As we move into 2021 and the possibility of recovery, we will be looking from the support of the medical community to the loving arms of people that will help us with our economic recovery. 

Accountants like me who have tried to keep the ship sailing and offer Financial Coronavirus guidance and support will continue to offer the critical role of keeping the key working companies going. The post-pandemic economic recovery will be about retaining staff after furlough, re-onboarding self-employed drivers, offering restructuring and business advice, and protecting companies from a hungry HMRC seeking to get the government’s money back.

Xero the bookkeeping software company undertook a major survey of their broad sector of SME clients recently and come up with the following figures: 43% of SME’s spotted their accountant as crucial to their pandemic survival, 32% of companies turned to their accountant for COVID19 financial recovery advice (34% to govt website and 15% to family members) More importantly 45% said their accountant is more important than ever before, with 58% naming their accountant as their most trusted business advisor. Just saying…….

So, what are we to expect financially for the coming year? Watch out for:

• Can a director have a personal guarantee with a Bounceback or CBIL Loan, even when they never actually signed for it? Many directors have signed up for these loans because they do not need a personal guarantee, a fixed charge, or a debenture. If the company does go into liquidation and the loans were used to reduce their director’s loans or pay themselves preferentially this will be caught by The Companies and Insolvency Act. More on this soon.
• The furlough scheme is now extended until March 2021, however, the HMRC has already had some early victories in sniffing out furlough fraud and there is and will be ‘tears before bedtime’ for people that think the HMRC cannot trace your emails, social media, and potentially illegal business activity better than the govt can trace infected people!
• Finally, next year sees the IR35 reforms fast approaching. You are going to hear more and more the phrase, ‘statement of work’ (SoW)referred to when talking about the issues of self-employed status.  

IR35 was originally set for this year however is being pushed to April next. The responsibility for determining employment status will no longer lie with the sub-contractor themselves but with the medium to large size business they contract to. (you can see where I am going with this). Workers that fall inside IR35 will have to have their Nat Ins and PAYE deducted at source or offered externally through umbrella companies.

The SoW is the document used in a managed service agreement for contracted out services, which specifies what outsourced work is being done. It is extremely detailed and is being touted by many legal advice teams and in my opinion not suitable for hire and reward.  So, what do we look for when IR35 rears its ugly head:

• • • • • Operators, do not take your position for granted
        • It can be managed effectively
        • There is no quick fix or workaround, but you need to be super familiar with the legislation and work within contract chains for compliance.

If any of this either scares or confuses we will be looking into all of these subjects in detail in the next few months.

Wishing all of you seasons greetings and a safe new year.

Gary