It is unlikely that our businesses will be unaffected by the inevitable slow-down in economic activity as the Coronavirus outbreak starts to bite.
Maintaining a strict control over your personal and business cash-flow is going to be a key decider in surviving this process.
A major expenditure item is taxation whether that be VAT, PAYE/NIC, self-assessed liabilities or Corporation Tax.
We suggest that all businesses rework their cash-flow forecasts based on the revised trading outlook post COVID-19. Be realistic and tend towards less optimistic scenarios. If the outcome requires support from your bank you may be eligible for a government backed Business Interruption Loan – the government will guarantee 80% of the loan – make your application now based on your revised cash-flow. For all self-assessment taxpayers who are due to make a payment on account on 31 July 2020, HMRC have announced that these payments will be deferred until 31 January 2021. This is being done automatically and there is no need to apply for the payment to be deferred. As long as the amount that is due is paid by 31 January 2021, HMRC will not be charging any interest or penalties for late payment. It will mean that for those taking advantage of this option to defer, there could then be very large amounts of tax due for payment on 31 January 2021.
Those who are in the fortunate position of being able to make the tax payment due on 31 July 2020 as normal may wish to do so to smooth out their cash-flow. It is not yet clear whether HMRC will be sending out statements and payslips in July as normal, or whether they will simply not even attempt to collect any self-assessment tax then. And finally, all businesses and self-employed people 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. You can contact HMRC’s new dedicated COVID-19 helpline for advice and support. To ensure ongoing support, HMRC has made a further 2,000 experienced call handlers available to support firms and individuals when needed. For Time to Pay support if you are concerned about being able to pay your tax due to COVID-19, call HMRC’s dedicated helpline on 0800 0159 559. And please call us if you need help reworking your cash-flow forecasts, negotiating loans with your bank or presenting tax payment deferment schemes to HMRC.