Leading Professionals Call On Governement To Clarity On Deferred Debts
The UK’s leading professional services group of independent chartered accountancy and law firms, the UK200Group, has called for the government to put in place measures for the handing of billions of pounds worth of business borrowing as a result of the pandemic.
The issues surround how the government and their agencies are going to treat the debts that have been deferred in 2020 due to the pandemic.
Businesses are facing payments in spring 2021 of:
- Income tax deferred from July 2020, now due on 31 January 2021
- VAT deferred from June 2020, now due by March 2021
- Bounce-back loans and CBILS have 12-month repayment holidays, and so payment will start in spring 2021.
It is feared that, without clarity, many businesses will take preventative measures now in order to minimise the risk of being unable to pay. The most likely impact will be higher redundancies than might be necessary.
The Group is recommending the consideration of a number of options including: the provision of a single consolidated business support loan owed to HMRC. They are also calling for the establishment a procedure for loans repayments based on a criterion such as: average profits of the business for the last 3 years, the size of business and the size of loan.
Andrew Jackson, Head of Corporate Tax, Fiander Tovell and Chair of the Tax Panel of the UK200Group stated;
“Business is largely supportive of Government initiatives so far. But it is looking increasingly likely that an upturn is further away than hoped for and as a result those businesses that have needed to defer their VAT or take advantage of a bounce -back loan are unlikely to have the cash available in as little as six months to make payments.
“We are not proposing writing off debts, but we are calling for ways for businesses to manage their finances over a longer period, so that they don’t have to take preventative measures now which may be unnecessary, but most likely mean more redundancies”.