The world of corporate finance can be a minefield, especially in the past year and a half. The government’s response to COVID-19 has been to offer businesses a range of options, including grants and loans and more traditional funding methods such as crowdfunding. We caught up with two tax and corporate finance specialists from R&D provider Access2Funding to find out where the field is in terms of alternative corporate finance and what the future may hold for us.
Kieran Newton works as a tax advisor in the southern parts of England and Northern Ireland. He has extensive knowledge, particularly in corporate tax for SMEs and personal income tax for high net worth individuals, as well as in the area of ââcorporate tax planning and restructuring. He was an accountant for six years where he accumulated extensive experience in auditing.
Chartered Institute of Taxation member and fellow tax expert Leslie Maloney works throughout the Northwest. Leslie joined Access2Funding after having served as a director in one of the 20 largest accounting firms. He holds a degree in chemistry from the University of Oxford and has held a number of positions in the areas of taxation, auditing, corporate finance and tax planning.
What changes can businesses expect to see in funding in the coming months?
Leslie Maloney: âAs we all know, due to COVID-19, many businesses needed financial assistance to continue doing business over the past year. The two main programs were the government Bounce Back Loans and the CBILS Loans – on which debt and interest repayments will soon begin to be paid. Although the country is slowly breaking out of the restrictions that have affected daily life, it is fair to say that we are not yet out of the water. This could mean that some companies will have to repay these loans, but could still have financial difficulties. “
What options do businesses have for repaying these loans if they are in difficulty?
Kieran Newton: âThere is a new business payback loan program, which means business owners are eligible to refinance existing CBILS and Bounce Back loans. However, there are no longer any 12-month government business interruption payment programs in place, meaning that refunds are usually immediate unless the bank directs otherwise.
âThe main advantage of these loans over ‘normal’ loans is that there is a government guarantee in the bank, to encourage lending, but it should be remembered that the borrower is always at risk for the amount in the first place. total. “
Can you describe alternative funding methods to help with cash flow?
Leslie: âThe R&D Tax Relief Scheme is a government initiative, created to reward and encourage UK businesses to invest in innovation. Businesses could be sitting on thousands of pounds of stashed funds just to accomplish their daily tasks! Over the past year we have been working with clients who have discovered R&D and this has actually helped them to
the doors open.
Kieran: âThis schema is often underused and perhaps misunderstood. Simply put, to be eligible for R&D tax credits, companies must be registered in the UK and subject to corporation tax. SMEs must have fewer than 500 employees and either less than â¬ 100 million in turnover, or â¬ 86 million in balance sheet. R&D is valued in euros rather than in GDP as written by the European Commission, but is not linked to EU funding.
From manufacturers to food and beverage suppliers, many companies may not realize that they are eligible for R&D. To learn more about HMRC R&D tax credits, contact [email protected] or visit www.access2funding.co.uk/