Post-Covid 'deluge of debt' fears need easing according to pan-Humber accountant
Forrester Boyd chairman calls on HMRC to allow for debt consolidation under business support loans with varied repayment thresholds
A leading regional accountant is calling for businesses to be able to consolidate what they owe as they emerge from Covid-19 lockdown facing a "deluge of debt".
Repayment of emergency measures broadly welcomed to support through the crisis could kick in and cripple or even kill off companies in the early part of next year.
Now Forrester Boyd’s practice chairman David Everatt wants to see the possibility created to repackage under business support loans, owed to HMRC, with thresholds for repayments based on profits, turnover and loan size.
Mr Everatt, who has just overseen the expansion into Hull city centre of the Grimsby-headquartered firm, enhancing the pan-Humber presence, said: “The government has done a good job supporting many businesses throughout the Covid-19 crisis, but we now need greater clarity on measures put in place to help SMEs survive the deluge of debt so many will face in early 2021.
“One of the biggest issues facing us is that of how debt deferred in 2020 – such as VAT and income tax – is going to be treated by the government and their agencies.
“On top of this many SMEs have borrowed via bounce back loans and the Coronavirus Business Interruption Loan Scheme (CBILS), which have 12-month repayment holidays, and so payments will start in the spring of 2021.
“Without clarity many businesses will understandably be taking drastic action now in order to minimise the risk of being unable to pay the likes of deferred income tax, VAT and their bounceback loans at the time due.
“The most likely impact will be higher redundancies than might be necessary.”
Forrester Boyd, through the UK 200 Group - an association of independent lawyers and accountants - has produced a paper, which details recommendations on several financial problems affecting SMEs as a result of Covid-19. It has been sent to the government for consideration.
The 180-strong team at the 85-year-old firm - one of the top 50 independent chartered accountancy practices in the UK - is calling on SMEs to get behind their proposals by writing to their local MPs, encouraging them to support the introduction of the measures. It has produced a template letter, available on the firm's website, alongside the full paper.
Mr Everatt added: “We are calling on the government to take action now to introduce measures to address this worry and to provide support that goes further.”
By David Laister Business Editor (Humber)
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|Summary: Forrester Boyd chairman calls on HMRC to allow for debt consolidation under business support loans with varied repayment thresholds
||6 Aug 2020