It is stating the obvious, but events of recent months have turned the world upside down for many businesses. What seems to have been given less prominence throughout is the impact right down the food chain on smaller supplier businesses, self -employed and contractors. Hopefully, the penny has finally dropped and the Chancellor’s most recent announcement of further and more extensive support measures is perhaps an indication that it finally may have.
As the Government tries to keep the economy intact, the constant barrage of announcements and support measures has been hard to keep track of for many: Income tax deferments, Self- Employed Income Support Grants, ‘Pay as you Grow’ extensions to the repayment term for Bounce Back loans, VAT concessions, the option for shorter hours working and ‘Time to Pay’ on Self Assessed tax returns. In simple terms, it has been a deluge for employers, employees, freelancers and contractors to try to absorb, let alone deal with the fundamental task of trying to balance revenues with overheads.
Importantly, and perhaps a crucial issue that gets lost in the mayhem, is that we will soon be reaching another 31 January deadline for self -assessed tax returns and in many cases, tax payments on account which were originally due on 31 July 2020. It is highly likely that vast swathes of the population will utilise the scope of UK government concessions for the short term at least. However, whilst stretching payment terms is helpful, and perhaps obvious, failing to file returns by deadline dates is not advisable and penalties are likely to be charged even in these most difficult times. If you aren’t on top of this now, then the advice is to ensure you become so sooner rather than later or appoint an accounting solution specialist to manage it on your behalf. It will help take the strain and can be achieved at a relatively modest monthly fixed fee.
It is also massively important to recognise that the support measures which have been made available by UK government are temporary and loans or deferments can quickly become major liabilities if not accounted for and planned properly. It goes without saying that the enormity of the bail outs will leave the UK with astronomic debt levels and these will need to be recouped in the future. So, whilst the here and now may seem like the only thing on your agenda it is vital not to lose sight of what comes next.
For contractors and freelancers, there remains the looming spectre of IR35 which has been delayed but set to take effect from April 2021. There is no reason why contractors cannot continue to work outside IR35 regulations beyond next April – largely because the rules haven’t changed. However, obtaining the right support and guidance and having professional contract and working practice reviews (for both end clients and contractors themselves) will be invaluable in preventing a costly dispute with the HMRC. Once again, working with a specialist accounting solution provider can help deal with these issues very cost effectively.
Unemployment has been central to the UK government’s Winter Economic Plan and there is clear evidence of a growing number of people who having been faced with this threat, have turned to starting their own businesses and commendably trying to take control of matters themselves. It was a similar theme in the economic crisis of 2008/09 and many businesses which were established in that period have grown well. The surge in buy to let landlords is probably a good example of a sector which has followed this trend; self- employed on-line trading would be another. It can be done. Once again, taking the correct advice and keeping your accounting and tax matters in good order and meeting all the required filing deadlines is an essential part of good business planning and many of those businesses which have prospered, have done so based on strong housekeeping and good business practices.
These are extraordinary times with little indication of any end date but influencing the things you can change and keeping your financial affairs tight and in order will pay dividends further down the line. There is no time like the present, quite literally.
Daniel Fallows is managing director of Gorilla Accounting Limited.