The dates for businesses to start to make instalment payments for loans obtained since the commencement of the Covid 19 lockdown, are starting for some, and many more will see these dates nearing over the next few months.
Finance companies will be discussing with businesses to assist with this process, as clearly it is possible that some borrowers will have needed those funds for immediate purposes, and now as their businesses are developing trading again, the need to produce a profit to enable a loan repayment may now be apparent. A number of these businesses may never had previously needed a loan, and their level of profitability to sustain such repayments will be relevant.
These loans were often issued on the basis of previous emphasis on expenditure on staffing costs and turnover, not profitability. As the ability to repay the loan may not have been an overriding factor at the time of application, this may be reflected in the current business plan, with some re-structuring needed.
Bounce Back Loans
The bounce back loans may have longer terms but again if the borrowers wish to start significant repayments, this will be important to them. As relevant is the fact that again loans may have been taken that eventually will have to be repaid, and the additional stress where it is necessary to rebuild or rekindle a business, is just another factor after a long year.
Directors potential personal liability for tax indebtedness of a company, on some tax planning schemes
Where the tax liability of a company has arisen from what is deemed a tax avoidance arrangement by HMRC, Schedule 13 of the Finance Act 2020, has made directors potentially liable for tax indebtedness for companies that enter insolvency proceedings after the 1st December 2020, for the tax. This will be relevant to those companies who find themselves struggling to repay a tax liability, that may as yet still be under review, and therefore they consider the insolvency of the company.
The problem may then not stop there, and be passed to the directors who were recipients of such benefits. There has previously been the potential for such personal claims by HMRC, but this Schedule 13 of the Finance Act 2020, suggests preparations of more active pursuit of such indebtedness may follow. The delays caused by Covid 19 may prove temporary in seeing a number of claims being made, but advice may soon be necessary for some of those who have had such arrangements, especially as more cases of tax liability are decided in the courts.