If your insurance company said you were not covered for Coronavirus under your policy, this is of great interest.
The Financial Conduct Authority (FCA) has brought a case on behalf of a number of UK businesses who’s insurance companies had said they were not ‘covered’ for Covid-19.
The FCA argued that policies which cover firms for business interruption from ‘infectious’ or ‘notifiable’ diseases should pay out for COVID-19 disruption. Similarly, it argued that firms with clauses such as “denial of access” or “public authority closures or restrictions” should also be eligible for payouts.
Yahoo Finance! reported also that: “Around 370,000 firms could be affected by Tuesday’s ruling, which is part of a test case looking at key issues around firms’ entitlements to payouts over the impact of the government-imposed lockdown.”
Mel Stride, Conservative MP and chair of the Treasury Committee added that “This ruling will provide hope for many businesses that have been put through the mill whilst seeking insurance payouts.” However he added: “the devil will be in the detail”.
Following the court decision, Christopher Woolard of the FCA said: “We are pleased that the court has substantially found in favour of the arguments we presented on the majority of the key issues…” adding: “Coronavirus is causing substantial loss and distress to businesses and many are under immense financial strain to stay afloat.”
If you have been refused Covid-19 related business interruption by your insurance company?
Go back to them quoting this test case and ask them to revisit your claim eligibility:
The scheme, launched today 02 Sep 20 is now open for employers to apply, but this is unlikely to work for most salons in the UK because you need to be offering at least 30 work placements.
However, for the larger salons in the UK, key points are:
See more here:
Shine Bright has just launched!
Salonfrog has worked with Claire and Diane, the lovely people at Shine, for a while now and watched this new offering coming together: a package of services exclusively for business owners in the Hair & Beauty industry.
It’s also great because for a monthly subscription, you have access to all their services:
And a lot more.
We never promote other businesses unless we really believe they’re a good fit for our own Clients, never mind recommending them 🙂
Heads up: join now for a big discount!
The people at Shine are selling the first lot of subscriptions at a massive discount of £19 per month (instead of the usual £47) but only if you sign up in the next few days. Well worth it!
More detail here:
Here’s a thing: What do successful Salon Owners do all day?
“Excellent and genuinely practical advice. Thank you! I feel encouraged and motivated.”
was just one of the comments from the Group after the session. Great to hear it helped!
Head over to the Shine facebook group to watch!
The IR35 tax rules have been confusing everyone for a few years now and with the new OPW “off-payroll working” changes now being delayed (thanks to COVID-19) until April 2021, we look to clarify how either apply to Salons where they have self employed businesses working in them (whether through chair renting, space renting, contracting or income splitting).
Before you read on, this is important!
Neither IR35 nor OPW are likely to apply to your salon, because neither rules apply to:
- Self employed contractors
- Self employed contractors supplied by a temp agency (who would pay them via their own PAYE)
- Contractors who have a contract of employment with an umbrella company (who would pay them via their own PAYE)
However, HMRC can still attack self employed set ups in different ways, other than IR35 & OPW. Read on…
Whats HMRC’s beef?
HMRC are looking for disguised employment. In other words, the person in your salon is (for all intents and purposes) really your employee – whether you’re treating them as that or not.
The IR35 tax rules (previously known as the “employment intermediaries” rules) apply when a “worker” in your salon supplies their services via a “controlled” 3rd party (which includes a ‘personal service company’ PSC, partnership, or even another individual).
Currently looks for an IR35 situation within the public sector; but from April 2021 now includes it within the private sector.
How might this apply to salon owners?
By using a PSC, a self employed stylist opens up the tax advantages of a Ltd company and HMRC doesn’t like this because it knows it means less tax and national insurance can be collected from that person.
As an example: a stylists works in your salon, barbershop, or spa but you pay them via their Ltd company (one that they have set up), rather than pay them directly (as you would do an employee, or self employed person).
Another example is where you have an income splitting arrangement with a stylist, but the contract is between your salon and a Ltd company (one that they have set up) and you treat them as self employed.
The Ltd company that they have set up could be deemed a personal service companies “PSC” by HMRC.
How does HMRC use IR35 & OPW?
HMRC applies IR35 & OPW rules in cases where they consider a person is “hiding” behind a PSC but is for all intents and purposes really an employee, or self employed individual.
Once HMRC get a whiff of this set up, they simply compare the person’s set up in practice against its own employment status test and if the person fails, they consider them an employee.
The consequence is that HMRC would then go after the person behind the PSC for income tax and NIC owed.
At the moment, the burden is on the person behind the PSC (this being the person HMRC would go after) but things are about to change…
From April 2021
From April 2021, the onus to check the employment status of any possible IR35 situation and possibly who will need to back pay the PAYE moves to the ‘end Client’ – i.e. the salon owner; but for now, this only applies to medium and large sized businesses only. For small businesses (like most salons), the onus remains with the PSC, at least for now anyway.
‘Small’ is defined as: 50 or less employees, turnover is less than £10.2million and their balance sheet shows £5.1million or less.
So pretty much all independent salons are exempt at the moment.
Should salon owners be worried then?
For the vast majority of Salon owners, IR35 & OPW should not be a worry, for at least 1 of 2 reasons:
- it only applies if the salon has a contract in place (either in writing or in practice) with a PSC (for example a ‘rent a chair’ arrangement with an individual using a LTD company themselves;
- it doesn’t apply to small businesses (ie. you’re exempt as you have less than 50 employees, your turnover is less than £10.2million and your balance sheet assets are less than £5.1million).
But watch out for self employed individuals who don’t have a PSC
Although similar (but different to IR35 or OPW) the more likely risk salon owners face is with their chair renters.
Where HMRC find that your self employed individuals should actually be treated as employees, they will go after the salon owner for PAYE & NIC, backdated to when the individual started working in your salon.
You can check each of your self employed individuals by running them through the online HMRC CEST test (link below).
Print off the results and HMRC say they will abide by them.
As the NHF states: “During the Queen’s Speech Boris Johnson gave an early indication that the government is concerned that the rising rates of self-employment across many sectors, including hair, barbering and beauty, could come at a cost for the government and taxpayers in lost revenues.”
And we know that Johnson recently said: “We will increase fairness and flexibility in the labour market by stopping employers and workers experiencing significantly different outcomes from flexible forms of working.”
It’s an issue that the government has being trying to attack for years – and we’ve been following their attempts very carefully.
We continue to watch this space!
More info from HMRC can be found here:
HMRC’s CEST test can be found here:
In the last few hours, the government has updated its guidance around furlough and we’ve been looking through it.
There are 3 key updates that we think affect you:
1. The original guidance stated that employees who resigned and left after 28 February to start a new job could not be furloughed by their old or new employer.
The updated guidance now says that the old employer can take the employee back and furlough them, but appears to use very generic wording nor any guidance on how it would work.
Remember, there is no obligation to re-hire, and we advise employers to be cautious. This new guidance seems very high level and we await questions on it over the next few days.
2. The updated guidance still does not deal with the question of holidays, although Acas has confirmed that employees on furlough can take holiday at the same time. This will help employers whose employees return from furlough with a lot of holiday to use up.
3. The new guidance has also changed its stance in that now furloughed employees can work for a different employer during furlough, so long as their employment contract allows it.
See all our guidance here.
So Rishi Sunak has made amendments to the scheme, announcing them 3rd April.
If you have applied unsuccessfully, go back to the bank again. But wait a few days, as you’ll see below.
Only around £90m of CBIL loans have been approved for 1,000 small businesses so far, despite 130,000 enquiries. Not good.
Why is this?
Number one is the Treasury’s failure to place restrictions on interest rates, meaning banks were offering CBILS loans with interest rates of up to 30% and demanding personal guarantees from before they would lend.
Rishi Sunak announced the following amendments (3rd April):
He is expected to speak to the banks next week to review the scheme and “ensure everybody is playing their part”.
See more in our coronavirus survival guide
This post has now been replaced by our Coronavirus page:
Salons and spas need to be proactive at the moment and actively communicate with their client base to minimise client cancellations.
It’s been seen that explaining the special measures your salon or spa has implemented to protect its clients is key.
Remember, it’s a worrying time your clients and it won’t take much for them to cancel their next appointment.
Below is an example of a communication you could send to all your Clients, especially the ones booked in over the next 4-6 weeks (but do tailor it to your own circumstances);
and also have your receptionist (or whoever answers the phone and emails) primed with what to say when a Client wants to cancel an appointment, or they’re asking whether the salon is still open, or indeed what measures you’ve got in place.
Here’s the example email:
Dear [client name]
No-one underestimates the impact that the spread of Coronavirus Covid-19 has already had and will continue to have in our daily and working lives for the foreseeable future.
I wanted to personally reassure you that we continue to monitor the situation daily and we are in a position to respond to official Government guidance as it arises.
Over the past two weeks we have put in place the following to keep you safe:
Our salon is working tirelessly and doing the best job we can to protect our Clients and keep them looking great!
It is still business as usual for us in these highly unusual circumstances and our intention is to continue to deliver the highest standard and quality, to all our clients and support you in every way we can.
I wanted to take this opportunity to thank you for your continued support and to thank our staff who are all working incredibly hard to ensure we can continue to serve our Clients well.
Feel free to contact us if you have any questions.
You should have a Business Continuity Plan and a Critical Interruption Plan in place and all staff should know both. For salons and spas, these tend to be one and the same document.
Business Continuity Plan
Your plan of how you will continue to run your salon if one or more of your staff phone in sick.
Critical Interruption Plan
Your plan of what to do if you need to close the salon for one or more days.
What to include in each
The list goes on but in other words: plan now because it can get chaotic very quickly when things are hitting the fan.
And make sure all your staff know what to do.
The NHBF have produced a really good guide which also looks at what to do if you need to close and what rights you have as an owner here: