Over the weekend The Government announced a number of financial measures to help businesses through disruption caused by the COVID-19 pandemic. Below is a summary of the measures announced.
Deferment of VAT payments
For VAT payments due between 20th March 2020 and 30th June 2020, payment will be deferred until the end of the tax year. This means that payment for this quarter will not be due to be paid until 5th April 2021.
It is important that your VAT return is submitted, and the information contained on the VAT return is accurate, however the payment will not be due.
If you normally pay your VAT via Direct Debit, at this point HMRC have not made it clear whether the Direct Debit will be cancelled. If you are expecting (or worried about) experiencing cashflow issues, we advise you cancel your Direct Debit. However, please ensure you make sufficient provisions to pay future VAT payments, and make provisions to repay any deferred VAT payments.
At this point, it isn’t clear whether late payment penalties/interest will be levied against any deferred VAT for the quarter highlighted above, we are seeking HMRC clarification.
This is an automatic initiative, and no application will need to be made.
Deferment of Self-Assessment Payment on Account
The government announced a deferment of Self-Assessment payments on account (due to be paid in July 2020) for the self-employed. Please be aware that we are seeking HMRC clarity on whether this will include all payment on accounts, or whether this relates solely to individuals registered as self-employed.
This is an automatic initiative, so no application needs to be made to be made to HMRC.
Time To Pay arrangements
If you are currently or expecting to experience cashflow problems, due to COVID-19, you can make an application to HMRC and arrange an extension on your corporation tax payment deadline.
In order to secure a Time To Pay arrangement, you will need to contact HMRC directly, have an understanding of their expected Corporation tax liability and their company’s (and personal) outgoings, in order to agree a payment plan which will give you more time to repay outstanding taxes.
This will need to be applied for via HMRC on 0800 0159 559 and discussed directly with them. It is important that repayments agreed under Time to Pay arrangements are kept up to date, otherwise HMRC have the option to withdraw the arrangement and pursue full repayment.
Coronavirus Business Interruption Loan Scheme
All Small and Medium businesses (based in the UK, with turnover of no more than £45 million per year) who have been impacted by COVID-19 can apply for a loan.
The loan is primarily directed at SME’s, however, if you meet the criteria, you may be eligible.
The main criteria is that before securing any business loan, It is important to determine whether you will be able to afford repayments. There will be further British Business Bank eligibility criteria lenders will use in assessing any loan application i.e. you must have a borrowing proposal which, were it not for the COVID-19 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.
For further details, you will first need to contact your bank/finance provider.
Extension for filing accounts
From the 25th March 2020, businesses will be able to apply for a 3-month extension for filing their accounts.
As part of the agreed measures, while companies will still have to apply for the 3-month extension to be granted, those citing issues around COVID-19 will be automatically and immediately granted an extension. Applications can be made through a fast-tracked online system which will take just 15 minutes to complete.
We would recommend that you continue to file your accounts on time if you are able to do so. Unnecessary delays should be avoided if at all possible, keeping up to date with your accounts enables you to have a clear picture of your business performance.