Yesterday the government announced new strict rules – the country has now gone into lockdown.
To summarise, you can only leave your house for the following reasons :
- To visit a supermarket or chemist
- To undertake one form of exercise a day, alone or with members of your household
- Any medical need, to provide care or to help a vulnerable person
- Travelling to and from work if absolutely essential and cannot be done from home
VAT payment deferral
Any VAT payments due on 10 April, 10 May and 10 June will not be collected by HMRC. No action is required by businesses – this will happen automatically.
However! This is effectively just an interest free loan from HMRC and it will need to be repaid within twelve months. There is a risk that businesses could run into serious trouble if they are unable to pay the VAT when it falls due. We recommend that you set up a separate bank account and segregate the VAT liability. That would mean that, when the VAT falls due and payable, the funds are available. Unless it is absolutely necessary, businesses should not dip into the VAT funds.
VAT RETURNS MUST STILL BE SUBMITTED!! Fines will be applied if the returns themselves are not submitted
Loans available for Businesses
There are currently 2 Government backed loans for those who need it. It will hopefully enable businesses to continue to operate during this global pandemic. Details of these two new loan schemes are being confirmed and an information campaign launched so that businesses know how to get help.
Coronavirus Business Interruption Loan Scheme – this will provide government-backed loans and will help any viable business with a turnover of up to £45m to access government-backed finance of up to £5 million to small and medium businesses. Interest payments and any lender-levied fees for businesses will be covered by the Government for an initial period of up to twelve months. You are able to apply now. The government will provide lenders with a guarantee of 80% on each facility to give lenders further confidence in continuing to provide finance to SMEs. The scheme is available through more than 40 accredited lenders, which are listed on the British Business Bank website.
The Bank of England’s Covid Corporate Financing Facility – this will provide a quick and cost-effective way to raise working capital for those large firms who need it. By purchasing short-term corporate debt – known as commercial paper – the scheme provides a quick and cost-effective way to raise working capital for companies who are fundamentally strong but are experiencing severe disruption to cashflows, helping businesses across a range of sectors to pay wages and suppliers. The scheme is open to firms that can demonstrate that they were in sound financial health prior to the impact of Coronavirus. Companies who wish to use the scheme do not need to have issued commercial paper before.
Self Assessment Tax Deferral
Any individual who had previously been advised that they are required to make a second payment on account on 31st July 2020 will not be required to make the payment at that time.
However! This tax will still be payable at a later date. You can still make the required payment on the due date, even though you are not required to. It is important to really understand that this tax is probably still payable at some stage. It is not money to play with unless you are in absolute hardship.
SELF ASSESSMENT TAX RETURNS
Personal tax returns must still be submitted by 31st January 2021, otherwise fines will be applied. If you are required to self isolate, this is the perfect time to put all the tax stuff together. We can then prepare your tax return sooner, leaving you (and us) free at Christmas to enjoy the festivities.
We strongly advise you to seek appropriate advice before taking action on any of the points listed above.
All information contained in this document are correct at the time of writing. Legislation and regulations may change at any time.
If you are in any doubt, please call us for clarification.
About us: Leggate Associates Limited was formed by Andrew Leggate LL.B FCMA FCA CGMA who has over 40 years of tax and accountancy experience in industry and practice, and the practice is managed by Joanne Leggate FMAAT, ATT (Fellow). Our clients range from building subcontractors to multi-million pound concerns and high net worth individuals all over the UK. Please see our website www.leggateassociates.co.uk or follow @LeggateAssoc on Twitter for occasional updates.
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