As another week passes by, many business owners are thinking about how to preserve vital cash to support working capital demands through the ongoing severe financial impact of COVID-19.

With details of grants available to small business and business rate holidays now filtering into the mitigation of immediate cash pressures, business owners are turning their attention to maximising potential claims under the Job Retention Scheme as well as formulating CBIL loan applications.

Don’t forget though – the Government has offered numerous opportunities in the immediate future to protect cash.

 

  1. VAT Deferment
  • How Does The Scheme Work?
    • Businesses can defer their next immediate VAT payment to HMRC:
      • Businesses should cancel their VAT direct debits to HMRC now, otherwise, payments will still be taken automatically;
      • The deferment applies to VAT payments due to be made to HMRC between 20 March 2020 and 30 June 2020 (rather than relating to VAT returns covering this period);
      • The payment of the deferred sum will fall due by the end of the tax year, 31 March 2021.
    • VAT returns must still be submitted on time: it is only the payment which is deferred
    • Any VAT due for payment after 30 June 2020 will still have to be paid to HMRC (as things stand).
  • What If I Am Due A Refund?
    • Since VAT refunds and reclaims will be paid by the government as usual, if you are due to receive a repayment submit that VAT return as early as possible.
    • If you regularly receive a repayment of VAT consider requesting monthly VAT returns.
  • Will I Be Charged For Deferring The Payment?
    • HMRC has confirmed that interest will not be applied to the deferred VAT payments.
    • It is assumed that HMRC will also not apply default surcharges or increase default surcharge periods/rates as the result of deferment although this is yet to be confirmed.
  • Are All Payments Of VAT Due Covered By The Scheme?
    • The Scheme covers:
      • Standard VAT return payments due;
      • Payment On Account instalments; and
      • Annual Accounting payments
    • The Scheme does not cover
      • MOSS payments.
  • Can I Defer Existing Time To Pay Arrangements?
    • HMRC has not clarified whether they might accept deferral of the payment instalments under a time to pay arrangement.
  • Eligibility criteria
    • Entitlement is automatic, no application is required.
    • All UK businesses are eligible.

 

  1. Income Tax Payment Deferment
  • How Does The Scheme Work?
    • To support self-employed individuals throughout this time, the Chancellor has announced that payments under income tax self-assessment, normally due on 31 July 2020, will be deferred until 31 January 2021.
    • During this period, individuals will not be charged any penalties or interest for late payment.
    • The deferral will apply automatically to all.
  • Can I Reduce My Tax Payment in January 2021
    • If your income earned in 2019/20 is lower than your 2018/19 income then by filing your tax return early you can reduce your balancing payment due in January 2021.
    • It is also likely that you will be able to estimate the impact of the COVID-19 Pandemic upon your current tax yea earnings and you may be able to reduce you first payment on account due in January 2021
  • What If I Am Entitled To A Repayment of Tax
    • Individuals who believe that they may be entitled to a tax repayment in respect of the 2019/20 tax year may wish to submit their tax returns earlier to accelerate any repayment.

 

  1. Time To Pay Arrangements
  • How Does The Scheme Work?
    • If you face financial distress through outstanding tax liabilities, you may be eligible to receive support with your tax affairs through HMRC’s Time To Pay service.
      • The government announced in the Budget 2020 that time to pay arrangements would be relaxed.
      • Such an arrangement should be sought if you have problems making payments to HMRC which are due but which cannot be funded.
      • These arrangements are agreed on a case-by-case basis and are tailored to individual circumstances and liabilities.
  • Am I Eligible For The Scheme?
    • You are eligible if your business:
      • pays tax to the UK government;
      • has outstanding tax liabilities
  • How Can I Access The Scheme?
    • If you have missed a tax payment or you might miss your next payment due to COVID-19, you should (preferably) call us to discuss the issues you face – failing that you should call HMRC’s dedicated helpline: 0800 024 1222.
    • If you are worried about a future payment, please call us nearer the time that payment falls due.

 

  1. Anything Else That HMRC Has That Could Help Me?
  • Research & Development Claims
    • Cashflow can be aided through claiming tax relief against qualifying R&D expenditure.
      • Such relief would provide a welcome boost at an important time.
    • Ensure that you have taken steps to claim any expenditure under the Scheme
      • The Scheme offers a cash pay out once approved. 

Barrons has put together a helpful guide to running your business during the coronavirus crisis.