Bounce back loan

davetheraver

chez6911 said:

I've always paid taxes and vat on time bo7ght my shop yrs ago so no rent to pay employ 3 staff who's wages I've topped up from furlough so they arnt out off pocket I have a full business account proper accountant so I'm not sherking from anything 

Never said you were, plenty of genuine people operating.

gwc1 said:

That’s quite a first post!

Not one for sitting on the fence eh? 😂

Just annoys me, anyone who is operating a genuine business and needs access to this scheme has to wait because its flooded with applications from people who do not really need it.

I know people who have a business account, and the business has been dormant for years with no money going in. They apply and get 30k the same day, or self employed who have been ducking tax and business fees for years suddenly getting a large cash advance. Tell me this is not wrong, unless they are genuinely going to put it to good use.

Grumpy_chap

davetheraver said

I know people who have a business account, and the business has been dormant for years with no money going in. They apply and get 30k the same day, or self employed who have been ducking tax and business fees for years suddenly getting a large cash advance. Tell me this is not wrong, unless they are genuinely going to put it to good use.

If a business has an account but it's essentially dormant, that is very easy for the bank to check and stop if the application clearly exceeds the permitted fraction of turnover.

For the self-employed, turnover can be checked against past tax returns.

It is really with the many newly self-employed as of 28th February that the largest risk is as the application simply asks for projected turnover self declaration.

In all cases where the loan request is above £21k, the bank should be asking for VAT number.

dunstonh

Are you serious? I thought the whole purpose of this loan scheme is to help businesses that are suffering and have been impacted from by Covid-19.

Its cheap borrowing and plenty of people are using it who don't need it.   It's available and they have every right to it.

I know directors that are spending it on a car, investing it in their pension, putting it towards buying a second home.   It is their choice.   

In all cases where the loan request is above £21k, the bank should be asking for VAT number.

What about businesses that are not VAT registered?

Grumpy_chap

dunstonh said:

In all cases where the loan request is above £21k, the bank should be asking for VAT number.

What about businesses that are not VAT registered?

Asking for VAT registration is a way to help verify turnover.  VAT registration threshold is £85k and maximum loan is 25% of turnover, so any loan application above £21.25k should be to a VAT-registered business.  This step would prevent some of the worst case fraud, especially those newly self-employed from 28th February self declaring £200k predicted turnover and asking for a loan of £50k.

Jeremy535897

@Grumpy_chap I always enjoy reading your posts as they often look at things in a different way. Your point about VAT is well made, in circumstances where the loan is based on past turnover and the business makes standard or zero rated supplies, although I think the VAT registration number is about the first thing they ask for anyway.

I suspect that the government will be extremely unsympathetic to borrowers who waste the loan and then default. They will regret it. For those who do pay it back, the loan costs the government up to £1,250, considerably less than the amount they have put into SEISS grants that can be frittered away on anything (at a potential cost in universal credit for some).

gwc1

gwc1 said:

That’s quite a first post!

Not one for sitting on the fence eh? 😂

Just annoys me, anyone who is operating a genuine business and needs access to this scheme has to wait because its flooded with applications from people who do not really need it.

I hear your frustration but who are these people?
Ive had a business account with HSBC since 1981 when it was the Midland, I’ve applied for a modest sum but still haven’t received it....

Rules and guides have never been 100% fair, Covid-19 won’t change that!
hope you get sorted regardless 

dunstonh

VAT registration threshold is £85k and maximum loan is 25% of turnover, so any loan application above £21.25k should be to a VAT-registered business.

What about businesses that are not VAT registered as their turnover is not VATable?

Not all income is subject to VAT.

Jeremy535897

dunstonh said:

VAT registration threshold is £85k and maximum loan is 25% of turnover, so any loan application above £21.25k should be to a VAT-registered business.

What about businesses that are not VAT registered as their turnover is not VATable?

Not all income is subject to VAT.

I covered that.in my post at 4.29pm.

Grumpy_chap

dunstonh said:

VAT registration threshold is £85k and maximum loan is 25% of turnover, so any loan application above £21.25k should be to a VAT-registered business.

What about businesses that are not VAT registered as their turnover is not VATable?

Not all income is subject to VAT.

It is my understanding that a business has to register for VAT once the VAT-threshold (£85k) is reached, irrespective of whether the turnover is VATable or not.  I am quite happy if I am informed my understanding is incorrect as then I have learned something  .  @Jeremy535897 will probably be able to confirm.

For the BBLS, applications for companies or sole traders with trading history are based on past turnover, which can be verified relatively simply by the banks.  The VAT-registration would just be a hurdle for those new sole-trader businesses claiming to have started 28th Feb and declaring projected turnover of £200k and asking for £50k loan straight off the bat.

@Jeremy535897 - I do so hope that the Government will pursue with vigour any defaulters under this scheme.  And thank you for your kind comments.

davetheraver

Grumpy_chap said:

If a business has an account but it's essentially dormant, that is very easy for the bank to check and stop if the application clearly exceeds the permitted fraction of turnover.

For the self-employed, turnover can be checked against past tax returns.

It is really with the many newly self-employed as of 28th February that the largest risk is as the application simply asks for projected turnover self declaration.

In all cases where the loan request is above £21k, the bank should be asking for VAT number.

Yes you are correct, and on a normal loan application that would apply.

dunstonh said:

Its cheap borrowing and plenty of people are using it who don't need it.   It's available and they have every right to it.

I know directors that are spending it on a car, investing it in their pension, putting it towards buying a second home.   It is their choice.  

It is cheap borrowing, your are right, but for those who are responsible enough to borrow it. Unfortunately I think most people applying for this are not responsible enough.

Jeremy535897 said:

I suspect that the government will be extremely unsympathetic to borrowers who waste the loan and then default. They will regret it. For those who do pay it back, the loan costs the government up to £1,250, considerably less than the amount they have put into SEISS grants that can be frittered away on anything (at a potential cost in universal credit for some).

Agreed, people seem to think as its Covid, its a cash gift. For sure they will regret it when that monthly repayment of 200-1K starts next year.

Regarding the VAT number, it appears if your apply via the bank you hold an account with, they apparently just check your turnover. But as I have mentioned, dormant accounts still getting loans..

I know with the feeder accounts, the option from my memory was, Yes I am the threshold and have my VAT number, or Yes I am at the threshold and not applied for my VAT number.

This is a quick way to get people into large amounts of debt, and what could/should make a business, could actually destroy it if people are not smart. People should be very careful with this, and use the money wisely. I am sure defaulting on this will be pretty costly, and you wont be able to bounce back from that!