#askkpmg webinar series - assets.kpmg · webinar series session 1: covid19 - channel islands...

#askKPMGWebinar SeriesSession 1: COVID19 - Channel Islands business outlook26 March 2020

Webinar presenters

Linda JohnsonHead of [email protected]

Tony ManciniTax Partner [email protected]

Rob KirkbyAdvisory Partner [email protected]

Paul EastwoodTax Director [email protected]

Mark AshburnAdvisory Director [email protected]

mailto:[email protected]





AgendaIntroduction

Macro economic position

Local economic position

Stimulus measures— Guernsey— Jersey

Tax initiatives— Guernsey— Jersey

Liquidity / Cashflow

Banking

Wrap up and Questions

Introduction

5

Document Classification: KPMG Public

© 2020 KPMG Channel Islands Limited, a Jersey company and a member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative (“KPMG International”), a Swiss entity. All rights reserved.

Introduction

Format of the webinar

Asking questions

Further webinars and updates

Reference to materials / webinar playback

Macro economic situation

7



Macro economic position

World position— Wide range of mixed views around length of recession, depth and recovery— Bandwidth of governments to make a difference— Prioritisation shift from ESG to survival mode

UK positionMixed views, KPMG paper available on our website and key views of this are:

— Main scenario 2020 GDP fall 2.6% and a rebound of 1.7% in 2021— Downside scenario 2020 GDP fall 5.4% and a further fall of 1.4% in 2021— Inflation to remain low

Economic situation locally

?

?

9



Local economic position — Balance sheet of the Governments and credit ratings— Predominant GVA / GDP based on Financial Services. Four key areas:

— Banking— Fund Administration— Private and Corporate Client Administration— Insurance

— Underlying fee base is more reliant on fixed and time based fees than AUA / AUM.— Key is understanding the profile of underlying clients and their cash position. Risk

areas include:— Real Estate— Debt Funds

— People matters— Spend and tax

Stimulus measures

11



Jersey – measures to support businessSeries of measures introduced by the Government of Jersey:— £50 million in a new Jersey Disruption Loan

Guarantee Scheme, to provide Government guaranteed bank lending and overdrafts to businesses;

— A Special Situations Fund of a further £50 million to support larger businesses;

— Consideration to be given to a small business emergency fund, for the self-employed and very small businesses;

— Deferral of Social Security contributions and GST payments;

— Deferrals or rent renegotiations;— Flexibility from utility companies; and— Upgrading of all users to 1 Gigabit broadband.

However, it is unclear at the moment how businesses will be able to access these funds

The States have voted to allow transfers from the strategic reserve to the stabilisation fund of up to £400m. Borrowing limits have also increased from £20m to £500m

Banks are working on processes to lend against the Government guarantee

12



Guernsey – measures to support business Announced 18th March

— Establishment of scheme to support banks in providing liquidity, govt guarantee up to 80% of loan. Early stages at the moment.

— Deferrals of social security payments and rates.

— Suspension of mooring fees for commercial fishermen.

— £5m ‘hardship fund’ established – administered via social security where individuals would not receive income support or sickness benefit, preserving future labour market.

— Adjustments to population management regime.

80%

£5m

13



Guernsey – further measures to support business

Announced 24th March, costing up to £41m

Coronavirus Payroll Co-Funding Scheme

— States to pay 80% of minimum wage (£8.50ph / £300pw)

— Employer must pay at least 20%

— Must have been in business for six months

— Available for three months

— Most adversely affected sectors only

Sectors:— hospitality and tourism;— passenger transport and travel;— rental and leasing of cars and recreational

goods;— recreation and entertainment;— event management and event services;— personal service activities such as

hairdressers, beauticians and animal boarding;

— commercial fishing;— private extra-curricular education such as

dance and riding schools;— non-food and non-pharmacy retail;— advertising and marketing;— construction;— manufacturing

14



Guernsey – other measures to support business

Business grants, aimed at small business and self-employed10 employees or fewer £3,000 grant Deferral of TRP

payments until July 2020 –excluding regulated finance business and professional services

Allow Aurigny to extend overdraft facility to £53m

Working with GIBA, GSCCA and Commercial Bar Association to enable business to access free critical business advice

£53m

15



Guernsey - measures announced by GFSCOne month extension for annual returns and no requirement for audited accounts

Audited accounts to be filed by 31st October 2020

Simplified procedures for appointing alternate directors

Extended timelines for responding to GFSC queries

Relaxation of timing for notification of formation of insurance cells

Tax measures

17



Guernsey – upcoming tax issues

Quarterly ETI and social security payments

30th June tax payments for 2020

Meeting substance requirements

Impact of staff working in other jurisdictions

Upcoming tax issues

18



Jersey – tax measures to support business

Social security contributions payment deferral for employers and self-employed— Applies to A and B 2020 quarters— Automatic where 80 employees or

less, otherwise apply for deferral— Continue to submit contributions

schedules – important for employees’ record and entitlement to social security benefits

— Next quarterly schedule due 15 April

GST payment deferral relating to (quarterly and monthly) returns ending 31 March, 30 April, 31 May and 30 June— Deferral of up to 12 months— Continue to charge GST to

customers in the normal way— Continue to submit GST returns –

payment deferral conditional on submission

— Deferral does not appear to apply to ISE fees – due on 31 March

19



Jersey – tax measures to support business

No deferral of ITIS –next return/payment due 15 April –expect employees to be changing their “effective rate”

No deferral of 2019 corporate income tax POA –“large companies” due by 31 March; non-large companies due by 31 May

No blanket deferral of 2019 personal income tax POA due 31 May –deferral can be applied for on a case-by-case basis

Limited service in Revenue Jersey – file electronically wherever possible

Economic substance requirements – particularly “directed and managed” element

Recognition of personal tax residence issues

Liquidity / cashflow

21



Liquidity /Cashflow

Cash is kingyou can never do too much work on liquidity management

Receipts and payments forecast is the key tool –17 weeks is the new 13

17 weeks

Key considerations when forecasting— Revenue— Expenses— Assumptions— Stress testing

Prioritise cash outgoings using Green, Amber, Red

View frombanks

23



Finance will take time to arrange and may require additional security and / or personal guarantees. Ensure you have considered other options such as creditor forbearance and deferring utility payments

Bank financing It may be appropriate to draw facilities sooner rather than later, financing is likely to be harder to obtain in the immediate post crisis landscape

If you believe new financing will be required speak to your bank as early as possible

Your normal relationship manager should be the first point of contact or in the case of smaller businesses, the general contact number

Preparation is key, banks will expect a detailed cash flow forecast showing requirements for 13 – 20 weeks

Wrap up and questions

Thank you

Document Classification: KPMG Confidential

The information contained herein is of a general nature and is not intended to address the circumstances of any particular individual or entity. Although we endeavour to provide accurate and timely information, there can be no guarantee that such information is accurate as of the date it is received or that it will continue to be accurate in the future. No one should act on such information without appropriate professional advice after a thorough examination of the particular situation.


The KPMG name and logo are registered trademarks or trademarks of KPMG International.

https://www.linkedin.com/company/kpmg-advisory

https://plus.google.com/111087034030305010189

#askkpmg webinar series - assets.kpmg · webinar series session 1: covid19 - channel islands...

Documents