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To answer this question, we should take a look at a few adjectives that have been used to describe COVID-19’s effects on our personal and business lives. For example, unexpected, unprecedented, disruptive…

Prior to the pandemic we assumed that tomorrow would turn out much like yesterday. Many businesses had become accustomed to managing cash flow on the assumption that next month’s turnover could be more or less guaranteed based on expected market conditions. There were trends, up and down, but by and large positive, growth orientated economic activity was a given in western democracies.

COVID-19, in a matter of weeks, tore up this assumption.

It quickly became evident that the pandemic was creating new norms. A few business sectors have benefitted from the ensuing disruption, but many businesses have not. A sizeable chunk has gone out of business as lock-down regulation has required them to close (witness the effects on our leisure and entertainment industries).

Lesson 1 – always expect the unexpected.

The are a number of businesses in vulnerable sectors that have survived COVID disruption thus far. Many have had their cash flow enhanced by the multitude of government grants and soft loans on offer. Others were financially prepared; they had fat on the bones. Their Balance Sheets showed healthy reserves of cash or assets that could be quickly converted into cash. Very few businesses would have considered the disruption we have suffered in 2020 as anything more than fiction, a great disaster movie script. What we now know if that the unexpected needs to be factored into our business planning.

Lesson 2 – make sure you can ride out extended downturns.

For example, periods where your income is much reduced or if in business you are required to trade at a loss. It will be many years before this coronavirus outbreak passes into folklore. The fear of a repeat will linger for some time, like an itch that can’t be scratched. Should we, therefore, include the acquisition of reserves as one prudent strategy for 2021? If that is not possible could you “mothball” your business if required or convert your business assets to a different use?

Lesson 3 – planning is no longer a luxury we cannot afford.

In the past, pre-COVID, when the expectation was tomorrow would be much like today (or yesterday), many of us felt no need to plan what was going to happen tomorrow. This is no longer the case. The last year has provided the evidence that the unexpected can have a real impact.

We can help

During 2021, perhaps we can all benefit from business planning? We are still in the centre of the COVID storm and from next month we will be dealing with additional disruption as we finally leave the EU transition period behind.

If you would like to consider your business finances, how we are going to survive 2021, and then regroup and build a sustainable business modal for the remainder of the 2020’s, we can help you start the process now.

Please call so that we can discuss your options. There will be no one-size-fits-all remedy from the damage inflicted in 2020. What is clear is that a willingness to engage in the challenges presented, to factor in the unexpected, and plan for the future is an endeavour worthy of serious consideration.

A summary of the business elements of the recent Spending Review for next year are set out below:

Continuing the UK’s recovery from coronavirus

The Spending Review has set out the government’s intention to maintain support to protect jobs, businesses and livelihoods, while stimulating the UK’s economic recovery.

In the Spending Review the government has committed to invest:

• an additional £733 million in the government’s Vaccines Taskforce for the purchase of Covid-19 vaccines; £128 million to support vaccines research and manufacturing, including funding for the Vaccines Manufacturing Innovation Centre which will be capable of producing enough vaccine doses for the entire UK population in 6 months;
• more than £500 million to support the continued delivery of vital Covid-19 loans, including paying for the 12 month interest free period on the Bounce Back Loans and Coronavirus Business Interruption Loan Schemes; and
• £557.5 million for the British Business Bank to continue supporting SMEs across the UK to access the finance they need to grow and stimulate the economic recovery post-Covid.

Growing the UK’s reputation as a science superpower

The UK has a proud record of innovation and discovery. We are the country that gave the world penicillin, the World Wide Web, the theories of gravity and evolution, that unravelled the structure of DNA. That spirit of discovery is still alive in this country today. The UK remains a science superpower, with a world leading research and development environment. To grow this reputation, the government has committed to investing £14.6 billion in research and development in 2021/22.

In the Spending Review the government has committed to invest in 2021/22:

• at least £490 million in core Innovate UK programmes and infrastructure to support ground-breaking technologies and businesses;
• £79 million in innovation loans to help cutting-edge UK businesses to access capital;
• £200 million for the Net Zero Innovation Portfolio to develop new decarbonisation solutions and accelerate near-to-market low-carbon energy innovations; and
• £450 million to support strategic government priorities, build new science capability and support the whole research and innovation ecosystem. This includes £350m for BEIS, including the first £50 million of an £800 million investment by 2024/25 towards a new agency for high-risk high-payoff research.

Spurring a green industrial revolution and achieving net zero by 2050

The UK is a world leader in the fight against climate change, cutting emissions by 43% since 1990/ The Prime Minister recently outlined a 10 point plan which will mobilise £12 billion to enable the UK to forge ahead with achieving net zero carbon emissions by 2050, while spurring a green industrial revolution that will create and support up to 250,000 jobs.

In the Spending Review the government has committed to invest:

• at least £125 million in 2020/21 in nuclear technologies, as part of up to £525 million set out in the PM’s 10 point plan, supporting the development of large-scale nuclear, and including up to £385 million in an Advanced Nuclear Fund for advanced nuclear R&D
• to increase the Carbon Capture and Storage Infrastructure Fund to support the construction of four new Carbon Capture and Storage clusters by 2030;
• £240 million to create a Net Zero Hydrogen Production fund to support the production of low-carbon hydrogen;
• £160 million upgrading ports and infrastructure to support the expansion of offshore wind;
• over £1 billion next year to decarbonise homes and buildings, extending the package for low carbon heat and energy efficiency announced earlier in the year;
• £122 million to support the creation of clean heat networks; and
• £500 million over next four years on the development and mass-scale production of electric vehicle batteries.

Most employers who are eligible will be aware that the furlough scheme (the Coronavirus Job Retention Scheme) has been extended for five months – from 1 November 2020 to 31 March 2021.

The general terms for the first quarter to 31 January 2021 are:

• Maximum claim per employee is 80% of hours not worked.
• Furlough claims will be capped at £2,500 per employee per month for hours not worked.
• Employers will remain responsible for paying for any hours worked, albeit on a flexible basis, and for any pension and National Insurance costs.
• Employers can top-up wages for hours not worked at their discretion.

This is a welcome extension for many businesses that were facing difficult choices as the previous furlough scheme ended 31 October 2020.

Readers should note that the amounts of government support – 80% capped at £2,500 for hours not worked – only applies to 31 January 2021. During January, these rates may be changed, and much will depend on the economic challenges at that time. We will of course publish any changes announced in the new year.

Employers claiming under the new scheme should also note:

• The previously announced £1,000 Job Retention Bonus has been withdrawn now that the furlough scheme is extended to 31 March 2021.
• One condition of the new scheme is that employers accept that HMRC will publish information about their claim on the internet. This will include the name of the employer and a reasonable indication of the amount claimed.
• Furlough agreements must be in place before the start of a claims period. These agreements can be subsequently varied.
• Claims cannot be made if an employee is serving a notice period between 1 December 2020 and 31 January 2021.

If you have still not submitted all of the information we need to complete your 2019-20 tax return, could we ask you to respond as soon as you can as the deadline is fast approaching – 31 January 2021.

HMRC has made no announcement that this deadline will be extended. Accordingly, the initial £100 late filing penalty will apply to any 2019-20 return filed electronically after 31 January 2021.

If you are having difficulties tracking down information, lost P60s etc, please call so that we can agree on a strategy to secure the missing data.

None of us need any additional pressure at this point in time as we all grapple with the effects of COVID disruption. However, we hope you can respond to this request – if it applies to you – in good faith and in the knowledge that our first priority is to keep you compliant and to avoid penalties.

Finally, can we thank readers who have supplied the required tax return information prior to this reminder.

A reminder that It is possible to make small tax-free payments to employees, including directors, and this might be an appropriate time to make a small tax-free bonus in advance of the annual Christmas, New Year holidays.

Employers and employees don’t have to pay tax on small benefits provided they comply with the following rules:

• it cost you £50 or less to provide,
• it isn’t cash or a cash voucher,
• it isn’t a reward for work or performance related activity
• it isn’t in the terms of an employees’ contract.

HMRC describes these payments as a ‘trivial benefit’. Based on the national mood following months of COVID disruption, these so-called trivial benefits now seem a possible means to spread a little good cheer.

A word of caution

Where the employer is a close company, and the benefit is provided to an individual who is a director or other office holder of the company (or a member of their family or household) the exemption is capped at a total cost of £300 in the tax year.

Secondly, if you provide a benefit to a group of employees and it is impractical to work out the exact cost per head, then it is acceptable to average the cost per employee.

Most smaller businesses will not have the resources to train and employ their own customs clearance staff in which case you may have to consider using a customs agent or broker. We have reproduced the advice on the GOV.UK website on this critical issue below.

If you do import or export goods from and to the EU you could consider one of the options that follow:

You can hire a person or business to deal with customs for you, such as:

• freight forwarders
• customs agents or brokers
• fast parcel operators

What they can do for you (and who will be liable) depends on:

• the services they provide
• what you want them to do
• the commercial agreement you have with them

They can act for you either as a:

• direct representative
• Indirect representative

They cannot act on your behalf without written instructions from you. The instruction must show whether they’re acting for you directly or indirectly. HMRC will only ask for evidence of the authorisation when required.

Freight forwarders

Freight forwarders move goods around the world for importers.

A freight forwarder will arrange clearing your goods through customs. They’ll have the right software to communicate with HMRC’s systems.

Customs agent or broker

Customs agents and brokers make sure your goods clear through customs.

Fast parcel operators

Fast parcel operators transport documents, parcels and freight across the world in a specific time frame. They can deal with customs for you, as part of their delivery.

1 December 2020 – Due date for Corporation Tax payable for the year ended 28 February 2020.

19 December 2020 – PAYE and NIC deductions due for month ended 5 December 2020. (If you pay your tax electronically the due date is 22 December 2020)

19 December 2020 – Filing deadline for the CIS300 monthly return for the month ended 5 December 2020.

19 December 2020 – CIS tax deducted for the month ended 5 December 2020 is payable by today.

30 December 2020 – Deadline for filing 2019-20 self-assessment tax returns online to include a claim for under payments to be collected via tax code in 2021-22.

1 January 2021 – Due date for Corporation Tax due for the year ended 31 March 2020.

19 January 2021 – PAYE and NIC deductions due for month ended 5 January 2021. (If you pay your tax electronically the due date is 22 January 2021)

19 January 2021 – Filing deadline for the CIS300 monthly return for the month ended 5 January 2021.

19 January 2021 – CIS tax deducted for the month ended 5 January 2021 is payable by today.

31 January 2021 – Last day to file 2019-20 self-assessment tax returns online.

31 January 2021 – Balance of self-assessment tax owing for 2019-20 due to be settled on or before today unless you have elected to extend this deadline by formal agreement with HMRC. Also due is any first payment on account for 2020-21.

The Chancellor, Rishi Sunak, confirmed a small increase in the National Living Wage rates from April 2021.

Employers will need to diarise these increases otherwise they may break their obligation to pay these rates and risk penalties.

The increase in the NLW will mean that low-paid workers’ incomes rise broadly in line with predicted wage growth; and modestly ahead of projected increases in prices, meaning low-paid workers’ living standards should be protected. Commissioners do not believe the increase presents a significant additional risk to employment prospects, beyond the already challenging outlook.

The Low Paid Commission’s (LPC) recommendations comprised:

The LPC remain committed to the Government’s goal of ending low pay. Given uncertainties over the long-term economic outlook, they have not recommended any change to the Government’s target of the NLW reaching two-thirds of median earnings by 2024. The LPC’s report sets out an indicative future path for the NLW; but the effects of furloughing on pay data limit its precision this year.

When we awake to the new year we will no longer be in transition; we will be out of the EU and will have to cope with a wide range of regulatory changes if we buy or sell goods or services to EU suppliers and customers.

The Department for Business, Energy & Industrial Strategy recently sent a “YOU NEED TO ACT NOW” plea to all UK businesses that may be affected by these changes.

Many of these reminders will have found their way to waste bins at a rapid rate of knots or be sitting in post boxes awaiting the return of staff all working from home or required to stay at home as their business is in lock-down.

The circular makes four points:

1. Check the new rules on importing and exporting goods between the EU and GB from 1 January 2021 – different rules will apply in Northern Ireland.
2. If you are planning to recruit from overseas from 1 January 2021 you will need to register as a licensed VISA sponsor.
3. Use GOV.UK to identify changes affecting manufactured goods, such as new marking requirements or approvals needed, to ensure your business is ready to sell them in the EU and UK.
4. If you are moving goods into out of or through Northern Ireland check the latest guidance.

The circular is peppered with red type to underline the importance and urgency of the DBEIS concerns. Presumably, they felt a reminder was necessary due to the expected number of businesses who are not prepared for this momentous change.

If you want to avoid potential disruption to your supply lines after 1 January 2021 it makes sense to take a look at the GOV.UK website and see what you need to do as a minimum to reduce these disruptive risks.

We are leaving and with complications due to COVID we may well be leaving with no formal trade agreement.

If you need help considering your options to protect your business please call.

If you are making claims under the extended furlough scheme from 1 November 2020 you need to be aware of changes in the claims process.

Perhaps the most significant is that claims need to be registered within 14 days of the relevant period end. In their revised guidance on this topic HMRC say:

You can claim before, during or after you process your payroll as long as your claim is submitted by the relevant claim deadline. You cannot submit your claim more than 14 days before your claim period end date.

When making your claim:

• you do not have to wait until the end date of the claim period for a previous claim before making your next claim
• you can make your claim more than 14 days in advance of the pay date (for example, if you pay your employee in arrears)

If you do not finish your claim in one session, you can save a draft. You must complete your claim within seven days of starting it. All claims for periods from 1 July 2020 to 31 October 2020 must be submitted no later than 30 November 2020.

Claims from 1 November 2020 must be submitted by 11.59pm 14 calendar days after the month you’re claiming for. If this time falls on the weekend or a bank holiday then claims should be submitted on the next working day.

But what happens if you cannot submit a claim by the deadline?

HMRC accept that there may be circumstances when a claim cannot be made within the statutory time limits. They confirm that you may have a reasonable excuse if:

• your partner or another close relative died shortly before the claim deadline
• you had an unexpected stay in hospital that prevented you from dealing with your claim
• you had a serious or life-threatening illness, including Coronavirus related illnesses, which prevented you from making your claim (and no one else could claim for you)
• a period of self-isolation prevented you from making your claim (and no one else could make the claim for you)
• your computer or software failed just before or while you were preparing your online claim
• service issues with HMRC online services prevented you from making your claim
• a fire, flood or theft prevented you them from making your claim
• postal delays that you could not have predicted prevented you from making your claim
• delays related to a disability you have prevented you from making your claim
• a HMRC error prevented you from making your claim

HMRC will not consider reasonable excuses in advance of a claim deadline.