To answer this question, we should take a look at a few adjectives that have been used to describe COVID-19’s effects on our personal and business lives. For example, unexpected, unprecedented, disruptive…

Prior to the pandemic we assumed that tomorrow would turn out much like yesterday. Many businesses had become accustomed to managing cash flow on the assumption that next month’s turnover could be more or less guaranteed based on expected market conditions. There were trends, up and down, but by and large positive, growth orientated economic activity was a given in western democracies.

COVID-19, in a matter of weeks, tore up this assumption.

It quickly became evident that the pandemic was creating new norms. A few business sectors have benefitted from the ensuing disruption, but many businesses have not. A sizeable chunk has gone out of business as lock-down regulation has required them to close (witness the effects on our leisure and entertainment industries).

Lesson 1 – always expect the unexpected.

The are a number of businesses in vulnerable sectors that have survived COVID disruption thus far. Many have had their cash flow enhanced by the multitude of government grants and soft loans on offer. Others were financially prepared; they had fat on the bones. Their Balance Sheets showed healthy reserves of cash or assets that could be quickly converted into cash. Very few businesses would have considered the disruption we have suffered in 2020 as anything more than fiction, a great disaster movie script. What we now know if that the unexpected needs to be factored into our business planning.

Lesson 2 – make sure you can ride out extended downturns.

For example, periods where your income is much reduced or if in business you are required to trade at a loss. It will be many years before this coronavirus outbreak passes into folklore. The fear of a repeat will linger for some time, like an itch that can’t be scratched. Should we, therefore, include the acquisition of reserves as one prudent strategy for 2021? If that is not possible could you “mothball” your business if required or convert your business assets to a different use?

Lesson 3 – planning is no longer a luxury we cannot afford.

In the past, pre-COVID, when the expectation was tomorrow would be much like today (or yesterday), many of us felt no need to plan what was going to happen tomorrow. This is no longer the case. The last year has provided the evidence that the unexpected can have a real impact.

We can help

During 2021, perhaps we can all benefit from business planning? We are still in the centre of the COVID storm and from next month we will be dealing with additional disruption as we finally leave the EU transition period behind.

If you would like to consider your business finances, how we are going to survive 2021, and then regroup and build a sustainable business modal for the remainder of the 2020’s, we can help you start the process now.

Please call so that we can discuss your options. There will be no one-size-fits-all remedy from the damage inflicted in 2020. What is clear is that a willingness to engage in the challenges presented, to factor in the unexpected, and plan for the future is an endeavour worthy of serious consideration.

A summary of the business elements of the recent Spending Review for next year are set out below:

Continuing the UK’s recovery from coronavirus

The Spending Review has set out the government’s intention to maintain support to protect jobs, businesses and livelihoods, while stimulating the UK’s economic recovery.

In the Spending Review the government has committed to invest:

• an additional £733 million in the government’s Vaccines Taskforce for the purchase of Covid-19 vaccines; £128 million to support vaccines research and manufacturing, including funding for the Vaccines Manufacturing Innovation Centre which will be capable of producing enough vaccine doses for the entire UK population in 6 months;
• more than £500 million to support the continued delivery of vital Covid-19 loans, including paying for the 12 month interest free period on the Bounce Back Loans and Coronavirus Business Interruption Loan Schemes; and
• £557.5 million for the British Business Bank to continue supporting SMEs across the UK to access the finance they need to grow and stimulate the economic recovery post-Covid.

Growing the UK’s reputation as a science superpower

The UK has a proud record of innovation and discovery. We are the country that gave the world penicillin, the World Wide Web, the theories of gravity and evolution, that unravelled the structure of DNA. That spirit of discovery is still alive in this country today. The UK remains a science superpower, with a world leading research and development environment. To grow this reputation, the government has committed to investing £14.6 billion in research and development in 2021/22.

In the Spending Review the government has committed to invest in 2021/22:

• at least £490 million in core Innovate UK programmes and infrastructure to support ground-breaking technologies and businesses;
• £79 million in innovation loans to help cutting-edge UK businesses to access capital;
• £200 million for the Net Zero Innovation Portfolio to develop new decarbonisation solutions and accelerate near-to-market low-carbon energy innovations; and
• £450 million to support strategic government priorities, build new science capability and support the whole research and innovation ecosystem. This includes £350m for BEIS, including the first £50 million of an £800 million investment by 2024/25 towards a new agency for high-risk high-payoff research.

Spurring a green industrial revolution and achieving net zero by 2050

The UK is a world leader in the fight against climate change, cutting emissions by 43% since 1990/ The Prime Minister recently outlined a 10 point plan which will mobilise £12 billion to enable the UK to forge ahead with achieving net zero carbon emissions by 2050, while spurring a green industrial revolution that will create and support up to 250,000 jobs.

In the Spending Review the government has committed to invest:

• at least £125 million in 2020/21 in nuclear technologies, as part of up to £525 million set out in the PM’s 10 point plan, supporting the development of large-scale nuclear, and including up to £385 million in an Advanced Nuclear Fund for advanced nuclear R&D
• to increase the Carbon Capture and Storage Infrastructure Fund to support the construction of four new Carbon Capture and Storage clusters by 2030;
• £240 million to create a Net Zero Hydrogen Production fund to support the production of low-carbon hydrogen;
• £160 million upgrading ports and infrastructure to support the expansion of offshore wind;
• over £1 billion next year to decarbonise homes and buildings, extending the package for low carbon heat and energy efficiency announced earlier in the year;
• £122 million to support the creation of clean heat networks; and
• £500 million over next four years on the development and mass-scale production of electric vehicle batteries.

1 December 2020 – Due date for Corporation Tax payable for the year ended 28 February 2020.

19 December 2020 – PAYE and NIC deductions due for month ended 5 December 2020. (If you pay your tax electronically the due date is 22 December 2020)

19 December 2020 – Filing deadline for the CIS300 monthly return for the month ended 5 December 2020.

19 December 2020 – CIS tax deducted for the month ended 5 December 2020 is payable by today.

30 December 2020 – Deadline for filing 2019-20 self-assessment tax returns online to include a claim for under payments to be collected via tax code in 2021-22.

1 January 2021 – Due date for Corporation Tax due for the year ended 31 March 2020.

19 January 2021 – PAYE and NIC deductions due for month ended 5 January 2021. (If you pay your tax electronically the due date is 22 January 2021)

19 January 2021 – Filing deadline for the CIS300 monthly return for the month ended 5 January 2021.

19 January 2021 – CIS tax deducted for the month ended 5 January 2021 is payable by today.

31 January 2021 – Last day to file 2019-20 self-assessment tax returns online.

31 January 2021 – Balance of self-assessment tax owing for 2019-20 due to be settled on or before today unless you have elected to extend this deadline by formal agreement with HMRC. Also due is any first payment on account for 2020-21.

Most smaller businesses will not have the resources to train and employ their own customs clearance staff in which case you may have to consider using a customs agent or broker. We have reproduced the advice on the GOV.UK website on this critical issue below.

If you do import or export goods from and to the EU you could consider one of the options that follow:

You can hire a person or business to deal with customs for you, such as:

• freight forwarders
• customs agents or brokers
• fast parcel operators

What they can do for you (and who will be liable) depends on:

• the services they provide
• what you want them to do
• the commercial agreement you have with them

They can act for you either as a:

• direct representative
• Indirect representative

They cannot act on your behalf without written instructions from you. The instruction must show whether they’re acting for you directly or indirectly. HMRC will only ask for evidence of the authorisation when required.

Freight forwarders

Freight forwarders move goods around the world for importers.

A freight forwarder will arrange clearing your goods through customs. They’ll have the right software to communicate with HMRC’s systems.

Customs agent or broker

Customs agents and brokers make sure your goods clear through customs.

Fast parcel operators

Fast parcel operators transport documents, parcels and freight across the world in a specific time frame. They can deal with customs for you, as part of their delivery.

A reminder that It is possible to make small tax-free payments to employees, including directors, and this might be an appropriate time to make a small tax-free bonus in advance of the annual Christmas, New Year holidays.

Employers and employees don’t have to pay tax on small benefits provided they comply with the following rules:

• it cost you £50 or less to provide,
• it isn’t cash or a cash voucher,
• it isn’t a reward for work or performance related activity
• it isn’t in the terms of an employees’ contract.

HMRC describes these payments as a ‘trivial benefit’. Based on the national mood following months of COVID disruption, these so-called trivial benefits now seem a possible means to spread a little good cheer.

A word of caution

Where the employer is a close company, and the benefit is provided to an individual who is a director or other office holder of the company (or a member of their family or household) the exemption is capped at a total cost of £300 in the tax year.

Secondly, if you provide a benefit to a group of employees and it is impractical to work out the exact cost per head, then it is acceptable to average the cost per employee.