If the Covid-19 outbreak disrupts your cash flow, you can apply to the Coronavirus Business Interruption Loan Scheme (CBILS).

The scheme is part of a wider package of support for UK businesses and employees operated by the British Business Bank via accredited lenders.

There are more than 40 lenders providing finance and four banks say they do not need personal guarantees.

What are personal guarantees?

The fact that Barclays, Lloyds, HSBC and the Royal Bank of Scotland are not requesting personal guarantees on loans up to £250,000 is being welcomed.

Under normal circumstances, banks might require a personal guarantee from company directors. And if loans are not paid back, these guarantees see assets owned by directors being seized.

Those lenders who request personal guarantees cannot include directors’ main homes as part of this scheme.

There was concern that personal guarantees may be required for the CBLIS. But until this week only Royal Bank of Scotland/NatWest had removed personal guarantees from the loan.

How does CBILS work?

A lender can provide up to £5 million through:

• Overdrafts
• Invoice finance
• Asset finance
• Term loans

The maximum sum is available on repayments terms of up to six years. On overdrafts and invoice finance, the maximum term is three years.

Borrowers remain liable for the debt and the lender is provided with a government-backed, partial guarantee against the outstanding balance of the finance.

The government covers the first 12 months of interest payments and any charges imposed by the lender under the scheme.

Who is eligible?

Businesses applying for CBILS must be based in the UK with a turnover of less than £45 million. The business must also have a borrowing proposal which the lender:

• Would consider viable were it not for the Covid-19 pandemic.
• Believes will enable you to trade out of any short-term to medium-term difficulty

Who makes the decision to lend?

The lender has the authority to decide whether to office you finance under the Coronavirus Business Interruption Loan Scheme. So, if the lender is able to do so with normal commercial terms, they will do so.

You can approach other lenders in the scheme if turned down by the first.

For more details and to apply for a CBILS, visit https://www.british-business-bank.co.uk/ourpartners/coronavirus-business-interruption-loan-scheme-cbils-2/ Or if you wish to discuss your options with us before applying for the loan scheme, then please contact us.

Self-employed workers are now eligible for financial support if affected by the coronavirus outbreak.

The Chancellor announced last week the measures – but eligible contractors and freelancers have to wait until June before being paid.

The government’s announcement implied that if you’re a startup and have never submitted a self assessment then unfortunately you won’t be eligible.

However, the government has clarified that if you have traded in 2019-20, are currently trading at the point of application (or would be except for Covid-19) and intend to continue to trade in the tax year 2020 to 2021 then you will be eligible. HMRC will have strict measures in place to avoid fraudulent claims.

People who work for themselves will be able to claim up to 80% of their trading profits if the pandemic has affected them. Each self-employed worker has to prove they have been affected.

The payment is a grant, which is taxable. There are worries those who are given support will pay more tax in the future.

Self-employed support announcement

The Chancellor announced the following measures:

• If you are eligible, there is a taxable grant available of 80% of your average trade profits based on the past three years of accounts
• If you don’t have 3 years worth of accounts it will be based on the average trading profits over the periods you do have, providing you have submitted a self assessment for the 2019 year
• To qualify, more than half of your income in these periods must come from self-employment
• The grant limit is £2,500 per month 
• The grant is for three months and may be reviewed
• You must have trading profits of less than £50,000
• HMRC will use existing information to check eligibility and will invite application

If successful, you are paid a lump sum that can be backdated to March 1. You can continue to do business and still apply for the grant.

If you have yet to submit your tax return for 2019 (which was due in January this year) a four-week extension has been granted so that you are also eligible for the scheme.

What else is available?

Self-employed workers can apply for business interruption loans and are also allowed to apply to delay tax payments that are due in July.

These payments would need to be paid in January 2021, but it may provide a stopgap until then.

What can I do?

Even if your work has dried up, we advise you prepare a cashflow forecast as there may be payments for work already carried out that you’ve missed.

Chase any outstanding payments to ensure you are up to date with your invoices. If there is a problem with cashflow, then make sure you inform those you owe.

Where to get help

Clients of Concept Accountancy can contact us [Link to contact page] to discuss their situation. We are also happy to give some advice to self-employed workers who need some guidance.

Government Business Support
If you want to apply for the Government’s business support measures or want to check your eligibility you can contact them in the following ways:

Website: https://www.businesssupport.gov.uk/coronavirus-business-support/

Telephone: 0300 456 3565

If you need Universal Credit you can apply online on the government website.

Businesses can apply for a three-month extension to file accounts if they have been affected by coronavirus.

From yesterday (March 25) those businesses that cite issues around Covid-19 will be automatically and immediately granted an extension.

The joint initiative between the government and Companies House will allow business owners to manage the impact of coronavirus.

Applications for the three-month extension take just 15 minutes to complete.

The Financial Reporting Council had already confirmed last week that Companies House was granting two-month extensions to accounts filing deadlines.

Also, the Government is consulting lawyers and interest groups so companies are able to hold their annual meetings for shareholders.

Estate and lettings agents see business rates scrapped for 1 year

Estate and letting agencies forced to close due to the outbreak will pay no business rates for 2020-21.

The government has announced the move along with the same measure for bingo halls.

If your business is eligible you will be re-billed with the updated discount.

And if you have made payments, the relevant local authority will make refunds.

The change comes after NAEA Propertymark campaigned for the inclusion of high street estate agents in the exemption.

“We are pleased Government is listening and acknowledges the concerns from across the country,” says NAEA chief executive Mark Hayward.

“This is a real boost in uncertain times and will assist all businesses that are finding it difficult to operate in the current environment.”

HMRC warns of new scams

As the coronavirus outbreak continues, criminals are trying new ways to scam business owners.

The latest is a very official-looking email from the government website gov.uk offering tax rebates.

It isn’t anything new for scammers to try and offer rebates by emailing, texting or calling about rebates. But the latest attempt maybe missed with the announcement of so many business support packages.

As ever, if anyone calls, emails or texts you from HMRC and asks for your card or bank details, it is a scam. HMRC never asks for personal details, so be aware!

If you’re unsure, it is best to ignore the contact. At this time, not wasting money is essential to keep your business afloat.

Don’t forget, if you are a client and need help you can contact us via email. And you can contact us if you’re not a client and want to talk about business support, use our online form.

As Covid-19 continues to grip the country more people are looking for reassurance around what support there is for business.

While we featured this in a blog early last week, there were further announcements at the end of the week.

There were also a lot of questions from business owners about what the announcements actually meant.

Accountancy firms and tax advisers will be advised at some point soon but until then we can only highlight the measures that matter to most businesses.

Covid-19 support so far

This list of measures looks at the announcements that were either new or updated late last week:

• A coronavirus Job Retention Scheme
• Deferring VAT and Income Tax payments
• A Statutory Sick Pay relief package for SMEs
• A 12-month business rates holiday for all retail, hospitality, leisure and nursery businesses in England
• Small business grant funding of £10,000 for all business in receipt of small business rate relief or rural rate relief
• Grant funding of £25,000 for retail, hospitality and leisure businesses with property with a rateable value between £15,000 and £51,000
• The Coronavirus Business Interruption Loan Scheme, offering loans of up to £5 million for SMEs through the British Business Bank
• A new lending facility from the Bank of England to help support liquidity among larger firms, helping them bridge coronavirus disruption to their cash flows through loans
• The HMRC Time To Pay Scheme

Here we look at some of those announcements to clarify some points.

The Coronavirus Job Retention Scheme

Looking at this, it appears that this is aimed at supporting up to 80% of the salary of somebody that would have otherwise been laid off as part of this crisis up to a maximum of £2,500 per month – these are classed by HMRC as ‘furloughed workers’.

It is not aimed at those staff who are still working and working from home.

There will be no doubt further measures to be introduced to reduce the risk of this support from being abused.

Small Business Grant Funding

The small business grant funding of £10,000 for all businesses is for those in receipt of small business rate relief or rural rate relief.

There has been conflicting advice given around this so far that whilst it seems to suggest that the eligibility is very broad, there are likely to be restrictions elsewhere.

Some of the media report that it ‘up to’ £10,000 and not every business will receive it. The truth is that while such measures are announced at press conferences, the finer details do not always come out until a week or two later.

At the moment, local councils, who will administer these scheme, are still being briefed by the government. Once that has been completed we will know more, but it is clear that there is not an application process. If you qualify, you will simply receive the grant.

However, we will keep you posted and advise that you wait until an official announcement is made about how this will be administered.

For more detailed guidance around any of the above please click here.

If you want to speak to us about your business, contact us now.

You cannot escape the concern around the Coronavirus outbreak. For many small businesses, any disruption can be costly – and at worst the result could be closure.

To help reassure businesses in these difficult times, the government has announced a £350 billion package.

Coronavirus business interruption loan

It has been announced that the British Business Ban is delivering the coronavirus business interruption loan to certain businesses.

To qualify for a loan of up to £5 million, the turnover of your business must be less than £41 million.

You can access the loan if you are within an eligible business sector and have not received De Minimis State Aid beyond €200,000 over the previous 2 fiscal periods

The first 6 months of the loan will be interest-free as the government will cover the interest.

The government will cover up to 80% of any losses without fees. The Chancellor said that the loans will be available to any business who needs access to cash to pay their rent, the salaries, suppliers, or purchase stock, will be able to access a government-backed loan, on attractive terms.

Smallest businesses

The smaller businesses will be able to access a £10,000 cash grant. This will be available to 700,000 of the smallest businesses and is delivered by local authorities. Councils will be contacting businesses who qualify and there will be no application procedure.

Retail, hospitality and leisure businesses

There will be a 12-month business rate holiday for all retail, hospitality and leisure businesses in.

There will be grants of up to £25,000 for those businesses operating from smaller premises with a rateable value over £15,000 and below £51,000.

Statutory sick pay and small business

One of the issues of Coronavirus is that staff will require statutory sick pay. To ease the burden, the government has guaranteed that it will refund business owners with fewer than 250 employees the cost of providing 14 days’ SSP employee.

Details will be provided by HMRC in due course on how employers can access the rebate in due course.

HMRC helpline

A dedicated helpline for businesses and the self-employed in financial stress and with outstanding tax liabilities has been set up.

Through this affected individuals will receive support with their tax affairs and you may be able to agree a bespoke ‘Time to Pay’ arrangement. Contact the dedicated helpline on 0800 0159 559 if you are unable to pay your tax.

Companies House

Here are the links you need if you should need to contact Companies House:

• File your accounts
• File your confirmation statement (annual return)
• Make changes to your limited company

If you wish to contact Companies House, it has been announced that staff are working normal hours unless the situation changes.

Filing accounts on time

File your accounts online if you are able to and always make sure you file on time.

Should Coronavirus affect filing your accounts, make an application to extend the period allowed. If you do not and your accounts are late, an automatic penalty will be issued.

With the ever-changing nature of the situation, we will continue to scrutinise the latest advice from government to small businesses.

If you have any concerns or need advice you can contact us via email or Direct Message us on Facebook or via Twitter. We monitor these and will get back to you, just please bear with us.

We believe in keeping in contact with our clients, and we will keep you updated on social media and via our website.

Last month we looked at turnover and profit and explained the difference between the two. If you have a good turnover but poor profits, your business isn’t running as well as it might.

If your business is more profitable it is more likely it can cope better if you experience any downturns or unexpected events.

Having more profits means your business also has the cash to invest in new equipment, products or staff.

Being an accountant in Newcastle means we understand that market conditions can often affect this region more than other areas of the UK. But higher profits will help you weather storms better.

If you want to increase your business’s profits, here some ways that can help:

Cut what you spend

How can I reduce business expenditure? The first thing you need to look at is your outgoings. It sounds easy, but without having a proper review you may be spending something that’s unnecessary

For example, could any of your suppliers reduce their prices? Are you paying for services that you’re not using?

If you are a member of a professional body but never utilise their service, then it’s wasted cash. Cutting non-essential spending can increase your profits.

Are you efficient?

Are you spending time doing something where there are quicker processes? This could be affecting your profits.

For example, can an online bookkeeping app save time? Review your finances regularly too. If your mobile phone contract is up for renewal, don’t ignore it. Use the opportunity to ensure you are getting the best deal.

Again, it is a simple process but one that could be costing you money and impacting your profitability.

Prices mean profits

When was the last time you reviewed your prices? If you haven’t changed them for years you are likely to be underselling your goods and services.

It is acceptable to ask a client or customer for more if your prices haven’t kept up with increasing costs. Think about the last time you went to the supermarket to find a product price had increased!

You could try introducing small increases over time rather than a big hike to ensure it isn’t a big shock to your regular clients. And be clear about why you’re raising prices!

If inflation means production costs or prices in the supply chain have risen, let your customer or client know. It helps them understand why you have increased prices.

Up-sell or cross-sell

Your current customers are also your best customers! If someone is enjoying using your products or services, the chances are they will continue to use them.

If you offer a more premium product that offers a higher margin, then why not encourage them to choose that instead. That is up-selling!

If you offer a service that complements what you do (such as a photographer offering a framing service) why not introduce your customer to it?

If it complements the original service you could sell more and that could mean more profits.

Increase customers

Another straight-forward suggestion but one that will increase your profits!

If you have more customers you will increase your turnover. And if you have priced everything properly and you’re not absorbing the cost of new customers, your profits will increase.

Work out any increases in salary should you need to employ a new salesperson.

Also, consider the cost of bonus structures to encourage your sales team to sell more. That way, they will want to increase their sales and, in turn, it will show in your profit and loss account.

Look at what you offer and add new lines or services too. The cost of adding them may not be much more but your profits can increase.

Greggs decided to appeal to a new market when it introduced the vegan sausage roll. As a result, they increased customers and profits by appealing to a different market.

There are many ways to increase profits in your business and no list is exhaustive as each company is different.

If you would like more information, then contact us at Concept Accountancy.

Business owners should prepare for an increase in the National Minimum Wage (NMW) next month.

From April 1, NMW will see low-paid workers earn almost £1,000 more a year with an increase of 6.2%.

The national living wage (which is for those aged over 25) will rise from £8.21 to £8.72 per hour. That equates to a pay rise of £930.

Also, younger workers will also receive a boost to the national minimum wage of between 6.6 and 6.5% depending on their age.

What are the new National Minimum Wage rates?

From April 1 the National Minimum Wage rates will increase:

• The rate for 25+-year-olds (the national living wage) increases from £8.21 to £8.72 per hour
• For 21 to 24-year-olds it is £7.70 to £8.20 per hour
• The rate for 18 to 20-year-olds rises from £6.15 to £6.45 per hour
• The new rate for 16 to 17-year-olds increases to £4.55 per hour
• Rate for apprentices also rises to £4.55 per hour

The difference between National Minimum Wage and Living Wage

All employers must pay at least the set National Minimum Wage to their employees, which is the NMW. These are the minimum hourly rates legally and are subject to change annually.

Workers cannot “contract out” of these rates and all employers, irrespective of size, are required to pay the NMW.

The National Living Wage (NLW) is essentially the minimum wage for all workers and employees aged 25 and over.

As with the NMW it is non-negotiable and is prescribed by law.

Are there penalties for not paying the correct wage?

It is a criminal offence for employers to not pay someone the NMW or NLW. And it is also an offence to fake payment records.

Also, HMRC may issue with a Notice of Underpayment to employers failing to pay the correct NMW or NLW.

This requires them to pay a penalty of 200% of the total amount of underpayment (the difference between the amount paid and the correct NMW or NLW rate).

This is halved if paid within 14 days of the notice.

The maximum penalty per worker is £20,000. Also, the Department for Business, Energy & Industrial Strategy (formerly BIS) can “name and shame” businesses that flout minimum wage regulations.

And directors can be disqualified for up to 15 years.

Can I include tips?

If you work in the service industry where customers give tips, they are not part of the National Minimum Wage.

Employers must not take them into account when calculating NMW or NLW payments.

If a company does include them, it means your business is not paying the correct minimum sums and you could face a penalty.

Where you don’t have to pay minimum wage

You do not have to pay the minimum wage to consultants, freelancers or contractors who are self-employed.

Also, interns and voluntary workers are exempt as are higher and further education students on a work placement for up to one year.

Workers on a government employment scheme can’t claim the minimum rate either.

If you are unsure you can always speak to us here at Concept Accountancy. So, prepare for the changes from April 1.

Profit and turnover is something business owners love to brag about. But there is a big difference between the two.

Owning a business with a great turnover sounds impressive. But what really matters is how profitable a business is.

If the turnover sounds substantial but is smaller than what’s owed to suppliers, then the business may not be as healthy as it sounds.

Thomas Cook’s turnover was almost £10bn when it collapsed in September 2019. Its debts were almost £2bn and it was still paying out salaries, etc. and had to pay into a pension pot.

So, the turnover figure didn’t really reflect the health of the business. It was losing money quickly and couldn’t pay its debts.

As a result, investors were nervous and it couldn’t find anyone willing to finance its future.

So what is turnover?

In accountancy, turnover is how much a business makes in cash sales during a specific period, usually a tax year. The sales can be in cash, credit or debit card transactions.

Usually, turnover refers to net sales, which are sales after discounts, returns or allowances.

Your gross sales figures are what you have taken before such discounts. So, if your business doesn’t give discounts or refunds, then the figures may well be the same!

If you keep accurate financial records (and you should for your tax purposes) it should be easy to add your total sales together. The resulting figure is your turnover.

And what is my profit?

Have you heard the saying about turnover being vanity while profits are sanity?

Profit is how much money your business makes after you take away the cost of doing business.

For example, if you have made £10,000 profit you need to then subtract how much it cost you to make that money. This includes items such as overheads, buying supplies, travel, etc.

There are three types of profit too! Your profits are reported as being gross, operating or net. So, what is the difference?

Gross profit: This is sales less the cost of goods sold. What that means is you’ve taken into account, or subtracted the expenses that were needed to produce the goods and services needed.

Operating profit: This is your gross profit minus operating expenses. These expenses are the likes of your overheads, such as rent and heating.

Net profit: This is your operating profit less your taxes and interest from any loans.

Turnover and profit

Both turnover and profit are ways to measure the earnings of a business. Turnover is a measure of the earnings without taking the costs into account.

Profit is the earnings of a business after costs. You can think of profit as the money your business gets to keep after spending on all your necessary expenses.

Those expenses can be the cost of wages, suppliers’ costs and overheads such as rates or rent.

If you fail to make profits, then your business will struggle or you will need to look at other means to raise the funds necessary to run your business.

But remember, the interest on any loans or credit then becomes one of those costs, and they can build up, as happened to Thomas Cook!

If you are a business owner looking for no-nonsense advice about your financial position and your accounts. We’re based in Newcastle but we deal with companies across the North East.

Contact us today for more information.

HMRC will often get in touch with you via email. But this means scammers can take advantage of the situation – especially if they are promising a refund!

A client recently received a real email from HMRC. It spurred us on to let you know how you can spot the difference between real and fake HMRC emails.

They had received the email as they had filed their self-assessment tax return on time.

As many people are receiving similar emails at the moment, we thought we’d share some advice.

The real email

Above is a screenshot of a real email from HMRC and it’s easy to see spot the difference once shown.

First of all, there are no requests to click on a link to the HMRC website. It sounds obvious but that is the giveaway!

If you receive an email asking you to ‘click here’ then it will be a scam. That is because HMRC never asks you to click anywhere.

Even if you are owed a refund, they will never ask you to click and give your details to them.

It is exciting thinking have a refund, but HMRC won’t contact you via email to tell you.

Instead, they inform you by letter. And they never ask for bank details as they will send the refund to your bank account or by cheque.

Try to avoid clicking on the links just in case you download a virus. But even if you do, just make sure you leave the website as soon as possible.

They will not attach any documents either as this could be a way of infecting your computer. If there is one it will be a fake email.

And remember, HMRC does not send an email asking you to share debit or credit card details or bank information.

Other ways of contact

If you have underpaid your tax, HMRC may give you a call. Beyond that, they will not.

So, if you receive a phone call demanding payment and your bank or card details, it’s a fake.

A real employee may call but it will be to discuss your account. The moment a request is made for your details, that’s the time to put the phone down.

Some scammers use an automated voice that tells you they are filing a lawsuit against you. Again, put the phone down if you receive a call like this.

Other ways scammers will try to get your information is by:

• Text. HRMC never uses texts to contact you
• WhatsApp: You won’t be contacted using the App.

Speak to your accountant

HMRC will understand if you are ever suspicious of a call. If you are, the best way is to put down the phone. You can email any concerns to phishing@hmrc.gov.uk

You can also speak to your accountant. Usually, your accountant will know of any issues before you. But if not, then they can contact HMRC on your behalf a lot more easily than you can.

If the underpayment or overpayment is an issue they will find out for you.

HMRC has more information on its website. Or you can always contact Concept Accountancy. We are accountants based in Newcastle, but we are happy to help business owners keep peace of mind.

Bookkeeping is an essential job when running a business. It’s part of the process in accounting and involves recording financial transactions.

Many small business owners, particularly sole traders or small companies, may find bookkeeping to be a real chore.

But without it, you won’t know what’s happening in your business financially.

At Concept Accountancy, we offer bookkeeping services like many firms in Newcastle. But it is a different service to accountancy.

For anyone new to business or who confuse bookkeeping with accounting, let me explain what you need to know.

Is there a difference between bookkeeping and accounts?

Bookkeeping is the regular task of recording and monitoring the financial transactions of your business. It is usually carried out by a qualified bookkeeper in accountancy firms like Concept.

Accountants tend not to carry out bookkeeping because their specialism is in interpreting and analysing the financial data.

But if that data isn’t recorded correctly, an accountant will have real problems analysing the data. This is where bookkeepers come into their own as they monitor the cash that’s coming in and out of the business.

Let us say you are a small business or SME in Newcastle and need to know how healthy your business is.

If you haven’t kept bookkeeping records correctly you won’t really understand why your bank balance stands at any particular time. Just looking at the cash in your bank doesn’t always tell the full story.

Some business owners will keep their own books, but many will employ the services of bookkeepers.

Many are individual specialists but here at Concept Accountancy, we offer a bookkeeping service. So what do you need to record?

The essentials

Bookkeeping is, as we have said, a way of tracking and recording the numbers in your business. It is essential and good bookkeeping allows you to track the performance of your business.

Correctly recording the data makes it easy for an accountant to assess your business and it means you will always pay the correct taxes.

The person or people responsible for bookkeeping will look after, among other things:

• Expense payments to suppliers
• Loan payments
• Customer payments for invoices
• Monitoring asset depreciation
• Generating financial reports

Why does it matter

You need to keep up-to-date records of what cash is coming in and out of your business so you know what you’re owed. If you know that you will know if you have enough money to pay what you owe, whether that’s bills or for staff or contractors.

Recording transactions

To keep tabs on financial transactions that happen daily, you need to record them into your accounting system. Although that’s often digitally these days, they’re still known as books.

For each transaction, there must be a document that describes the business transaction. This can include a sales invoice, sales receipts, supplier invoices, bank payments, etc.

The documents provide an audit trail for your transactions and are an important part of maintaining accurate records. These records help your accountant understand the strengths and weaknesses of your business. They also ensure you don’t over or underpay HMRC!

Traditional way

As already mentioned, the name goes back to the days when physical books were used to record transactions.

Each transaction created a paper-trail of finances and it traditionally involved ledgers, charts of accounts and a double-entry system.

Double-entry is based on the fact that every transaction has two parts, which affects two ledger accounts.

Each transaction involves a debit or credit entry in an account. It is very much like an error-detection system and if, at any point, the sum of debits doesn’t quite equal the corresponding sum of credits, there is an error in your books.

Debits are the sum owed and are recorded on the left side of the double-entry book. Credits – such as income and other financial gains – are recorded on the right side.

Modern way

For anyone who dislikes the idea of buying hard-backed books, don’t worry! Technology means bookkeeping is a lot easier than it used to be.

Software has been developed over the years which allows transactions to be tracked simply, even via smartphones.

You may have heard of Xero or Quickbooks. These and other platforms allow you to keep records without fearing you may lose the receipt or piece of paper given.

At Concept Accountancy, we are official partners of Xero or Quickbooks, but we also work with other types of bookkeeping software as each offer something different to the user.

Whether you use paper or software, bookkeeping is something you can’t ignore. If you’re still unsure or want to know more about our bookkeeping services, you can contact us today for details.