The building blocks of accountancy

is for support and succession planning

Our A-Z of top tips from accountants to doctors continues as Julia Burn turns to the letter ‘S’

Spring is in the air and, thankfully, there seems to be light at the end of the tunnel. 

As lockdowns begin to be relaxed and a bit of our old life resumes, businesses can hopefully get back to some form of normality, albeit in potentially a completely different format to  previously.

During the pandemic, the Gov­ernment has offered various measures to support businesses, including the furlough scheme, which, during the Budget on 3 March 2021, has been extended to September 2021.

Other support measures include the Coronavirus Business Interrup­tion Loan Scheme (CBILS) and bounce-back loans, which are coming to an end at the end of March to be replaced by the Recovery Loan Scheme, which currently runs to 31 December. Details of this loan scheme are pending clarification. 

HM Revenue and Customs (HMRC) has also offered deferral of payments of certain taxes, which, although helping with immediate cash flow issues, can just push the problem further down the line and create worse headaches when the original liability becomes due at the same time as the next liability. 

So it is necessary to consider what other support is available for businesses to ensure they can recover from what has been a very difficult period for many. 

Alternative areas of support

Keeping on top of accounting and finance records will be an even more important task than usual to ensure that any issues arising are dealt with quickly and to ensure that they do not affect the smooth running of the practice. 

Many accountants offer out­sourcing solutions. These provide a back-office function, keeping your financial records up to date and leaving you the time and resources to concentrate on the day-to-day running of the practice and what you do best.

The future of businesses are uncertain and the ongoing effect of the pandemic cannot be accurately anticipated. It is important to maintain up-to-date information to allow quick decisions to be made to keep expenditure controlled and cut costs when necessary. 

Maintaining cash flow forecasts will give a reliable way to make sure that any pinch points are identified quickly so they can be dealt with appropriately. Your accountant will be able to assist with cash flow forecasting for the business.

Where a private practice has had to fully or partially close, getting back up and running again could be costly in terms of keeping both patients and staff safe by applying all the measures stipulated by the Government. 

Additional equipment such as screens and extra PPE should be claimable against business expenses. Your accountant should be able to advise you on the tax treatment of such costs to the business. 

Many businesses have had to adapt to the pandemic in a variety of ways, the most common being the need for most employees to work from home. 

In most cases, this has involved a major adaptation of their IT infrastructure. This will inevitably have affected practitioners where they have had to hold more virtual rather than the normal face-to-face appointments. 

Patients may no longer be working so near to your practice and so you may need a more flexible approach to appointments. Practices will therefore need their staff’s support to deliver a more flexible business.

Succession planning

‘S’ is also for succession planning. With every cloud there is a silver lining and one thing the pandemic seems to have taught us all is the importance of spending time with loved ones and taking valuable time out. 

Properties and trade valuations in the current climate  may be lower than previously, so it may be an ideal cost-efficient opportunity to consider handing practices and investment properties over to successors at a time when valuations are lower to minimise potential tax liabilities arising from the transactions. 

The recent Budget has kept capital gains tax at 20% for now, but by freezing allowances for capital gains tax, lifetime limits on pensions and inheritance tax, these are tax rises, as more assets will be captured. Now may be an opportune moment to review your financial position.

It may also be a sensible time to consider restructuring the business where it holds both a trade and a property so these can be split in anticipation for selling or planning for succession. 

Again, based on the current valuations, now may be the moment to consider this, as initial tax liabilities may be minimised.

Your accountant will be able to advise you on the best actions for you to take in the current climate based on your individual circumstances.

The future

We will all have to wait and see what the effects of the pandemic ultimately have on the economy.

But the most important thing for practices is to ensure they continue to offer the exceptional services they have always done, while ensuring all finances are up to date so that decisions which need to be made within businesses and personally can be reviewed and actioned as quickly as possible.

Julia Burn (right) is a director at Blick Rothenberg and part of the team that advises medical practitioners

• See ‘“R” is for remuneration’