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Business tax planning vital to maximise cashflow at this tricky time

PUBLISHED: 08:30 01 July 2020

Cashflow is the number one issue facing many firms right now   Picture: Getty Images/iStockphoto

Cashflow is the number one issue facing many firms right now Picture: Getty Images/iStockphoto

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With post-Covid cashflow the number one issue for many businesses, now is the time for some judicious business tax planning, says Mary Schofield of Lovewell Blake.

Mary Schofield of Lovewell BlakeMary Schofield of Lovewell Blake

While the freedom to trade is slowly being restored to many businesses, ensuring they have the cash to be able to carry on is the number one issue facing many firms right now.

The various government initiatives have undoubtedly helped, but these are now starting to wind down. Alongside this, businesses which paused during lockdown will find themselves having to restock, bring workers back and generally ramp up productivity, probably before the necessary resumption of full trading activity. It’s always true, but never more so than now: cash is king.

For many, a simple reorganising of their business tax affairs may give them an immediate cash boost without too much hassle or cost.

As well as the VAT payment deferral and the much-publicised business rates holiday, HMRC is more than ever open to making Time To Pay arrangements for things like corporation tax. If your business is likely to make a loss this year, deferring those payments could mean that you are able to offset them against that loss, and in effect not have to pay them at all. That means getting your year-end tax return done as soon as possible so that you can set the loss against any existing liability.

If cashflow is tight, talking to HMRC about Time To Pay is probably the best advice of all: you are likely to find a sympathetic ear. But make sure you talk to them about any reliefs or rebates you may be due, otherwise you may find these offset against outstanding liabilities, even where Time To Pay arrangements are in place.

Equally important is to make sure that you are taking advantage of any tax reliefs you may be due, such as R&D tax credits, capital allowances, and indeed offsetting any losses from previous years’ trading.

Business taxes are often regarded as some of the most urgent things to pay, but right now most businesses should be ensuring the first draw on whatever cash they have are those payments which will allow them to trade, and build up their reserves once again.

Ensuring you are taking advantage of the various government initiatives, talking to HMRC about Time To Pay arrangements to defer tax payments, and making sure you are taking advantage of any reliefs or allowances are all part of vital business tax planning, which right now could tip the balance towards your business surviving.


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