The UK Treasury and Bank of England (BoE) have called in their go-to counsel Slaughter and May and Freshfields Bruckhaus Deringer as they iron out details of the multibillion-pound support scheme to underwrite British business through the coronavirus crisis.
The UK Government announced last week the Covid-19 Corporate Financing Facility to help companies with cash flow as the rapid spread of the virus has forced governments to put a third of the world’s population in shutdown.
Under the scheme, the BoE will buy short-term bonds to ensure businesses making a material contribution to the UK economy can continue to pay staff and suppliers, upon the condition that they demonstrate they were financially-healthy before the crisis. The facility will operate for an initial period of 12 months.
Slaughters’ finance partners Matthew Tobin, Oliver Storey and Guy O’Keefe are advising the Treasury alongside corporate partner Nilufer von Bismarck (pictured) and state aid partner Isabel Taylor. Slaughters’ core role to Whitehall echoes its high-profile mandate during the financial crisis when it advised the Treasury on a wide-ranging bank bailout.
A Freshfields team led by financial services chief Michael Raffan is acting for the BoE, the Magic Circle firm’s most celebrated client.
The scheme is one of several unprecedented economic measures disclosed by the Government in response to the unfolding crisis. UK Chancellor Rishi Sunak announced on Friday (20 March) a coronavirus job retention scheme to offer all employers access to a grant covering up to 80% of the average wage to prevent widespread layoffs.
Businesses will not be expected to pay VAT for a quarter until the end of June and will not be liable for VAT deferred during that period until the end of the 2020/21 financial year.
Speaking to Legal Business about the measures, Hogan Lovells head of public law and policy Charles Brasted said they were ‘directly feeding into what our clients are thinking about in terms of how they can maximise what they retain over the next few months’.
‘It’s almost inevitably not the end of it, it’s not a one-off package,’ he added, saying that new measures will be likely to address the self-employed: ‘A lot of the measures at the moment work easily if you are on pay as you earn but not so easily if you are self-employed, and the government is looking closely about what it can do [on that front].’