Coronavirus update: Hospitality and Leisure

The COVID-19 outbreak has hit the Hospitality and Leisure sector hard. If you haven’t already we recommend that you consider signing up for newsletters from UK Hospitality. They intend to issue daily newsletters as the situation is changing quickly.

On Friday (20th March) the government prohibited pubs, clubs, restaurants and indoor leisure facilities from opening. The sector had already felt the impact of the recommendation for people not to attend these places earlier in the week. 

Coronavirus Job Retention Scheme 

To encourage businesses not to lay off staff, the government unveiled support for the payment of worker salaries.

Under the new Coronavirus Job Retention Scheme, government grants will cover 80% of the salary of PAYE employees who would otherwise have been laid off during this crisis (furloughed workers). The scheme, open to any employer in the country, will cover the cost of wages backdated to 1 March 2020 and will continue for at least three months but may be extended. It can include workers who were in employment on 28 February, even if they have subsequently been made redundant, as long as they are reinstated on the payroll.

VAT 

All VAT payments due between 20 March and 30 June 2020 will be automatically deferred. This will apply to VAT periods ending February, March and April 2020. The deferred VAT will become due for payment in March 2021.

This deferral will apply to all businesses and is automatic so there is no need to contact HMRC. However, any business that pays VAT by Direct Debit must cancel it, otherwise HMRC will collect VAT due as normal.

For the avoidance of doubt, VAT returns should still be submitted on time as usual. For any business that is unable to file on time, a default surcharge may apply, though there may be grounds to appeal assuming it is COVID-19 related.

Insurance

In regards to the insurance position, Chancellor, Rishi Sunak said:

“Let me confirm that, for those businesses which do have a policy that covers pandemics, the government’s action is sufficient and will allow businesses to make an insurance claim against their policy. Please check to see whether your insurance policy does cover pandemics. We believe that few policies will include this.”

Business Interruption Loan Scheme

The business interruption loan scheme unveiled at the 2020 Budget has been extended to offer loans to SMEs of up to £5 million (originally capped at £1.2m) with no interest due for the first six months.

Business Rates Retail Discount Scheme

The chancellor is extending the business rates holiday to all businesses in those sectors, irrespective of their rateable value for the coming year.

On 2 April, the government released further guidance on this scheme which can be found here.

Additional measures for those in the hospitality and leisure industry

  • Grants: businesses in these sectors with a rateable value of less than £51,000 will also have access to cash grants of up to £25,000. More details of the grant funding scheme can be found here.
  • Help with tax liabilities: all businesses and self-employed people in financial distress, and with outstanding tax liabilities, may be eligible to receive support with their tax affairs through HMRC’s Time to Pay service.
  • Payroll costs: the government will bring forward legislation to allow small and medium-sized businesses (SMEs) and employers to reclaim Statutory Sick Pay (SSP) paid for sickness absence due to COVID-19.

Further information on these measures can be found in our government support for businesses blog:

For further advice please get in touch with a member of our Hospitality and Leisure team.