Future Liabilities In The Year Ahead

In 2020, the government took unprecedented steps to support businesses affected by the coronavirus pandemic. Thanks to government support funding including furlough payments, business interruption loans, 'bounce back' loans and other grants, it is possible that some businesses may have cash in the bank as we start 2021.


 

On the face of it, this may seem like a great position to be in. However, it's worth being mindful of the liabilities that may be ahead of you in the year to come. Here are six financial liabilities you need to remember.

1. VAT

If you deferred your VAT liabilities between 20 March and 30 June 2020 and still have payments to make, you now have three choices:

  • Pay the deferred VAT in full on or before 31 March 2021.
  • Opt into the VAT deferral new payment scheme when it launches in early 2021. Instead of paying its full VAT bill by 31 March 2021, a business can make between 2 and 11 smaller, interest-free payments by the end of March 2022.
  • Contact HMRC if you need more help to pay.

Check here for more information.

2. Corporation Tax, PAYE and National Insurance payments

If you have delayed Corporation Tax, PAYE and NI payments, you must contact HMRC to arrange a Time to Pay arrangement.

This is because HMRC have not automatically allowed the deferral of these liabilities. Interest will be charged on these deferrals.

3. Accounts filing deadlines

If your business accounts are due in the period 27 June 2020 to 5 April 2021, Companies House have automatically extended all accounts filing deadlines by three months.

However, the Corporation Tax payment deadline has not been extended. Payment is still due at the beginning of month ten of your annual cycle.

4. Rent

You may have received a rent holiday for your business premises. You need to remember that you will still have to make these payments, and so should speak to your landlord to negotiate repayment terms.

5. Self-assessment tax liabilities

There was the option to defer your second payment on account in 2020 which was due for payment on 31 July 2020. This can still be paid any time up to 31 January 2021 and there will be no interest or penalty provided you paay in full by that date.

If you can't pay in full by 31 January 2021, you can pay your tax in instalments over a period of up to 12 months to 31 January 2022, once you have filed your 2019/20 tax return.

For liabilities up to £30,000 you can set up a Time to Pay instalment arrangement online, and there's no need to contact HMRC. Note that interest is payable on Time to Pay instalments.

If the personal tax liability is more than £30,000, you will have to negotiate a Time to Pay arrangement with HMRC in the normal way.

Check here for more information.

6. Business interruption and bounce back loans

If you used the Coronavirus Business Interruption Loan Scheme (CBILS) or the 'bounce back' loan scheme (BBL), then it's likely repayments will begin in 2021. Therefore, you need to ensure you have the cash available to meet these repayments.

If you need help managing your cash flow for the year ahead, please contact Debbie Boulton db@richardsonswift.co.uk who can advise on next steps.

Please note that this is only a summary of the main issues and should not be construed as advice. Every effort has been made to ensure factual accuracy at the time of publication (20 January 2021), however, the government response of the Coronavirus situation is changing 24-7, so it should not be relied upon completely.