Financial support options for Swansea businesses hit by Covid-19 – Author – Jon Munnery, UK Liquidators

The economy has restarted following the coronavirus crisis, however, many small business owners across the country are finding that income is yet to return to pre-Covid-19 levels. As the threat to public health saddles into the new year, consumer demand remains inconsistent.

As a result, company reserves may be stagnant while you bide your time to raise enough funds to cover essential payments. If company creditors are calling in debts which you are unable to settle, such as HMRC, propose a formal payment plan so you can put an end to creditor pressure while you get your financial affairs on track. Enlist professional debt collection support or access alternative finance to support Covid-19 business recovery.

HMRC payment plan – What is a Time to Pay arrangement?

If you’re falling behind on payments to HMRC, such as VAT, Corporation Tax or PAYE, request more time to pay. A Time to Pay (TTP) arrangement is an agreement made with HMRC to pay your taxes through affordable monthly instalments. A Time to Pay arrangement is designed to help businesses recover from their debt problems and repay HMRC quickly.

All Time to Pay arrangements are negotiated based on the financial circumstances of the business, i.e., income and expenditure, so there is no ‘one size fits all’ Time to Pay arrangement. This type of debt repayment plan encompasses all penalties and interest and can help businesses tackle their HMRC company debts head-on and in a flexible manner.

The TTP arrangement can be adjusted as your earnings fluctuate throughout the agreement. If your earnings improve, your monthly instalments will increase, and if your financial position worsens, your instalments will be reduced to mirror this.

How is a Time to Pay arrangement calculated?

When discussing a Time to Pay arrangement with HMRC, your repayment proposal must be realistic. If your suggested payments are not feasible, HMRC may reject your request. You must also not understate your ability to make repayments as the aim of a TTP arrangement is to pay off tax debts as quickly as possible.

How can I apply for a Time to Pay arrangement?

You can apply for a Time to Pay arrangement by contacting HMRC directly. When speaking to HMRC, they will ask questions to build an image of your financial history, including what efforts are being exercised to raise funds and how future business finances are expected to change.

You may seek advice from an accountant or licensed insolvency practitioner to maximise your chances of securing a TTP arrangement. If you owe money to multiple creditors, a formal company restructuring procedure may be better suited to address all company debts, in addition to that owed to HMRC.

Creditor payment plan – What is a Company Voluntary Arrangement?

A Company Voluntary Arrangement (CVA) is a formal insolvency procedure that indebted

businesses can enter under the recommendation of a licensed insolvency practitioner. It’s a payment plan that’s agreed upon between all company creditors and splits company debts into affordable monthly instalments. The typical length of a CVA is between 3-5 years.

Additional funding sources

If your business requires a jump start after a turbulent year of Covid-19 disruption, raise funds through additional sources to help boost the financial health of the company and its capability to trade independently. A whole suite of finance options is available for businesses, from invoice finance, asset finance to business loans.

If the lag between providing a service and receiving a payment creates a gap in company cash flow, invoice finance can help fill this void. If you have limited capital to purchase essential equipment, you can facilitate the purchase and spread the cost through asset finance.

Debt collection services

The detrimental financial effect of Covid-19 has been widespread, wiping out income from under the feet of small business owners across the country. Insolvency statistics released by Real Business Rescue for Q3 2021 found that the reopening of the UK economy resulted in a 14% drop in business distress levels across Wales, taking the number of SME jobs in distress to 73,725.

If you’re falling behind on payments due to late-paying customers, use professional credit control services to fast-track payments, and ensure you always get paid on time, every time.

As the coronavirus crisis continues into 2022, businesses are better placed to weather trading uncertainty, having received financial support from the government and time to adapt business models to operate seamlessly outside of Covid-19 restrictions. The Covid-19 vaccine rollout is well underway and consumer behaviour is recovering in tandem.

This guest post is by Keith Tully, a partner at Real Business Rescue, a nationally renowned company insolvency and restructuring advisor. The Real Business Rescue team of licensed insolvency practitioners can offer a free consultation to company directors in financial distress across Swansea to discuss outstanding Bounce Back Loans and company debts.