Covid-19 Guidance Update - 1st April 2020
Deferring self-assessment payments on account due in July 2020
When the announcement was first made regarding deferring the self-assessment payments on account due in July 2020 it appeared that it was for the self-employed only. However, following that initial announcement the position has been clarified to confirm that it is in fact available to all self-assessment taxpayers and not just the self-employed.
So, if you are due to pay a self-assessment payment on account by 31 July 2020 but the impact of the coronavirus causes you difficulty in making payment by that date, then you may defer payment until 31 January 2021.
You are eligible if you are due to pay your second self-assessment payment on account for tax year 2019/20 on 31 July 2020. You do not need to be self-employed to be eligible for the deferment.
The deferment is optional. If you are still able to pay your second payment on account on 31 July 2020 you should do so.
This is an automatic offer with no applications required. No penalties or interest for late payment will be charged if you defer payment until 31 January 2021.
This could result in larger balancing payments for 2019/20 becoming payable on 31 January 2021. Therefore, we would recommend early completion of your 2019/20 tax return so that you can plan for the amounts that will be payable. For further details, please contact James Andrews.
HM Revenue & Customs have said that during the deferral period you can set up a budget payment plan to help you pay the deferred payment on account when it comes due.
Please let us know if you would like to discuss further.
Coronavirus Business Interruption Loan (CBIL) Scheme update 1/4/20
This week has seen most of the banks and other lenders on the CBIL scheme get to grips with their role in the process as further clarifications and agreements have been made with the British business Bank (BBB), who will administer the scheme. BPR Heaton has supported our first clients this week in applying for scheme loans with the big banks and so far the process has been detailed, in the level of information required, but relatively efficiently executed by the lenders.
Most notably, since the schemes inception, there has been some movement around the requirement for security and specifically, Personal Guarantees (PGs) from directors of companies. Firstly, the scheme rules state that a lender cannot use the “Primary Residential Property” as security, but this does not prevent the lender from asking for secondary and investment property as security. With regards to PGs there has been no slackening of the scheme rules here and they can still be asked for by lenders, however the BBB has secured agreement with the Big Four banks, being RBS, Lloyds, Barclays and HSBC, that they will not take PGs for lending below £250,000. But this agreement ONLY applies to the Big Four Banks and other smaller lenders have not signed up. This has become a very fast changing environment and so we will have to see if other lenders agree to this.
We believe that some of the Big Four banks have sought to extend this and will not request PGs for any lending under the scheme, regardless of the amount.
Additionally, we have been made aware by the banks we have had discussions with, that they are currently not actively taking on new clients and will only make the scheme available to existing clients. What this has meant is that there has become a lottery across the business community that if you’re with the “right” lender before the impact of coronavirus, your path to CBIL scheme loans could be smoother than for other borrowers and you may be able to access the funds with less personal risk, through the taking of PGs, than other borrowers are able to.
The scheme and various lenders have sought to emphasise repeatedly that the scheme is only available to borrowers who:
- Have a viable business, that was viable prior to the impact of coronavirus and can trade out of any short to medium-term difficulty caused by the coronavirus (with the help of the loan);
- To demonstrate the viability required, lenders are requesting historical accounts and management information and 6-12 months of cashflow forecasts.
- Are UK-based in its business activity;
- Have annual turnover of less than £45m; and
- Cannot access borrowing on normal commercial terms, without the need for access to the CBIL scheme.
If you bank with one of the banks that is not listed on the 40 approved lenders with access to the CBIL scheme and need access, then there are options available to you, please speak to us for further guidance.