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New recovery loan scheme launches
Budget 2021 announced a new Recovery Loan Scheme (RLS), offering government-backed guarantees on loans or overdrafts between £25,000 and £10 million. The finance can be used for any legitimate business purpose including growth and investment in assets. There will be no turnover restriction for businesses accessing the new scheme.
The RLS will be backed by an 80% guarantee from the government to the lender in the hope that lenders will continue to have the confidence to lend to businesses. Participating banks have been asked not to take personal guarantees or secure lending on the borrower’s home.
RLS term loans will be available for terms of up to six years.
Unlike with the Bounce Back Loans (BBLs), businesses will be required to pay interest and fees associated with the facility from the outset.
The eligibility criteria set out by the government require the business to be: (1) trading in the UK;
(2) viable would it not be for the pandemic;
(3) impacted by the pandemic; and
(4) not subject to insolvency proceedings.
If you’ve previously accessed a CBILS loan or BBL, you are still eligible.
Tax returns filed late
HMRC has confirmed that coronavirus is a “reasonable excuse” for the late filing of tax returns (including CT and VAT). If you are appealing against a late filing penalty on behalf of your company, make sure you explain how the virus impacted the company, i.e. you need to have a valid reason rather than “because of coronavirus”.
Loss carry back extension
It was announced in Budget 2021 that for accounting periods ending between 1 April 2020 and 31 March 2022 it will be possible to carry back relevant losses to offset against total profits incurred in the three years leading up to the period in which the loss was incurred, rather than just the previous twelve months.