Covid-19 Business query

[W145user]

Would like members thoughts and opinions on the following please.

I own my own business and share shop premises with another business.

We split all the bills (rent, electric, phone, water etc) 50/50 and any repairs 50/50.

As per current rules our shop is shut.

As we have a small rateable value the premises has received the £10,000 grant from the government.

The grant has been paid to the other business as it’s his name on the records.

The other business has paid me a third of the £10,000 rather than the 50% I was expecting.

The reason he gave was due to the fact he employed someone whereas I didn’t and he needs to protect his business.

My feelings are as I pay half of all the bills I should receive half. I don’t pay a third. I also need to protect my business.

He has also Furloughed the staff member so it’s not costing him anything.

Am I right in expecting half or not.

Many thanks

 

[BlackC55]

If its a separate business then you should both get the 10k right?

 

[pmcgsmurf]

If its a separate business then you should both get the 10k right?

It's each business that is in receipt of the SBBS (rates deduction) that gets the grant.

 

[Dryce]

If its a separate business then you should both get the 10k right?

AIUI it's tied to paying business rates.

As regards the OP's question then I suspec that legally his business isn't legally entitled to anything under the scheme - but morally if the businesses split the bills for the premises then it should be half.

However there is the additional - possibly minor complication of de-minimis and state aid and how that is accounted for - and whether transfer of money between the businesses is VAT'able and taxable.

 

[pmcgsmurf]

We split all the bills (rent, electric, phone, water etc) 50/50 and any repairs 50/50...........

The other business has paid me a third of the £10,000 rather than the 50% I was expecting...............

Am I right in expecting half or not...................

I'd say that would be reasonable.

The number of employees, other business commitments etc. for me are immaterial and as you have said HMRC have put a system in place to pay staff 80% of their salary.

If it was me I'd just politely point out that since you pay half of everything it would be reasonable to expect half of the grant.

You may find the other business digs their heels in and sticks to the 33%.

If that turns out to be the case I'd then wait till further bills appear and go to paying 33% of these explaining that to you now seems reasonable.

Unfortunately it is times like this that the worse can come out in some people only trying to look after number one with no consideration for what it right and proper.

 

[AMGeed]

Also, looking ahead, that £10k will have to be repaid back to HM's government at some point?
Better your share is only one third, unless you need that extra £1700 now to keep the business afloat.

 

[pmcgsmurf]

However there is the additional - possibly minor complication of de-minimis and state aid and how that is accounted for - and whether transfer of money between the businesses is VAT'able and taxable.

That came to my mind to, it's not just as simple as moving money with no supporting invoicing.

 

[pmcgsmurf]

Also, looking ahead, that £10k will have to be repaid back to HM's government at some point?

No, these are grants, small business £10k, hospitality £25k, no need to repay.

 

[Swotty]

You say you share all the bills ... does that include rates?

If so, is that 50:50?

 

[pmcgsmurf]

You say you share all the bills ... does that include rates?

If so, is that 50:50?

They likely wont pay rates, anything below £15k is 100% relief.

 

[Deleted member 65149]

If you’re liable for half of the business rates, you should get half of the £10k Small Business Grant. It has absolutely nothing to do with the number of employees.

The shop has been valued as a single entity so your council is treating it as a single business for the purposes of providing the grant, hence only £10k between the businesses equally sharing the premises.

Unless you have a mutual contract with the owner of the other business regarding payment of business rates, he could play nasty because only the ratepayer is entitled to the grant and he’s the one registered as the ratepayer. He has chosen to share the grant with you; but it was at his discretion. If you have it in writing that you equally share the payment of business rates, then he has to give you half.

 

[Deleted member 6183]

Also, looking ahead, that £10k will have to be repaid back to HM's government at some point?
Better your share is only one third, unless you need that extra £1700 now to keep the business afloat.

That will be up to all of us.

 

[Deleted member 65149]

Also, looking ahead, that £10k will have to be repaid back to HM's government at some point?
Better your share is only one third, unless you need that extra £1700 now to keep the business afloat.

No, it’s a grant not a loan so it doesn’t have to be paid tax. But it has to be declared as part of business income and therefore taxable.

 

[W145user]

Also, looking ahead, that £10k will have to be repaid back to HM's government at some point?
Better your share is only one third, unless you need that extra £1700 now to keep the business afloat.

No it's a grant and does not need to be repaid

 

[AMGeed]

^ OK, not having a business I was unsure how the grant worked.
So the taxpayer picks up the bill.
There is going to be a lot of pain in years to come for this extra borrowing.

 

[W145user]

You say you share all the bills ... does that include rates?

If so, is that 50:50?

We get 100% rate relief, so there are no rates to pay.

 

[W145user]

^ OK, not having a business I was unsure how the grant worked.
So the taxpayer picks up the bill.

Yes, just like all the furloughed workers on 80% salary. Employees have been protected, company directors and self employed not so, despite what they say.

 

[pmcgsmurf]

^ OK, not having a business I was unsure how the grant worked.
So the taxpayer picks up the bill.
There is going to be a lot of pain in years to come for this extra borrowing.

The larger businesses pay a surcharge to help support the smaller ones so they do not have to pay rates.
The larger ones now have to continue paying rates while perhaps not having the same income where the smaller ones get grants!

As a rate paying business, for me this is bonkers but that's another discussion.

 

[markjay]

The various COVID-19 schemes where prepared in a hurry and as such they (inadvertently) contain some elements of unfairness.

According to the letter of the law your business is not entitled to the grant, only his business is entitled.

He was being fair by offering to share the grant with you.

The grant is meant to help businesses survive the crisis. It is a fixed amount, i.e. it is not related to the amount of Business Rates that has been paid.

So I would think that sharing fairly does not depend on how you pay the bills, but instead it should be based on the business needs.

I am still with him at this point when he said that his need is greater because he employs someone and offered you one third of the grant.

But his line of reasoning fails on the last hurdle - if his employee is furloughed, than this puts you both in the same place. Unless there's another logical reason why his business will be in greater need of support than yours?

 

[Deleted member 6183]

Any idea why the grant is linked to business rates?

It appears to be up to the local authority (who levy the rates) who can claim, I don't have separate premises and, therefore, neither pay rates or have relief on them so assume I cannot claim the free money?