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Companies will need to commit to extra debt – and the Government should pause tax collections

Companies will need to commit to extra debt says Simon, Senior Manager in Blick Rothenerg’s Audit, Assurance & Advisory team.

“The introduction of additional loan funding of £330bn is welcome and is a huge amount of support to large and small business – it is clear that companies will need to be committed to continuing through coronavirus to take out extra debt rather than close down the business.“

He added, “I am hopeful that many business owners will see this support and feel that the end has not yet been reached. The Chancellor’s further announcement that business owners can walk into a bank on Monday and speak to a manager about the business loan support is very encouraging – however will the banks be able to open given current and predicted future advice?

“The widening of the removal of the rates burden from the leisure and hospitality industry is clearly welcomed – but this will not compensate business without “pandemic” insurance cover sufficiently for the curtailment of trade given coronavirus.”

Simon said, “It will be interesting to see what the next few days will bring re announcements relating to staff and employment support as on an individual level people are going to significantly feel the pinch very soon as employers reduce working hours, enforce unpaid leave and have no demand.”

HM Revenue & Customs should pause tax collections for at least three months.

Alexander Altmann, Partner and head of Blick Rothenberg’s German Desk said, “HM Revenue & Customs should pause tax collections for at least three months to help with the liquidity of smaller and medium-sized businesses and follow the example of other European countries.”

He added, “The loan scheme is a good idea, but why ask businesses to pay VAT and PAYE and then ask them to apply for a loan? It does not make sense. Pausing tax collections is quicker and makes more sense.”

For more information, please contact Alexander Altmann or Simon Rothenberg.

Businesses and employers can find further guidance to plan and respond to the Coronavirus crisis here: https://www.blickrothenberg.com/insights/detail/guidance-for-businesses-and-employers-to-plan-and-respond-to-the-coronavirus-crisis/.