As Covid-19 restrictions in England continue to ease, the range of the Government’s Covid-19 support measures to help businesses survive the pandemic are also coming to an end.
So what steps should directors of fashion businesses be taking or considering now?
1. Moratorium on winding up petitions and statutory demands
Restrictions on filing a statutory demand and winding up petition for Covid-19 related debts have now been extended (again) by three months, to 30 September 2021.
This means that creditors are prevented from presenting a statutory demand or winding up petition unless the creditor has reasonable grounds for believing that (1) Covid-19 has not had a financial effect on the company or (2) that the circumstances forming the basis of the winding up petition would have occurred even if Covid-19 had not had a financial effect on the company.
If you are owed or owe monies, you should be aware that the 30 September moratorium is unlikely to be extended so you should be prepared to look to press for repayment or repay from such date.
2. Wrongful trading
The announcement about the extension of the Moratorium on winding up petitions and statutory demands did not mention a further extension on the suspension of personal liability for wrongful trading. It is therefore implied that directors could be liable for wrongful trading post 1 July.
In the current environment due to Covid-19, many directors will be concerned about their personal exposure, particularly if the businesses they help manage are experiencing financial distress. Directors should consider purchasing a Directors’ & Officers’ liability insurance policy (“D&O policy”) which can provide peace of mind for any directors who are concerned about their personal exposure if their business enters into an insolvency procedure.
It should be noted that a D&O policy is no substitute for taking appropriate precautions to avoid liability in the first place. Speak to Paul Taylor or another member of the corporate fashion team for further advice.
3. Protection from eviction enforcement
The moratorium on “aggressive” action by landlords against their commercial tenants that breach the terms of their leases has now been extended until 25 March 2022. This means that, whilst the moratorium is in place, a landlord will not be able to evict a tenant for non-payment of rent.
The legislation does not apply to short leases and after 25 March 2022, landlords will still be able to claim for forfeiture for both payments that became due during the moratorium period, and for any becoming due, but remaining unpaid, after it ends.
If you are a tenant contemplating your next steps, speak to Scott Hilton and Elizabeth Ruff from the Fox Williams’ real estate team for further advice on this matter.
4. Coronavirus Job Retention (Furlough) Scheme
The Furlough Scheme is being fully withdrawn on 30 September 2021. For employees who are placed on furlough there is no guarantee that they will be retained once the scheme ends.
If you have employees currently placed on furlough, you should now be considering their return to work and, importantly, the prospect of dealing with redundancies once the scheme ends.
If you are an employer, you may need to consider reshaping your team to adapt to the different working conditions/needs post pandemic. Please get in touch with Aron Pope and Grace Waterhouse from the Fox Williams’ employment team for further advice.
5. Coronavirus Remote Right to Work concession
As a result of the Government’s announcement on 14 June 2021 to extend the date for the easing of lockdown restrictions and social distancing measures, the temporary Covid-19 adjusted right to work checks in respect of overseas workers will now end on 31 August 2021.
From 1 September 2021, employers will revert to face-to-face and physical document checks as set out in legislation and guidance.
Speak to Sacha Schoenfeld and Adèle Standard from the Fox Williams’ immigration team for further advice on reverting to physical checks.
6. Deferred VAT
If you deferred VAT payments due between 20 March 2020 and 30 June 2020, the following options are available to you:
- if you joined the VAT deferral payment scheme you will pay the deferred VAT in line with the instalment scheme available to you;
- the deferred VAT payments can be paid in full; or
- you should contact HMRC by 30 June 2021 if you need extra help to pay.
A 5% penalty or interest may be imposed if your deferred VAT is not paid in full or you have not made alternative arrangements to pay by 30 June 2021.
7. Your supply chain
And finally on 30 June 2021 the Trade Credit Reinsurance (“TCR”) scheme will close. The scheme assisted suppliers to secure insurance protection in respect of supplies to their customers.
But whilst the TCR will end, the question remains about exposure to retailers, some of whom may well ‘over trade’ in the months ahead and, as a result, default on their creditors.
If you are concerned about:
- the terms on which you trade; or
- whether your standard terms and conditions of sale will protect you; or
- if your standard terms and conditions of sale are being properly incorporated into contracts made with customers, speak to Steve Sidkin, Emma Roake, and Lucy Coffey in our Commercial law team.
