I agree with Roland 195. The situation is not cut and dried for all practitioners trying to do the best for their clients. I might even argue that early BBL repayment is not required at all by HMG and would not necessarily be in the client's best interest.
For instance, I have a single personal services client who borrowed £35k legitimately through his company and has now paid the first 3 months of regular repayments. However, unbeknown to me he also paid £12.5k of this back a couple of weeks ago, only because he doesn't like debt, and has now come cropper by contracting Covid and being forced into nil income for at least a week. His effective rate of interest under the BBL is 2% (2.5% - 19% CT) whereas he pays much more than this on his mortgage or, hopefully not, his overdraft. We can lead a horse to water .......
I certainly would not ditch such a client, as I believe to leave them without professional support would be unethical and an unduly emotional response.
Agreed. Also consider that phoning HMRC may be a joke as well, with long wait times on many occasions, listening to inane 'music'. Writing would not be a reasonable option, as they often take more than 30 days to reply despite published service level targets. Meanwhile, the client has money tied up with HMRC. Will they pay interest on the delayed refund/offset? I don't think so.
Whilst everything above is correct in normal times, HMRC rules for 2020-21 and the current tax year are more generous in response to the Coronavirus pandemic. Go to https://www.gov.uk/tax-relief-for-employees/working-at-home for the details. I've been advised by a tax consultant that this applies during the pandemic even if working from home for just some of the tax year.
My answers
I agree with Roland 195. The situation is not cut and dried for all practitioners trying to do the best for their clients. I might even argue that early BBL repayment is not required at all by HMG and would not necessarily be in the client's best interest.
For instance, I have a single personal services client who borrowed £35k legitimately through his company and has now paid the first 3 months of regular repayments. However, unbeknown to me he also paid £12.5k of this back a couple of weeks ago, only because he doesn't like debt, and has now come cropper by contracting Covid and being forced into nil income for at least a week. His effective rate of interest under the BBL is 2% (2.5% - 19% CT) whereas he pays much more than this on his mortgage or, hopefully not, his overdraft. We can lead a horse to water .......
I certainly would not ditch such a client, as I believe to leave them without professional support would be unethical and an unduly emotional response.
Agreed. Also consider that phoning HMRC may be a joke as well, with long wait times on many occasions, listening to inane 'music'. Writing would not be a reasonable option, as they often take more than 30 days to reply despite published service level targets. Meanwhile, the client has money tied up with HMRC. Will they pay interest on the delayed refund/offset? I don't think so.
Whilst everything above is correct in normal times, HMRC rules for 2020-21 and the current tax year are more generous in response to the Coronavirus pandemic. Go to https://www.gov.uk/tax-relief-for-employees/working-at-home for the details. I've been advised by a tax consultant that this applies during the pandemic even if working from home for just some of the tax year.