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Coronavirus frequently asked questions

This page has been designed to answer Coronavirus frequently asked questions for businesses, employers and employees, the self-employed, education, construction, family, property and planning related queries, landlord and tenant matters and any other questions that arise from our clients and contacts. The page will continually grow as and when new frequently asked questions arise. Further advice and guidance can be found on our “Coronavirus – Legal advice and guidance page


This section contains answers to business related questions we have received as a result of the Coronavirus pandemic.

As part of a group restructure, we are planning to dissolve some our solvent subsidiaries. Will there be any delay in such applications being processed by Companies House?

Due to the Covid-19 pandemic, Companies House announced in April 2020 that the process of voluntarily striking off a company from the register would be paused. This meant that, once an application for striking off was received by Companies House, they would publish a notice in the Gazette, but would thereafter suspend any action to dissolve the company. The rationale behind this decision was to protect the company’s creditors and any other parties that wished to object to the company being dissolved.

From 10 September 2020, Companies House will resume the standard process for applications that have been sent to them during the pause period. Applications for voluntary strike off received from 10 July onwards will not be affected by the Covid-19 temporary measures.

We are just about to complete a share buy back from a retiring shareholder. I know we have to pay stamp duty on the shares bought back – are HMRC operating normally and how do I deliver my paperwork to them given the Government advice on lock down?

HMRC have recently announced a change in their approach due to the current lock down restrictions and are now willing to accept electronic copies of original documents which have to be emailed to An electronic copy of the signed SH03 (or, for that matter, if we are looking at a normal share transfer, the stock transfer forms) can be submitted to HMRC . If signing and scanning the original form is not an option, a version that is signed electronically will be accepted instead.

The payment of the stamp duty itself is still required within the required 30 days and this can be made by electronic transfer such as Faster Payment, BACS or CHAPS and an email must be sent to HMRC setting out the details of the transaction and a payment reference so that HMRC can identify the payment. The payment account details are set out on HMRC’s website The payment reference should be the name of the person making the payment and the amount paid. For example,” JBrown/240.00.” HMRC say they will deal with these applications within 15-20 working days.

Please note that any paperwork or cheque sent by post will no longer be processed by HMRC and therefore the method detailed above should be followed until further notice. Any submissions made by post which have not been returned to date should be resubmitted electronically using the new system.

I sold my company a few months ago. As part of the deal, some of the purchase price was held back, the buyer and I had to commit to work for the company for a year after I sold. I had a new employment contract which gave me a salary and other benefits . They now want to reduce my salary by 20% and furlough me. How does this affect my right to the balance of my sale proceeds?

Much will depend upon the wording in your share sale agreement. However, I would imagine that this says you are entitled to all your sale proceeds if you are a “Good Leaver” and not if you are a “Bad Leaver”. A Good Leaver would typically be someone who ceases to be employed by the company within the 12 month window after completion because of ill health, death, or because they are made redundant or unfairly dismissed. By contrast, a “ Bad Leaver” would be someone who just voluntarily resigns, with or without notice, within the first 12 months or who is dismissed fairly for eg gross misconduct etc.

By asking you to take a pay cut (and assuming the company is not going to make up the balance of your salary which is not paid by the government’s scheme), you have to consent to the change – and if you do not, that represents a change in the terms of your employment by your employer and in all likelihood a breach that entitles you to treat the contract as terminated if you so wish: again depending upon the wording in your sale agreement – this would ordinarily make you a “Good Leaver” and mean you are still entitled to your sale proceeds.

In considering your position, also take into account:

1. Is the amount of sale proceeds you are still owed, deposited in a retention or escrow account and safely ring fenced? If so, at least you know that the buyer of your shares is “good for the money”, regardless of trading conditions over this difficult period. If not consider whether you would prefer to take a cut in salary to help safeguard the financial stability of the company and possibly your buyer so that in 12 months time it stands half a chance of being able to pay you rather than being an insolvent company which can’t pay you anything.

2. What does your share sale agreement say about what hurdles have to be overcome to show you are a Good Leaver? Have you, for example to show you are successful at an employment tribunal before you satisfy the test of being a Good Leaver? If so, that takes time and at the moment you will understand that hearing dates could be some way off – and there will be a cost to bringing proceedings.

3. Are there any other provisions in the share sale agreement which allow a disgruntled buyer, unhappy with your approach, to “make waves” to try and defeat your claim? ie -could they allege a warranty claim under the share sale agreement?

4. If money is in an escrow account it is not contributing to the buyer’s/company’s cashflow: why not see if you can do a deal to get it released to you in consideration of you agreeing to furlough?

The sub-contractor I am working for has sent me a message saying that its main contractor has suspended work on site under a "force majeure" clause in their contract. They don't want us to attend site at the moment. We don't have a written contract with our sub-contractor. Can they do this?

If you are happy to abandon the job you can use this as a chance to terminate your arrangement with the sub-contractor if that is what you wish to do. Their instruction that you do not attend site is a repudiatory breach of contract. If you do wish to permanently terminate your arrangement with them, write to them to say “As a result of the suspension of your contract with X, and therefore our inability to work on site, we are treating your email of xxxx as a repudiatory breach of contract, and we accept that breach as terminating our contract. This is on the basis that termination is without prejudice to our right to be paid for the work already done”.

Of course getting paid for what you have done will be much harder if you take this line, but you may have decided to “cut your losses”.

If you had no wish to leave site but were forced to do so, you can claim damages for breach of contract because there was no “force majeure” term between you and the sub-contractor giving them the right to suspend the contract due to events outside their control. Read our blog “Coronavirus (COVID-19) and the meaning of “force majeure” for a more detailed explanation of the term “force majeure”.

What are the Coronavirus Business Interruption Loan Scheme and the Bounce Back Loan Scheme?

The Coronavirus Business Interruption Loan Scheme supports small and medium-sized businesses with access to loans, overdrafts, invoice finance and asset finance of up to £5 million and for up to six years. The government will also make a Business Interruption Payment to cover the first 12 months of interest payments and any lender-levied fees. The scheme will be delivered through commercial lenders, backed by the government-owned British Business Bank.

Running alongside this scheme is the Bounce Back Loan Scheme which allows smaller businesses gain access to a six year term loan from £2,000 up to 24% of business turnover, to a maximum of £50,000. The government guarantees 100% of each loan. 

Other sources of public funding may be available, including local authority grants for specific purposes, so when approaching the question of availability of finance, you should consider seeking appropriate professional advice to assist you to assess these options, and potentially to assist with cash flow projections. Some accountants and most qualified insolvency practitioners should be able to help here.

For more information, please see our blogs “The Coronavirus Business Interruption Loan Scheme” and “Bounce back loans for smaller businesses“.

As a director, how do I manage to meet my directors' duties not to trade insolvently when we are in such uncertain times financially?

The Corporate Insolvency and Governance Act 2020 was passed into law on 26 June 2020, in which there is a temporary provision to suspend the law against wrongful trading retrospectively from 1 March to 30 September 2020 to take into account the unprecedented financial climate the country finds itself in. The news – first announced as a policy initiative in April – would have come as a relief to directors, many of whom would have been struggling to weigh how best to protect themselves and their families from the consequences of potential liability, with their desire to do the best for employees, suppliers and other stakeholders. While this will offer some comfort to directors faced with difficult decisions, directors’ duties and certain other trading offences remain in place so this was a very difficult provision for the drafters and law makers in Parliament to get right. Many will argue that the drafting still very much leaves scope for courts in the future to find that continued trading was wrongful as all the temporary provision does in effect is ask the court to resolve any doubt in the directors’ favour. We therefore recommend directors continue to trade – or as the case may be resume trading – cautiously, by reference to the best information and advice they can reasonably access, and that they keep particularly careful records of their decisions, and the reasons behind them, during this time. 

Under normal circumstances, directors of a company owe their duties to their shareholders. However, where a company is, “in the zone of insolvency” those duties change , and the interests of the company’s creditors are key. Breach of these duties mean personal liability, disqualification and requirements for the directors to account personally for improper transfers of assets or cash. These duties remain unchanged so the ability to say whether a company is insolvent is very important, particularly as decisions in the interests of creditors may be different to decisions benefitting shareholders. Think very carefully before declaring dividends which can only be made out of profits retained – or making directors’ loans of cash which may be needed for company cash flow. Having up to date management accounts and forecasts and projections (as far as possible) will be key to boards of directors in their decision making. Consider the availability of Government backed funding such as CBILS and bounce back loans and apply for it if necessary, but please be wary of taking on loans, or even applying for grants (many local authorities will consider discretionary grants) simply because they are available. The purpose of these loans and grants is typically to enable continued trading, so directors who take them and then close their companies shortly afterwards may potentially face difficult questions in due course about how this was actually in the interests of the company and its stakeholders. Look at whether you can bring any contractual obligations to an end using force majeure clauses. Look at whether you can bring any contractual obligations to an end using force majeure clauses. Think about partial shut down or moth-balling or phased re-opening of part of the business and hold regular (remote/virtual) board meetings to keep on top of this.

Even though the law on wrongful trading has been amended, temporarily and retrospectively, the offence of fraudulent trading (dishonestly incurring liabilities that the directors know cannot be met before the company becomes insolvent ) remains in place, and understanding of the company’s solvency will have a direct bearing on any director’s personal liability for that offence. Certain transactions may also be set aside under insolvency legislation, including a company entering into transactions preferring one or more of its creditors over others; transactions for no, or insufficient, value; and individual transactions (as opposed to general trading) defrauding creditors. All of these will continue to apply during the wrongful trading relaxation window, and require careful analysis on an ongoing basis. Directors’ duties must be assessed on a company-by-company, rather than group, basis. For more information on directors’ duties where a company is or might become either cash flow or balance sheet insolvent, please see our blog on directors’ duties.

Can my company defer payment of VAT to HMRC during the crisis?

Yes, as at 31 March 2020 the government had applied a deferral for VAT payments from 20 March 2020 until 30 June 2020. All UK businesses are eligible, as are non-established businesses registered for VAT in the UK. This will generally mean the deferral of one quarter’s VAT, so the payment due on 7 April, May or June 2020 or the monthly payments due on each of these dates. Payments on account that were due to be paid on 31 March, 30 April, 31 May and 30 June can be deferred. Businesses wishing to avail themselves of this deferral will need to cancel their direct debits and diarise to reinstate their direct debit mandate once the deferral is over. Taxpayers have until 31 March 2021 to pay any liabilities that accumulate during the deferral period and will need to make arrangements to pay the accumulated VAT. VAT refunds and reclaims will be paid by HMRC as normal and businesses should continue to file their VAT returns by the due date.

What are the consequences of my company deferring payment of tax and VAT during this crisis?

The decision whether or not to take advantage of the deferral should not be taken lightly. Deferring may adversely affect your standing with other creditors and/or investors and/or store up cash flow issues for the future. For more on this topic see our page COVID-19 and insolvency related FAQs.

What are the consequences of not paying my company’s suppliers?

Ignoring suppliers’ invoices even in these troubled times risks involving your company in avoidable legal costs, a winding up petition (which could freeze the company’s bank accounts) and potential personal liabilities in the event of the company’s insolvency. If you think you may have grounds to dispute the invoices you should ideally admit nothing and take immediate legal advice. If you are sure you have no defence to the invoices but are uncertain if you have the funds to pay everyone you owe, you should engage with your suppliers early but avoid making promises of payment until you have consulted with a qualified insolvency practitioner accountant. 

Under the Corporate Insolvency and Governance Act 2020, there is a general prohibition (subject to exceptions) on winding up petitions based on the non-payment of invoices due to financial difficulties caused directly by COVID19, currently until 30 September 2020. Each winding up petition should be looked at closely on its merits and you should seek legal advice as soon as possible if you receive such.

For more information and suggestions about how to go about these things see our page COVID-19 and insolvency related FAQs.

How can my company legitimately delay paying our suppliers?

Delaying payment may seem an attractive solution to short term cash flow issues and may be entirely appropriate, for example to ensure that all of a company’s creditors are treated fairly. However, if you do not go about it carefully you risk bringing legal proceedings and/or a winding up petition down upon you and/or incurring contractual penalties and breaching funding conditions. 

The general prohibition (subject to exceptions) on winding up petitions based on the non-payment of invoices due to financial difficulties caused directly by COVID19 under the Corporate Insolvency and Governance Act 2020 applies retrospectively from 1 March to 30 September. If the reason for the delay in paying your suppliers is non-COVID19 related, a winding up petition may still be granted during this period.

If you think you need to delay a payment for a legitimate purpose, such as to obtain advice, you should avoid doing anything which could be construed as admitting any particular debt and seek to engage with your suppliers on a constructive basis, ideally without seeking anything but forbearance (ie no new credit). For further guidance on how to defer payments legitimately and to solve problems associated with problem debt and/or temporary cash flow issues, see our page COVID-19 and insolvency related FAQs.

I have received a threat of a winding up petition from a supplier. What should I do?

Winding up petitions can have very serious consequences for a company, including the freezing of bank accounts and other assets. Even before they are formally advertised, winding up petitions may come to the attention of the company’s bankers or suppliers, and may trigger termination of unrelated contracts and untold reputational damage. If the threat is illegitimate – ie the sum claimed is fully disputed – you should obtain urgent legal advice and/or representation as it may be possible to resolve the threat early on. If it is justified – ie the company owes an undisputed sum of more than £750 which it cannot pay – you should obtain urgent Insolvency advice from a qualified Insolvency practitioner as it may be possible to make use of an alternate procedure or to secure appropriate funding to preserve the company’s business. 

Under the Corporate Insolvency and Governance Act 2020, there is a general prohibition (subject to exceptions) on winding up petitions based on the non-payment of invoices due to financial difficulties caused directly by COVID19, currently until 30 September 2020. Each threat of petition should be looked at closely on its merits and you should seek legal advice as soon as possible if you receive a winding up petition. You should not simply assume you are safe from the possibility of a winding up petition, but likewise you should not threaten such action if the action itself would likely be unlawful.

For further guidance on dealing with the threat of a winding up petition see our page COVID-19 and insolvency related FAQs.

Can I close down part of my business during the crisis?

The short answer is yes, in principle, but trading the company on will require a very careful assessment of the cash demands of the whole business and it may be that other solutions are preferable for avoiding possible personal liabilities which might follow such a decision. For more guidance on dealing with a company which operates more than one business under one ‘roof’ where one is profitable and another is not, see our page COVID-19 and insolvency related FAQs.

Can I set up a separate company for parts of my business which is more successful than other parts?

The short answer to this question is yes, but not without great care and, we suggest if your existing company is or might be insolvent if you do this, not without first engaging the services of a qualified Insolvency practitioner accountant to advise the board. For further guidance on when and how to do this and to deal with this situation, see our page COVID-19 and insolvency related FAQs.

I have applied for a grant under the Coronavirus Business Interruption Scheme for businesses in the retail and hospitality sector. How long will it take to receive it?

All enquiries on eligibility for, or provision of, the grants should be directed to the relevant local authority. The person should therefore contact his LA and ask them as to how long is it taking them to make the grants.

What is force majeure for a commercial contract?

Force majeure clauses are contractual clauses which alter parties’ obligations and/or liabilities under a contract when an extraordinary event or circumstance beyond their reasonable control prevents one or all of them from fulfilling those contractual obligations.

Depending on their drafting, such clauses may have a variety of consequences, including: excusing one party from delay in performing their obligations, entitling them to suspend the performance of their obligations or claim an extension of time for performance; excusing the affected party from performing the contract in whole or in part; or giving that party a right to terminate.

Usually, the contract will list a series of events which are to be considered to be ‘force majeure events’. Where no relevant event is specifically mentioned, it is a question of interpretation of the clause whether the parties intended such an event to be covered. This involves considering whether the list of events included was intended to be exhaustive or non-exhaustive. Unless specific words are used to suggest that a list is non-exhaustive, it can be difficult to argue that parties who set out a list of specific events but did not include a particular event, such as an epidemic, nonetheless intended that event to be covered.

To determine whether COVID19 is covered by force majeure, you will have to look at the specific clause within your contract. Our blog “Coronavirus (COVID-19) and the meaning of “force majeure” gives a fuller explanation.

What is frustration of a commercial contract?

‘Frustration’ is slightly different. A frustrated contract is a contract that, without fault of either party, is incapable of being performed due to an unforeseen event (or events), resulting in the obligations under the contract being radically different from those contemplated by the parties to the contract.

There are three main requirements for frustration:

  • The intervening event must cause the obligation owed under the contract to become impossible or radically different from the obligation contemplated at the time of entering the contract;
  • The occurrence of this event that caused the radical change cannot be due to either party; and
  • The contract must not deal (or deal properly) with what will happen on the occurrence of the alleged frustrating event (i.e. the contract lacks a force majeure clause or does not otherwise allocate risk in the event of Coronavirus).

If frustration does arise, the contract will be brought to an end automatically. All parties are released from their obligations (except those that should have been performed before the frustrating event, which they can remain liable for). It should be noted that the courts are very reticent about permitting frustration as a means of ending a contract and it is not to be relied upon simply because the contracted force majeure clause is not sufficient, for example. The courts have demonstrated that, for example, contracts are not ‘impossible’ to perform where a supplier further up the supply chain has gone into liquidation, if there are other suppliers from whom goods can be sourced.

Again our blog “Coronavirus (COVID-19) and the meaning of “force majeure” gives a fuller explanation of the term “frustration”.

I have a business interruption insurance policy. Is Coronavirus covered?

You will have to check on the particular terms of your policy as there is not a ‘one size fits all’ answer. If your policy is not clear on this point, we would advise that you call them directly and discuss it.  

I have heard the contactless card payment limit has increased. What is it?

 The contactless card payment limit has been raised from £30 to £45 in an emergency move to help tackle Coronavirus.

The £15 increase is to reduce the need for physical contact with machines, with scientists previously saying the virus can stay on particular surfaces for days. The changes were already being considered by the industry, but the process has been accelerated in the midst of ‘extraordinary circumstances’. The British Retail Consortium (BRC) said the last increase to £30 took two years to implement but the new limit would be working at some shops across the UK from April 1.

My supplier is seeking to change the payment terms of my contract with it. Can it do so?

Your contract should have a clause (usually towards the end of the contract) which deals with how variations are dealt with. Such a clause would usually state that any contractual variations to the provisions of the contract have to be in writing and signed by both parties. Unilateral changes to contractual terms are usually not effective unless the contract permits them to be.

However, you may wish to consider the proposals in some circumstances, as sometimes, a reduced payment is better than no payment at all, or a longer delivery schedule is better than not receiving the goods at all. But in both of these examples, you would be consenting to the changes.

We have a company which sold off its business and assets some time ago and we have been dealing with the solvent winding up of this company. The plan was to do this within the relevant timeframes and claim entrepreneur’s relief on the distribution of the funds. Can Companies House still strike off the company within the required timeframes to allow this to happen?

On the 16th April, Companies House announced that they will “ease off” the strike off procedure. This means that they are still processing applications for voluntary strike off, albeit later than usual due to the current circumstances, but placing them on hold halfway through.

Under the standard procedure, once you have submitted the DS01 form to Companies House, and if the form has been filled in correctly, they will write to inform you that a notice will be published in the your local Gazette. This will give the public and your creditors official notice of your intentions and an opportunity from them to object to the process. If no objections are brought in the two months‘ time period mentioned in the notice, the company will be struck off and a second notice will be published to effect the dissolution of the company.

Companies House have now taken a temporary measure to suspend any further action once the first notice is published. In this way they protect the creditors of the company and any other interested parties by allowing them more time to object. These measures are only temporary and will be reviewed on the 1st May 2020.

Will my court case still go ahead during COVID-19?

It is difficult to say. Courts are prioritising the most urgent cases as they try to deal with the extra burden associated with having to set up hearings to be dealt with remotely as either telephone or video conferences but many cases are still being heard. Some categories of cases are being put on hold such as certain residential possession claims. Specific guidance depending on the court or tribunal concerned is available and updated daily on the Ministry of Justice’s website.

If my company looks like it might be insolvent as a result of COVID-19, when should I make contact with an insolvency practitioner?

It is important to remember that any IP formally appointed over a company – whether ultimately appointed by the directors themselves, a lender, one or more creditors, or the court – is bound by their own legal duties to investigate and pursue (or to sell to a third party where appropriate for the benefit of creditors) any proper claims against directors. The Secretary of State has a similar duty to pursue disqualification and/ or creditor compensation orders where it is observed that the director’s conduct fell below expected standards.

This means that there is everything in fact to be gained by directors consulting with their own choice of IP at an early stage, i.e. before the cash starts running out. The first thing the IP will do is take a health check on the company, which will help inform the directors’ decision making, and they will then explore all available options to hopefully ensure that the company does not need to enter an insolvency procedure at all. If their advice, however, is that a formal insolvency procedure cannot reasonably be avoided, they can help you to choose the right one, and to ensure that the directors do not fall foul of the sort of pitfalls along the way which might suggest that claims should be brought against them after the event. In being aware of their duties (for more information see our FAQ “What legal duties do I owe as a director which I need to be aware of during the Covid-19 Crisis”), seeking professional advice where needed, and maintaining clear records of their board decisions, directors keep themselves firmly on the right side of the line, and should have nothing to fear therefore if, in the end, the company itself  (as opposed to the underlying business, which in principle can be sold by an IP without the associated debts) cannot be rescued. Please see our blog for further details of directors’ duties.

The very worst thing that directors can do during a crisis is to fail to recognise and address the issues that their business is facing and to put a misplaced trust in their ability to simply fold the company at the last minute when all the money has already run out. IPs are there to assist where they can. They are heavily regulated, specialist accountants who are trained to respond positively to a crisis. They add a huge amount of value to the economy through their work, which often preserves any value in a company’s underlying business which can be recycled and recirculated to save or create jobs and productivity. Directors should never, therefore, regard the consultation of an IP as an admission of defeat. It is something to be welcomed, and may be just what directors need to help them in these unprecedented times.

Should you or any of your contacts require any guidance with any of the issues highlighted in this FAQ, please get in touch with any of our CR&I team who have a wealth of connections with a variety of IPs and financial advisors, and we would be glad to assist you with putting you in touch with the right individuals for your business needs.

What legal duties do I owe as a director which I need to be aware of during the COVID-19 economic crisis?

Many directors will of course be very familiar with their legal duties, however, most directors who were trading businesses which were wholly profitable before the crisis will likely not have needed to concern themselves with such matters too much. Until now.

We thought it would be helpful to highlight some of the most important duties which – amongst others – become even more relevant when the long-term security of a business is starting to be called into doubt.

1. Act within your powers

Every director must act in accordance with the company’s constitution (broadly speaking, the Articles of Association) and only exercise their powers for the purposes for which they are conferred. This is an exercise in knowing your company. If you are not familiar with your constitutional documents, read them. If you do not understand them, or you realise they do not reflect the way you do business or will need to do business in the future, take advice on them, and if necessary change them with shareholder approval as appropriate. You may wish to review your trading terms and conditions at the same time.

2. Promote the success of the company

In general terms this duty requires directors to act in a way which they believe is most likely to promote the company’s success for the benefit of its shareholders as a whole. Directors should consider, among other things, the following:

  • the long-term consequences of any given decision;
  • the interests of the company’s employees;
  • the need to maintain the company’s business relationships with suppliers and customers;
  • the likely impact of the decision on the community and the environment;
  • the desirability of maintaining a reputation for high standards of business conduct; and
  • the need to act fairly as between shareholders of the company.

When a company approaches insolvency, however, this duty to promote success transforms by degrees from a duty to the shareholders into a duty to the company’s creditors. At its lowest, the duty will require you to do all you reasonably can to minimise any shortfall which the creditors might suffer if and when the company does fail.

In trying to meet this duty, the Insolvency Act steps in to remind directors that treating one creditor more favourably than another (particularly if the favoured creditor is connected to a director in some way), transferring company assets (including contracts and new business) to another party at an undervalue and paying yourself an income in the form of share dividends when there are no profits to justify it, are all expressly forbidden. If you do any of these things and the company finds its way into an insolvency procedure, you (and potentially anyone else who has benefited from this sort of conduct) can expect to be on the receiving end of claims.

Likewise, directors must not simply bury their heads in the sand and continue trading in exactly the same way if they are reasonably aware that the company is in difficulty. In the particular circumstances of the pandemic, it is likely that this duty would extend to a positive duty upon you to take such professional advice as you may need in order to challenge (if properly arguable) and/or negotiate down any contract clauses which place a burden on the company to do something which simply could not be done owing to the virus and/or the lockdown. On the flip side of this, if you are banking on the fulfilment of a contractual obligation to your company, you may be expected to take advice as to whether there is now a legal exposure for the company, e.g. because the other party might be released by law from that obligation. By taking advice and/ or renegotiating terms on the basis of such advice, you might gain valuable information and/ or mitigation which helps you justify a decision to either continue to trade as you are, make changes to your trading practices, or to shut up shop (for more information, please see our blog on force majeure).

3. Exercise independent judgement

Every director should exercise their own personal judgement when taking decisions for the company; the law does not allow you to abdicate or contract out of your general duties This duty does not prevent delegation to others with particular expertise provided such delegation is authorised constitutionally, independent judgement is exercised when deciding to delegate and the delegating director maintains oversight. A marketing director would, for example, be entitled to rely on the advice and opinion of the finance director when considering financial matters but would have an obligation to scrutinise and exercise independent judgement when following such advice.

A director should not (except in exceptional circumstances that are outside the scope of this note), enter into an agreement with another person to vote in a particular way at a board meeting. If in doubt about how you should vote at a board meeting, talk it out, insist that the board takes external advice, or ask for an adjournment so that you can take your own.

4. Exercise due care, skill, and diligence

Directors are not expected to be able to see the future, nor are they expected only to take decisions which bring the company unbridled success. They are allowed to make mistakes. Whether those mistakes are ultimately culpable, however, will be judged by the standards to be expected of a reasonably diligent person carrying out the functions of a director. All directors will be held to the same minimum standard of competence when making company decisions, regardless of whether they kept quiet during the decision process or chose to take no part in those decisions. Directors will also be held to the standard of the knowledge, skill, and experience they themselves possess. This means that if a director is also a qualified lawyer or accountant, for example, they may be held to a higher standard than directors who do not possess such specialised skills or training.

5. Avoid conflicts of interest and declare any personal interests in proposed transactions

Every director must avoid situations likely to give rise to a conflict of interests. Generally speaking, a director should not vote in a decision in which they have an interest but a conflict may be authorised by shareholders or (in certain circumstances) by other directors. As such, directors must declare the nature and extent of any direct or indirect interest they may have in a proposed or existing transaction or arrangement and this should be reflected in the minutes of the board meeting. Depending on the company’s Articles of Association, a director may be authorised to vote in relation to a proposed or existing transaction or arrangement provided such interests are declared but if in doubt, advice should be taken on this point to ensure that any decision has been taken with sufficient board authority. This is particularly important if, for example, the directors decide that the best thing they can do for the company’s creditors is to transfer some of its business to another company with which they are also involved.

6. Not to accept third party benefits

Directors must not, as a rule, accept benefits from third parties gained through their position or through a decision they take as a director. In the event of the future insolvency of the company, any pecuniary benefit derived by the director personally is likely to ring loud alarm bells both in terms of director conduct reporting and liability.

To a certain extent, compliance with the above duties is a matter of common sense. In practice, however, directors should ensure that they understand their duties in light of the applicable circumstances and record their decision making processes together with any professional advice obtained (for more information, please see our FAQ “If my company looks like it might be insolvent as a result of COVID-19, when should I make contact with an insolvency practitioner ?”) in order to evidence that they have considered their duties and acted properly.

Should you or any of your contacts require any guidance with any of the issues highlighted in this FAQ, please get in touch with any of our CR&I team.


This section contains brief answers to frequently asked questions we have received in connection with the construction industry as a result of the Coronavirus lockdown. Fuller answers can be found in our blog “Coronavirus impact on construction projects

What construction site precautions should be taken as a result of Covid-19?

All relevant Government guidance for workers during lockdown should be followed. The Government has encouraged use of the CLC’s (Construction Leadership Council) Site Operating Procedures (SOP), which follows Government and WHO guidance and sites can choose to adopt it within their own site procedures to mitigate Covid-19 risks.

The CLC published version 4 of the SOP on 19 May – the changes are minimal and the position remains the same on the 2m rule as mentioned above. The Government has also recently published its own guidance on safe working and the virus for construction. This has now been superceded by version 5 announced on 5 July, again with minimal changes.

Does our construction work have to cease if we cannot achieve 2m social distancing for all tasks?

As things stand currently under Government guidelines, the 2m rule must be followed where possible and safe. Under version 3 of the CLC’s SOP, site work does not have to stop if 2m separation cannot be achieved safely but if so, the importance of affected tasks needs to be considered and the hierarchy of controls used. Please now see version 5 of the SOP for an update on this.

If construction work is delayed by Covid-19 should extra time be awarded to the Contractor?

Taking a JCT DB 2016 as an example, if a Relevant Event delays the works an extension of time should be available, but remember, Contractors must apply for an extension of time and must mitigate the effects of a Relevant Event.

What about the extra costs incurred by Contractors due to Covid-19 related delays?

Taking a JCT DB 2016 as an example, loss and expense will be available where a Contractor incurs cost because the works have been materially affected by a Relevant Matter (as defined in the contract), but Covid-19 delays do not fall neatly into that bracket meaning only time and not money may be available.

Our Employer has told us we must stop work because we cannot achieve 2m distancing at all times, what is our position?

As mentioned above, neither Government guidelines or version 3 of the CLC SOP forbid work to continue if it is important and if 2m distancing cannot be achieved safely for that work to continue. If an Employer is overzealous in its exercise of social distancing measures in excess of current guidance, it may be possible for a Contractor to argue for extra time and/or money depending on the contract.

Will a Contractor be charged liquidated damages for Covid-19 delays?

Taking a JCT DB 2016 as an example, only where provided for in the contract and where a Relevant Event is not available and delays had caused a failure to achieve the planned completion date(s). The Employer must also follow the relevant contract procedure to claim or withhold those LADs.

Can a building contract be suspended and/or terminated due to Covid-19?

The standard JCT terms, as an example, allow for termination by either party if before PC the works are suspended by 2 months (or other stated period) due to a number of factors which could be argued to cover Covid-19 impact, depending on the circumstances.

What if one of the parties to a building contract becomes insolvent as a result of the current economic impact of Covid-19?

Under a JCT then the other party has the right to terminate. The obligation to carry out the works is also suspended from insolvency. Do keep abreast of any potential Government reliefs though.

How should contractual notices be served?

Carefully follow the contractual process and consider altered delivery timescales due to the virus.

What wider issues should Employers consider when their construction project is delayed due to Covid-19?

Their position under other agreements/requirements relevant to the project, such as planning permissions/agreements, development agreements, agreements for lease or sale and/or funding arrangements. Consider target dates, final long stop dates and possible liquidated damages, plus possible lost rent or lost income due to delayed availability of the completed site.

What wider issues should Contractors consider when their construction project is delayed due to Covid-19?

  • Impact on supply of materials and goods for the works
  • Workforce issues, including sickness, furlough and self-isolation needs
  • Difficulties in compiling, signing and completing contracts
  • Impact down the contractual chain, on sub-contractors and suppliers
  • Impact on projects that have been awarded and not yet commenced
  • Impact on insurance and security availability


This section contains answers to residential property questions we have received, mainly around house sales and purchases following the Coronavirus outbreak.

What happens if I am supposed to exchange and complete during lockdown?

The most recent guidance there is from The Law Society was on 29th March. It states that if you are going to move into an unoccupied house and you have an agreed completion date, then you can continue and go ahead and do that as long as it is all done and in accordance with the Public Health England, social distancing and so on.

This means it’s possible to move, however you will of course face practical difficulties. Whilst not all, most removal companies are not working at the moment, so you would likely need to organise the logistics of the move yourself.

You will face more complicated issues where the house is occupied; the current advice on that is that you should try and defer the completion. There will be an agreement and completion date if that’s looming then a buyer should get in touch with the seller or their agent and try to defer the completion until or after the lockdown has been lifted.

So far we have seen clients be very realistic about their situations and everybody involved is looking to be as helpful as possible in agreeing to defer completion dates.

What if my house move is essential?

The Police Emergency powers don’t apply if it is a critical home move. If you have got to move because otherwise you are going to be homeless for example, it’s perfectly fine to continue.

I exchanged contracts on my house purchase but my financial circumstances have now changed before completion. What happens?

Unless the contract you have entered into with the other party specifically provides for a change in financial circumstances prior to completion, which can be the case with some new build residential contracts subject to Help to Buy loans, you may find yourself in breach of contract should you be unable to complete.

The Standard Conditions of Sale (Fifth Edition) which govern residential sale contracts have no specific frustration clause included in these to deal with not being able to fulfil obligations under a contract due to a force majeure (a major incident outside of your control). However the Doctrine of Frustration dictates that a party cannot be held liable for non performance of obligations under a contract where an act of force majeure has occurred making it impossible for said party to comply with their obligations. Therefore technically if we were served notice to complete for failure to complete we could argue that under the Doctrine of Frustration principals this wouldn’t be valid. However this would be a matter that would likely to proceed to arbitration should a resolution not be reached between the parties.

If you fail to complete on the completion date and no other remedy is available, you will find yourself liable for interest on the balance of monies outstanding under the contract calculated at a daily rate until such time as completion takes place. Once notice to complete is served, a further 10 working days is given for completion to take place subject to the payment of interest occurring on the balance of funds. In addition, you will be liable to pay the other party’s legal fees for service of the notice and any additional costs and expenses incurred as a result of completion not taking place. If after the expiration of 10 working days completion is not achieved, you will forfeit the deposit paid on exchange (and if less than 10% of the purchase price be liable to make this up to the full 10%). In addition, should the seller resell the property at a lesser value to the original price agreed then you can find yourself liable for the difference between the old sale price and the new sale price by way of compensation to the seller.

It may be possible to agree with the other party to a supplemental deed of variation to vary the original terms of the contract to allow for an extension of the original completion date and additional provisions should matters be delayed beyond your control due to COVID-19. This would be subject to negotiation between the parties.

We are at the present time advising clients that where exchange of contracts has not yet taken place, to either negotiate further conditions in the contract to provide for delays caused by COVID-19 or ultimately agree to a simultaneous exchange and completion on the same day to ensure that all parties are ready willing and able to complete prior to any form of legal commitment taking place.

I have exchanged contracts on a house I am buying but I cannot complete because of the lock down. What happens?

If you fail to complete on the completion date and no other remedy is available, you will find yourself liable for interest on the balance of monies outstanding under the contract calculated at a daily rate until such time as completion takes place. Once notice to complete is served, a further 10 working days is given for completion to take place subject to the payment of interest occurring on the balance of funds. In addition, you will be liable to pay the other party’s legal fees for service of the notice and any additional costs and expenses incurred as a result of completion not taking place. If after the expiration of 10 working days completion is not achieved, you will forfeit the deposit paid on exchange (and if less than 10% of the purchase price be liable to make this up to the full 10%). In addition, should the seller resell the property at a lesser value to the original price agreed then you can find yourself liable for the difference between the old sale price and the new sale price by way of compensation to the seller.

It may be possible to agree with the other party to a supplemental deed of variation to vary the original terms of the contract to allow for an extension of the original completion date and additional provisions should matters be delayed beyond your control due to COVID-19. This would be subject to negotiation between the parties.

I'm worried about mortgage arrears during Coronavirus, what can I do?

Contact your mortgage provider as lenders are granting three month repayment holidays to all homeowners who are up to date with their mortgage payments and this includes buy-to-let mortgages who are receiving less rent as a result of Coronavirus. Be aware that this doesn’t mean your mortgage amount will be reduced, it is likely that after a payment holiday the mortgage payments will increase or the term of the mortgage extended. 


In this section we answer questions we have received around education issues as a result of of the Coronavirus lockdown.

Will pupils still gain GCSE and A level qualifications now that the examinations have been cancelled?

These are worrying times for students and their families, many of whom had expected to sit exams later in the year and to achieve results which would have determined their further education.

The government has made it clear that in place of exams, there will be a calculated grade process which will take into account a range of evidence including non-exam assessments and mock results and that these results will then be standardised between schools and colleges.

The government announced on 3 April that schools provide information needed for exam boards to award grades. This would include information on “predicted” grades and to rank pupils’ performance within each subject.

Schools are being asked for the grade they believe pupils are most likely to get if teaching, learning and exams had happened as planned and further that schools and colleges will consider a range of things including classwork, homework, assignments, mock exams, any non-exam assessment work that pupils may have done and their general progress during each course.

However, the government has also made it clear that the calculated grades awarded will be formal grades with the same status as grades awarded in any other year.

Do you know how long schools will close for during COVID-19?

The latest advice from the government is that due to the Coronavirus outbreak schools, colleges and childcare providers will be closed to the majority of pupils until further notice. The government is also asking independent schools and boarding schools to do the same.

There is no current date set for the re-opening of schools although this is constantly under review by the government and schools.


The Employment team have their own separate FAQ pages as there are so many employment related questions being asked at the moment on different employment issues. Below are links to these pages :


This section contains frequently asked questions we have received on family related issues as a result of the Coronavirus pandemic.

My child has an underlying health condition. Can they still move between homes during the lockdown?

The President of the Family Division (the most senior family court judge in the country) has issued advice that whilst children can be moved between separated parents, this does not mean that children must be moved between homes. The decision about whether a child is to move between parental homes is for the child’s parents to make in accordance with what they believe is in the best interests of their child. Parents would have to jointly assess their particular circumstances, including the child’s present health (ie if the child has an underlying health condition) and the risk of infection. Each family’s circumstances will be different and it is crucial that parents act reasonably and sensibly in light of the official advice in place at that time and their child’s specific needs in order to avoid the risk of subsequently being criticised by the courts.

In many cases there is an order in force which says which parent the child should be with. Where parents do not agree to vary the arrangements set out in a court order, the President of the Family Division has provided some helpful guidance. The general advice is that if the parent with whom a child lives most of the time is sufficiently concerned that complying with a child arrangement order would be against current public health advice and may put their child’s health at risk, then that parent may exercise their parental responsibility and vary the arrangement to one they consider to be safe for their child. In those circumstances, the courts will expect alternative arrangements to be made to establish and maintain regular contact with the other parent, ie by video connection or, if that is not possible, by telephone.

We don't have an official childcare arrangement in place. What should we do while the Coronavirus is present?

Unless there are justified medical/self-isolation issues, children should maintain their usual routine of spending time with each of their parents. Maintaining a sense of routine will help your child to feel safe and secure. Therefore, the same informal arrangements that have been in place until should continue, as much as possible, unless both parents agree different temporary arrangements. If the parents cannot reach an agreement and one parent believes the other has acted unreasonably, then it would be possible to apply to the courts for a judge to make a decision.

I have lost my job due to COVID-19. What should I do about maintenance payments?

If you can no longer afford to pay maintenance to your ex-husband or wife in line with the terms of a court order, then it might be sensible to try to agree with your ex to temporarily reduce the level of payments or even to stop them altogether. It would be sensible to make an informal written record of any agreement reached in order to avoid any future misunderstanding. If it is impossible to reach an agreement, then it might be necessary to apply to the court to reduce the order. Technically, until the order has been varied by the court, you will continue to be liable to pay spousal maintenance at the same amount, so it is crucial that this is dealt with promptly.

If you are paying child support pursuant to an assessment, then you should contact the child maintenance service. Their web-site says that if you have lost your job or you are currently without an income due to self-isolation etc, you should contact them by telephone. Whilst they do not give their number, it is 0800 171 2345. If They will not accept notice of this sort of change on-line, so it is important that you call them, although you may have to face lengthy queues. See our separate blog “Coronavirus; unable to make maintenance payments?” for more information.

Are the family courts closed due to Coronavirus?

Although the family courts are not closed, the Coronavirus outbreak does mean that the courts have had to change how they work and there will be delays in some cases. Most hearings are considered suitable to be conducted remotely and if the necessary arrangements can be made, then those hearings will go ahead without any physical presence at court. Remote hearings could therefore take place via Skype, telephone or video link. Some cases may be considered suitable for paper hearings and the court file will be referred to a judge where necessary to consider the documents and make directions for the next steps in the court process. We are finding that the courts are being pro-active about this, and listing short telephone hearings at which the necessary arrangements can be discussed and agreed.

What are the access arrangements for children living apart from one parent where that parent may be in a different town?

Government guidance issued alongside the “Stay at Home Rules” on 23 March deals specifically with child contact arrangements. It says: “Where parents do not live in the same household, children under 18 can be moved between their parents’ homes.” Although this establishes an exception to the mandatory “stay at home” requirement, it does not mean that children must be moved between homes. It is for the parents to decide whether it is sensible for a child to move between parental homes in light of their present health, the risk of infection and the presence of any recognised vulnerable individuals in one household or the other. 

Are there any legal implications of living together during Coronavirus lockdown?

Yes, there are potential legal implications of living together during Coronavirus lockdown if one of you is a property owner. As an unmarried couple, your claims against each other are limited as you do not have the same rights as a married couple. However, if financial or other significant contributions are made by a non-owning party to property held in the other party’s sole name, then under trust law the non-owning party may be able to make a claim. Property owners therefore need to be cautious. For more information about this, please see our blog “Are there any legal implications of living together during Coronavirus lockdown?

I am currently living in an abusive relationship. Is there anything I can do during the Coronavirus lockdown?

Yes, the government has released new guidance which states that despite the Coronavirus lockdown, victims of domestic abuse are allowed to leave their homes to seek help at refuges. You are also allowed to move to a friend’s address for several days to ‘cool off’ following an argument at home.

You can also apply for a domestic abuse (Family Law Act) injunction, which will either protect you or your child from being harmed or threatened by the person who is abusing you (known as a non-molestation order), or decide who lives in the family home or enter the surrounding area (known as an occupation order).

The courts have classified these types of injunctions as ‘work which must be done’ during the Coronavirus pandemic. Applications can be made with or without notice to your partner, depending on the urgency of your situation. The courts will then list a hearing which, at the moment, are being held remotely via Skype, telephone or video link.

Legal aid may be available for this type of work, provided you have evidence of the abuse and you cannot afford to pay legal costs. Read the eligibility criteria.


If you are in immediate danger, you should dial 999, or for non-emergency support, you should dial 101.

It is important to remember that there is help and support available to anyone who feels they are at risk of abuse, including police response, online support, helplines, refuges, and other services. Links to bodies who can assist you can be found via the  Government guidance – Coronavirus : Support for victims of domestic abuse

You should not feel alone.

Landlord and tenant

Please see our separate FAQ page for queries we have received relating to landlord and tenant matters as a result of COVID-19.

Private client

In this section we answer the most common questions we have received as a result of the Coronavirus lockdown. In particular there have been many questions centred around the making of Wills, the logistics of having Wills witnessed etc.

When is the right time to draw up a Will?

Essentially every homeowner, asset holder or parent needs a Will.

To draft a Will you must be aged over 18 years (there are some exceptions to this age rule).

Why is having a Will important?

A Will is the most important document that you will make. That is because a Will incorporates our wishes about whom we wish to benefit, how we wish to benefit them and who has the responsibility of dealing with our assets after our death. It is much better to have made an informed decision about your estate then to have the Intestacy Rules govern how your estate will be distributed and by whom because you have not made a Will.

A Will can also be a very useful vehicle for:

  • Inheritance tax planning;
  • Protecting assets for vulnerable adults or children (by means of a trust);
  • Protecting assets for the purposes of care funding (by means of a trust);
  • Providing for Guardians.

What are the main assets which can be covered in a Will?

The assets that you can leave in your Will may be property, money, bank accounts, investments and shares. Indeed any asset that you own or of which you share ownership. This can include your “digital assets”. A Will can also make provision for items that have sentimental value i.e. jewellery, paintings and/or furniture (known as “personal chattels”).

If you have young children then your Will should also make provision for the appointment of Guardians.

Can I make a Will or can I make amendments to my Will when I should be self-isolating?

Yes you can. Whilst face to face meetings to discuss your requirements are not possible in these unprecedented times, we are able to speak with you by using video applications such as Facetime, Whats App, Zoom or Skype.

How can I sign my Will when I should be self-isolating?

There are specific rules setting out how your Will must be signed in order to be valid. Your signature must be witnessed by two independent witnesses who are present when the Will is being signed who are not named as beneficiaries in your Will. Read our guide to assist you in arranging the signing and witnessing of your Will.

What are some of the common mistakes people make when drawing up a Will?

Common mistakes might include not making adequate provision for someone or making provision that causes conflict between the beneficiaries after you have died. Not effectively appointing executors. Not maximising the Inheritance tax reliefs.

How regularly should it be reviewed?

Ideally a Will should be reviewed if your circumstances have changed but it is recommended that a minimum is every 4 or 5 years.

Must you always use a solicitor? What happens if you can't afford one?

You do not need to use a solicitor to make a Will. Indeed there are plenty of Will making kits available. However, if your circumstances are not straightforward, for example, a second marriage, vulnerable children, family estrangement, discordant issues with the family or assets held abroad then it is advisable to take advice from a solicitor. You can make an informed decision about the provisions to be incorporated in the Will to ensure it is right for you and your circumstances.

How should you choose an executor? Does it have to be a family member?

An Executor should be someone who has your complete trust. It does not need to be a family member and it can be someone who is benefitting in your Will. However, the individual/individuals should be happy to take on the role and likely to be able to cope with the role when you die. You need to be satisfied the individuals you choose that will carry out that role appropriately to ensure that the wishes in your Will are adhered to.

Do you need a solicitor with specialist experience?

You should see a solicitor who is experienced in drafting Wills and ideally a member of STEP (the Society of Trust and Estate Practitioners) – STEP is a global professional association for practitioners who specialise in family inheritance and succession planning. You can also locate solicitors with the appropriate skills on the Law Society website.

Should you tell your family you have a Will?

A Will is a private document so it is entirely up to you whether or not you tell your family that you have drafted one or its terms. However, to ensure that there is no confusion on your death it is advisable to let your family know that you have made a Will and where the original document is held.

What happens after you're gone (assuming you have a Will in place)?

After your death normally a member of your family or an appointed Executor will register your death with the Registrar of births, deaths and marriages. The funeral will need to be arranged (normally banks will permit the funeral invoice to be paid from any monies held in an account of the deceased). The Executors then need to ascertain what assets you held when you died, their value, deal with your income/pensions and any liabilities you may have. The Executors will probably need to apply for a Grant of Probate and then ensure that your liabilities are paid and your assets are distributed in accordance with the terms of your Will.

What happens if someone dies during the Coronavirus pandemic?

Whilst it would normally be a family member of the deceased or their appointed Executor who will register the death this might not be currently possible because of the restrictions in place. Therefore the rules have been modified so that a funeral director acting on behalf of the family may now register the death – if this is more convenient.

Registration can no longer take place with a face to face meeting. Appointments are dealt with remotely and the individual registering the death will need to contact the relevant Registrars’ Office. The Registrar will then telephone that individual to take the relevant details for the registration. Communications will be exchanged electronically.

For further information for deaths in Hampshire read the Hampshire County Council’s advice paper on registering a death

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