Help for solicitors following the Covid-19 outbreak
The Government has announced a package of support for businesses ranging from supporting SMEs with payroll costs to the creation of temporary loan schemes.
We have created a Coronavirus hub on our website which is updated regularly with guidance and advice as this ever-changing picture evolves.
Law firm specific guidance
The Law Society has provided a lot of guidance for firms, covering mostly practical advice relating to performance of legal services.
The SRA has also produced some guidance notes, which are more relevant to client account concerns:
Of particular note is the SRA’s response to the delay of banking client funds:
“Our accounts rules set out that you should promptly pay client money into your firm’s client account. If you are delayed in paying in any cheques because of the impact of the coronavirus on your firm or your bank, we would expect you to keep your client updated as to the position. You should document any decisions you make, and we will take these mitigating factors into consideration if we were to receive any complaint. You may also want to look at other banking options so you can continue to effectively deal with your client’s money, such as requesting electronic payments where these are possible.”
Another area to consider is the processing and approval of online payments from the client bank account. In some firms, a paper payment slip is required to be signed by a fee earner to authorise payments prior to them being processed, which clearly cannot occur whilst working from home. Rule 5.2 of the SRA Accounts Rules only required that withdrawals are “appropriately authorised”, therefore not requiring that a physical signature is required. In this circumstance, the fee earner can authorise a payment via an email. It is recommended to remind fee earners of their responsibility to adopt the same scrutiny of authorising a payment, for instance checking enough funds are held on the client ledger. Rule 5.2 also expects “supervision” of the withdrawal, which in a work from home scenario ought to include checking that the withdrawal has been processed correctly.
Following this, the actual payment from the bank should still be actioned by the appropriate persons as per the firm’s internal procedures. It is recommended that there are contingency plans in place, to cover for where members of staff in this process are unavailable. This may therefore be a good opportunity to review the procedures and consider if there are enough people in each stage of the process. Where there is not, and a further appropriate person is identified for a stage of the payment process, an additional login would need to be set up with the bank. The use of one login for numerous individuals is not recommended.
The Government has announced also that they will support businesses by deferring Valued Added Tax (VAT) payments for 3 months. Our factsheet provides a summary of the key facts to be aware of.
You may wish to consider deferring your next VAT return payment (only applicable to returns filed on or after 20/03/2020 and before 30/06/2020) to assist with cash flow.
Should you wish to defer payment and you currently pay your VAT via direct debit you will need to cancel this direct debit otherwise the payment will be taken automatically in the usual way by HMRC.
Please note that submission of the VAT return by the normal deadline is still required by HMRC even if you chose to defer payment.
For limited companies and limited liability partnerships, Companies House have announced that businesses can apply for a 3 months extension to the filing deadlines for their statutory accounts, where meeting the initial one is now no longer possible.
For the SRA Accounts Rules accountant’s report, although there is no set extension period as above, the SRA have stated that they will be pragmatic regarding requests for additional time to complete the accountant’s report longer than the standard 6 months deadline from the period end date.
ACAS HR guidance
The ACAS website has some useful HR information on how to deal with the current situation. One particular area of concern is this page which is specific advice for employers and employees:
Financial support for the self-employed and partners in small law firms
The Chancellor, Rishi Sunak, announced last week a package of support to help the self-employed, which also covers partners. We set out a summary of the measures here.
As a business we are taking our social responsibility very seriously and we are working seamlessly from home. We are fully contactable via the usual telephone numbers. If you have any questions about any of the above please do not hesitate to contact a member of the Professional Practices team on 01772 821021.