Cash is king and here’s how the Winter Economy Plan is helping your business
It is an old adage that in times of business stress, “cash is king”.
The Government and the Chancellor know that, for many businesses, the next six months will be critical. They have imposed restrictions across the UK in many business sectors and they are taking steps to improve cashflow in targeted ways.
With the Prime Minister having announced this week that restrictions on business sectors across the UK being likely to be in place for up to six months, businesses should plan accordingly. At the moment, working to a “worst case” scenario will provide greater certainty than what has been, in many cases, a week to week existence in the prior six months.
Businesses will be well advised to now assess what they need to do to survive through what may be an exceptionally challenging winter. As the Chancellor has said repeatedly, he cannot save every business and he cannot save every job. Businesses should seek to ensure that they are not among the casualties and so should now revisit forecasts and business predictions to establish what the impact might be over what is now known to be a six month period.
Businesses should, as a minimum, assess the following based on the announcements under:
- Is there now a renewed case for looking at CBILS or Bounce Back Loans if those were not taken up in the period from April to September? For many businesses, what is likely to be a prolonged downturn in business activity over the winter may now give cause to regard CBILS (or alternative funding) as a necessary step where the extension of the application period to November will give more ability to assess the real impact of the restrictions.
- What support will the Job Support Scheme provide? For many businesses it may not make sense to have staff on part time working where a smaller number of full time staff may prove cheaper than the partial funding under the Job Support Scheme.
- Should the business opt into the deferred payments of the VAT deferred from April to June 2020? For many businesses this will be a sensible option as the impact on cashflow of the deferred VAT will be felt at the end of what may be a difficult winter period.
- Are shareholders able to defer tax payments under Self-Assessment which were due in January 2021 using the Time to Pay arrangements which HMRC have said will be available?
Businesses should also be going back over measures we have discussed previously, for example:
- Utilisation of tax losses
- Recovery of tax payments which have been made based on forecasts which may now be significantly overestimated
- R&D claims and Capital Allowance claims
- VAT bad debt relief claims
Businesses across all sectors and across the region should be revisiting their forecasts, and in particular their cashflows, and now assessing which measures from existing ones to the new ones announced in the Winter Economy Plan that they may need to use over the coming six months.
For further advice, please contact us at firstname.lastname@example.org.