Covid-19: UK practical business advice using existing tax rules

We set out some advice based on existing income tax and corporation tax rules.

• As we near the end of the tax year, get your income tax return in as soon as possible after 6^th April 2020, for a potential refund of part of your January 2020 tax payment. Then know the exact amount due in July. Although the tax payment due by 31^st July 2020 has been deferred until 31^st January 2021, this will help you plan your cashflow in the coming months.
• If you make a sole trader or partnership tax loss to 5^th April 2020, generate a tax refund by carrying the loss back to 2019.
• If you are a start-up sole trader or partnership, this loss can be carried back three years to generate a tax refund from your previous PAYE job or even from rental income.
• If you are a limited company and make a loss in your current year end, carry it back by a year to generate a tax refund.
• Trading losses can be carried forward against future profits of the same trade, reducing future tax payable.
• Ensure all your returns to HMRC, including PAYE, VAT, CIS, Income tax and Corporation Tax, etc. are on time. Deferral is announced on VAT and Income tax payments only. HMRC is still expecting to receive all returns in time and is more amenable to agreeing time to pay if returns are up to date and the correct liability has been established.
• Getting your return in early does not bring forward any tax payment dates, but it does bring forward tax refunds.
• Keep records to make coronavirus claims, whether it is claims for SSP or for applying for the Business Interruption Loan facility.
• If you are working from home more than usual, claim more costs against your taxable income for your home office.
• Consider if you need to write-off any bad debts. This will help in reducing your VAT as well as Income tax or Corporation tax.
• Consider Time-to-pay arrangements from HMRC, where you phone HMRC to agree a delay in paying your tax. HMRC have a dedicated helpline for businesses affected by coronavirus. Have a realistic proposal ready that you expect to adhere to. We will share useful tips on how to negotiate with HMRC shortly.