As the UK begins a third national lockdown, West Kirby-based finance specialists Bathgate has urged business owners to address VAT and tax payments as a matter of urgency.
Despite the extension of the BBLS and CBILS schemes to 31st March 2021 and Chancellor Rishi Sunak’s new £4.6bn relief package for UK retail, leisure and hospitality sectors, unveiled in light of the new COVID-19 measures announced by the Prime Minister, experts at Bathgate have warned against “kicking the can down the road” with VAT and tax payments.
Bathgate Business Finance VAT finance specialist, Paul Trickett, said: “Since April last year businesses have in effect been kicking the can down the road.
“Come March 2021, when we expect to emerge from lockdown once more, BBLS and CBILS loans will have been exhausted. VAT payments due between April to June 20 will have been deferred and businesses will have potentially negotiated Time to Pay with HMRC on June and September 20 quarter returns.
“While it has been vital and prudent for businesses to access and use these schemes, the continuing nature of the COVID-19 pandemic has made it easy to lose focus on finances and keep pushing away the inevitable. Now is the time to assess the position of your business and plan accordingly.”
The firm is advising that businesses prioritise the new HMRC payment scheme, while also exploring other finance options through independent business finance providers, such as VAT and tax funding solutions.
Paul continued: “In the last 12 – 24 months we have seen this option considered more favourably by business owners than they perhaps have been in the past, and we’ve been able to use our significant expertise in this area to help SMEs use VAT funding prudently and effectively. We expect to see an acceleration in this shift in opinion in the new year, parallel to an increase in demand for such facilities.
“When it comes to negotiating the new payment scheme at the end of March, VAT returns will need to be up-to-date and – for accessing other funding to keep businesses alive – preparation will be key.
“A joined-up approach between accountant, business owner and financier, combined with effective cash flow planning that is continually flexed and updated in line with changes in the business landscape and customer habits, will be essential in securing business finance in 2021.
“The market has changed in the past ten months, with some funders exiting or reducing the products available. Lenders’ criteria have changed, in many cases become more rigid, particularly in the types of businesses they can lend to. There are also more businesses trying to access alternative funding, such as VAT finance, and it is the businesses that are up-to-date, co-ordinated and prepared who will present the best case to lenders.”