The building blocks of accountancy

is for unlocking

Operational and financial matters to consider as lockdown eases and the last elements of support that you can claim come to an end.

Julia Burn continues with her A-Z of top tips. This month she turns to the letter U.

Thankfully, lockdown restrictions are continuing to ease and life can gradually get back to some form of normality as this process continues. 

This month, I concentrate on the operational and financial aspects which will affect businesses as the country begins the gradual process of ‘unlocking’.

Operational factors

Many businesses, including private medical practices, have had to close their doors during the pandemic, either fully or partially. 

It is going to take time for people to get their heads around returning to some form of normality and it is anticipated that this will be a gradual process and many businesses will not return to working full time in their usual place of work.

Operational factors to consider will include getting buildings ready for re-opening where they have had to close. This will inevitably incur additional costs of deep cleaning and redesigning workplaces to incorporate any social distancing measures that are likely to stay in place in some form for an indeterminable period of time. 

Another consideration will involve managing staff who maintain an element of working from home to ensure that the right level of staff are on site at the right times to ensure the business runs smoothly.

Covid self-testing

Businesses will also need to consider processes to put in place for staff to carry out self-testing for Covid, where this is considered appropriate; agreeing how often tests need to be performed, how they are recorded and monitored.

Many people have delayed taking annual leave due to the travel restrictions in place and this could cause additional pressures for businesses as the country begins to unlock and staff want to take time off. Managing staff to ensure that everyone does not decide to take annual leave at the same time could be quite a task. 

Another consideration which has become a hot topic among businesses and the country in general is mental well-being. 

Ensuring that businesses have provision in place to support their staff, some of whom will have had to shield or may be nervous about returning to a normal way of life, will be a major onus. This support needs to encompass those who have suffered difficulties with loneliness and felt isolated due to the restrictions in place or have had to juggle working from home alongside home schooling. 

It cannot be underestimated the great effect that the pandemic and the various lockdowns will have had on the vast majority of the population and the importance of the ways that this is managed by employers.

Financial factors

Budgeting and forecasting and making future plans for businesses are going to be even more important as the Government support relating to the pandemic start to come to an end. 

Government loans – bounce- back loans and Coronavirus Business Interruption Loans – will start to need to be repaid. Also, the furlough scheme is coming to an end, so careful consideration will need to be made regarding levels of staff that businesses need and whether the business can afford to keep all of its original staff employed once the furlough assistance is removed.

Businesses will also need to start repaying taxes, which have been able to be deferred due to the pandemic for example, PAYE and National Insurance.

Businesses that have had to close their doors may also have benefitted from rent-free periods and Business Rate holidays/grants, which will also come to an end.

All of the above could lead to cash flow strains and it will be really important to have timely reporting of financial performance to ensure you do not get into any difficulties. 

Avoid nasty surprises

Preparing budgets and forecasts which are regularly reviewed and flexed for actual performance will be key to avoid any nasty surprises, your accountant will be able to assist with this where necessary.

Other things to consider are the timing of tax-efficient costs, especially where the business profits are going to be subject to the new higher rate of corporation tax of 25% from April 2023.

There are also companies that will fall into the marginal rate of corporation tax as well, as they too will be subject to higher tax bills than when they were subject to corporation tax at 19%.

Timing of capital equipment costs can be key, especially if you are eligible for the super-deduction for capital allowances. Timing of pension payments for staff can also mitigate some of the corporation tax payable by companies.

In the Budget, the Government announced that, due to the economic effects of the pandemic, companies are able to carry back losses of up to £2m against profits made in the prior three years. Previously, losses could only be carried back one year. 

Timing of expenditure could therefore be critical to maximise future savings on corporation tax.This is again something that you should speak to your accountant about.

The key is going to be careful planning and a flexible approach to the way your business is run in the future.

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

• See ‘“T”is for tax’

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