leisure there are two specific business rate packages available:
a. If the business is operated within a property with a rateable value between £15,000 and £51,000 they can apply to their Local Authority for grant funding of £25,000; and
b. There will be business rates holiday in England and Scotland for the 2020 to 2021 tax year with no limit on rateable values.
3. If the business is a nursery and is on Ofsted’s Early Years Register or wholly or mainly used for the provision of the Early Years Foundation Stage in England there will be a business rates holiday for the 2020 to 2021 tax year.
4. If the business operates in Scotland all non-domestic properties in Scotland will get a 1.6% rates relief. This relief effectively reverses the change in poundage for 2020-21.
Value Added Tax
5. If the business is VAT registered it can defer any VAT payments due between 20 March 2020 and 30 June 2020 until the end of the tax year, which we assume means the VAT tax year for the business. This may run from 31 March, 30 April or 31 May depending upon the businesses VAT returns period.
Job Retention Scheme
6. The Government will pay to employers up to 80% of salary costs of anyone not working due to Coronavirus but whose job has been retained (up to a maximum of £2,500 per month). Please see our blog Coronavirus (COVID-19): Support for businesses announced through Job Retention Scheme for more detail click here >
Time To Pay Arrangements
7. If the business is not able to pay its tax liability it can approach HMRC to agree an instalment payment plan. HMRC has a dedicated helpline: 0800 0159 559 who will be able to agree a payment schedule. HMRC will base each decision on a case by case basis.
The position is changing on a regular basis and further announcements or updates may be released. We will wait to hear if the EISA has been successful in lobbying the Government to make amendments to the current restrictions to encourage further investments to EIS and/or SEIS investee companies.
If you would like further details about this please do not hesitate to contact our Tax team.