Businesses in Lockdown
We are heading into week 8 of lockdown now, and we are eagerly awaiting the Prime Ministers announcement this coming Sunday. It certainly has been an
unprecedented time, and something no one could have thought possible in this
day and age.
A lot has changed, but the key thing for us all is to plan for now and coming out of lockdown and protecting the people, your business and preserving cashflow as much as you can. Here are a few brief ideas for you to consider:
· Do a cashflow based on the assumptions that you can safely make now. Be realistic and if you are likely to have a cashflow shortfall apply for help early. The banks are busy so get started early. The government loan scheme and other grant scheme in our Business Support article may help.
· Consider whether you have reserves that perhaps you are unaware of or have forgotten about such as Genus shares which return very little annual income but could hold considerable value.
· Look forward and think about how your business may need to change as we come out of lockdown and possibly having to work with more social distancing in the longer term and what changes you should make to your business in life after Covid-19. Technology will feature more prominently than in the past – use it to help you and your business even if it is just learning what can be done and upskilling now. Also consider whether there may be any new opportunities for your business.
· Use the ability not to pay any tax due on 31 July or any VAT payable on periods ending on or before 30 June. However, do not lose sight of the fact that tax will still have to be paid by 31 January 2021, along with any tax owing for the 2019/20 tax year, and VAT payments by 31 March 2021.
· If you or any of your family have mortgages on or off the balance sheet perhaps negotiate a mortgage repayment holiday with your lenders. It will preserve cash now.
· Ensure family members who are eligible do claim Universal credit – now is when they may need it.
· Plan for the eventuality of you or a staff member having Covid-19 – can others step into your shoes immediately until you are well and how will you deal with the practicalities on the ground – the NFU have some excellent practical guidance here.
· Know the key RPA deadlines for various schemes as many have been delayed – again a very useful summary on the HMRC website . Be prepared if key personnel should become ill and ensure everyone is briefed and know where information/passwords etc are to be able to meet deadlines.
· Added pressure can put business relationships under pressure as well. Talk about things early before it gets too far and seek help if you cannot do it on your own.
· Lastly, and most importantly, try to look after yourself – it’s tough managing a business often on your own, when communication is more difficult – we are all struggling with the new world and it can be very isolating. Try to take a regular break from routine and talk to others as we all feel the same. Use technology to help keep in touch and up to date. Many are now familiar with products like Zoom, and Microsoft Teams as an additional way to get help break down barriers. If you don’t know how to do it, get help from other members of the family who often use it every day.
The content of this article is for general information only and does not constitute tax advice. It should not be relied upon and action which could affect your business should not be taken without appropriate professional advice.
Margaret Scarrott FCCA BIAC
Margaret has been in practice in the South West for over 20 years after qualifying as a Certified Chartered Accountant in London. Margaret is frequently called upon to help with partnership capital tax planning and family business reorganisations.
Margaret is a member of the British Institute of Agricultural Consultants and has been a member of the CLA National Taxation Committee, the Somerset CLA Committee, Cannington College Corporation and the Bath & West Conference Committee in the past. Margaret farms with her husband on the Somerset and Devon border. She is a keen supporter of Young Farmers and is a club leader and is on the advisory of Honiton YFC. Entertaining family and friends takes up much of Margaret’s spare time.