Clearly, the pandemic has had other ideas, the restrictions placed upon us all have had to be extended, and with it, the financial support from Government has changed as things proceed.
Bounce back loans started to be provided around May/June 2020 and so under the original agreements, repayments of those loans would due to commence on the 12-month anniversary of taking out the loan. However, on 8th February 2021, tweaks were announced to these repayments whereby the business could opt to repay ‘ as the business grew’, so it now offers a further delay to commencing repayments and whereas originally the repayments were due to be made by fixed sum monthly sums, now those repayments can be tailored to a business’s circumstances. Additionally the loan can be extended from 6 to 10 years of duration. The business’s lender should be contacting the business to inform the owners of their options.
9th February 2021, sees one or two further tweaks to VAT deferrals and loan repayments.
In terms of Vat deferrals, the deferred VAT from the period 20 March 2020 to 30 June 2020, which was due to all be payable by 31 March 2021, can now be further delayed, if the VAT registered person requires by joining the VAT deferral new payment scheme. There is a limited period to join the new payment scheme, i.e. between 23 February 2021 and 21 June 2021, but depending upon when you join can offer a further period of up to a year to settle that deferred VAT liability. Other conditions do attach to joining the scheme but it may help.
Clearly these are two measures that alleviates the immediate need for cash for the repayment of these obligations and may assist business going forward. My concern, however, is this storing up problems for further down the road with unpaid debt.
The next steps
For further advice on cash flow forecasting/VAT deferral or bounce back loans, please get in touch with Brian Carey or your usual UHY adviser.
