Update on Coronavirus Schemes Introduced by Government

sailing boat in bright landscape

This week has continued to see us advising clients on measures introduced by the Government, see below for some updates on implications for small companies and also the changes to Insolvency Law that are designed to help businesses in difficulty during this period.

Coronavirus Job Retention Scheme – Small Companies

Many clients who are directors of small companies have contacted us regarding the Coronavirus Job Retention Scheme, specifically as to whether they can furlough themselves and whether dividend income would be included in the calculation. It has been clarified by the treasury that it is possible to furlough Directors, however this would only see Directors claim for the PAYE element of their income and the duties they can undertake for the business would be severely limited (IE: Unable to do work that would add value or generate revenue for the business). See below for the direct quote.

“With respect to Directors and owner managers, that does not disqualify them from being furloughed so long as they are on PAYE payroll. I understand that they will have some statutory duties and obligations such as filling up their accounts and they will still be allowed to undertake those statutory duties whilst they are being furloughed so that would not count as doing work. So one of the key conditions of the furlough scheme is that the employee is not allowed to work for the employer but if you are the owner-manager and you do have statutory duties then you can continued to undertake those duties while being on furlough.”

Ben Kerry, Head of Labour Markets, HM Treasury.

Insolvency Laws

In response to COVID-19, the government has introduced changes to insolvency laws to provide businesses with extra time and space to weather the storm. The two key changes are below:

Wrongful trading:

There will be a temporary suspension of wrongful trading provisions for company directors to remove the threat of personal liability during the pandemic, applied retrospectively from 1 March 2020.


A short moratorium or “breathing space” has been implemented that will give companies in difficulty time to explore options for rescue. This will include protection of supplies to enable companies to continue trading during the moratorium.