BUSINESSES accepting government help during the Covid-19 crisis are being warned to make sure they are not breaking European Union regulations on state aid.

Although the UK has left the EU, it remains subject to State Aid regulation until December 31, 2020.

Its state aid rules seek to prevent unfair competition and trade by restricting the amount of financial support that governments can provide.

The rules affect any aid that is selective – for example, where support is restricted to a geographical region or particular industry sector.

On top of existing limits on how much state support those businesses may receive, the EU has granted a new, temporary framework which sets out how much additional support businesses may accept in the form of targeted Covid-19 measures.

For most organisations, this figure is set at the equivalent of 800,000 euros in total, but there are lower limits for the agriculture sector (100,000 euros) and the aquaculture and fisheries sector (120,000 euros).

Alan Rolfe, senior tax manager at regional accountancy firm HWB, which has a base in Chandlers Ford, said: “While widely-used measures such as furlough pay, tax payment deferrals and business rates relief do not count towards the Covid-19 state aid limit, there are a number of welcome tax reliefs that do.

“These include the reclaim of employees’ coronavirus-related statutory sick pay, the Coronavirus Business Interruption Loan Scheme, the Bounce Back Loan Scheme and the Retail, Hospitality and Leisure Grant Fund.

“Organisations which are subject to EU state aid rules will want to monitor the amount of additional support they receive very carefully. Although the limits are relatively generous, over time it will be possible to exceed them.

“The onus falls on businesses to ensure that they do not accept grants which would breach state aid limits and so you may be asked to sign declarations that the support to be received will be within the permitted thresholds.

“Breaching the rules can mean that the EU can force governments to reclaim support, and having to pay money back is not a position any business wants to be in. Therefore compliance with the rules is vitally important.”