Filing of company accounts
From 25 March 2020 businesses will be able to apply for a 3-month extension for filing their accounts.
While companies will still have to apply for the 3-month extension to be granted, those citing issues around COVID-19 will be automatically and immediately granted an extension. Applications can be made through a fast-tracked online system which will take just 15 minutes to complete.
A number of directors have been concerned about the concept of “wrongful trading” (in effect, continuing to trade that may worsen the position of creditors) especially as the new ability to “furlough” means staff remain on the payroll even though sales might have completely dried up. Thus, such businesses continue to trade even though they have no income.
New rules have now been introduced to “allow companies undergoing restructuring to continue access to supplies and raw materials” for a temporary suspension of wrongful trading provisions for company directors will apply retrospectively from March 1 to remove this threat of personal liability during the pandemic.
It should be emphasised however that all of the other checks and balances that help to ensure directors fulfil their duties properly will remain in force.
Businesses reviewing the impact of “off payroll workers” have been given some breathing space as the introduction of IR35 has been delayed until 6 April 2021.
Making Tax Digital (MTD)
HMRC have announced a one-year extension of MTD to facilitate a VAT soft landing period in response to the COVID-19 pandemic. This means that all businesses now have until their VAT Return period starting on or after 1 April 2021 to put digital links in place in their accounting software.
The deferral of the introduction in IR35 will be welcomed by many freelance and other “workers”. And whilst the 3-month extension in which to file accounts does not save cash as such it nevertheless is a pragmatic response.
The suspension of “wrongful trading”, whilst helpful, will not be overly impactful as very few cases of wrongful trading have ever been proved.
Finally SME’s will doubtless be relieved at the extension of MTD; whilst the claims benefits are dubious, the costs to businesses are clear.