No one was prepared for the extent of the global effects of the pandemic. The coronavirus caused economies to shut down and many businesses to close permanently.
The government’s financial support schemes were vital to UK businesses hit hard by the restrictions imposed to reduce the spread of Covid-19. Employers have claimed £58bn of financial support so far through the Coronavirus Job Retention Scheme alone.
Your practice may have been overwhelmed over the past year assisting clients with these schemes to help pay their employees, provide temporary cash flow relief and guarantee loans.
A key responsibility for you now as an adviser is to ensure your clients don’t lose traction after these benefits wind down.
In this article, we’ll discuss the ways you can do this, including advice you can offer and ideas for extending extra support.
Here’s what we cover:
Remaining financial support schemes and when they end
- Self-Employment Income Support Scheme (SEISS): Applications for the fifth grant must be made on or before 30 September 2021.
- Coronavirus Job Retention Scheme (CJRS): The final CJRS grant covers payrolls up to 30 September 2021. This is the final date for which employees can be furloughed. The final claim date for this payroll is 14 October 2021.
- Coronavirus loan schemes: You can apply for the Recovery Loan Scheme until 31 December 2021.
- VAT reduced rate for hospitality and tourism: 31 March 2022 is when the full VAT rate must resume; 30 September 2021 is when the 12.5% rate can be used.
- Enhanced Time to Pay for Self Assessment taxpayers: January 2022 (although it’s no longer possible to apply).
- VAT Deferral New Payment Scheme: Applications for deferred payment are closed and 31 March 2022 is potentially the final payment date.
- Pay As You Grow: As late as November/December 2030.
- Tax relief for home working expenses: No end date has been mentioned.
For more detailed information on each of these schemes, see our coronavirus financial support timeline.
How accountants can help their clients
You’ll be able to provide the most value to your clients if you stay proactive. Just because clients don’t reach out doesn’t mean they’re not in need of your help.
Business owners may be overstretched right now with employees on furlough and normal trade resuming. They most likely don’t have time to keep up to date with support scheme changes and deadlines.
So continue to reach out regularly and keep your clients updated, especially as their financial support scheme end dates are approaching. The earlier your client can prepare for them, the smoother the transition will be.
You may be able to provide temporary relief for overwhelmed businesses by offering additional services where appropriate. For example, providing payroll, bookkeeping or accounts receivable services will ensure your client doesn’t get behind on important filing requirements and cash collection.
You can also assist your clients by ensuring their accounting systems are set up correctly for any financial reporting changes.
Hospitality and tourism businesses, for example, have been able to take advantage of reduced VAT rates and will need to update these for 30 September 2021.
As clients prepare to pay their deferred tax and loan payments, you can help them minimise spending in other areas by reviewing and discussing their monthly costs.
Start by identifying potential savings in low impact areas of the business such as subscriptions, telephone, internet, insurance, IT, freight and cleaning.
Pausing non-critical projects is also an opportunity for a low-risk cost saving.
If necessary, you can also suggest other immediate solutions, such as putting a freeze on certain recruitment not core to the business, streamlining the way orders are placed or renegotiating terms with suppliers.
And if your client holds stock, you could review their stock levels. This would be a good opportunity to discuss whether they can hold less inventory or lower the cost of goods while still delivering the same service.
Advice for you to give your clients
The pandemic caused a quick shift to remote working, which halted face-to-face meetings, and now the trend towards digitalisation and cloud computing has accelerated greatly.
You could advise clients on the benefits of moving to cloud accounting software, so they can take advantage of collaborating with you in real time.
This would ensure their accounts remain up to date and provide real-time data for decision-making. This is also important if clients may be looking to approach a lender for short-term finance because they’ll need to have current and accurate financial accounts available.
Your clients may also have to navigate continued remote working and possibly establish a permanent hybrid working model.
You can advise them on how to create a clear plan so everyone gets clarity on how the business is moving forward. Clients will need to decide what their overall remote working strategy is, establish their employees’ needs and what technology they require to make it workable.
How many days a week will employees be encouraged to come to the office? Or are they only required when necessary, such as for important meetings?
And if they want to be in the office full time, is that an option?
With future revenues still uncertain for many businesses, building out detailed cash flow forecasts for you and your clients to monitor will be vital to keep ahead of any issues.
This will allow them to plan for any upcoming payments that were deferred by taking advantage of the support schemes.
Start recommending they put funds aside now to pay these, so it doesn’t risk affecting their business operations down the line.
Another option for providing cash flow support is to advise your clients around their cash collecting processes. Help them to identify slow-paying debtors, then you can create a strategy together to speed up payments.
If your clients missed out on tax deferral schemes but are concerned about making their upcoming payments, you can recommend they call HMRC to discuss setting up a Time to Pay arrangement, at the discretion of HMRC.
Your self-employed clients can no longer apply for the Self Assessment taxpayers extension, but if their Self Assessment tax bill is less than £30,000, they may qualify to simply set up an online plan to pay in monthly instalments.
Final thoughts on supporting your clients
Cash has always been king for small businesses, and now more so than ever, as the government coronavirus financial support schemes come to an end. The way businesses navigate this upcoming period will be critical to their survival.
Make sure you’re proactively supporting your clients because they’ll need your expert advice to help them save and plan for future commitments during these uncertain times.
In turn, you’ll be ensuring your practice continues to thrive.
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