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Coronavirus Guidance for Companies
Loans through the Future Fund
On 20 April 2020, the government announced a new source of finance for companies: the Future Fund (the ‘Fund’). The Fund, which is aimed at companies which rely on equity investment, and so which may be unable to access support, will launch in May 2020.
The government will provide loans ranging from £125,000 to £5 million, subject to at least equal match funding from private investors.
To be eligible for a loan from the fund the company must have raised at least £250,000 from private third-party investors in previous funding rounds in the last five years.
Directors: Job Retention Scheme
A director of a limited company is not eligible for a grant under the Self-employed Income Support Scheme.
Guidance updated by HMRC on 4 April states that directors, including directors of personal service companies (PSCs), are eligible to be furloughed under the Job Retention Scheme. The relevant part of the guidance is reproduced in full below:
As office holders, salaried company directors are eligible to be furloughed and receive support through this scheme [the Job Retention Scheme]. Company directors owe duties to their company which are set out in the Companies Act 2006. Where a company (acting through its board of directors) considers that it is in compliance with the statutory duties of one or more of its individual salaried directors, the board can decide that such directors should be furloughed. Where one or more individual directors’ furlough is so decided by the board, this should be formally adopted as a decision of the company, noted in the company records and communicated in writing to the director(s) concerned.
Where furloughed directors need to carry out particular duties to fulfil the statutory obligations they owe to their company, they may do so provided they do no more than would reasonably be judged necessary for that purpose, for instance, they should not do work of a kind they would carry out in normal circumstances to generate commercial revenue or provides services to or on behalf of their company.
This also applies to salaried individuals who are directors of their own personal service company (PSC).
Legislation: para. 6.1 – 6.8 of the Direction made by the government in accordance with powers conferred on it by the Coronavirus Act 2020
Shareholders: deferral of 31 July 2020 POA
The deferral of the 31 July 2020 POA described above applies to all taxpayers. This includes shareholders in the company who may have an income tax liability in respect of dividend income.
Impact on company residence
HMRC has updated its guidance on corporate residence and permanent establishments to take into account the disruption caused by CODID-19. HMRC state that they are ‘sympathetic’ and that the existing legislation provides ‘flexibility’ to deal with the situation.
Extension of filing deadlines
A company which is unable to file its accounts with Companies House on time should consider applying for 3-month extension. This may prevent the imposition of a fixed penalty.
Unlike some other measures, this is not given automatically – the company must apply to Companies House for an extension.
It is possible to apply for an extension online.
Engaging with Companies House
Companies House has published guidance on how to submit certain documents (for example, form RPO2A to apply for rectification by the registrar of companies) and with regard to the process for form SH03 (Return of purchase of own shares).
Advice from the ICAEWContent last updated 20 May 2020