Ask the expert

By Jack Enfield, Community Outreach Manager, Company Debt

Coronavirus has taken a huge toll on the UK wedding industry, with brides and grooms-to-be across the UK postponing and canceling their weddings.

Just when the first shoots of recovery were sprouting, new guidelines announced in September reduced the number of people allowed to attend weddings from 30 to 15.

That thrust the industry back into an enforced hibernation that is threatening the survival of many of the 139,000 businesses that operate in this industry.

Figures endorsed by the Association of British Wedding Businesses reveal that the industry will take a £5.6 billion hit in 2020, with 36% of weddings being abandoned or moved and more than half being impacted in some way.

Unfortunately, the sector’s problems continue to mount, with uncertainty over how many people can attend events and disputes with insurers over payouts causing immense financial and personal harm in the sector.

Without being too political, it’s difficult not to bemoan the role of the government in the crisis the UK wedding industry is facing. There is an average of 275,000 weddings in the UK every year, generating revenues of £10 billion, yet decisions are being made and implemented with no forewarning to give the wedding sector time to prepare.

The result is that many people working in the wedding industry, whether as planners, photographers, florists, caterers, bridal shops, wedding venues, DJs, cake-makers, hair stylists and transport providers are now fighting for their livelihoods.

With that in mind, we have created a comprehensive guide that details the government support that’s available, the organisations you can contact for assistance and the practical measures that you can take to keep your business afloat.

What Government Support is Available in the Wedding Industry?

Despite widespread calls from wedding businesses, there is currently no sector-specific support for an industry that has been hit harder than most.

The furlough scheme is being withdrawn at the same rate as other sectors that are starting to see a return to normality. However, despite this one-size-fits-all approach, government support is available that could provide vital financial assistance for your business.

The Government support available includes:

Job Support Scheme

Starting on 1 November, the furlough scheme will be replaced by the Job Support Scheme. That will run for six months and top up employee salaries for businesses that can’t take them back full-time. To be eligible, employees of small and medium-sized wedding businesses must work at least one-third of their normal hours. The government and their employers will each pay one-third of the remaining wages, meaning employees will receive at least 77% of their pay.

While this may be good news for some wedding businesses and employees, it means that those who work for businesses that are still closed will miss out and could lose their jobs when the furlough scheme ends, even though they’re likely to be required when the sector bounces back.

Wedding companies will also receive £1,000 for every furloughed employee that they keep on until at least the end of January 2021.

Coronavirus Business Loan Interruption Scheme

Wedding businesses that require short-term working capital can still access the Coronavirus Business Interruption Loan Scheme (CBILS), which has been extended until 30 November 2020. It provides loan facilities of up to £5 million with repayment terms of up to six years. The government covers the cost of interest and fees for the first 12 months and provides lenders with a guarantee for 80 percent of the loan.

Barclays, HSBC, Lloyds and The RBS Group are the only banks that have agreed not to ask for personal guarantees on the remainder of the loan. So, if you’re unwilling to give a personal guarantee and the loan amount is under £250,000, those are the banks you should make your application to.

As well as term loans, the CBILS can also give you access to:

Overdrafts
Invoice finance facilities
Asset finance facilities
Find out how to apply and read the eligibility criteria here.

Business Rates Holiday

All retail, hospitality and leisure businesses do not have to pay business rates for 12 months. This exemption was applied automatically to all council tax bills that were issued in April 2020.

Wedding businesses that have benefitted from this relief are those with commercial properties and include:

Bridal shops, florists, caterers, hair salons, wedding venues, restaurants, hotels, self-catering accommodation, etc.
Wedding businesses that met the criteria for the business rates holiday and have a rateable value of under £51,000 were also eligible for a one-off government grant under the Retail and Hospitality Grant Scheme. However, the scheme is now closed.

There have been calls for the business rates holiday to be extended for another year and the government is currently in ‘listening mode’ regarding a potential extension.

Small Business Grant Scheme

The Small Business Grant Scheme is now closed. If your business was eligible for the grant, you should have been contacted by your local authority. If you think you are eligible for a grant but have not yet received it, you should contact your local council immediately.

VAT Payment Deferral

VAT registered businesses were able to defer their VAT payments for the period between 20 March and 20 June 2020, which provided vital cash flow protection. Wedding businesses that chose to defer their payments will no longer have to repay this as a single lump sum by 31 March 2020. Instead, they have the option to split this cost into monthly, interest-free payments over 2021-2022. That means your VAT liabilities do not need to be paid in full until the end of March 2022.

You will need to opt-in to the scheme if you want to make smaller payments over a longer period. You can find out more about paying in instalments here.

Self-Employment Income Support Scheme

If you operate in the wedding industry and are self-employed, you could be eligible to apply for a grant under the Self-Employment Income Support Scheme. Applications for the first grant closed on 13 July 2020. However, applications for the second grant, which is worth 70 percent of your average monthly trading profits, are still open but must be made on or before 19 October 2020.

If your wedding business has been adversely affected by coronavirus on or after 14 July 2020, then you will be eligible for a grant if all of the following apply:

You trading profits are no more than £50,000 and at least equal to your non-trading income
You traded in the tax year 2018 to 2019 and submitted your Self-Assessment tax return on or before 23 April for that year
You traded in the tax year 2019 to 2020
You intend to continue trading in the tax year 2020 to 2021
If you are eligible for the grant, you will receive 70 percent of your average monthly trading profits, paid in a single sum up to a limit of £6,570. You cannot claim the grant if you operate through a limited company.

Find out whether you can make a claim.

Self-Assessment Income Tax Payment Deferral

On 24 September 2020, it was announced that self-assessment taxpayers with up to £30,000 of income tax liabilities due on 31 January 2021, whether deferred from July 2020 or otherwise, could choose to spread the payment over 12 monthly instalments. That means the final payment would not be due until January 2022.

At present, no announcements have been made as to the eligibility criteria or whether interest will be charged on the deferred payments. However, it is worth monitoring your position and implementing a Time to Pay arrangement by using the self-serve Time to Pay facility online.

Find out more here.

Practical Advice for Wedding Businesses to Navigate The Crisis

The wedding industry has been brought to its knees by insurers who are passing the buck. Rather than accepting any liability themselves, many insurers have pressurised couples to postpone their venues and suppliers at no extra cost. That has put the small businesses that make up the UK wedding industry under huge financial stress. At the same time, many of the insurers that provide cover for small wedding businesses have washed their hands of the pandemic and are refusing to payout.

The industry has also made significant sacrifices to help couples without wedding insurance by offering no-cost postponements. Not only are these postponements damaging to wedding businesses across the country, but this practice also removes future dates from suppliers’ calendars, delaying the recovery and exacerbating the crisis. The wedding industry also has significantly longer lead times than most hospitality businesses, which will further delay the recovery.

Given the current challenges wedding businesses are facing, what practical steps can you take to help your wedding business survive?

Reduce Uncertainty

With such an unprecedented level of uncertainty and disruption, you must look at your cancellation policy carefully and understand what your position is in various scenarios. For example, what will you do if:

A couple cancels their wedding one day, week or month before they’re due to get married?
A couple reduces the scale of their wedding significantly or chooses to go ahead with the ceremony but not the reception?
A couple has to postpone or cancel their wedding due to government intervention?
You should also consider the knock-on effects of your actions. For example, if you can’t find enough staff to work and cannot fulfil your part in the wedding, will you be liable for the potential losses if the wedding has to be cancelled?

Communicate With Your Couples

Contact couples who have weddings booked in the next three to six months to find out what their position is and provide them with accurate and up-to-date information. They’re likely to be concerned about losing their deposits, so discuss their options with them and provide contingency plans.

Explore all Measures to Allow Weddings to go Ahead

The more weddings that go ahead, the less the impact on your cash flow will be. If you operate a wedding venue or are a wedding planner, explore all the steps you can take to allow the wedding to go ahead. Can the wedding be moved outdoors? Could it be live-streamed to those who can’t attend? Can you accommodate fewer guests without penalising the couple?

Play Fair on Contracts

Many wedding contracts have fairly punitive clauses for couples that cancel simply because they have changed their minds. In these uncertain times, it may not feel right to enforce those terms. Many businesses in the wedding industry have been tremendously supportive and understanding of couples, often to their detriment. That’s why so many firms are so desperate for insurers to understand the role they have to play.

Here you can read more about the Competition and Markets Authority’s position on refunds for wedding services that are cancelled or altered due to COVID-19.

Keep a Close Eye on Your Finances

If your wedding business is struggling, it’s more important than ever that you keep a close eye on your finances. It might make grim reading, but regularly reviewing financial statements such as cash flow statements, bank statements and payables ageing is crucial to your survival. That will allow you to identify potential issues and take action, such as seeking external funding, before it’s too late.

What if Government Support isn’t Enough?

If you have already accessed all of the government support available to you and your wedding business is still struggling, then don’t worry, there are several other options available to you.

Explore alternative funding

COVID-specific government support is not the only type of funding that’s likely to be available to your wedding business. If you are still trading, then invoice finance, which releases the cash tied up in invoices that you send to other businesses, could provide an immediate cash flow injection. The benefit of this type of funding is that it’s very quick and is also available to businesses with a less than perfect credit record.

Alternatively, if your business is cash poor but has physical assets of value, such as stock, equipment and property, you could use those assets as security for a loan. Asset-based lending, as it’s known, is fast and flexible and can be used alongside other existing forms of finance.

If you have paid off significant portions of hire purchase agreements on company-owned assets, asset refinancing could be another option that’s available to you. A refinance company will usually pay off the balance of the hire-purchase agreement and allow you to access the equity. Although this is effectively the equivalent of creating a new debt to repay old debt, it can be an effective, if expensive way of addressing short-term cash flow problems.

Make an informal arrangement with your creditors

If you have bills you are struggling to repay and are facing payment demands and threats from your creditors, contact them immediately to explain the situation you are in. Landlords, HMRC, suppliers and other creditors understand the problems businesses are facing and may be willing to give you more time to repay your debts. That could provide breathing space and allow you to trade your way out of trouble.

Before contacting your creditors, calculate what you can afford to pay each month, for how long, and make it realistic. If you don’t deliver on your promises, it’s unlikely you’ll get a second chance. There are risks associated with this approach as no legally binding agreement is put in place, so your creditors can change their mind at any time.

Ask HMRC for more Time to Pay

If you’re struggling to pay tax liabilities that are not covered by the government’s COVID-support package, you should contact HMRC on 0800 015 9559. HMRC has set up a new helpline for business owners with 2,000 staff ready to provide advice and support. A Time to Pay arrangement will give your business more time, typically 12 months, to pay your tax liabilities and any interest and penalty charges will be frozen. Crucially, other taxes must be paid when they are due or the HMRC Time to Pay arrangement will be in default, which will reduce the company’s options to settle with HMRC in the future.

While you can contact HMRC and propose a Time to Pay arrangement yourself, it can be beneficial to seek the help of a licensed insolvency practitioner. They will have experience mediating with HMRC and will draw up proposals that are realistic, affordable and have the best chance of being accepted.

Enter into a Company Voluntary Arrangement (CVA)

If you’re unable to repay creditors such as a landlord, commercial lenders, HMRC and suppliers and are being threatened with enforcement action, you need to act quickly. A company voluntary arrangement or CVA is a formal insolvency procedure that will allow for the part or full payment of your company’s debts over a period of up to five years.

You first have to appoint a licensed insolvency practitioner to draw up proposals that will be presented to your creditors. If 75 percent of your creditors (by value of debt) agree to the proposals, the CVA will be put in place. It is a legally binding agreement that will protect the company from legal action and prevent interest charges being added to the debt. As long as you continue to meet the terms of the agreement, you will be able to continue to trade while making affordable monthly payments towards the debts.

What Organisations can you Turn to for Support?

Business Debtline
Phone: 0800 197 6026, Mon-Fri 9am-8pm,

StepChange Debt Charity
Phone: 0800 138 1111, Mon-Fri 8am-8pm,

TaxAid
Phone: 0345 120 3779, Mon–Fri 10am–12midday

HMRC Business Payment Support Helpline
Phone: 0300 200 3835, Mon-Fri 8am-8pm & Sat-Sun 8am-4pm

To find out more, click here