Sole trader turnover - bounce back loan

andre87

Hello,
From what I've read so far we can apply for up to 25% from the turnover we have on the 2018/2019 hmrc tax return? 
-Are we forced to use the amount from the tax return?
-Estimation won't work as it works for the sole traders who started trading in mid 2019?
For example I have 35k turnover on my 2018/19 tax return but I had more income sources in 2019.

I also have an limited company incorporated on 3 April 2019. The first accounts are made up to 30 april 2020 and due by 3 january 2021. If i want to apply using it I have to fill the accounts first even if I have 6 more months to do it?


Thank you !

jfinnie

andre87 said:

Hello,
From what I've read so far we can apply for up to 25% from the turnover we have on the 2018/2019 hmrc tax return? 
-Are we forced to use the amount from the tax return?

You need to provide whatever information the particular bank you are applying to request.

Most are requesting you self-certify turnover for the 2019 calendar year, not 2018/19 tax year. 
From Starling:

"You can borrow up to 25% of your turnover in 2019 (minimum £2,000, up to a maximum of £50,000). If your business was established in 2019 or 2020, you can use your estimated annual turnover from the date you started your business."

The tax return is requested for reasons of fraud checking sole traders, not checking turnover.
From Starling's webpage:
"As a sole trader, why do you need my tax return?

We’re required by the British Business Bank to conduct anti-money laundering and fraud checks on customers who join the BBL scheme. For sole traders, a 2018/2019 tax form is how we perform these checks and is a requirement of the scheme. If you did not start trading until after 5th Apr 2019, and therefore do not have a 2018/19 tax return, we will use either your VAT number or your 2019/20 tax return to do these checks. We use this information only to perform required checks, not to assess affordability or eligibility."

You do not have to have accounts filed at Company's House. 

All that said, the actual process and flags by which folk are being turned down (and there are folk being turned down) are not very clear, so who knows what feeds into that decision.

It sounds like you might be considering applying for two loans.  Be careful that you don't fall foul of applying for loans from two businesses in the same group.

andre87

Thank you for your reply!
So if I have 35k turnover on my 2018/19 tax return i can use estimation when I apply? Or i will be asked for 2019/20?


thank you very much!

mobilejo

andre87 said:

Thank you for your reply!
So if I have 35k turnover on my 2018/19 tax return i can use estimation when I apply? Or i will be asked for 2019/20?


thank you very much!

jfinnie answered your question - they want to know your actual turnover in 2019. That shouldn't be an estimate, because 2019 has happened already. So how much did you turnover in the (calendar) year of 2019? You won't have that figure on a tax return, because tax returns cover the period from April - April, not the calendar year. It is just something you should know or at least have a good idea of.

jfinnie

andre87 said:

Thank you for your reply!
So if I have 35k turnover on my 2018/19 tax return i can use estimation when I apply? Or i will be asked for 2019/20?


thank you very much!

No, in any case when they are asking for turnover for the calendar year 2019 it is actual, real recorded turnover between Jan and Dec 2019.  Ignore what it says on your tax return as the periods won't align and won't help you.  You should have sufficient records to be able to work this period's turnover out, or ask your accountant to do it if you can't.

If your business wasn't established at the beginning of 2019 (eg the company you mention starting in April 2019) you'd use the 12 months from that start date.  If you don't have 12 months then you'd expect an estimate to come into it. 

-------------

There is an open (interesting) question I think only about if you have to estimate turnover for a period that includes a significant number of COVID affected months, whether the estimate is pre-COVID or post-COVID....  In the case where you have actual turnover of 2019 you obviously have the benefit of pre-COVID numbers.  But if you've just started a business that will be badly affected by COVID, and you have to estimate what your turnover will be now, you're not so lucky if it has to be based on taking COVID into account.  Starling don't provide any guidance there.

Grumpy_chap

andre87 said:

Hello,
From what I've read so far we can apply for up to 25% from the turnover we have on the 2018/2019 hmrc tax return? 
-Are we forced to use the amount from the tax return?
-Estimation won't work as it works for the sole traders who started trading in mid 2019?
For example I have 35k turnover on my 2018/19 tax return but I had more income sources in 2019.

I also have an limited company incorporated on 3 April 2019. The first accounts are made up to 30 april 2020 and due by 3 january 2021. If i want to apply using it I have to fill the accounts first even if I have 6 more months to do it?


Thank you !

There is no estimation required.  The business can apply for a BBL of 25% of the 2019 turnover.  2019 calendar year.  That is a historical period so accurate turnover is available to the Directors - either the sum of all invoices or, if the business uses cash-basis, the sum of all Client payments into the business.

The sole trader business can claim for a BBL and the Ltd Co may be able to claim also.  However, if the two businesses are deemed as part of a group, then only one application is permitted (based upon the combined turnover of both businesses).  Santander give a helpful guide to assess whether businesses are or are not in a group https://www.santander.co.uk/assets/s3fs-public/documents/bbls_business_group_guidance_sheet_0.pdf

Nakky

I am the only owner and director of a Ltd. Company, incorporated in February 2019
I did apply for an HSBC BBL on 10/06 as my business account cashplus does not provide BBLs. 
HSBC asked me for a 2018/2019 self assessment tax return which I am not able to provide as it is not requested by HMRC until Jan 2021.
For this reason the BBL application was refused and I have been asked to open a feeder account therefore I did applied for it online but HSBC Ltd database is not linked to the company house and so the details of my Ltd on HSBC hands are incorrectly linked to more than one owner.
I did applied through the phone, same result.
I have been complaining to HSBC since 01/07 and sent a formal complain on the 14/07, still waiting for HSBC to sort the mismatch of the data and let me apply for the feeder account.
On the previous BBL application that has been refused I have had mentioned less than the 25% of my turnover, I would like to know if the HSBC will take in account the first application amount or if I will be able to apply for more on my future BBL application ?
Also how can I prove my annual 2019 turnover and what kind of documentation HSBC will ask since I don’t have a 2018/2019 self assessment? 
For how long the BBL scheme will be valid?

Thank you 

Jeremy535897

Your 2018/19 return should have been submitted by 31 January 2020, not 2021. You should have been able to provide it. However, all it will show is the income you received from the company, not the company's turnover for calendar year 2019. The accounts for the company should show that. The BBL scheme closes on 4 November 2020. If your turnover is sufficient, I imagine you could ask for an increased amount, although that might be another reason for rejection.

Grumpy_chap

Nakky said:

HSBC asked me for a 2018/2019 self assessment tax return which I am not able to provide as it is not requested by HMRC until Jan 2021.
 

2018/2019 tax return was to be submitted by January 2020, extended to 23rd April 2020 for SEISS - not relevant for a Ltd Co. - but, either way, the 2018-19 tax return should have been done by now.

For the 2019-20 tax return, January 2021 is a deadline, there is no reason not to prepare and submit now.  I have done mine.  It is still irrelevant for Ltd Co., so I am not sure why HSBC asked for it, maybe they understood that you are a sole-trader for some reason.

Bounce back loan is open until 4th November.

Nakky

I am the only director of the Ltd and not a sole-trader
The Ltd has been incorporated on January 2019 and there was not requirement by HMRC  to submit a self assessment tax return for 2018/2019, but it will be one required for 2019/2020 once the first year of accounts are prepared. According to my accountant, the first year of account to 31st January 2020 are require to be filled with company house by 10th October 2020.
Not sure why HSBC requested it but in any case their company database is not linked to the company house ones and this is what is giving me pain.
So is HSBC gonna ask me for a copy of the statements from the business accounts as a proof of the turnover?
Or Is it just a personal statement from the owner of the company?
Did anyone experience this step? 

Grumpy_chap

Your 2019 turnover is a number you should have readily available.  It doesn't need you to have filed the accounts to know what you invoiced.

Won't HSBC have access to the business bank account records in any case?