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FREE UP CASH - HMRC HELP

If you have any questions, please get in touch with our COVID-19 Task Force here


RELEVANT AS OF 1:00 PM ON 23 JUNE

Right now, cash is king. How you manage your revenue, costs and tax position will help to improve cash flow and can also bring new cash into the business. A few straightforward tweaks to revenue and costs may help in the immediate term. For example, you can bill earlier, speed up payments through deposits or prompt payment discounts, and agree to pay suppliers later.

Tax can play a significant part in generating cash.  Here we look at:

  • HMRC’s time to pay arrangements – agree up front to defer the tax you owe to HMRC.
  • What you could do now to save cash if you are expecting your corporation tax bill to be lower than anticipated, for your current accounting period.
  • Generating cash by accessing some very generous tax reliefs in the form of Research and Development Tax Credits and Capital Allowances.
New Webcast

Our VAT Partner, Damian Shirley, gives you his unique insights on VAT and other key measures for business. This is 10 minutes of essential, practical and timely advice. Watch it here.

Time to Pay arrangements

If your payment obligations in respect of tax are leaving the business in distress and you require support, HMRC will offer ‘Time to Pay’ arrangements on a case by case basis– but what exactly is on offer?

Here’s what we know so far:

2,000 experienced call handlers are available on 0800 024 1222 to talk to businesses and self-employed people who are concerned about struggling to paying their tax due to coronavirus;

  • The time to pay provisions can apply to any tax (PAYE, VAT, Corporation Tax etc) which a business owes HMRC. The VAT deferral period is currently ongoing, if you need more information then it is here.
  • The handlers will discuss paying your tax by instalments, suspending debt collection proceedings, and cancelling penalties or interest where these have arisen due to administrative difficulties with contacting or paying HMRC;
  • HMRC asked those who have already missed/will miss their next payment to call the helpline, but asked those worried about a future payment to call nearer the time.

‘Time to Pay’ is not a new concept and we hope HMRC will be more lenient in their approach given the circumstances. Right now, HMRC are saying requests will be reviewed on a case-by-case basis, so it’s hard to be specific. Early indications are that requests are being dealt with sympathetically although it is taking some time to get through.

From past experiences, you can expect a time to pay negotiation to cover:

  • The amount of tax you need more time to pay and the reasons why;
  • What you’ve done to try and pay the tax so far;
  • Details about your income and expenditure, including projections and forecasts;
  • Whether you’ve approached your debtors to try and get more cash in;
  • Whether you have sought wider funding and sufficiently negotiated payment terms with wider suppliers;
  • How much you can pay right now and how long you want to pay the rest over; and
  • Evidence that you will continue as a going concern once the time to pay arrangement has been settled.

If you’d like any assistance to help prepare for your conversation with talking to HMRC regarding ‘Time to Pay’ arrangements please get in touch with Mark Baxter.

It is worth thinking about what opportunities are available to optimise your VAT cashflow beyond the current VAT deferral period. Get some insight here from our VAT partner Damian Shirley.

CORPORATION TAX PAYMENTS

HMRC have released some long-awaited clarification on the position for companies who expect to generate losses as a result of coronavirus.

For companies making quarterly instalment payments (QIPs), it is possible to apply for a repayment of QIPs if you believe your liability will be less than previously calculated.

For smaller companies not in the QIPs regime, it is also possible to apply for a repayment by making a loss carry back claim, based on expected losses in your current account period.

In either case described above, you will need to provide evidence to show what losses you expect. The types of information you might want to collate are:

  • Revised profit and loss forecasts
  • Management accounts and draft tax computations
  • Details of assumptions used in preparing the above
  • External evidence that supports the fact that the issues involved are unlikely to be resolved in the short term

As always, we are happy to help in any way we can with preparing loss carry back or QIP refund claims. Please get in touch with your usual CP contact to discuss.

Generating cash by accessing tax reliefs  

We see two key opportunities to generate tax cash repayments:

  • Research and Development Tax Credits;
  • Capital Allowances;

R&D tax credits can generate cash repayments for any business that spends money on qualifying R&D.  Qualifying R&D is wider than you may originally think it is. A lot of businesses are reliant on R&D tax credits being refunded from HMRC so making sure you know where you are with your claims and claiming the full amount you are entitled to is important to your cash. Luckily, HMRC have acknowledged the importance of these claims to businesses right now. They are working hard to clear repayment claims within 28 days and are being more lenient on late claims. Click here to hear the latest from our R&D partner Chris Knott.

Capital allowances are a form of tax relief for capital expenditure incurred on property, plant and equipment.  When it comes to commercial property we can help to make sure you’ve claimed all the relief you are entitled to on current and historic projects   Whether the projects are a purchase, a new build, refurbishment or fit out, there is often no time limit to making historic claims.  On recent projects we’ve secured repayments of corporation tax for many businesses that have underclaimed capital allowances.

Get in touch with our capital allowances expert Jeremy Chapman and hear his further thoughts here.

Are you late in paying a tax liability or filing a tax return?

If so, under normal circumstances you are likely to incur an interest charge and/or a penalty unless HMRC agree that you had a ‘reasonable excuse’.

HMRC have updated their guidance to confirm that if your ability to deliver your tax return or pay a tax liability was impacted by COVID-19 then this may constitute a reasonable excuse.  However, in your appeal against any interest/penalty charge you will need to explain how it impacted on your ability to meet your reporting/payment obligations and demonstrate that you took remedial action at the earliest opportunity.

If you have any questions, please get in touch with our COVID-19 Task Force here

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