Whether you think the Pre-Budget Report is ‘what the country and business needs’ or ‘a reckless gamble’, it’s how it affects your business that matters.
Whether you think the Pre-Budget Report is ‘what the country and business needs’ or ‘a reckless gamble’, it’s how it affects your business that matters. Tom Kelman, director of finance at the Association of Accounting Technicians, outlines the action you need to take immediately.
You need to act quickly here as the cut in VAT from 17.5 to 15 per cent is effective from Monday. HM Revenue & Customs (HMRC) is sending out guidance to every VAT-registered business in the UK, but the essential point is that you need to amend your accounting systems and electronic tills manually. However, HMRC is aware of the short timescale and will be adopting a ‘light touch’ approach to errors made in the first VAT returns after the change.
Essentially, an extra £7 billion of finance is to be made available to SMEs, £4 billion of which is coming from the European Investment Bank. Another £1 billion of the total has been earmarked for a temporary Small Business Finance Scheme, meaning that loans of between £1,000 and £1 million will now be available. We don’t yet know the details of how the money will be handed out, so it’s a mistake to rely on this, but if you are in financial difficulty you can’t afford to ignore this opportunity to secure your business’s future.
Tax payment support
A new HMRC Business Payment Support Service is set to be implemented. Again, the fine print is not yet available for scrutiny but in principle this should allow businesses facing temporary financial difficulties to spread their HMRC tax bills over a timetable they can afford until – hopefully – the economy and your business recovers. Crucially, no late payment surcharges will be added to these arrangements. Check out the relevant page of the HMRC website.
The changes to the arrangements for offsetting losses against taxes will be a big money saver for businesses across the country. Currently, companies can offset losses against profits they have made in the last year (i.e. claim a repayment of the tax they paid last year). This will now be extended to the last three years with a limit for reclaiming losses of up to £50,000. If your business is more than a year old and you will make a loss this year, you should ask your accountant to look into this.