VISITOR ATTRACTIONS & EVENTS SCHEME
GUIDANCE NOTES
Introduction
The outbreak of Covid-19 resulted in Government taking measures which impacted the ability of businesses to operate at their normal capacity. Various schemes have been introduced to mitigate the impact of government imposed restrictive measures, including the Co-funded Payroll Scheme, the Business Disruption Loan Guarantee Scheme and the Visitor Accommodation Support Scheme.
The business model for events and attractions businesses is similar to that of accommodation providers in Jersey; that is to build up cash reserves in the peak trading months between May and September to support the business to trade through the expected period of reduced trading or closure between October and April.
Government imposed restrictions to combat COVID-19 infections meant that events and attractions businesses were prevented from trading at all between April and June 2020. The further restrictions on borders and travel to Jersey over the key summer period and into the autumn period, together with a dramatic fall in confidence to travel have resulted in an unprecedented drop in visitor numbers.
As a direct consequence many events and attractions providers have incurred significant financial losses over the period in which their trading pattern requires them to produce profit in order to sustain the business over the winter period.
In order to avoid sudden structural change in the visitor economy due to key events and attractions providers ceasing to trade it is proposed that a subsidy scheme is made available to support events and attractions providers to meet up to 80% of their fixed costs incurred over the winter period (October 2020 to end of April 2021). The aim of the scheme is to enable qualifying events and attractions businesses to continue trading in 2021.
Principles of the Scheme
The Visitor Attractions & Events Scheme is not intended to substitute lost earnings or underwrite operating costs through the winter. It seeks to balance support with shareholders and owners so that businesses can to continue to trade once restrictions are lifted.
This support scheme focusses on preserving businesses which are core to Jersey’s attractions and ability to operate large scale events. It is a scheme of last resort to support business where other avenues of finance has support have been explored and exhausted.
The objectives of the scheme are to
- Ensure that Jersey maintains the core infrastructure to operate large scale events after restrictions based on Covid-19 public health measures are lifted; and
- Retain key attractions which are suffering reduced footfall, and in turn income, due to the reduction in visitor numbers caused by Covid-19 and related public health measures.
Scope of the Scheme
The Scheme is designed to preserve unique attractions and that form a key part of the visitor economy ecosystem and events organisers and suppliers that form a key part of the visitor economy.
The scheme will support businesses that are:
- Event specific venues that are completely reliant on the events and entertainment industry
- Event promotors and organisers who promote events and concerts as their only business
- Main suppliers, employing staff, with warehousing and stocks of equipment whose principle customers are events requiring gatherings of more than 40 people, or are unable to operate due to Level 1 restrictions, this being their principal income stream[1]
- Businesses not attached to a hotel or restaurant holding a seventh category (b) "designated nightclub" and/or (c) "any other place of entertainment" license, previously reliant on revenue coming from non-seated service during late night hours
- Travel businesses providing tour operations delivering visitors to Jersey, with trading history, employing staff[2]
- Attractions with fixed assets and employed staff that rely on the visitor economy and attract significant footfall
Government supported arm’s length organisations (such as Jersey Heritage) are out of scope for this scheme.
Scheme Qualifying Criteria
- The business must have completed a Jersey Business “Business Health Check”, to include an assessment that with the proposed support, they can continue to trade for the next 12 months, and confirm that they meet the criteria of the scheme having discussed with Jersey Business;
- The business must confirm that it has sought to borrow to support it through its financial difficulties, either through commercial options or the Business Disruption Loan Guarantee Scheme;
- Can show a detriment to turnover of 50% due to public health intervention (for example, the restriction on 40 people and subsequently 20 people gathering together, people; being closed to trade or cannot operate in accordance with the prevailing public health advice; majority of trade come from visitor to the island);
- The business must have a business licence as at 1 October 2020;
- The maximum support available to any particular business under the scheme is £250,000;
- The business must be registered for GST and have an annual turnover in excess of £300k.
- The business cannot be a beneficiary of the Visitor Accommodation Subsidy Scheme;
- The States of Jersey must not be a shareholder; and
- The business must not be grant funded by the States of Jersey.
Support provided by the Scheme
The Scheme will provide support of up to 80% of designated fixed costs paid on a monthly basis in arrears. The subsidy payable is the amount needed to break even in that month or 80% of designated fixed costs whichever is lower.
Designated fixed costs will include the following items, where they are apportioned and charged to the business on a basis consistent with previous periods where they are relevant:
- Rent payable on business premises where the landlord is not a party connected to the business*
- Interest on mortgage payments; repayments of capital are not covered by the Scheme
- 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
- Licences (liquor, TV, tourism etc.)
- Audit/accounting fees
- Refuse collection
- Uniforms
- Statutory staff training
- Pest control
- Group costs, where they are apportioned and charged to the business, if they are a cash cost to the head office company in that month and they are apportioned and charged in that month to operating businesses on a basis consistent with previous periods.
- Where the business operates from a private residence, only costs designated as business cost on a business tax return can be included under the above headings as the apportioned cost that is declared on a business tax return.
*parties connected to the business include parties connected by common shareholders, directors or common ultimate beneficial owners, a company in the same group of companies and persons who are directors or owners of the business.
Salaries and other costs associated with the payment of staff are not included
The scheme will cover the period of October 2020 to April 2021, inclusive and will open to applicants on 29 December 2020.
Additional Conditions
The following conditions apply to the Scheme:
- Applications to the scheme will be made monthly, in monthly arrears, with subsequent applications providing a revalidation of the qualifying criteria;
- The monthly benefit under the scheme is capped at 80% of the fixed costs incurred or apportioned to the month applied for;
- Signed accounts for the financial period ending in 2019 and 2020 (when available) must be provided on request;
- Applicants must make legally binding declarations as part of the application process to access the Scheme:
- For corporate applicants an extract of a minute of a board meeting of the company evidencing that the company has considered and agreed to the rules of Scheme and has duly delegated authority to a director or other individual to make the declarations required under the Scheme on behalf of the company will be required
- For non-incorporated businesses a personal declaration by the registered business owner that they have considered the rules of the Scheme, agreeing to procure that the business will comply with the rules of the Scheme will be required. The business owner will make the additional declarations required under the rules of Scheme
- Failure to comply with the rules of the Scheme will result in all monies paid under the Scheme becoming immediately repayable and any further access to the Scheme will be denied
- Applicants must declare that they and their shareholders (where relevant) have considered all alternative options available and the subsidy is considered necessary to secure the continuity of the business
- Applicants must declare that they meet the prevailing conditions of the Co-Funded Payroll scheme (where it is benefiting), and has paid all relevant taxes and social security contributions due to the States up to date (allowing for deferrals where permitted)
- No dividends can be paid for a financial year within which a business participates in the scheme;
- The business must declare that it has reviewed and appropriately reduced director salaries (or owner’s renumeration where relevant) in the context of applying for a taxpayer funded subsidy and must not increase director salaries or owner’s remuneration during the life of the scheme
- All funds paid under the Scheme must be listed as a contingent liability in the accounts of the applicant business
- The applicant business must declare that it is a going concern and not in immediate danger of insolvency, winding up or ceasing to trade on a permanent basis
- The applicant business agrees to be audited to verify eligibility and compliance with the rules of Scheme, and to open its financial data to government auditors for that purpose
- Beneficiaries under the scheme and amounts paid will be made public
- The subsidy is not payable where the business is profitable for a month claimed for under the scheme, on an apportioned basis.[3] The scheme is designed to support businesses to survive (up to and including break-even) but should not underwrite profit
- If it is found that a business has been profitable in a month in which it has made a claim, it must repay the profit up to the total value of the claim
- The subsidy payable is the amount needed to break even in that month or 80% of designated fixed costs whichever is lower
Declarations to be made by Applicants in respect of the Scheme:
- Applicants must make legally binding declarations as part of the application process to access the Scheme:
- For corporate applicants an extract of a minute of a board meeting of the company evidencing that the company has considered and agreed to the rules of Scheme and has duly delegated authority to a director or other individual to make the declarations required under the Scheme on behalf of the company will be required
- For non-incorporated businesses a personal declaration by the registered business owner that they have considered the rules of the Scheme, agreeing to procure that the business will comply with the rules of the Scheme will be required. The business owner will make the additional declarations required under the rules of Scheme
Failure to comply with the rules of the Scheme will result in all monies paid under the Scheme becoming immediately repayable and any further access to the Scheme will be denied;
Additional Q & A Guidance
Questions and Answers:-
Qu: Will applicants be asked to state detriment on the application form?
A: Detriment should be calculated and declared on the application form
Qu: Explanation of detriment:
Applicants must show a 50% detriment comparing the total turnover in the last 12 months of operation (up to and including the month of claim) to the total 2019 turnover.
• Turnover is the total operating income including income from trading and any other sources of income that the business may have.
• This includes (and is not limited to): the sale of products and services, commission receipts, business rental income, business bank interest or other business investment income, and payments received from business disruption insurance. Accruals accounting must be used for turnover calculations
• Before the deduction of any allowable expenses
Detriment is calculated by comparing 2019 turnover to the turnover of the business in the last 12 months up to and including the month claimed for.
For example, if turnover in 2019 was £300,000 and turnover in the last 12 months up to and including the month of claim is £120,000 then 60% detriment has been suffered; the detriment test is met.
If turnover for the last 12 months up to and including the month of claim was £180,000 then 40% detriment has been suffered; the detriment test is not met.
Qu: Will the fixed costs be calculated on a cash or accruals basis?
A: An accruals basis; costs previously incurred can be apportioned and charged on a consistent basis with previous accounting periods
Qu: What if management accounts are normally only done on a quarterly basis or fixed costs are not clearly understood?
A: In a period of trading crisis the expectation is that applicants should understand and be able to detail the fixed costs being paid on a cash basis in each month. If subsequent management accounts reveal any discrepancies this needs to be accounted for in the next claim
Qu: Are all subsidies included in the profit/loss calculation in respect of potentially paying back profit?
A: Yes; the scheme is designed to support businesses to survive (up to and including break-even) but should not underwrite profit
Qu: Should all income, including income from cafes and restaurants be included in the detriment test?
A: All income to the business applying should be included in the detriment calculation, including restaurant and cafe takings where relevant.
Qu: What about group head office fixed costs charged to the business?
A: Fixed costs (as included in the Designated Fixed Cost list) apportioned and charged by a head office company to the business where they are a cash cost to the head office company in that month and they are apportioned and charged in the month of claim on a basis consistent with previous periods, will be covered by the Scheme.
Qu: What is included in fixed costs?
A: See list above; these include costs that are declared as business costs for tax purposes only; apportionment of costs already paid is not permitted. Focus is on asset related fixed costs - personnel costs should not be included.
Qu: Over what period will the scheme operate?
A: The Scheme will open on 21 December 2020 for applications in relation to October 2020 fixed costs and will cover costs incurred up to 30 April 2021. The scheme will close to applicants on 31 May 2021.
Month claimed for: Opening and Closing times
Claim month | Claim window |
October 2020 | 29 December 2020 9 am - 26 February 2021 5pm |
November 2020 | 29 December 2020 9am - 26 February 2021 5pm |
December 2020 | 4 January 9am - 26 February 2021 5pm |
January 2021 | 1 February 9am - 26 February 2021 5pm |
February 2021 | 1 March 9am - 31 March 2021 5pm |
March 2021 | 1 April 9am - 30 April 2021 5pm |
April 2021 | 4 May 9am - 28 May 2021 5pm |
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