Specialist guidance on coronavirus for businesses

Supporting your business through the coronavirus pandemic (COVID-19) – your questions answered

To help us address your concerns and provide information that is relevant to your business, please tell us which areas you would like information about by completing the form or find the full information below.

Please note, all information should be taken as general guidance. It is not intended to be a definitive statement of the law nor relied on as advice. All information is correct at the time of publication.

Coronavirus Q&A

Managing issues relating to actual or potential insolvency

What can I do if I am unable to pay my debts as they fall due?

Being unable to pay your debts when they are due could be a temporary (coronavirus) related position, or more a serious/fundamental issue with your business. In either case, it is important to think about your situation and the future of your business carefully and consider taking professional advice. Engaging with key stakeholders early, for example HRMC, lenders, landlords and/or other suppliers to your business, may mean that payments can be (temporarily) reduced or deferred. The current climate, which includes temporary and permanent changes to the law as well as government backed lending and other measures, has created an environment where creditors and debtors should, where circumstances allow, act cooperatively to avoid business failures that can/should be avoided. The Corporate Insolvency and Governance Act 2020 (CIGA), which came into force on 26 June 2020, has introduced new insolvency procedures. It includes a stand-alone moratorium, as well as temporary measures that aim to protect businesses that are struggling because of the pandemic. The Act also relaxes some of the filing requirements for companies at Companies House. Many of the temporary measures have already been extended to the end of 2020 and beyond.

The government’s implementation of policies and protections, some of which are contained within CIGA and other statutes, mean that struggling companies and businesses can benefit from government backed loans; furloughing/its replacement; restrictions on enforcement powers of creditors; and the availability of new stand-alone moratorium and restructuring procedures. CIGA also provides that directors will not be held personally liable for losses sustained by companies that continued to trade during the period 1 March to 30 September 2020 pursuant to wrongful trading provisions in the Insolvency Act 1986. This temporary suspension of liability for wrongful trading has been re-introduced for the period 26 November 2020 to 30 April 2021. It is highly unlikely that an insolvency practitioner would bring a wrongful trading claim for the period falling between 1 October and 25 November 2020.

It is a constantly changing playing field and we recommend that you research whether any (government supported/coronavirus related) loans, funding or support are available to you/your business. You should also check the up to date position as to the availability of other means of support or protection that are or may be available to your business, seeking professional advice and/or assistance if required. Many lenders are also offering specially designed loans and other products to help support their customers through the crisis.

Notwithstanding that the government has introduced a number of temporary and permanent measures to support UK businesses and companies, it is also important to objectively evaluate whether your business remains viable, now or in the future. This includes assessing your staffing needs for the future. Obtaining professional advice early, from solicitors, insolvency practitioners and/or accountants, may be critical to your business surviving. Do not forget that your lenders may be able to assist you as well.

Updated 28 November 2020

As a director, am I personally liable if my business enters insolvency?

Directors can become personally liable for losses to creditors if they trade beyond the point where legislation dictates that they should have ceased to trade in order to minimise those losses. Whilst directors of most companies will no longer be held liable for losses suffered by the relevant company between 1 March and 30 September 2020 or 26 November 2020 – 30 April 2021, this does not mean that there is no risk of personal liability falling on directors.

Personal liability can also attach to directors who breach their duties or cause the relevant company to act inappropriately. It is important to speak to professionals as early as possible if your company or business is insolvent, likely to become insolvent or of dubious solvency. This will help you avoid placing the relevant business or company and/or its board at risk. It also gives the professionals the best opportunity to rescue the company or business or, if that cannot be achieved, to mitigate the losses suffered by creditors and other stakeholders.

The insolvency options available to a company or business dramatically decline as it runs out of money and/or (over)stretches its credit terms and/or (over)leverages its assets. The likelihood of avoiding an insolvency process is significantly improved the earlier that the relevant company seeks advice, engages with stakeholders and implements appropriate changes.

Updated 28 November 2020

What can I do if my business is necessarily dependent upon key suppliers and/or customers who may be at risk of falling into an insolvency process, being unable to supply me or pay my invoices?

The Corporate Insolvency and Governance Act 2020 (CIGA), as amended, effectively prevents creditors relying on statutory demands and/or issuing winding up petitions against another company until 31 December 2020. A creditor can only issue a winding up petition if it can establish that coronavirus has not had an effect on the relevant debtor company, or that the relevant circumstances on which the petition is based would have occurred even if coronavirus had not negatively impacted the debtor company’s finances.

To provide your business with some protection from the risks associated with key customers and suppliers insolvency, you should consider revising your terms, in particular those relating to retention of title and/or credit terms, so that they are more favourable to you. A retention of title clause ensures that the seller retains legal ownership of goods until certain conditions are met, which will normally include payment in full for the relevant goods. Retention of title is a very complex area of law, so even if you consider you have adequate protection it is worth checking that you have the cover that you believe you have. A retention of title clause is also of little or no value unless you take practical steps in relation to your supplies, including ensuring that the relevant products are clearly identifiable as having been supplied by you.

Whilst CIGA includes provisions that prevent suppliers from utilising termination clauses, increasing prices or enforcing retention of title clauses without relevant consent in certain circumstances, it is still worth ensuring you have the best protection for your company and business as possible. If your business has such clauses and regularly relies upon them, it would be sensible to consider reviewing and revising your terms of business in any event.

You can also reduce payment periods; consider requiring deposits to be paid or security to be provided; ensure that invoices are delivered electronically to persons able to authorise and pay them (earlier); consider seeking (part) payment in advance of (discounted) supplies; and consider diversifying your customer and supplier bases.

We recommend that you also check existing insurance policies and consider claiming under them and/or obtaining additional or better insurance cover, such as credit insurance.

Updated 28 November 2020

What can I do if I am facing (likely) enforcement action from my lender or HMRC and/or have issues with a tenant or landlord?

The Corporate Insolvency and Governance Act 2020 (CIGA) came into force on 26 June 2020. CIGA, together with other legislation, significantly curtails the actions that creditors, especially landlords, can take before 30/31 December 2020 and, in some cases, permanently. If you are being threatened, you may be able to avoid the threat and/or reach an accommodation with the relevant creditor. CIGA, as well as other new legislation, are partly designed to assist companies and businesses that have struggled financially because of the pandemic. CIGA, along with related legislation and policies, also seeks to encourage and incentivise an open dialogue between a struggling company and its creditors.

Even in more usual circumstances most creditors, in particular HMRC, have no desire to force their debtors into formal insolvency processes if it can be avoided, as it means they are less likely to get paid in full. They would prefer to engage with their debtors to revise payment terms and even, in some cases, reduce the level of debt to ensure that they get more than they would in a formal insolvency of the debtor.

Equally an underperforming tenant is often better than no tenant at all, which can give rise to rates liability, and other costs and risks for a landlord. Most landlords are not able to forfeit leases for non-payment of rent until after 31 December 2020. Nor are they able to effect corporate rent arears recovery or, since the latest amendment to CIGA, issue statutory demands or winding up petitions against tenants if the reason the tenants cannot pay is related to coronavirus.

Correct as at 28 November 2020

I am proposing to enter into a transaction or joint venture, what can I do to protect myself in the event of the insolvency of the other party?

In these uncertain times, protecting yourself against future uncertainties when entering into any contract may be critical so that the asset, project, opportunity or benefit isn’t lost (in part) to you. Careful wording is required to ensure that relevant clauses and protections are enforceable in the event of the other party’s insolvency to protect your investment.

The current crisis does offer opportunity as well as risk. Entering into a joint venture can also share risk and offer a level of protection for a main business if the joint venture project does not work out as envisaged.

Correct as at 28 November 2020

I’ve heard the government has suspended the rules concerning ‘wrongful trading’. Do directors need to worry about personal liability for continuing to trade whilst insolvent during the pandemic?

The government introduced legislation that provides that directors will not be held personally liable for what might otherwise be deemed to be wrongful trading during the period 1 March to 30 September 2020 and, following further legislation, the period 26 November 2020 and 30 April 2021. This is an appropriate decision in the circumstances and is undoubtably a welcome relief for many businesses. However, whilst other protections for businesses have been extended, there was no extension to the relevant period in which directors will not be held personally liable for wrongful trading. Directors can therefore be held personally liable for wrongful trading for any trading outside of this period.

The suspension of liability for wrongful trading for the relevant period does not provide directors with blanket immunity from the risk of personal liability, even during the relevant period. Where a company is insolvent, or of dubious solvency, the directors’ duties to the relevant company are considered (by a court) with reference to the company’s creditors, not its shareholders. When a company is insolvent, its directors must therefore act in a way that promotes or protects the creditors’ interests. Breaching those duties can still lead to personal liability. As noted above, the suspension of liability for wrongful trading also only relates to a particular periods of time (1 March to 30 September 2020 and 26 November 2020 – 30 April 2021). It will not offer any protection for directors that continue to trade “wrongfully” for the purposes of the Insolvency Act 1986 outside of that period.

Any decision to continue trading a company which is insolvent, or of dubious solvency, must be taken with these considerations in mind and should, in most cases, be taken with the benefit of professional advice.

Correct as at 28 November 2020

Read about our restructuring and insolvency services.

Ken MacLennan - Partner - Insolvency - Clarke Willmott BristolFor more information, please contact
Ken MacLennan
0345 209 1325

Recovery of debts due to my business

What do I do if my customers have not paid outstanding invoices by the due date?

Maintaining cashflow is vital to all businesses and robust credit control procedures are an essential part of this. The current coronavirus pandemic is creating breaks in the chain and, as it was unforeseen, most businesses do not have contingencies in place. If a customer doesn’t pay you by the due date, we advise talking with them as soon as possible. This is especially important given the current situation. By understanding each other’s circumstances, you may be able to reach a solution that works for both of you. If agreeing new terms, you should ensure they are carefully worded so that you do not remain bound by them should the customer’s circumstances improve.

However, if your customer is avoiding you and not willing to discuss the non-payment, it may be a warning sign that they don’t want to, or are unable to, pay you. In these circumstances you should consider the options available to you at the earliest opportunity to give yourself the best chance of collecting the debt.

Correct as at 10 June 2020

Contact a debt recovery solicitor

Banking and business lending

What can I do to safeguard my existing borrowing arrangements during this period of uncertainty?

You should consider your existing financial covenants and, if possible, run revised modelling based on current conditions to see if breaches are likely in the forthcoming testing periods. The government, Bank of England and the Financial Conduct Authority are strongly encouraging lenders to maintain and extend lending, support their customers and not let fundamentally sound businesses collapse. If you have concerns about your ability to meet your obligations, you should speak to your lender as soon as you can. This will allow them to understand your situation and advise you of the approach they are taking to support businesses that might be facing challenging financial conditions.

Correct as at 13 May 2020

Times are hard and cashflow is tight. What financial options are open to me?

The government is running various schemes for businesses facing financial hardship as a result of the coronavirus outbreak, aiming to move quickly to get funds to businesses in need. Details can be found via the government’s own website. Mainstream lenders (for example high street banks) participate in the scheme and the government guarantees some or all or the loan. Options include:

Any new loan or security terms should be reviewed by a solicitor – please contact us for advice.

Correct as at 13 May 2020

What about non-government help?

A number of banks and lenders have announced additional support for businesses during the coronavirus outbreak. These include additional or extended overdraft limits, repayment holidays, waiving fees or extending existing loan terms. Speak to your bank and ask what help they can offer. If the bank agrees to change your loan terms, please contact us if you would like advice on what the changes mean for you.

Correct as at 13 May 2020

My bank has asked me for a personal guarantee to support my business loan. What does this mean for me?

If your bank asks for a personal guarantee, you should seek independent legal advice on your obligations are under the guarantee. The most important thing to realise is that by entering into a personal guarantee for the liabilities of your business, you can become personally liable for the business’s debts.

Correct as at 13 May 2020

Contact a banking solicitor

Terms and conditions of commercial contracts

What do I need to look for in the contracts I have in place with my customers and/or suppliers?

It is advisable to review any commercial contracts you have in place to find out whether you or your customer/suppliers rights and/or obligations may be affected. Check the consequences of a failure to comply, including any rights by either party to terminate.

Correct as at 13 May 2020

What happens if a contract I have in place with my suppliers/customers has been breached?

A breach of contract may provide the non-breaching party with an entitlement to damages, including liquidated damages. A liquidated damage is a fixed or determined sum that is agreed when a contract is formed and will be paid on a specific breach to compensate the injured party.

The contract may include indemnities for breach of contract. An indemnity is when one party takes on the obligation to pay for any loss or damage that has been or might be incurred by another individual as a result of the first party’s breach.

A breach of contract may also provide the injured party with a right to terminate the contract. Alternatively, if the coronavirus pandemic caused the breach the contract may catch this event as a force majeure event.

If you or another party to the contract is in breach you should seek commercial litigation advice.

Correct as at 13 May 2020

What is ‘force majeure’?

Force majeure clauses are common in commercial contracts. The term force majeure means “superior force”. A force majeure clause may encompass “acts of god”, such as earthquakes or hurricanes, and certain acts which are unforeseeable, such as industrial action.

If one of the events listed in a force majeure clause occurs, the clause will usually set out what the parties must do next. For example, a party claiming force majeure may have to notify the other and take reasonable steps to mitigate the effect of the event impacting performance. The onus is on the party seeking to rely on the force majeure clause to prove that the force majeure event has prevented, hindered, delayed or affected the performance of the contract.

A force majeure clause may provide for an extension or postponement of performance, or enable one or both of the parties to terminate the contract.

Correct as at 13 May 2020

What should I be thinking about if my contract has a force majeure clause?

If force majeure clauses have been included in your contract, consider whether the clauses might be triggered by or against you and seek advice. It should be noted that if the clause includes the occurrence of a pandemic, following the classification by the World Health Organisation of coronavirus as a “global pandemic”, this clause is likely to be triggered.

If you need advice on the interpretation of a force majeure clause you should contact our Commercial team. If the parties to the contract are already disputing matters relating to performance, we advise that you urgently contact seek commercial litigation advice.

Correct as at 13 May 2020

What can I do if a contract doesn’t have a force majeure clause in it?

If there is no force majeure clause, or the impact of the coronavirus outbreak is outside its scope, the parties may need to consider whether the contract has terminated by operation of law or any other basis, such as “frustration”. The doctrine of frustration applies where events occur that result in a situation fundamentally or radically different from what was in the contemplation of the parties when the contract was made. However, the doctrine of frustration is rarely available in practice and is unlikely to apply where performance is merely delayed.

If frustration does not apply but the pandemic is nevertheless affecting performance, please refer to ‘Pursuing and defending business disputes’.

Read more about law on frustration.

Correct as at 13 May 2020

What should I do if my contract contains a business continuity plan and policies?

Many businesses may have generic crisis and business continuity plans. These may need to be reviewed to ensure they are effective for this specific crisis and the challenges it brings. In such a novel situation, it is likely that these policies may need to be adapted to enable businesses to properly comply with them.

Correct as at 13 May 2020

How can I mitigate a breach of contract?

Examples of mitigating actions could include using alternative goods or services suppliers where the usual one is unable to provide these, working remotely where possible and taking advantage of the various deadline extensions and assistance offered by the government. There may also be other express provisions in the contract requiring parties to mitigate their losses in certain circumstances.

If it is not possible to rely on the force majeure clause to avoid a breach of contract, there may be other provisions within the contract or principles under English contract law that enable a party to do so. You should seek legal advice if you consider that there has been or there is a potential breach of contract.

For advice on interpreting and understanding the terms of your clients contact a commercial contracts solicitor. If matters become contentious as a result of the pandemic, our Commercial Litigation team is best placed to advise you on your liability, your options and your rights.

Correct as at 13 May 2020

Contact a commercial contracts solicitor

Pursuing and defending business disputes

What happens if we cannot supply goods or services because of reasons relating to COVID-19? Or what should we do if the other party to the contract seeks to rely on COVID-19?

In either case, it is important to establish the effective cause of non-performance. Is the reason for non-performance the virus itself, for example a business having to close because of legislation, or is it a temporary but remediable supply issue?

In the right set of circumstances COVID-19, or matters relating to it, could enable a party to terminate a contract. In other cases, it may result in the committing of a repudiatory breach of contract which entitles the other party to damages.

We recommend seeking legal advice on your rights and guidance on the best action at the earliest opportunity.

Correct as at 27 April 2020

I am struggling to meet my contractual obligations due to the pandemic. Can we agree an extension of time as a way of avoiding action?

This will depend on whether time is of the essence.

A contract may provide a mechanism for extensions and if it does you should ensure that you follow the contract strictly, complying with any formal notice provisions. You should check whether there is any contractual penalty for late performance and undertake a financial risk assessment before proceeding.

Correct as at 27 April 2020

Can we agree to terminate a contract that cannot be fulfilled due to the coronavirus pandemic?

A mutual agreement to terminate is an option. However, care should be taken to ensure that the termination effectively discharges you of all obligations so you avoid any claim for damages being pursued against you. Always seek legal advice before agreeing to terminate a contract.

Correct as at 27 April 2020

What should we do if the other party disputes the effect of the coronavirus pandemic?

Parties to any dispute should always attempt to establish their respective positions and assess whether there is any scope for resolution. It is unlikely that many parties to a contract will have had experience of dealing with a pandemic and therefore this is a new territory for all.
It is advisable that both parties explore means of mitigating their position. Legal advice should always be sought at the earliest opportunity to ensure that you do not waive or weaken your position in the event that matters cannot be amicably resolved.

Correct as at 27 April 2020

How should we communicate with our prospective opponent?

Any conversations about resolution or attempts at reaching a resolution should be conducted on a clear ‘without prejudice save as to costs’ basis. This heading should be used at the start of any conversation or used as a header in correspondence.

Any communication, if not written, should be clearly recorded in an attendance note where possible. If you require legal advice, this will be required by your solicitor as evidence, along with all contractual paperwork.

Correct as at 27 April 2020

I have a business dispute. Does the government imposed lockdown mean that I have additional time to bring an action?

Whilst there have been various legislative changes as a result of the pandemic, the statute of limitations remains unchanged. For a contractual dispute, you have six years from the date of breach to pursue a claim. For negligence claims (whether or not against a professional) you have six years from the date of loss, or if later three years from the date of knowledge of the loss.

Limitation issues can be complex. If you are uncertain, it is important that you speak with a commercial litigation solicitor to ensure that deadlines are not missed or that certain steps are taken so that your claim does not become barred.

Correct as at 27 April 2020

Can I still issue court proceedings during the lockdown?

The courts are still operating. New claims can continue to be issued and should be issued in good time, with additional consideration to limitation periods. The time periods for service, acknowledgment and filing of defences remain unchanged. However legislative changes have permitted the parties to extend certain deadlines by up to 56 days (previously 28 days) where the parties agree.

Correct as at 27 April 2020

How will the court conduct hearings and trials during the lockdown?

Legislation and guidance from the courts is that as many hearings as possible should be conducted
remotely. A court will not postpone a trial simply because physical attendance is not possible. Hearings are likely to be heard by telephone or Skype.

Inevitably the change in the functioning of the courts is resulting in a build-up of cases and adjournment of some matters. The knock-on effect is that there will be a delay in cases being heard or set down for directions and trials of some cases may well be postponed for several months in certain courts.

Correct as at 27 April 2020

Is there an alternative to issuing court proceedings during lockdown?

Alternative dispute resolution (ADR) is something that all parties should consider before commencing court proceedings, irrespective of any pressures that the courts are under due to the pandemic. ADR can allow disputes to be resolved more quickly and cost-effectively. Read more about mediation and its benefits.

You could consider engaging in mediation or if proceedings have not been issued, resolving the dispute by arbitration could be an option. Indeed, the parties may be contractually obliged to undertake ADR prior to commencing court proceedings.

Correct as at 27 April 2020

How does remote mediation take place?

Several mediation practices already conduct mediations remotely, therefore the recent pandemic has not unduly troubled mediators. It will still be possible for the parties to have private conversations in their own virtual room and for all parties to be put into the same virtual room with the mediator for the purpose of discussions. Careful preparation by the lawyers will mean that a virtual mediation can be just as effective as one that is conducted in person.

Correct as at 27 April 2020

Can we use arbitration as an alternative to mediation or court?

A contract may already make provision for arbitration. If it does not the parties could seek to agree to use arbitration as a means of resolving their dispute.

Arbitration is similar to court proceedings in that the outcome, known as the award, is binding on the parties just like a court order is. The difference is that the parties have more freedom on the steps and action to be taken in preparing their case, and the arbitrator (or panel) are appointed based on the expertise of the subject matter.

The current global impact of the pandemic is likely to lead in an increase in arbitrations, particularly because an arbitration award (unlike a court judgment) is automatically enforceable in a foreign jurisdiction. With the added pressures faced by the courts, arbitration will present a cheaper, faster and more flexible resolution procedure.

Correct as at 27 April 2020

How do we sign court documents during the pandemic?

In most circumstances, documents relating to legal proceedings can be signed using electronic signatures such as PDF, electronic signature platforms or a photograph of a wet ink signature. During the pandemic, the court has agreed that they will accept documents signed in that way. However, the document must be signed. A document will not be accepted if it does not bear a signature.

Legal advice should be sought to ensure a document is executed correctly.

Correct as at 27 April 2020

How do we sign legal documents during the pandemic (excluding court documents)?

It is generally accepted that electronic signatures will be valid on legal documents, provided there is an intention to be bound and the relevant requirements have been complied with. Particular care should be taken if that document is in relation to a deed, and/or a document that requires a witness or involves issues outside of English jurisdiction.

Legal advice should be sought to ensure a document is executed correctly.

Correct as at 27 April 2020

Contact a commercial litigation solicitor

Commercial leases for landlords and tenants

Does a tenant who cannot trade have to pay rent?

Most leases contain a clause suspending the requirement to pay rent where premises cannot be occupied due to an event that is covered by the landlord’s insurance policy. It is highly unlikely that the coronavirus pandemic is an insured risk covered on a landlord’s policy for loss of rent, although some occupiers may be able to make a claim for losses caused by the pandemic if they hold business interruption insurance. For a list of insurers whose policies could provide such cover see here.

The measures announced by the UK government do not include a release from any contractual obligations to pay rent.

Updated 24 September 2020

Can a landlord use commercial rent arrears recovery (CRAR)?

On 24 April 2020 the government introduced regulations to restrict the use of CRAR to cases where the rent is more than 90 days overdue. On 19 June the government announced it will extend the period from 90 to 189 days. This will apply until 30 September. On 16 September the government announced that the period will be further extended with effect from 30 September to 276 days where CRAR takes place before 24 December 2020, and 366 days where CRAR takes effect on or after 25 December 2020.

In any event, CRAR cannot be used for sums other than the annual rent. Nor can CRAR be used where the demised premises contain residential premises.

Updated 24 September 2020

Can a landlord issue court proceedings for rent arrears?

There is no prohibition on commencing court proceedings. This means that a landlord can issue court proceeding for rent arrears at this time.

Updated 24 September 2020

Can a landlord serve a statutory demand for rent?

The Corporate Insolvency and Governance Act 2020 prevents a winding up petition being presented from 27 April until at least 31 December where the landlord relies on a statutory demand served between 1 March and 31 December 2020.

It also prevents a winding up petition being presented between 27 April and 31 December unless the landlord can show it has reasonable grounds for believing that coronavirus has not had a financial effect on the tenant company, or the company would have been unable to pay even if coronavirus had not had a financial effect on the tenant. This is likely to be very difficult so in practice we expect to see all petitions stop while these provisions apply.

Updated 24 September 2020

What should we do if we want to arrange a temporary waiver or rent concession?

We recommend that any waiver or concession is documented in writing. You will want to consider whether any concession needs to be subject to conditions. Where there is a guarantor, they will need to be involved to avoid inadvertently releasing him or her from future liabilities.

On 19 June the government published a Code of Practice for commercial property relationships during the COVID-19 pandemic. This encourages transparency and co-operation when discussing requests for discounts or waivers.

Updated 24 September 2020

Can a landlord draw down on a rent deposit?

Yes. There are no coronavirus restrictions on withdrawing sums from a rent deposit. The terms of the rent deposit deed should be followed. This may require notice to be given. Consideration should be given as to how to serve a valid notice.

Updated 24 September 2020

Can a landlord forfeit a commercial lease?

Section 82 of the Coronavirus Act 2020 restricts forfeiture of leases to which Part 2 of the Landlord and Tenant Act 1954 applies for non payment of rent. Part 2 does not apply to mining leases, tenancies under six months (unless there is provision to extend the term or the tenant has been in occupation for more than six months), farm business tenancies or tenancies covered by the Agricultural Holdings Act 1986.

Under section 82 a landlord is prevented from starting court proceedings or effecting peaceable re-entry to forfeit a lease for non payment of rent until at least 31 December 2020. Where a landlord had commenced proceedings before the Act came into force, the court cannot make an order for possession to take effect before 31 December 2020. If an order for possession has already been granted it cannot be enforced before 31 December 2020.

Forfeiture for breaches other than non payment of rent is unaffected by the Act. It will be necessary to serve a section 146 notice and allow a reasonable time to pass before seeking to forfeit the lease. However all possession claims are automatically stayed until 20 September 2020. As a consequence, a landlord wishing to forfeit a lease for reasons unconnected with the failure to pay rent may only do so by peaceable entry for the time being.

Updated 24 September 2020

Will a break option still apply?

Yes, a break option still applies as there are no restrictions on either party relying on an option to end a lease early. Care will need to be taken to ensure that the requisite break notice is properly served. Currently there are occasional issues with postal service and there are only a few process servers willing to effect personal service, so where possible allow plenty of time for service.

If the break is conditional, for example on providing vacant possession or undertaking reinstatement works, consideration will need to be given to whether the conditions can be met. If conditions cannot be met force majeure, a clause in a contract that allows the agreement to be broken in the event of unforeseeable circumstances, is unlikely to assist the tenant. This is because there are seldom force majeure clauses in leases. A tenant may want to rely on the doctrine of frustration, although there is no certainty that this will apply.

An unconditional break clause will still operate if the tenant cannot gain access to remove their possessions. Failure to remove to give vacant possession following a valid break notice will be a breach of the yield up obligations only. A landlord would have a claim for damages. It could require payment of double rent under the Distress for Rent Act 1737. The landlord would owe the tenant a duty of care as an involuntary bailee of the goods left behind.

Updated 24 September 2020

Is the lease frustrated as the tenant is prevented from occupying due to government restrictions?

There is no case in which a lease has been frustrated. Frustration requires an outside act which the parties could not have, and did not, contemplate. In 2019 the court decided that Brexit did not frustrate a lease. In 2004 in Hong Kong the court decided that SARS did not frustrate a lease. To some extent the length of the disruption caused by the coronavirus pandemic and the length of the lease will determine whether a court faced with a tenant arguing that its lease is frustrated is prepared to agree that the doctrine does apply to COVID-19. It may be that tenants who are unable to take advantage of a break option or who have shorter leases are better placed than those with long term leases to make a case for their lease being frustrated.

Updated 24 September 2020

Can a landlord pass on increased cleaning costs to tenants?

This will depend on the terms of the lease. In most cases we would expect increased costs of cleaning, the provision of hand sanitizer and other similar items will be covered by most service charge clauses.

There may be issues where a centre, building or estate has been kept open for essential services or key workers, but other commercial occupiers are not permitted to open or to work from their premises. In such cases arguments about “reasonable proportions” or “fair and reasonable” amounts may arise.

The Code of Practice for commercial property relationships during the COVID-19 pandemic, introduced on 19 June addresses these concerns.

Updated 24 September 2020

Are landlords in breach if they refuse to allow access to premises?

Most leases contain a covenant to allow the tenant quiet enjoyment of the premises and contain an implied covenant that the landlord will not derogate from grant. If premises are closed by the landlord, there may be a breach of these covenants. However, we will need to review this on a case by case basis and consider the detailed government guidance on which business can and cannot open for business.

Landlords and tenants are expected to follow the government’s guidance to close specified businesses. Neither the act nor the guidance contain a general requirement for offices to close. Government guidance is that apart from the limited list of businesses that are required to shut down, “it is important for business to carry on” and entry to offices may be allowed where work cannot be done from home.

Certainly within offices, certain rules must be followed (social distancing, no person exhibiting symptoms must travel to work, for example) and it should be ensured that employees are able to follow Public Health England guidelines. Therefore, if, for example, a landlord prevents access to offices it may be that this is a breach of quiet enjoyment / derogation from grant, but we will need to look carefully at the facts of each case.

Updated 24 September 2020

Contact a property litigation solicitor

Validity of insurance policies

Will my insurance cover me for a breach of contractual obligations due to coronavirus?

You need to review your existing cover, especially business interruption insurance. You may have cover for loss of use of a premise due to contamination for example. There may however be specific requirements in relation to unoccupied premises. You therefore need to check the policy for notice periods and other formal requirements. If you are required to make notifications make sure you comply with your obligations in relation to how and when to notify. You also need to consider whether insurer consent will be required for any steps you anticipate taking to respond to events, such contingency plans for working locations.

Correct as at 21 May 2020

What should I do about my business interruption insurance?

Most standard business interruption insurance policies are designed to only cover loss caused by physical damage at the insured’s business premises. This means they are unlikely to provide cover for coronavirus-related losses. However, some policies do provide extended cover for non-physical damage such as closure of premises or denial of access.

The most likely route is by way of extended cover for loss due to the occurrence of notifiable infectious diseases (essentially those which have been classified by the UK government as notifiable to Public Health England). Many policies that include this kind of extended cover specify particular notifiable diseases. As COVID-19 was not classified as notifiable until 5 March 2020 it will not be specified, meaning the policy won’t pay out.

Some policies do not specify particular notifiable diseases, meaning they may provide cover. In this situation, the insured is likely to have to show that it was unable to use its business premises due to government restrictions or advice. Closing solely out of caution is unlikely to be enough, but as government guidance has grown more stringent throughout March this will have become easier.

We recommend checking your policy wording carefully and discussing your coverage with your broker where relevant. If you believe your policy provides cover, you should make a claim as soon as possible. If your insurer refuses to pay out, obtaining professional legal advice may help. The courts are available as a means of resolving disputes where necessary and since 1 April 2019, small businesses are eligible to use the Financial Ombudsman Service (FOS). The FOS is free to use and can make enforceable awards of up to £350,000

Correct as at 21 May 2020

Contact a financial litigation solicitor

Corporate and business governance

The company is required to hold board meetings and or general meetings of the shareholders in the near future. How do we do this with people self-isolating?

The practicalities of calling and holding such meetings should be considered and it would be sensible to check relevant provisions of the company’s articles of association and any shareholders agreement. This includes, for example, the number of directors that are required in order for board meetings to be quorate and whether attendance at such meetings can be by telephone/ video calls, rather than personal attendance. Consider whether there are provisions allowing for alternate directors and proxy voting. Large-scale physical general meetings are unlikely to be possible in the near future and so alternative arrangements should be considered.

The government has announced that new legislation will be introduced to allow companies greater flexibility in holding AGMs, Potentially, this will allow AGMs to be held online or postponed. However, the legislation has not yet been announced and we await further details.

Correct as at 19 May 2020

A shareholder or director of the Company has contracted coronavirus. What are the implications if they become seriously ill or even die?

You might consider, for example, reviewing the articles of association and any shareholders agreement for relevant provisions that would apply in the event of the death or serious illness of a shareholder or director. Consider whether you have a cross option agreement (an agreement which obliges the company to purchase a deceased shareholders’ shares from their estate, which are often backed by life assurance).

Correct as at 19 May 2020

The deadline by which we need to file our company accounts is this month, but the accounts will not be finalised in time. What should I do?

Companies House recently announced that from 25 March it will automatically grant a two month extension to file company accounts. Companies House has advised that companies should act before the filing deadline.

Although the law provides a three month extension, it is not normally Companies House policy to allow extensions unless there are extreme circumstances. However, due to coronavirus, policy has changed to automatically allow for a two month extension and then another month after that if companies can demonstrate extreme circumstances.

Correct as at 19 May 2020

Contact a corporate solicitor

Intellectual property queries

I was due to make a filing to the UK Intellectual Property Office (IPO) and I am worried about missing a deadline due to the coronavirus pandemic. What can I do?

The UK IPO recognises the disruption to business caused by the coronavirus pandemic. It has declared all days following 24 March 2020 to be “interrupted days”. This action relaxes the requirements on applicants and rights-holders to act by certain deadlines, as any deadlines which fall on an interrupted day will be extended to the next non-interrupted day. The situation has now been reviewed and the UK IPO has decided to end the period of interruption on 29 July. This means that the first normal day of operation when all interrupted days deadlines expire will be Thursday 30 July.

The period of interruption does not apply to time periods set out under the Madrid system, where the UK IPO may be acting as a receiving office.

Correct as at 6 July 2020

Can I make a filing to the UK Intellectual Property Office (IPO) on an interrupted day?

IPO staff are equipped to work from home and will continue with business as usual as far as possible. This means that you can still file on interrupted days. Where possible we will continue to meet the original deadlines for our clients, rather than wait for the end of this period of interruption.

Correct as at 6 July 2020

Will the filing date of my new application be affected by the interrupted days?

New trade mark and design applications will not have their filing dates affected by these interrupted days if they are filed at the UK IPO and do not claim priority from a previous application. These will continue to be assigned a filing date under the usual rules.

Correct as at 6 July 2020

Do I need to ask for an extension to respond to examination reports during this period?

The UK IPO has announced that it will allow four months to respond to new examination reports issued in relation to trade mark applications, not the current two months. This removes the need to request an extension.

It is not possible to automatically extend the reply period for design examination reports, but extensions are available on request.

Correct as at 6 July 2020

Will there be a delay in the publication of trade marks on interrupted days?

Most accepted trade marks will be published for opposition purposes as usual. There may be a delay for some because of the need to notify owners of any earlier UK marks (and international marks with UK designation) identified within the search report as this is currently only done by post.

Correct as at 6 July 2020

Should I expect a delay with my correspondence with the Intellectual Property Office (IPO) on interrupted days?

There will be a delay in receiving postal versions of trade mark and design registration certificates. The IPO will continue to receive and process international applications and registrations and correspond with holders by email where possible.

Correct as at 6 July 2020

Read about our Intellectual Property team

Kate Cheney - Senior Trade Mark Attorney - Intellectual Property - Clarke Willmott SouthamptonFor more information, please contact
Kate Cheney
Senior Trade Mark Attorney
0345 209 1529

Visa sponsorship, right to work checks and stranded employees

If employees or students are unable to attend work or their studies due to illness, are sponsors of non-EU nationals who are Tier 2 or Tier 5 employees, or Tier 4 students required to report absences that they have authorised?

No, employers and educational organisations, will not be required to report absences that they have authorised. This means employees and students can follow government guidelines on self-isolation without the fear of having their visa removed.

Are sponsors required to withdraw sponsorship when an employee is absent from work without pay for four weeks or more, or when a student is unable to attend for more than 60 days?

No. In this situation sponsors will not need to withdraw sponsorship. It will be at the sponsor’s discretion if they think there are exceptional circumstances e.g. relating to the coronavirus. The Home Office recognises that decisions on whether to terminate employment or withdraw individuals from their studies are for sponsors themselves to make. They will not take compliance action against sponsored individuals who are unable to attend work, college or university due the coronavirus pandemic.

In addition to this, action will not be taken against sponsors who authorise absences and continue to sponsor employees or students despite absences due to coronavirus. The Home Office will keep absence periods under review. We suggest that sponsors, where possible, ask for some evidence that the absence is related to the coronavirus. Of course, as the NHS isn’t currently actively testing for the virus evidence may be difficult to obtain and you may wish to seek legal advice.

I have an employee who is on a UK visa and unable to return home because of the coronavirus pandemic. Can they extend their visa?

Guidance from the government states that people with a visa who can’t return home due to the coronavirus pandemic can extend their visa. The extension will apply to anyone whose visa expired after the 24 January and who can’t leave the UK because of travel restrictions or self-isolation.

The extension has been put in place to give these individuals peace of mind that they will not be penalised for overstaying their visas when the situation is out of their control due to the coronavirus pandemic. The extension is set to last until 31 May 2020 and will be kept under regular review in case (as is likely) further extensions are needed.

People who want to apply for visas to stay in the UK long term can temporarily do this in the UK. This will mean people can apply to switch routes, e.g. from Tier 4 Student to Tier 2 General Workers, without having to the leave the country.

Do I still have to conduct right to works checks during this period?

Yes, although from 30 March 2020 right to work checks for employers have been temporarily adjusted due to the coronavirus pandemic. This is a welcome move that makes it easier to carry out the checks.

It is important to understand that whilst the checks have been made easier to conduct, they continue to be necessary and employers must continue to check the prescribed documents listed in the Home Office guidance. It is still an offence to knowingly employ anyone who doesn’t have a right to work in the UK.

The coronavirus pandemic has left some people unable to evidence their right to work. During this period, employers must be extra cautious to make sure they don’t discriminate against any job applicants or employees simply because they can’t provide documents.

Read more about the adjustments to right to work checks and post COVID-19 measures.

Does the furlough scheme apply to sponsored employees?

It depends. The furlough scheme only applies if the employee is employed by a UK entity through PAYE. This means it may not apply to some workers employed under Tier 2 Intra-company Transfer scheme (ICT).

We have received a copy of an email from the government that states:

The Government has made provisions to allow employers to retain employees during interruption to commercial activity because of the pandemic. Employers can apply for support from the Government that can assist with these current difficulties. Employees whose leave in the UK is subject to conditions that they have no recourse to public funds may be able to secure assistance (subject to meeting all requirements) through-

  1. Statutory Sick Pay
  2. Contributory-based Employment and Support Allowance
  3. Support provided to employers through the Coronavirus Job Retention Scheme
  4. Some other work related benefits.

I have employees (British nationals and foreigners) stranded outside of the UK. What can I do?

On 30 March 2020 the government announced measures to help British nationals stranded abroad. Read our practical tips for anyone who is struggling to get home to the UK due to the coronavirus pandemic restrictions.

I am unable to contact an EU processing centre. Why is this?

The EU Settlement Resolution Centre telephone lines are currently closed due to the coronavirus pandemic. There is an automated message to state centres will open once they are able to do this safely. However, no indication is given of when this may be.

Do employers have to report sponsored migrants who are working from home?

The coronavirus pandemic is having a huge impact on businesses that rely on migrant workers. The Home Office has confirmed that all employers who have a licence to sponsor non EU workers will not have to report a change of location for all sponsored migrants working from home at present.

How can I contact the Home Office?

Employers who have employees whose visa has expired must contact the Home Office to let them know and so they can issue extension.

The government has set up a Coronavirus Immigration Help Centre. Calls are free of charge.

Telephone: 0800 678 1767 (Monday to Friday, 9am to 5pm)

Email: CIH@homeoffice.gov.uk

It is very difficult to get through to the helpline and we have been informed that the government’s preference is for people to submit enquires by email. This is because a number of caseworkers are working from home. However, there is still a considerable delay in obtaining a response.

Implications on construction contracts and development agreements

What are the implications of the coronavirus pandemic on my construction contract?

Recent government advice has put the UK into lockdown and we have been asked to avoid non-essential travel and increase social distancing. Similar restrictions are being made across the world as the impact of the coronavirus is felt by many nations. It is clear there will be difficulties in the construction industry. Parties will no doubt struggle to fulfil their contractual obligations. In addition, there are uncertainties around whether the supply chain will be able to deliver; any breaks will result in delays to or the suspension of programmes.

It seems highly probable that the coronavirus pandemic itself will be found to constitute a force majeure. This will only be applicable if the contract was entered before the coronavirus outbreak. Alternatively, contracts will be “frustrated”. This means they literally cannot be performed.

Continue reading our guide to force majeure and frustration in construction contracts.

What are the implications of the coronavirus on my development agreement and getting the development done?

Property development agreements comprise a series of events and as each is reached and satisfied, the project moves on:

  1. Obtaining planning permission;
  2. Starting on site;
  3. Completing works.

COVID-19 has the potential to affect the timetable at any of these stages. Our Construction team has produced guidance on each of these stages.

Contact a construction solicitor

VAT deferral, payments and returns

The chancellor announced a VAT payments deferral on 20 March to support businesses with cashflow during the coronavirus pandemic. What are the details and how can I claim this?

The announcement means that all businesses with a UK VAT registration have the option to defer VAT payments due between 20 March and 30 June 2020. Businesses have until 31 March 2021 to pay any VAT deferred as a result of this announcement. HMRC will not charge any penalties or interest on payments deferred by this announcement.

Businesses do not need to inform HMRC if they wish to defer payments. They can opt in to the deferral simply by not making VAT payments due in this period. Businesses that pay by direct debit should cancel their direct debit with their bank. This can normally be done online and should be done in sufficient time so that HMRC does not attempt to automatically collect on receipt of their VAT return.

Should they wish, businesses can continue to make payments as normal during the deferral period and can continue to make ad hoc payments after the deferral period to repay any deferred VAT up to 31 March 2021. HMRC will also continue to pay repayment claims as normal.

Correct as at 19 May 2020

What payments are covered by this announcement?

All payments of VAT to HMRC due between 20 March 2020 and 30 June 2020 can be deferred until 31 March 2021. This includes:

  • payment for quarterly returns ending 29 February due 7 April;
  • payment for quarterly returns ending 29 March due 7 May;
  • payment for quarterly returns ending 29 April due 7 June;
  • payment for monthly returns due in this period;
  • payments on account due in this period; and
  • annual accounting advance payments.

Correct as at 19 May 2020

Can I defer payment of import VAT/customs duties as part of this announcement?

Until recently, the position was that you must pay import VAT and customs duties in line with existing rules.

HMRC announced on Friday 10 April that they will consider requests from UK VAT registered businesses who import goods from outside the EU to suspend the monthly March deferment account payment for import VAT and customs duty, which is due this Wednesday 15 April. The timing of the announcement does not provide much time for importers to contact HMRC and request this suspension.

Requests for this suspension must be made via one of three channels listed below.

  • Telephone the HMRC Duty Deferment Office on 03000 594 243. Lines are open Monday to Friday, 9am to noon, and 2pm to 4pm.
  • Email the HMRC Duty Deferment Office at cdoenquiries@hmrc.gov.uk
  • Telephone the COVID-19 helpline on 0800 024 1222. Lines are open Monday to Friday, 8am to 4pm.

The applicant will need to explain how the pandemic has impacted the business’s finances and cashflow, and suggest a belated payment plan. Once an agreement is reached, HMRC will not approach the bank guarantor to ask for the outstanding payment.

No interest will be charged by HMRC, and the compliance status of the importer will not be affected. The importer can continue to use their duty deferment account as usual during the payment suspension period.

A similar approach is available for VAT registered importers who do not use a deferment account and will struggle to pay import VAT and customs duty on particular imported shipments. Currently the goods will not be released from customs control at the port or airport without either a deferment account or immediate payment. However, importers can contact HMRC at the above email address to request a suspension period. HMRC suggest that these agreements may require that the importer creates a bank guarantee.

Correct as at 19 May 2020

Does the deferral apply to other taxes/duties such as Machine Games Duty, Insurance Premium Tax, withholding tax etc?

No, unless covered by another government announcement, you must pay all other taxes/duties in line with existing rules.

Correct as at 19 May 2020

Does deferral apply to VAT due to be paid in relation to disclosures and assessments due to HMRC?

No, only VAT payments due alongside normal VAT returns between 20 March and the end of June will be deferred. For any other debts, HMRC’s Time to Pay scheme has been enhanced. Additionally, HMRC has a dedicated helpline for those who cannot pay because of COVID-19. The telephone number is 0800 024 1222 and lines are open Monday to Friday, 8am to 4pm.

Correct as at 19 May 2020

Can I still make a VAT payment at my usual time?

Yes, the deferral is optional.

Correct as at 19 May 2020

Will there be any changes to the VAT MOSS or EU refunds systems?

No, this announcement does not cover any payments or policies relating to the VAT MOSS or EU refunds system.

Correct as at 19 May 2020

What happens after the VAT deferral ends?

VAT payments due following the end of the deferral period will have to be paid as normal.

Businesses will be given until the end of 2020/21 financial year to pay any VAT they deferred as a result of this announcement. Payments must be made on or before 31 March 2021.

Correct as at 19 May 2020

How do Time to Pay (TTP) arrangements interact with the new arrangements?

For TTP arrangements made for payments due before 20 March 2020 you will need to continue to make these payments. If you are struggling to meet these obligations, you can contact the dedicated helpline on 0800 024 1222.

For TTP arrangements made for payments due between 20 March 2020 and 30 June 2020 only you can benefit from the ability to defer payment until 31 March 2021. You do not need to notify HMRC. You will need to cancel any direct debts set up for these arrangements.

If you are struggling to pay your tax bill on time HMRC is also delivering an enhanced Time to Pay offer to fit the specific impacts of COVID-19. Time to Pay is available to all businesses and individuals who are in temporary financial distress as a result of COVID-19 and are unable to pay their tax on time or having existing liabilities. HMRC has set up a dedicated helpline to enable those eligible to get practical help and advice which can be reached by calling 0800 024 1222.

Correct as at 19 May 2020

Do I still have to submit VAT returns?

Businesses must continue to submit VAT returns as normal.

Correct as at 19 May 2020

What happens if I can’t submit accurate returns?

In normal times HMRC expect you to apply for estimation. HMRC still require you to apply in writing. As it is unlikely that you will get a response in time, you should as a minimum log the matter by phone and obtain a reference number/ officer name for proof.

Correct as at 19 May 2020

Will any interest or penalties apply to the delayed payment?


Correct as at 19 May 2020

Will any interest or penalties apply to a delayed VAT return?

These may still be charged if the return is submitted late. HMRC has published updated guidance about the impact of COVID_19 measures on reasonable excuse, penalties and appeals.

Correct as at 19 May 2020

Contact a tax solicitor

Contact a solicitor

If you need to speak to someone and are unsure which of our solicitors will be able to help, please complete an enquiry form and we will get back to you.

Latest news and updates

Supreme Court judgment: FCA’s business interruption insurance test case

The Supreme Court handed down its judgment on the...

Read more

Child arrangements in lockdown

Since the outbreak of #Covid19, the Government has allowed...

Read more

The Quiet Green Revolution

Dale Edwards, Strategic Consultant – Green Energy shares his...

Read more

Wealth, Health and Inheritance Briefing – December 2020

As I write we have had good news about...

Read more

Looking for legal advice?

Ask us consultation Request a consultation
Call us call 0800 652 8025