With tax payments and deadlines deferred until January 2021, not to mention the lockdown, January could prove to be the perfect storm for many businesses struggling with the pandemic.
As part of the relief effort introduced by the Government they allowed VAT between March and June to be deferred and personal income tax liabilities to be deferred until January 2021.
The majority of Limited Companies have March or April year ends with corporation tax bill falling due on 1 Jan or 1 Feb 2021. To make things worse for these companies the initial government business rate grants will become taxable in these periods which may result in higher tax bills than anticipated.
The rent quarter day of 25 December has just passed with many tenants unable to pay, especially within the retail and entertainment sectors.
Cash is the lifeblood of all businesses, and at this period of uncertainty, all business owners and their finance teams must understand what cash is due to go out of the business and then make deliberate decisions about their payment.
Ensure that you have claimed all of the Coronavirus support payments to which you are entitled such as the National and Local Lockdown Grants, Discretionary Grants for those not eligible for the business rate grants, and of course the Coronavirus Job Retention Scheme (Furlough Scheme) or Self Employed Support Scheme. A list of all of the coronavirus support schemes for businesses is available from HMRC here.
Do you have more capacity to borrow funds under the Coronavirus Business Interruption Loan Scheme or Bounceback Loan Scheme? There is also the Rosebud Fund which was setup by the Government to support the growth of Lancashire businesses and the economy. They're looking to support businesses on their road to recovery, including the creation and retention of jobs as well as resuming growth plans.
Are you eligible for relief under the R&D tax credit scheme? Many businesses are unaware that their activities are Research & Development (R&D) qualifying for tax purposes which can lead to significant corporation tax savings or cash repayable credits from HM Revenue & Customs. Such activities can include making bespoke products, product development and changes to production techniques and processes.
You can defer you January 2021 self assessment tax payments online if you owe less than £30,000, you don't have any other personal tax payment arrangements and your tax returns are up to date.
Any VAT deferred from 2020 to March 2021 can be paid over 11 months instead of becoming due in one payment by March. You VAT returns must be up to date to benefit from this payment plan.
It may also be possible to arrange a payment plan for your corporation tax with HM Revenue & Customs albeit there is no dedicated scheme available.
Most importantly, if you are struggling please give us a call.