Accura Accountants – update
Following on from my email dated 27th March and this morning’s observations, I now set out my views following recent comments (over the weekend) by the Government.
I start with a question that has been put to me countless times
“Where do we go now and what will happen to our lives and businesses”?
Unfortunately, nobody has a magic wand! But we, the business community MUST not lie back and give in.
Our Government has virtually rewritten in a few days, established procedures and rules that go back to 1928 when legislation was brought in to disqualify directors from running companies when it was considered that they had acted without due regard to creditors.
Although these comments appear to change the rules, albeit for the short term, faced with such upheaval of businesses it is impossible to establish when old rules and procedures “kick in” and new rules, not set in statute, protect company directors.
Only time and pleadings will establish whether the Insolvency Service or Insolvency practitioners will decide to take action based on a company insolvency. This will be a total mine field and will create mayhem for many years to come.
So where do businesses/Limited companies go from here….
- Liquidate the company.
- Seek a Creditors Voluntary Arrangement or for individuals, Individual Voluntary Arrangement.
- Or with appropriate advice based on the fact that virtually every business is faced with exactly the same problems, be it cash flow or losses attributable to this pandemic and slowdown in business life, apply to creditors to await business recovery.
In my opinion with viable businesses and the capability to resume normality, this procedure may be more acceptable, especially with Government help via non-payment of VAT to April 2021 and deferment of self-employment tax from July 2020 to January 2021.
What I believe to be a very relevant factor is “contact” and information to be provided to a business’s creditors /suppliers.
Non-contact will drive a lack of confidence in the customer and what will follow will be aggression and legal action. If a supplier, be it trade or any other facility provided is aware that their customer is being honest with their current problems, in all probability they will accept the position. Although not happily, but will agree a “hibernation” of claims, as they together with their customer are in exactly same position.
Such assistance has already been shown by HMRC in allowing VAT to be deferred until April 2021.
Although such an offer has not been made by HMRC in respect of PAYE and NIC, there has been reference to applying for TTP, Time to Pay arrangements with HMRC. Normally a business would telephone HMRC and agree to discharge current outstanding liabilities over an extended time. As discussed, the phone lines are virtually impossible to get a response, so it is imperative that businesses contact HMRC in writing.
Requesting assistance and providing a sensible repayment program, even if it allows for a six-month payment holiday. In this uncharted period, proposals as such requested 2 months ago would have been refused, BUT today? What can HMRC do considering Government is extremely anxious to keep you all trading and surviving.
Please read an extract from Insolvency media that I received over the weekend, copied at end of my email, the content is unprecedented .
Another factor worrying many people is payment of mortgages and credit cards, each institution is already offering a payment holiday, so take advantage and remove any monthly pressing concerns.
I would now like to address the constant worries expressed to me by many clients and friends.
How can we stop our lives and businesses for in excess of 6 months?
The government has stated that they will review the lock down after circa 3 weeks and it is still possible that businesses can trade albeit within a different modus operandi. Going forward we will see dramatic changes where people will not travel to meetings, but conduct via video conferencing and staff will work remotely. The long term damage will predominately be in the entertainment industry, such as cinemas, gymnasiums & restaurants where they rely on “mass gatherings” and landlords who provide premises in these areas.
The majority of businesses who seek advice and apply maximum flexibility will survive.
Remember, if your business was viable and provided you with a living before, it will again, so my advice is to stay calm.
Restaurants are already, albeit on a much smaller scale operating as take aways, landlords are literally forced to accept the situation (they cannot afford to take action to remove tenants, either due to time or inability to rent to others with accruing local rate liabilities)
Without a doubt this pandemic changes our lives forever.
We will survive but take advantage of the offers by HM Government.
My view is that they are too little too late but after due consideration the Government may try to provide faster and better assistance.
We can assist our clients to attempt to normalise their businesses and invite any client to contact myself directly or their prime adviser at Accura Accountants to discuss and agree the most pragmatic approach to your personal situation.
Do not be shy, you are not alone and we are here for you.
In current uncharted times considerable flexibility is being offered and will be offered so advice is paramount, do not throw your hands into the air and give up.
There will be life after and it is in your very capable hands to mould the future.
I end this email to advise all clients that although flexibility is being offered and will be agreed by your supplier’s businesses MUST deal with compliance with Government /HMRC.
Future emails will address offers by HM Government and banks, both in anticipated timing and what information will be required.
“The U.K. government is loosening its bankruptcy rules to allow struggling businesses to continue trading if they can’t pay their debts because of the impact of the coronavirus. In another sign of how the pandemic is forcing governments to upend policy, Business Secretary Alok Sharma said the changes would allow British companies being reorganized to access supplies and raw materials, and not be placed into administration by creditors. There will also be a clause that temporarily removes the threat of personal liability for company directors during the pandemic. “These measures will give those firms extra time and space to weather the storm and be ready when the crisis ends, whilst ensuring creditors get the best return possible in the circumstances,” said Sharma”