Nobody could have planned for what the UK business community is experiencing during this coronavirus outbreak
There have been so many emergency provisions announced by the government over the last week to try and provide financial support to UK businesses, to ease cash-flow, pay employees, contribute towards property costs and finally some help for the self-employed businesses who find themselves unable to generate enough income as a result of the shut down.
In the first part of a series of posts we have summarised below what is available to help businesses with their immediate cashflow needs:
Whilst the basics still apply to the information below, read our updated post here to see the changes made in Autumn 2020
HMRC – Time to Pay
- What support is available?
All businesses and self-employed people in financial distress, and with outstanding tax liabilities, may be eligible to receive support with their tax affairs through HMRC’s Time To Pay service. These arrangements are agreed on a case-by-case basis and are tailored to individual circumstances and liabilities.
- What do I need to do?
If you’ve missed, or are worried about missing, your next tax payment due to coronavirus, please contact HMRC helpline for advice on 0800 0159 559. You can access this support now.
- Our thoughts
The Time to Pay service have been instructed to be more sympathetic to the situation that taxpayers find themselves in, and is always the case they do need to know the actual amount of tax due, before agreeing to a payment plan, so it is still important to file all relevant tax returns, which we will continue to work with you on.
VAT Deferral
- What support is available?
As part of the measures, any VAT that is due for payment between 20th March and 30th June can be deferred. All UK businesses are eligible.
As it stands, this will mean that the VAT due for the following VAT Quarter Ends – Feb’20, Mar’20 and Apr’20 can be deferred in this way. VAT due for the May’20 QE will be due on 7th July, so falls outside the window that has been given so far.
- What do I need to do?
There’s no formal application that needs to be made to defer the payment.
Any VAT refunds and reclaims will be paid by HMRC as normal.
Importantly, VAT Return submissions still need to be made in line with the existing deadlines.
- Our thoughts
To note, any VAT that is deferred will ultimately need to be paid to HMRC by 31 Mar’21 – therefore, it will be a question of how paying VAT will best be dealt with from your expected cashflow point of view. Clearly, if you’re in the position that you feel you’re going to be OK to continue to make VAT payments during this period, then you can just make them as per the usual instructions.
Income Tax Deferral for the Self-Employed
- What support is available?
For Income Tax Self-Assessment, payments due on the 31 July 2020 will be deferred until the 31 January 2021.
- What do I need to do?
Again, this is an automatic offer, you don’t need to apply.
- Our thoughts
This measure was initially only available for the self-employed however it has now been extended to anyone with a second payment on account due in July.
The Coronavirus Business Interruption Loan Scheme
- What support is available?
The temporary Coronavirus Business Interruption Loan Scheme will support 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 pay to cover the first 12 months of interest payments and any lender-levied fees, so smaller businesses will not face any upfront costs and will benefit from lower initial repayments.
There are a number lenders able to offer the scheme, including all the major banks.
- What do I need to do?
Talk to your bank or finance provider as soon as possible and discuss your business plan with them. If you have an existing loan with monthly repayments, you may want to ask for a repayment holiday to help with cash flow.
- Our thoughts
Please remember these are loans and as the borrower you will be 100% liable for the debt.
Looking at the overall eligibility criteria for these loans, you are expected to have a borrowing proposal which, were it not for the current pandemic, would be considered viable by the lender, and for which the lender believes the provision of finance will enable your business to trade out of any short-to-medium term difficulty. Although it may sound harsh, these loans are not necessarily going to be available to all businesses struggling as a result of the downturn in business. Lenders will still be looking for businesses that are viable in the longer-term.