Hoteliers perspective on the effects of the Covid-19 pandemic. HMRC also issue updated guidance on the Coronavirus Job Retention Scheme in line with some of the main queries they have received from businesses.
COVID-19 – A HOTELIERS PERSPECTIVE
Chris Walker, Proprietor of the Selkirk Arms in Kirkcudbright, gives his perspective on the effects of the Covid-19 pandemic.
“Everything is going to change after the Covid 19 pandemic, some of us will survive in business some of us won’t – it’s going to have a massive effect on unemployment going forward, a massive effect on monies coming into local councils from rates and other revenues, a massive hit to HMRC on VAT and Tax revenues received and in reality the pressure we’ve all been put under up to now has come home to roost.
We’ve had to manage auto enrolment and the associated costs, we’ve had to manage a living wage call, we’ve had to manage OTA’s and their greedy commissions shuffled into their off shore tax free havens, we’ve had to manage the consumer expecting more for less, we’ve been frightened to put rates up, frightened to increase menu prices as we’ve been subject to on-line offers and group discounting whilst operating costs have gone up around our ears and this virus is now threatening the very livelihoods of many self-employed business owners. Naturally the most important consideration in all this is human life and we totally understand the reasons for the lockdown, but help is seriously required to save businesses.
What I have found myself doing over the past few days is spiralling into a pit of deep despair as the reality of “We’ll do everything it takes” actually means – we’ll let you go to the wall.
As a local business with 27 staff we find ourselves ineligible for either of the two grants due to our rateable value of £65k at the Hotel and the Cafe business we operate with 5 staff isn’t eligible for the £10k grant as it’s not in receipt of small business bonus scheme or rural relief, (surely that’s a good thing – we’ve not been taking out of the pot) in fact over 30 years in business in Dumfries and Galloway we’ve never had a brass bean in a grant from enterprise or visit Scotland – we’ve created a business on the back of hard work and bold risk taking in order to succeed.
So can you imagine how I’m feeling knowing that a 4 bedroom B&B will get £10k and the pub round the corner in town which is just a pub with about 5 staff will get £25k – I’m left to spend my days scrambling about producing cash flows and projections in order to apply for a small business loan and that’s the elephant in the room, it’s a loan and it needs to be paid back. Then to top it all I hear that we might have to borrow in order to pay the 80% for furloughed staff until HMRC are in a position to pay it back. Well that’s not going to happen – why should I borrow when there’s free grants being given out?
Whatever it takes is starting to grate on me now – but maybe there’s a glimmer of hope with the self-employment announcement? Alas no… it looks like, as directors of our limited company, neither my wife or I will at present get any help. Here’s what our accountant had to say:- ‘The latest information that I have seen on the Self-employment Income Support Scheme refers to individuals and partnerships only.’
Ahhh! maybe the insurance company may help? No, help there either – Covid 19 isn’t listed as a Pandemic. Well of course it isn’t – it didn’t exist last April when I renewed my £6000 per annum policy!! Here’s what my broker had to say:- ‘I have heard back from NIG and I am really sorry but there would still not be any cover under the policy even if the government does enforce closure. Basically, from an Insurers point of view, the risk of a new or different disease or illness is too great for them to insure or evaluate and they therefore restrict cover to ‘specified diseases’ only. The Coronavirus is a great example of what a new or unevaluated disease can do to businesses and if insurers were to pick up all losses from Coronavirus, that is likely to send them bust.’
So, I’ve lobbied my MP, my MSP, my local councillor, the council officials and still we seem to be no nearer a solution, nearly all just want to kick the can down the street. The one exception is our local councillor Pauline Drysdale, she is fighting as hard as she can to get parity in this unfair grant allocation.
There are businesses locally that have received thousands of pounds in grants to get themselves up and running and they’re all getting their £25k pay-outs, where’s the fairness in that? £25k is a month’s wages at the hotel and at this very moment it will help offset an ever-growing overdraft which is about to max out as we pay suppliers and try and do the right thing, as we always have, to look after people. We’ve paid the wages to date and the majority of our suppliers. Yet there’s nobody with our interest at heart, it’s all the same white noise coming out of every phone call.
So, what lies ahead for those in the same boat as me? Whilst the headlines look good the reality is that we’re on the Titanic and it’s going down fast. Is insolvency an option – possibly, should I look to cut my losses and close the doors and stop the haemorrhaging of money as our cash flow grinds to a halt? As there isn’t a penny coming in it looks like we’ve been hung out to dry. I have spoken to many hoteliers in the same boat and we feel very vulnerable especially if this is to go on for months.
Cash flow is king and having come through the winter paid our tax, vat and corporation tax along with internal investment in fixtures and fittings we find there’s no cash left in the cow and we’ve fed the beast for many many years and now the feed has all been eaten – the cow will inevitably die, unless we can put some more feed in the trough, we’re just not sure when.”
FURTHER GUIDANCE ON THE JOB RETENTION SCHEME
HMRC have issued updated guidance on the Coronavirus Job Retention Scheme in line with some of the main queries they have received from businesses. Whilst all the guidance has been refreshed, the main areas to focus on are:-
- the more detailed information on scheme eligibility
- further information on how to calculate a claim
- clarification of what constitutes wages.