Fixed Cost Support Scheme

The Government of Jersey’s Fixed Costs Support Scheme (FCSS) makes a financial contribution towards a business’ fixed costs where they have been impacted by Covid-19 related public health measures. The scheme is designed to compensate a business for the impact of either not being able to open or being restricted in its ability to trade because of the restrictions.

The scheme will cover costs from January 2021 until June 2021.

The scheme will support all eligible businesses when they have been forced to close. It will continue to support some businesses once they reopen but continue to be affected by public health restrictions.

Business eligibility for the scheme

To be eligible for support:

  1. The business must be in one of the eligible business sectors.
  2. The business’ primary business activity must be severely impacted by the public health measures to tackle the spread of Covid-19.
  3. The business must have suffered material detriment of 20% (being a 20% fall in turnover when compared with the same or a comparable month in 2019).

Support provided by the scheme

The scheme will provide support to eligible businesses that have been forced to close as a result of public health restrictions. It will also provide reduced support to some businesses once they open but are still subject to restrictions.

A business that has been forced to closed by public health restrictions can claim:

Some businesses that are able to operate, but with restrictions in place, can to claim:

For any business that is claiming on the scheme fixed costs are those costs that a business must incur regardless of whether it is able to trade. A list of eligible fixed costs is detailed below.

Maximum levels of support

The maximum claimable amount depends on the value of the non-domestic rates that the business paid in 2020.

The following table shows the business sectors and the conditions that will be in place to determine if it can claim 100% or 50% of fixed costs up to the maximum allowable subsidy:

Full Government Guidance can be found here:

Government Guidance

 

Eligible business sectors - closed

The scheme will support businesses that have to close in the following business sectors[1]:

    1. Non-essential retail
    2. Licensed restaurants
    3. Pubs
    4. Cafes and places of refreshment (excluding takeaway from a fixed premises)
    5. Food and/or beverage wholesalers[2]
    6. Visitor attractions
    7. Wellbeing, beauty and cosmetic services:
      1. hairdressers
      2. barbers
      3. beauty and nail salons
      4. piercing and tattoo
      5. acupuncture and massage
      6. laser and cosmetic clinics delivering non-essential cosmetic treatments
      7. Other human health activities delivering non-essential treatments
    8. Gyms/fitness centres (indoor sports and exercise including jacuzzi, saunas and steam rooms)
    9. Nightclubs
    10. Betting and bookmakers
    11. Travel agency and tour operator activities
    12. Dedicated events venues
    13. Events-related businesses with dedicated premises – outdoor/event caterers, AV providers etc
    14. Mobile businesses with reliance on events but without fixed premises[3]
    15. Car rental businesses, driving instructors and taxi drivers

Where a business undertakes multiple business activities, if the majority (over 50%) of its normal trade would be within an eligible industry, the business will be considered eligible for the FCSS.

[1] Subject to the condition of suffering material detriment and access to other Government support schemes

[2] Provided that the business derives more than 75% of their income from businesses that were required to close for part of a month as a result of the public health measures set out in the Government’s Winter Strategy

[3] A mobile food and beverage van, or outdoor caterer would be an example of this

 

Eligible business sectors - allowed to open but with restrictions

Some businesses will be able to claim 50% of their fixed costs up to the maximum claim levels when the are allowed to open but will be operating under restrictions. These businesses are:

  1. Licensed restaurants
  2. Pubs
  3. Cafes and places of refreshment (excluding takeaway from a fixed premises)
  4. Food and/or beverage wholesalers
  5. Visitor attractions
  6. Gyms and fitness centres (indoor sports and exercise including jacuzzi, saunas and steam rooms)
  7. Nightclubs
  8. Dedicated events venues
  9. Events-related businesses with dedicated premises – outdoor/event caterers, AV providers etc
  10. Travel agency and tour operator activities
  11. Mobile businesses with reliance on events/close contact but without fixed premises
  12. Car rental businesses, driving instructors and taxi drivers

Government public health policy will determine when trading restrictions are lifted, and specified businesses will be entitled to continue to claim. This will be clearly outlined in Government public health guidance. It will be this policy that is applied to the operation of the FCSS and the eligibility of a business, not any decision of the business.

Examples

Example 1:

A non-essential shop which is not able to open, paying annual Parish rates of £7,500, would fall into Business forcibly closed Level 2. The business would be eligible for 100% of their fixed costs up to a maximum of £5,000.

Example 2:

A DJ would fall into the mobile business category and therefore fall into Level 1. The business would be eligible for fixed costs up to a maximum of £1,500.

Example 3:

A restaurant which is able to open but operating at 2m physical distancing, paying annual Parish rates of £1,000, would fall into Restaurant operating at 2m distancing Level 2. The business would be eligible for 50% of their fixed costs up to a maximum of £1,500.

Example 4:

A business operates 4 cafes, which are not able to open. 2 cafes pay rates of £2,000, and 2 cafes pay rates of £6,000.  The business would be able to claim up to £16,000.

Working out:

  • A café paying rates of £2,000 falls into Business forcibly closed Level 2, would be eligible for 100% of their fixed costs up to a maximum of £3,000.
  • A café paying rates of £6,000 falls into Business forcibly closed Level 3, would be eligible for 100% of their fixed costs up to a maximum of £5,000.
  • 2 cafes can claim up to £3,000, and 2 cafes can claim £5,000, so the maximum claim is £16,000.

Example 5:

A business provides plumbing and decorating services to private residences. Customers have cancelled scheduled work due the customer isolating, or not being comfortable with others entering their home. The business is not within scope of the FCSS, so cannot claim for a payment because it has not been forced to close by Government guidelines.

Example 6:

A catering van, who usually relies on income from events is calculating its claim under the scheme. The business is a mobile business (i.e. one which operates its services from no fixed premises, or by working from home with a reliance on events for income).

The business may be able to claim up to £1,500 each month, this would be 100% of costs if it is not possible to provide the mobile service due to lack of events.

Apply here for fixed cost support scheme
What information do I need to put on the application form?

You will need the following information for your application:

  • Business Undertaking Reference (as seen on your Business Licence or Manpower return)
  • 2019 turnover and 2021 turnover for the relevant months
  • Address of each premises that your business trades from
  • Fixed costs incurred for the relevant month relating to each premises or if mobile business the fixed costs incurred
  • Non-domestic rates for each premises
  • Bank account details and front cover of bank statement
  • Contact details
Businesses that are mobile, sub-letting or working from home

Mobile businesses will be eligible for the FCSS if they are normally reliant on events/close contact for their income. For the purpose of FCSS, this will also include driving instructors and taxi drivers. Mobile businesses will automatically be in Level 1 of the FCSS. Therefore, the maximum claim that can be made by a mobile business will therefore be £1,500. Whilst to be eligible, a mobile business must normally be reliant on events/close contact for their income, the business can claim regardless of whether it is forcibly closed (in this case, no events possible under public health guidance/close contact not possible) during the calendar month being claimed.

If a business does not directly pay non-domestic rates for the entire premises in which the business operates, you will be considered to be sub-letting under the FCSS. Where a business sub-lets a workspace, (for example a hairdresser renting a chair in a salon and therefore is not responsible for paying the non-domestic rates’) a claim is permissible under the FCSS. Sub-letting will automatically be in Level 2 of the FCSS. The maximum claim that can be made by a sub-letting business will therefore be £3,000.

The business providing the sub-let should claim on the basis of the total rates paid for the premises during 2020.

Where a business operates from a residential address, a claim is permissible under the FCSS. The maximum the business will be able to claim will be the limit for Level 1 which is £1,500.

Trading Groups

If businesses are structured as a trading group (a “trading group”), and different businesses in the trading group undertake different activities, some of which are eligible industries under the FCSS and some of which are ineligible, the following will apply:

Businesses in the trading group can be considered eligible for a claim under the scheme in the following circumstances:

  1. the eligible businesses alone can meet the material detriment test (20% drop in turnover over in the same month/comparable trading period in 2020);
  2. the trading group as a whole can meet the material detriment test for the relevant month that the claim is made for (20% drop in trading group turnover over in the same month/comparable trading period in 2020)

There will be a requirement for additional financial and non-financial information from the trading group and for additional declarations to be made on behalf of the trading group. This may delay processing of applications.

The structure and arrangements for the application for a trading group will need to be agreed with the Government before an application can be made. Contact should be made with [email protected] before applying on behalf of a Trading Group. Businesses claiming under the Trading Group Scheme will be placed in a higher risk category for audit.

A trading group can claim for a payment for each premises up to the amounts set out above, but the maximum amount that can be made to any single undertaking is £30,000 per month. This will be a single claim under the FCSS.

 

Which costs are eligible?

The subsidy payable is the lower of 100%, or 50% if allowed to open but with restrictions, of fixed costs up to the maximum available subsidy at the relevant level.

Eligible costs

Fixed costs, accounted for on an accruals basis include:

  • Rent payable on business premises where the landlord is not a party connected to the business*
  • Interest on mortgage payments;
  • Property management service charges
  • Rent/leasing of equipment where the lessor is not a party connected to the business*
  • Maintenance of fixed and leased assets essential to the operation of the business
  • Utilities (gas, heating, electric, water, fuel, non-guest phones, internet etc.)
  • Parish rates
  • Software licences
  • Insurance
  • Essential subscriptions (e.g. trade magazines and subscriptions to membership bodies)
  • Licences (liquor, TV, tourism etc.)
  • Audit/accounting fees
  • Refuse collection
  • Uniforms
  • Statutory staff training
  • Pest control
  • Hawkers licence
  • Group costs, where they are apportioned and charged to the business, if they are a cost to the head office company and they are apportioned and charged in that month to operating businesses on a basis consistent with previous periods.

*A connected party to the business for the purposes of rent/leasing constitutes a relationship where there is more than 50% of legal/ultimate beneficial ownership in common between the parties

Where payments that benefit the business over the year are made on an annual basis, such as parish rates, insurance, or a hawkers licence, they can be claimed on an apportioned basis, i.e. 1/12th of the annual cost can be claimed per month. Quarterly rent payments can also be apportioned and claimed on a monthly basis.

Excluded costs

The following costs cannot be included:

  • Rent payable on business premises where the landlord is a party connected to the business*
  • Repayments of capital are not covered by the FCSS
  • Labour costs
  • Food
  • Beverages
  • Raw Materials
  • Stock
  • Motor Fuel
  • New or replacement equipment

Where payments are made on an annual basis which benefit the business over the year, such as parish rates, insurance, or a hawkers licence, they can be claimed on an apportioned basis, i.e. 1/12th of the annual cost can be claimed per month. Quarterly rent payments can also be apportioned into 3 monthly payments and claimed on a monthly basis.

How do I find my rates paid?

Owners and occupiers of land are liable to rates. You will need to refer to your 2020 Rates Assessment to identify the total amount paid for the year which will determine the level of subsidy that applies to you.

NB: If you are unable to locate a copy of your Rates Assessment for 2020 you should check online: https://parish.gov.je/Pages/Rates.aspx#online . If this does not work you can contact your Parish, who will be able to assist.

 

I operate from more than 1 premises, what can I claim?

Where a business operates multiple premises, it can  claim under the FCSS. Details of each premises will be included on the application form.

All claims for a single business are capped at £30,000 per month.

For example: a retail company may operate a flagship store in St Helier, and 3 smaller satellite shops in other parishes, and therefore operate under one undertaking reference. Similarly, a restaurant business may operate 5 pubs and restaurants throughout the Island. The maximum claim payable to the business per month by reference to the undertaking reference will be £30,000.

 

How do I calculate material detriment?

For a business to make a claim under the FCSS, it must have suffered material detriment during the relevant period as a result of the restrictions brought about by COVID19.

The definition of material detriment is that, during the relevant period, it can evidence a drop in turnover of at least 20% in 2021 when compared to the same period in 2019.

The online application form will now require the business to input relevant monthly turnover in 2021 and the comparison in 2019 in order to calculate detriment (%).

The definition of Turnover which will apply under this scheme is “total operating income including income from trading and any other sources of income that the business may have (including investment income)”. Accruals accounting must be used for turnover calculations.

Businesses unable to use prior year turnover as a benchmark (e.g. businesses registered after April 2019) should use turnover from other comparable trading months. Businesses must be able to justify why the comparable month used fairly demonstrates detriment due to coronavirus, rather than other factors (e.g. seasonality).

When can I make a claim?

Applications for the FCSS open in February 2021, when businesses can apply for their subsidy for January 2021 costs.

The last month covered by the FCSS is June 2021, and businesses will be able to claim for June’s payment in July 2021.

January 2021

9 February

26 February, 5pm

February 2021

1 March, 9am

31 March, 5pm

March 2021

1 April, 9am

30 April, 4pm

April 2021

30 April, 5pm

31 May, 5pm

May 2021

31 May, 5pm

30 June, 5pm

June 2021

30 June, 5pm

31 July, 5pm

 

 

Declarations

In order to make a claim, the business is required to make the following declarations:

  1. The business has suffered material detriment of 20% or more loss of turnover for the month of that claim compared with a previous comparable month.
  2. The business confirms that more than 50% of ordinary business turnover was derived from the industry sector selected.
  3. The claim has been limited to the lower of actual fixed costs or the maximum level permitted by the Scheme.
  4. During 2020, and the period of the operation of the FCSS, no dividends or coupons (excluding commercial bank interest) have been / will be paid to holders of equity or debt instruments exceeding a total of £100,000 e.g. holders of shares including preference shares; providers of shareholder loans. Where such payments have been made the business may claim provided the excess is returned to the business, for example as a shareholder loan. The business must not pay total dividends in excess of £100,000 during 2021.
  5. That the business has a ‘good order’ relationship with Government of Jersey to the effect that arrangements for payment of GST, income tax, social security contributions etc are either up to date, subject to terms of the prevailing COVID-19 related deferment terms and / or in line with any agreed repayment plan.
  6. The Government of Jersey (and its relevant departments) and / or administrators of the Scheme having rights to audit including, but not restricted to, request for financial forecasts, financial statements, debtor and creditor analysis, evidence of fixed costs, and most recent available accounts.
  7. The Government of Jersey will periodically publish appropriate information in respect of businesses and self-employed individuals that have claimed under the FCSS. For businesses, this may include the name of the business and the total amount claimed. It may include similar aggregated information for self-employed workers.
  8. The business has a business licence issued by the Population Office with a start date no later than 30 November 2020.
  9. At the time of application that the business considered that application to the FCSS was necessary to ensure the continued survival of the business and that all other reasonable opportunities for investment into the business have been considered.
  10. The business is not at immediate risk of insolvency, winding up or ceasing to trade on a permanent basis.
  11. Once the business has made a claim to the FCSS, it will not be eligible to claim under the Visitor Accommodation Subsidy Scheme or Visitor Attractions and Events Scheme, and the business has only made a claim under one of these schemes for the month being claimed under FCSS.

 

 

If you have any further questions on the scheme please contact [email protected]