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  1. Home
  2. For members
  3. Journal Archive
  4. Issues
  5. November 2020
  6. Prepare for the tax due date

Prepare for the tax due date

As the January tax payment deadline approaches, financial planning is essential for practices still hit by COVID-19 – and a tax loan could be one option to consider
16th November 2020 | Paul Mosson

As we get to the end of 2020, it is fair to say it has been a very tough start to the new decade.

When we surveyed members back in May to understand the impact the COVID-19 outbreak and subsequent restrictions were having on the financial health of the sector, 90% of private practice firms reported a downturn in new business, with the majority also reporting reduced turnover and cash flow. Since then certain areas, such as residential conveyancing, have experienced a significant and welcome upturn. But for many, while the upturn may be welcome, it is unlikely to be large enough to outweigh the drop in income and strain on cash flow during the full lockdown.

We still find ourselves in very uncertain times, and many firms will be wondering how they can maintain resilience and plan for the coming year. Many firms took advantage of the HMRC support to defer payments, but with January approaching many of our members have growing concerns over meeting payment deadlines in 2021.

Meeting deferred and usual payments is a real challenge, so I asked two of our commercial partners to join me in explaining what options are available to you, either from them or elsewhere in the open market.

Crucial information

Lyn CalderFinancial management information is critical to plotting firms’ recovery and building up resilience. Lyn Calder, managing partner – Edinburgh from AAB, our accountancy partners, highlights the need for robust financial management, saying: “It has been a challenging time for businesses since lockdown was first announced back in March, and while it may feel like we are slowly turning a corner, some firms could be about to enter another challenging period.

“With the various Government business support packages coming to an end, there is every possibility that cash could become tighter than it was previously.

Therefore, it is essential for firms to have a clear and regular view of their business performance and cash against forecasts.

“Strong financial management has never been more crucial. Firms must have a clear understanding of the KPIs that drive their business, and these must be regularly reviewed along with the two key profit levers – fees and costs.

“We would encourage all firms to ensure that they have the right systems, software and processes in place to provide their decision-makers with quality, real-time information about their business performance.”

Time for a tax loan?

As part of your financial planning, you should also consider any temporary cash flow support that is still available to law firms. Every tax season brings its own challenges, but fortunately, there are finance options available to both individuals and businesses to help spread the cost of any tax liability.

Aileen BoyleAileen Boyle, managing director of our Strategic Partners Braemar Finance, introduces the benefits of a tax loan.

“Tax time can be incredibly stressful for business owners, because no one enjoys the thought of having to deal with the impact that paying out a lump sum to HMRC has on a firm’s cash flow. We introduced the Braemar Finance tax loan to help business owners avoid any HMRC penalties and daily interest charges for late submission.

“Our unsecured tax loan gives professionals and business owners the option of spreading the cost of their tax demand into more affordable monthly payments.

“We fund personal, business, corporation, capital gains and crossover tax demands and will consider consolidation of existing agreements. With flexible repayment terms and fixed monthly payments, the payment can be made directly to HMRC or to your bank account by faster payment transfer.

“The application process is very simple – tell us the amount of your tax bill and the term you would prefer, and our in-house specialist underwriters will provide a quick decision.

“We will then tailor the tax loan to suit circumstances with fixed payments over the agreed repayment period.”

You can find out more about support available from Braemar Finance and AAB in the member benefits section.

Tax loan: the benefits

The Author

Paul Mosson is executive director of Member Services & Engagement at the Law Society of Scotland

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Regulars

  • People on the move: November 2020
  • Reading for pleasure: November 2020
  • Book reviews: November 2020

Perspectives

  • Opinion: Matthew McGovern
  • President's column: November 2020
  • Editorial: November 2020
  • Profile: Emma Dixon

Features

  • Save Our Sector
  • Leading legal excellence in a pandemic
  • New job, no office?
  • All change here
  • From people talk to system talk
  • Year of the cloud

Briefings

  • Civil court: keeping justice on the rails
  • Employment: Time for a redundancy refresher
  • Family: Watch your step with behaviour-based divorce
  • Human rights: Inner House message in privacy group chat
  • Pensions: The future – the regulator's blueprint
  • Scottish Solicitors' Discipline Tribunal
  • Crofting law reform: time to act
  • In-house, online and in demand

In practice

  • Paralegals: 10 years of recognition
  • Ask Ash: Too busy, but still insecure
  • Property pitfalls: problematic but preventable
  • The Word of Gold: Count us out
  • Prepare for the tax due date
  • The Eternal Optimist: Help to turn the corner
  • Appreciation: Ross Paton
  • Appreciation: Claire Reilly (Robertson)
  • Tenancies succession reminder

Online exclusive

  • Discount or windfall? The cost of future accommodation
  • Antigone, and the limits of state powers
  • Appreciation: Rev Alistair Gerald Crichton McGregor QC
  • When sorry might be the wrong word

In this issue

  • Shape your firm’s success in 2021
  • Has 2020 made you look again at the way you work?
  • Five questions lawyers should ask cloud technology vendors
  • Waterstons: a trusted partner for IT/legal collaboration
  • Amnesty on tenants' improvements

Recent Issues

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