Raising Finance - seed enterprise investment scheme (SEIS)
The SEIS is designed to help your company raise money in it’s early trading years. It does this by offering tax breaks to individual investors who buy new full risk ordinary shares in your company.
If your company needs to raise £150,000 or less and the board are happy to provide investors with ordinary share capital, then the SEIS could be used to attract investors.
To help reassure potential investors, it’s possible to ask HMRC to provide a non-binding opinion (known as advance assurance) as to whether a potential investment will qualify for SEIS relief.
HMRC will no longer issue an opinion for speculative applications. This means that you will need to have found a potential investor before requesting an advance assurance opinion.
Using VAT to improve cash flow
Aim to make any large VATable business purchases near to the end of your VAT quarter, so that the reclaim of the VAT paid will be quicker. Similarly, if you make large sales near the beginning of your VAT accounting period, you are more likely to have received payment from your customer before you must pay VAT over to HMRC.
If you normally receive a payment from HMRC when you submit your VAT return rather than make a payment, you can improve you cash flow by completing monthly VAT returns instead if quarterly or annual returns.
Business losses and tax relief
The current rules allow a company to use a trading loss to reduce tax on other profits and gains of the same year, and if any loss remains, profits from the same trade for the previous twelve months. Any loss not used in either of these ways reduces the taxable profits, income and gains of later years.
Temporary loosening of the loss relief rules
Businesses that make overall losses in accounting periods ending between April 2020 and April 2022 can use them to reduce the tax paid on profits of the previous three years.
The change extends the period for which a company can carry back loss relief. Instead of it being the twelve months before the start of the accounting period in which the loss was made, it’s now 36 months. The loss must be set against the most recent profits first, then those of the period immediately before and so on. Any losses left after the carry-back are carried forward.