Seeking refunds for Covid-19 related cancellations: do businesses need to pay up?

03 JUL 2020

One of the many challenges faced by businesses during the Covid-19 pandemic has been the need to balance their commercial interests on one hand with the financial interests of their customers on the other.

It is particularly relevant in relation to consumers’ prepayments and deposits for events and services which businesses can no longer hold and perform due to the Government restrictions. Although the current lockdown will in many ways be eased from July 4th onwards, the significant remaining restrictions will keep affecting particular business activities in the months to come.

This article addresses what you should be doing with such consumer prepayments: whether you need to refund them when you cannot hold the event or perform the service and whether you can deduct any cancellation fees as per your standard T&Cs. These issues are especially pertinent to the businesses in the hospitality, travel and childcare sectors.

Do I have to pay out full refunds to my customers?

You should always first check whether the terms of your contract with customers specifically prohibit you from keeping the deposit or charging cancellation fees in case the contract is ended by either party. Even if the contract does not prohibit this, consumer protection law will often require you to refund the customer. Following many complaints, the Competition and Markets Authority (CMA) established a Covid-19 Taskforce and issued Guidance to businesses on how to best uphold consumer rights during this period.

Generally, most customers will be entitled to a full refund where:

  • You have cancelled a consumer contract without providing any of the promised goods or services;
  • You are not allowed to provide the service or hold the event due to the Government health and safety measures; or
  • The customer cancelled or is prevented from receiving the service because doing so is not allowed under the Government health measures.

You therefore likely need to issue a full refund, even if it is a deposit or pre-payment that you described as non-refundable. Additionally, you should not be charging any admin or cancellation fees for processing refunds and should do so within a reasonable time (which may be longer given the pandemic context).

However, in limited scenarios, customers may be entitled only to a partial refund where:

  • You already provided part of the service, in which case consumers can only claim a refund for the services not yet provided and need to pay for those they had already received;
  • You have been prevented from providing the service by the Government restrictions, in which case you may be able to deduct from the prepayment a contribution to the direct costs you incurred in relation to their specific contract. This is subject to your duty to mitigate losses by claiming these costs elsewhere. According to the CMA Guidance, instances of this will be rare.

Can I offer vouchers or postpone the event or service instead?

Many businesses will prefer to offer credit to their customers through vouchers or re-bookings to a later date, since this ‘locks in’ customer funds which the business can then use freely.

It is perfectly acceptable to offer these to consumers, as long as they are offered as alternatives to a refund. Refunds should not be made more difficult to get than the other options, so any restrictions should be fair and clear to consumers.  All options should be given similar prominence in your communication with customers. Businesses should not coerce customers into opting for vouchers or re-bookings but should instead focus on strengthening their relationships with customers and show how, by opting for a refund alternative, they could meaningfully contribute to the business with its pandemic recovery.

What about future contracts?

Now that Government restrictions are getting eased from July 4th onwards, many businesses have started accepting prepayments for future services and events they expect to perform later in the month. The Guidance advises that, although businesses should not accept payments for services which they are not certain they can provide, they can accept payments when if they reasonably expect that they will be able to provide the service.

As it currently stands, businesses may thus accept customer prepayments and deposits for services they will be able to perform after July 4th. However, should the situation change down the line and restrictions re-introduced, the above guidance on refunds would remain relevant.

What if the customer cancels for other, non-pandemic reasons?

If your customer ends the contract for a reason not related to Covid-19 (eg, they no longer need the service or event), refunds should be made in line with the contract’s usual terms and conditions (as long as they are fair and reasonable, in accordance with the consumer protection legislation)

Final points to keep in mind

  • Even though it can be possible to agree to reschedule or postpone an event or service with your customers, their ‘consumer’ status means that you cannot exert any pressure on them to stop them from opting for a refund.
  • You should update your customers on the ‘reasonable time’ it takes to process refunds and explain the timing of the process to them.
  • Review any other onwards commercial contracts you have in order to limit your exposure to other business parties.
  • Good market reputation is always important, so make sure that PR considerations play a role in dealing with your customers, even if this means incurring additional business costs.
  • If you have not already, check what your current insurance covers in terms of pandemic-related business costs. Make sure to have relevant policies in place in the future.

Overall, consumer protection is a fact-sensitive area of the law, so each situation is likely to be different. If you need additional guidance and support with your contracts (Covid-19 related or otherwise), we are open for business as usual and are happy to advise. Please get in touch with our team at

Yulia Barnes

Managing Partner

Yulia Barnes is our Managing Partner. She is an experienced solicitor and advises on a wide range of contentious and non-contentious matters for both private and corporate clients.

Experience Yulia started her legal career at a large international Magic Circle firm. She then became a partner at a regional law firm and headed a Dispute Resolution Department. She then moved in-house before starting her own Boutique practice, Barnes Law, with the aim of providing exclusive services to high net-worth individuals and privately-owned businesses. More details can be found on her LinkedIn profile.

Expertise Yulia and her team are widely recognised for their professional and practical approach to matters. She is committed to ensuring that her clients’ objectives are achieved in the most cost-effective way possible.

Approach Yulia has a wealth of experience working with businesses of all sizes: from large multinational corporations to start-ups. She has particular expertise in a hospitality industry, investment funds, private and corporate clients, and focuses on startups and technology-driven companies. Yulia brings the same level of attention to detail, professionalism and a personal touch to every case and client, and truly immerses herself in her clients’ businesses. She prides herself on her problem-solving, commercially astute approach and her track record of partnering with clients to help them achieve their strategic objectives.

Will Moran


Will joined Barnes Law as an Associate Solicitor in Spring 2023, shortly after qualifying in September 2022.

Will works mostly on real estate and corporate/commercial matters. Will enjoys providing advice on transactional matters.

Away from the office, Will can be found reading or playing golf. While he played rugby until university, and rowed throughout his degree, he now tends to watch both from the sidelines. During the winter he can also be found skiing.

Will plans to continue developing his legal skills and experience at Barnes Law, under the expertise and guidance provided by Yulia.

Mark Corran


Mark is an experienced solicitor whose practice areas include intellectual property (IP), IT, data protection and general commercial law.

Mark advises businesses of all sizes – from sole traders to corporations. Among his clients are: clothing and lifestyle brands, restaurants and food suppliers, IT companies, banks, hedge funds and venture capital firms, education providers, medical and pharmaceutical brands.

Outside of his practice, Mark also advises members of the Institute of Directors as part of its Directors’ Advisory Service.

Recent transactions
  • Prosecuting a UK trademark application on behalf of an education provider and representing them in related UK IPO opposition and revocation proceedings;
  • Advising a publisher and a delivery business on data protection matters, B2B and B2C Ts & Cs of sale, website and app Ts & Cs, all aspects of global brand protection;
  • Advising footwear brands, alternative asset managers and hedge funds on their global brand protection, including overcoming various refusals, representing them in opposition proceedings and settlement negotiations;
  • Representing a central bank in opposition proceedings before the UK IPO;
  • Advising a lifestyle brand concerning trademark clearance and protection, negotiations for a website/app development and maintenance agreement.

Ioulia Tatawat

Family Law Adviser

Ioulia has a solid background in family law and offers guidance, clarity, and support to clients during one of their most challenging times in their life.

She advises on all three pillars of separation: divorce, children matters and financial settlements. Ioulia is a member of Resolution and is keen to try to settle matters at early stages.

Ioulia is dedicated to assisting clients and navigating them through their legal matters with clarity and support.

Alex Reidy


Alex joined Barnes Law in September 2023 after finishing his master’s degree in law. Prior to joining Barnes Law, Alex worked in property litigation at Ashfords. Alex assists Yulia on a variety of both contentious and non-contentious matters.

Outside of the office, Alex enjoys reading and hiking. Prior to working in law, Alex was a competitive tennis player.

Alex continues to develop his skills in legal practice under Yulia’s guidance, he plans to sit the Solicitor’s Qualifying Exams (SQE) in 2024.


Mehves Selamoglu


Mehves joined Barnes Law in August 2023, right after graduating from Queen Mary, University of London (LLB Senior Status). As part of her qualification journey, Mehves is currently pursuing her Legal Practice Course (‘LPC’) at the University of Law. She also holds a degree in European Union Law from Maastricht University, Netherlands.

Mehves works closely with Yulia on a variety of contentions matters and also writes Barnes Law’s legal blogs, manages social media accounts and is responsible for marketing.

Outside of work and studies, she enjoys running, tennis and yoga.

Mehves is looking forward to developing her legal skills at Barnes Law.


Julia Podgornova

Investor Relationship Manager

Julia guides clients in making important business decisions based on comprehensive risk assessment and strategy. She supports investors in devising strategies designed to maximise each business’s potential from pre-seed to IPO.

Julia’s particular area of expertise are IT start-ups at different stages. Julia supports business through their fund-raising journey. As an Investor Relations Manager, Julia communicates with investors to facilitate a smooth round and legal part of each transaction.

In her free time Julia enjoys sailing, ballroom dancing, art exhibitions and travel.