Easing your cash flow
Time to pay arrangements
Time to pay arrangements are negotiated agreements with HMRC that allow for the payment of self assessed tax after its due date. In response to the coronavirus (COVID-19) crisis, businesses and individuals are being assured that time to pay can be used as a way of easing cash flow concerns by paying tax in instalments.
For more on the details of negotiating these arrangements, see the Time to pay arrangements for tax due under self assessment guidance note.
Consider reclaiming child benefit
Individuals who have made an election to stop receiving child benefit due to the high income child benefit charge (HICBC) may wish to consider revoking the election in order to restart their claim.
The child benefit may need to be ultimately paid back via the self assessment tax return, but it can help a little towards easing immediate cash flow concerns. The election can be revoked by completing a form online via the GOV.UK website (a Government Gateway account is necessary) or by contacting the Child Benefit Office by telephone on 0300 200 3100.
The election must be revoked by the person who originally made it, which is the person who is to receive the child benefit. Child benefit will start to be paid again from the Monday following the call or receipt of the form. However, if neither partner’s adjusted net income is expected to exceed £60,000, the revocation can be backdated to the start of the tax year. See the High income child benefit tax charge ― advising the taxpayer guidance note for more details.
Also, where a child is born during the lockdown period, the birth cannot be registered until the registry offices are reopened. However, child benefit cannot usually be claimed until the birth has been registered.
This requirement is relaxed during the coronavirus crisis, as confirmed on the GOV.UK website. Instead, where it is the parents’ first child, they should complete and submit form CH2 and include a note that they have not been able to register the birth due to coronavirus. For those already claiming child benefit, they can either submit this form on the birth of the child or call the Child Benefit Office on 0300 200 3100. They will need their national insurance number or child benefit number to hand when making the call. The child benefit claim can be backdated by up to three months.
Managing your cash flow
Below is a checklist of things for businesses to consider when responding to the coronavirus crisis:
Managing your cash outflows
Talk to your suppliers
Not all businesses have been affected in the same way, and some may be willing to extend terms or possibly not even charge for services out of goodwill.
Defer your tax liabilities
Consider time to pay arrangements for your taxes, including automatic VAT and self-assessed tax deferral.
Access Government grants
Check to see if you are eligible for coronavirus grants for the self-employed or for the retail, hospitality and leisure sectors.
Take a closer look at your business rates
Check if you are eligible for the business rates holiday and, if so, has it come through? If you have already paid the rates upfront, partially or in full, then consider asking for refund.
Check and possibly challenge your business rates valuation. The Valuation Office may prioritise your case where there is hardship, but remember that there are staffing issues and backlogs everywhere.
Consider if you can vacate the property if your business is shut during the crisis. You may be able get empty property rate relief if this is offered by your local council.
Consider partly vacating your property and apply for part occupation relief if this is offered by your local council.
See business rates relief for more on the the different types of business rates relief, and for details on how to contact your local council.
Check your lease / rental contract
Rents can sometimes be linked to business rates, so if you now qualify for a rates holiday, check to see if your contracted rent is also reduced.
Talk to your landlord for a negotiated rent reduction for the period in which there is a stay on evictions.
Use the coronavirus job retention scheme
The scheme closed to new entrants from 30 June 2020.
However, for those who have been furloughed, use the furloughed time to retrain your employees or plan your study leave for apprentices and trainees so that it coincides with the furloughed time off work. Remember that if you do this the employees must still receive at least the national minimum wage.
Keep evidence of financial distress being caused by coronavirus.
Check employment T&Cs
Get agreement to furlough in writing and clearly state the date of furlough. Be aware that existing employment law applies, so adhere to equality and discrimination rules.
Manage your cash inflows
Talk to your customers
Not all businesses are adversely affected, and many may be willing to help you by paying outstanding invoices earlier than usual.
Review your insurance policies
Contact your insurance provider (online contact may be quicker and easier then trying to call them) and push for a pay out if you are eligible.
Look to the banks for support
Lenders will only lend to viable businesses pre-coronavirus. This will be assessed on a case-by-case basis.
Coronavirus Business Interruption Loans (CBILs) are for companies with turnover of less than £45m. Lending can be in many forms, from overdraft to ordinary term loan or invoice finance.
Bounce back loans (BBLs) are for smaller businesses. More information can be found from the British Business Bank.
Look at things from the banks’ point of view
Banks are only being guaranteed 80% of their lending by the Government for CBILs, and so they are at risk for 20%. They are cautious in a time of crisis where real asset values are falling. Borrowers may be asked to provide security for the 20%, but it cannot be their main home. So, think about what personal security you can offer.
All banks have agreed that they will not take personal guarantees as security for lending through overdrafts and invoice financing facilities under £250,000.
Prepare revised business plans with cash flows prepared by an accountant showing comprehensive thought to different scenarios and outcomes before approaching a lender.
Make an online application rather than trying to contact them by phone. It may take a while for the money to come through, so consider bank support as one thing in a suite of options that you should be looking at.
Click here for more information on CBILs.